Podcast Episode - Suze School: Wrong, Wrong, Wrong

Investing, Podcast, Saving

April 02, 2022

Listen to Podcast Episode:

After getting emails from listeners who continue to ignore the lessons in this podcast, Suze explains why we need to listen to every single episode.

Podcast Transcript:

April 3, 2022. So about a week or two ago, I was talking to somebody and I simply asked them, how did you like the podcast and it was the podcast all about interest rates and the Fed funds rate and the discount rate and the prime rate and how all of that affects you. And they said to me, well, I really liked the opening Suze a lot about Ukraine. And again, our hearts and prayers still go out to everybody in Ukraine. But really the rest of the podcast didn't apply to me and I tried responding to that. But I saw that I really wasn't going anywhere with it. I just wasn't making any headway. And I just want to say to all of you. Do not think that every single podcast does not apply to you. Maybe it doesn't apply to you right here and right now, but there will be a time somewhere I promise you within your entire financial life that if you listen, if you learn, even if it's not applying to you right now, when that situation comes up for you in the future, you will not make the mistakes that most likely you're going to make because why you didn't think what I was trying to teach you applied to you. I mean, that is why so many people right into the podcast and they say to me, I have been listening to you for years, Suze and then they go on to tell me something that they've done that I've addressed over those years. But because they didn't pay attention because at the time it didn't apply to them. They went ahead and made one of the biggest mistakes of their lives. You know the truth of the matter, everybody is the biggest mistake you will make are the mistakes you don't even know that you're making and then you get yourselves in trouble, then you right in and you're saying help me, what can I do, if you had just simply listened? So wrong, wrong, wrong. If you think every one of these podcasts don't apply to you because they most certainly do. And the reason why I'm talking about this right now is that recently a lot of you are writing in and you are telling me that you are either inheriting a large sum of money or you've sold a home or a rental property and now you have all this cash and you don't know quite what to do with it or you've recently gotten divorced and have a large settlement and you need to know what to do with it. And all of these situations the people seem that they just want to keep their money secure, they're afraid of the stock market right now, they're afraid of everything and they just want to keep it secure and they go to see a financial advisor and the advisor says to them the following and I cannot tell you how many emails I've gotten about this. The advisor says listen I know you want to keep your money safe and secure, but we have inflation right now going at 8% almost. So, you have to invest your money. You can't just keep your money sitting in a savings account or somewhere making a small amount of interest. You have to invest the money. Again. Wrong, wrong, wrong. Maybe that's what I'm going to call this podcast. Suze's School, Wrong, Wrong, Wrong. Hmm. I'll have to think about that anyway. No, you don't. Everybody you don't. I understand very well that inflation right now is rampant. Listen, it's not always going to be that way but to get it under control. As I tried to tell you a few weeks ago, interest rates with the feds are going to be going up and all of you need to understand that when interest rates go up yields go up, which means the interest that you earn on things. In fact, that reminds me Alliant credit union just a few days ago raised their interest rate to .06%. They were at 0.55% there. Now at 0.60%. one of the highest interest rates out there. So all of you who have accounts which are tens of thousands of you now at Alliant Credit Union, you're going to see the interest rate has increased for those of you who have not yet taken advantage of The Ultimate Opportunity, Savings Account where you can make $100 bonus. You need to check that out and go to MyAlliant.com and look for me. If you just go to Alliant.com, you're not going to participate in the Ultimate Opportunity Savings Account. Anyway, I got off track here. What was I talking about? So as interest rates go up because they have to tame inflation then the price of bond funds they go down now. Didn't I warn you about bond funds, especially anything other than a short-term bond fund. Didn't I say to you to be careful because bond funds are going to go down and that's exactly what has happened and it's happened to the tune of depending on what kind of bond fund you happen to be in, maybe you're down 6% for the year or 9% from last year, but you are down significantly. So, what good does it do you to be in an investment that you think is offering you security when in fact that investment is going down? But did you listen to the Suze's school on what kind of bond funds would be safe? What kind of bond funds would not be safe, or did you just think at the time that it didn't apply to you? So yeah, this is kind of a little Smackdown. And if KT was sitting here with me right now, she would say so educate them, Suze tell them what kind of bond funds they should be buying or what they should be doing. And I'm sitting here in my own head saying. But I told them that KT did they not listen; they could go back to an old podcast and listen and be educated. But because KT is in my head this is what you all need to understand when it comes to a bond, essentially a bond is a debt instrument and you lend an entity whether it's a corporation, a municipality, whatever it may be, a sum of money and you give them a sum of money and they pay you a specific interest rate for a specific period of time. The longer the maturity of the bond Because there are bonds that mature in three months, six months, two years, five years, ten years and so forth. The longer the maturity, the higher the interest rate that bond pays you normally, the shorter the maturity, the less that bond pays you an interest rate, that's normally how it works. So, if you were to go out longer in maturity because you're taking more risk, they pay you more. If you go out shorter and maturity, they pay you less. And what's been happening is because interest rates have been going up. What you will see is that longer term maturity bonds actually go down more than shorter term maturity bonds. Now you can buy individual bonds, or you can buy bond funds or bond exchange traded funds if you for whatever reason are going to buy a bond fund or a bond ETF only by short term maturity funds. Who bonds mature really 23 years? Not really a whole lot longer than that because if you do, you're going to find that you probably will be taking a bigger hit. However, if it were me, if it were me and I were looking for security right now and I knew that I didn't need the money for two years, one year, there's nothing wrong with you buying a two year treasury note, a two year treasury note guaranteed by the taxing authority of the United States government right now we'll give you about 2.5% and I know advisors will say but no, you're going to lose money for inflation. Like I said before, inflation isn't always going to be here and if you want your money safe and secure and you're not spending it right now in the long run, you will see inflation come back down again and nothing will have happened to your money and you will feel secure which is the goal of money. Now I also as you know, have been telling you to buy Series I bonds and I've been telling you that since last year and the reason that I've wanted you to buy Series I bonds is not only are they giving you approximately 7% right now because inflation the I stands for inflation is high but the most you can lose is three months of interest, if you need that money in year two to year five after that you can get your money anytime you want the first year. You cannot access that money at all. But many of you are telling me that you're going in to see your financial advisors and they are telling you the following. You can only put $10,000 in a series I bonds. So why not if you have larger sums of money by treasury inflation protected securities or tips. Either bond funds or ETF’s and for some reason you have been writing me and you have been saying so you put a large amount of money in that at the beginning of this year. But those funds Suze are down anywhere from 3 to 7%. And you're saying to me as if it's my fault, but you wanted me in inflation bonds. No, I wanted you in Series I bonds. I never said to you go out and buy Tips for those of you who wanted to do it. I said okay but I wouldn't necessarily do that if I were you, but you did it anyway because you weren't listening. And again because of how tips work which is very different than a Series I Bond if interest rates continue to go up and certain other things happen you may continue to lose money especially if the maturity of those bonds our long term. So, if for whatever reason you're going to buy a tip or a tip ETF make sure that it is a short term one and then you may not make money right now but you're not going to lose a lot. My true advice to all of you is again, there is nothing wrong if you want your money safe and sound to just put it in Alliant to put it in banks to put it in somewhere where you're earning at least what Alliant is giving you anyway. And those are hard to find right now. But There's nothing wrong with it. I personally would rather make .60%. Then put my money somewhere and lose where I think it's supposed to be safe and sound 3%, 6%. So I need you to think about this. Next many of you have money that you have with a financial firm where the firm charges you a fee of 1% or more or less just depending to manage your money. And you are telling me that you are putting these large sums of money there just to keep it safe and sound. Really people you are? Because when you put a large sum of money in an account that's under a management fee, they may be charging you one on that cash and you're probably not even making 1% because the interest rate is probably way lower than that. So, in essence, you're still losing money just keeping it there. And I know a lot of the advisors are saying to you, but let's keep it in cash so that when something comes along, we could take advantage of it If you kept your money in an account that's paying you .60% with no fees that you can access at any time. If an opportunity came along, there's nothing wrong with the adviser calling you and saying all right, this is what I think we should do right now, and if it makes sense you just transfer the money into them. But that's not what you're doing because you are not listening to all the podcasts that I have been doing because you don't think it applies to you. And again, going back to the emails. Alright. Many of these emails are like Suze. I never in a million years thought that I would inherit $1 million. I went from zero to $1 million dollars in one week. What should I do? Well, I tell you what you should have been doing. You should have been listening to everything in every podcast. Whether it applies to you or not at the time that you are listening to it. Can you tell I'm aggravated? I'm aggravated because this is information that you need to know. You need to know the things you should do and the things you shouldn't do with your money. So, to that end on the Women & Money App that I have that you can simply download by going to either google play or apple apps. It's absolutely free. I'm going to shortly within this month. You'll see right there, there's going to be a thing that says the Do’s and Don’ts of Money and that will be there for you in every aspect of your financial life. It will say do this, don't do that when it comes to buying a house, when it comes to buying a car, when it comes to retirement accounts, when it comes to investments, when it comes to all the important parts of your life. So, I can make it easier for you just in case you haven't paid attention to every one of the podcasts. What's funny is that many of you are finding the podcast for the very first time And you're writing me and you're saying Suze, oh my God, I have listened to all 300 some podcasts and now I have learned so much. It's not even funny and I love that because maybe if you listen to it all at once, maybe you're in a situation now where the majority of it may apply to you. So it's really, really important that if your goal is to be really secure with money that you have just received under some circumstance that there's nothing wrong with you keeping it safe and sound do not let a financial advisor scare you that inflation is out there. So, you have to do something with it. Also you've heard me say in the past that I'm still a little bit afraid of what's happening with these markets that I do think that they will go up and they will go down and that's exactly what has been happening. I told you I wanted to wait until at least April 4th or so just to see and we're almost there really what is going on? So I don't want you to be emotionally controlled by a few days these markets go up and everything is great and I have to tell you many of the financial advisors that I talked to and we've been going over certain ideas of stocks to buy. They presented me with some ideas and I just said you know, and this was just a few days ago and they said we think you should buy this stock; we think you should do this. What do you think of that, Suze? And I said no I'm just not ready right now. I'm just not feeling it. I still think these markets are going to go down and they say to me Suze, have you not seen how the markets have gone up for the past two weeks and many of the technology stocks have skyrocketed really? We think that this is it. And I said no I just don't think so. And sure, enough after they said that the next two or three days, the stocks that they were talking about skyrocketed. And of course, I got emails saying, see we should have done it. Then the next few days after that, including last Friday, the stocks plummeted to under where they were when they started to talk to me about it. So do not let what you are investing in be dictated by a few days of something going up because until we solve what's really happening in Ukraine, until we start getting more of a handle on inflation. Until we really solve some of the problems the big problems that the United States is having right now. I don't have a problem with you doing nothing. I do not have FOMO; I do not have the fear of missing out. I have the fear of you doing something because advisors or somebody else are saying you have to do this, the only thing you have to do when it comes to your money is to do what makes you feel secure. I think I've told you in the past the story of my really one of my best friends, her name was Ruth Karnowski and she died so many years ago and I actually was introduced to her when I was a financial advisor at Merrill Lynch. And at the time I was one of the only women advisers at Merrill Lynch and when a financial advisor left, they had what was called a book and they would hand out that brokers accounts to all the other brokers that were remaining. And the really good accounts that generated a whole lot of commissions always went to the top brokers. And the accounts that generated no commissions at the time usually went to the women financial advisors. And one of the accounts that generated no commissions was an account by Ruth Karnowski and her account was given to me. And so, I called her up and started to meet with her and I just loved this woman. I didn't care whether she was going to buy or sell with me. I cared about her, people first, then money then things. And it turned out that Ruth had a serious sum of money in nothing other than the United States Treasury bill bonds and notes. And when I talked to her she said Suze, that's what I feel safe in. I have more money than I need, I have a pension, I have Social Security, I have everything. And all I do is live off the interest of these. And most of the time I don't even need the interest to the day that she died. She kept all of her money in treasuries. And what I learned from that is that it didn't matter. It really didn't matter. And that was in 1980 during the time that inflation was at 14 to 14.5%. And what was so funny about that is that her interest rates were really high because when inflation is high interest rates go up to tame inflation and that's what we're seeing right now. So, when inflation came down, she was still making 15, 14, 13%, on Treasuries and the investments that she made. So, for those of you who are keeping money safe and sound right now as inflation starts to come down maybe a year or two from now because interest rates have gone up. That is the time my friends, that is the time that you go in and you lock up maybe a 10-year treasury note or a 30-year treasury bond. Because as that happens and you've done that, and interest rates then start to come down because inflation has been tamed as interest rates start to come down. The value of your treasuries will go up and if you decide them that you want to sell them, great. Do you remember a year or so ago I asked all of you to buy 30-year treasury bonds and I said that if interest rates just go down by 1%, your bond will go up by at least 10 or 15%? And that's exactly what happened in a very short period of time. But were you listening, did you do that, or did you think that it just didn't apply to you at the time? I know I've been rambling and I'm all over the place. But my true advice here is this: I would rather see you keep your money liquid, make 0.60% or whatever it is like at Alliant Credit Union, if you want short term by a one- or two-year treasury note. But in the long run, as the Feds continue to raise interest rates to tame inflation, interest rates will go up on treasuries and other interest-bearing vehicles. And as interest rates go up a year two or three, what however long it takes you then have money that maybe you want to keep safe and sound, that you could simply buy treasury notes at a high interest rate and lock it in. Maybe then you go in and you buy bond funds or individual bonds. Because as interest rates start to go down, those bonds will go up in value. So, if you need to sell them, you can make more money. But to do that, you have to understand why interest rates affect bonds, why bond prices go down when interest rates go up, why bond prices go up when interest rates go down. So, can you just search past podcasts, where I talk in detail about that. But the main message of this Suze's School is this it's okay to keep your money safe and sound. It is okay not to invest your money if the goal is to keep it safe and sound. That is what you have to stick by, and you cannot come off of your convictions. Do you understand me? All right. So, until Thursday there's really only one thing that I really want you to remember when it comes to your money, and it is this: I really want you all to stay safe, strong, and secure, and you do that by doing what's right for you, versus what somebody else wants you to do with your money. Alright? See you, Thursday with Miss Travis for Ask Suze & KT Anything.

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