Podcast Episode - Friendship Isn't A Financial Plan

This Suze School episode is packed with three very important lessons, starting with why one of the biggest mistakes you can make is basing financial decisions on friendship.  Then, Suze explains the correct way to do tax-loss harvesting and what steps you need to take, regularly, to avoid financial scams and fraud.

Listen to Podcast Episode:

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Podcast Transcript:

Suze: December 7th, 2025. Welcome everybody to the Women in Money podcast, as well as everybody smart enough to listen. And today is Suze School.

So get out your Suze notebooks.

And we're going to start Suze School with a story.

And the lesson of the story is this: friendship isn't a financial plan.

Friendship isn't a financial plan, OK? That's the lesson of this story.

Are you ready?

So...

I'm telling you this story truthfully because I really think every one of you needs to hear this, especially, you know, women. We tend to do things we don't want to do. We say yes when we want to say no. We think one thing, yet we say another, and I include myself in this, by the way. I've learned that lesson, trust me. My new lesson is: don't say yes, Suze Orman, when you want to say no.

So, if we're not careful, then this situation could possibly happen to you, and it can cost you a whole lot of money. There's this woman, and let's just call her Susan, OK.

And she had about $2 million invested with a financial adviser who had been doing absolutely remarkable for her.

And we're talking consistent 15, 20, even 28% returns over the past few years, which is spectacular.

And he charged her a 1.5% advisory fee. Now, I know, I know, I told all of you I wouldn't be paying more than 1% in an investment advisory fee, but sometimes when an advisor is in incredible demand...

And they are producing results like the ones I just told you about year after year after year, that if they want to charge 1.5%, and after that 1.5% fee they're still talking 15, 20, 28, 30% returns, I don't have a problem with that.

So here we are.

And one day, Susan is out to lunch with her really, really good friend. And what do good friends do? They always talk about their kids.

And the good friend happens to say, Susan, my son just became a financial advisor.

And is it possible that you could do me a favor?

Do you think you would transfer your account to him so he can look like he has clients that have money?

Think about what this good friend just asked Susan.

To change her account to her son who just became a financial advisor.

Just so he can look good.

Now, besides the fact that I've told all of you...

In general, I wouldn't pay more than 1% for an investment advisory fee unless the advisor is seriously worth it and the numbers tell the story.

I've also said to you, I wouldn't dare invest with somebody, especially in these kinds of markets, who hadn't been an advisor for at least five years, 10 years, 15 or 20 years—many, many years.

I wouldn't touch it with a ten-foot pole.

However, OK, but because Susan didn't want to upset her friend...

Because even though she may have wanted to say no, she said, OK, yes, yes, I'll do it. And I find that most women say yes out of guilt.

You know, I say this all the time.

Women would rather say yes out of fear that somebody won't like them any more versus no out of love for herself.

So what did she do? She actually called her financial advisor up.

And told him, I'm moving my account.

And when the adviser said, why in the world are you moving your account?

And she said, well, number one, and the most important reason is because he's only charging me 1% instead of 1.5%.

OK, now I just want you to think about this.

And this is the Suze School lesson of the day and the one mistake I want you always to avoid. You never base financial decisions on friendship. You never judge an adviser solely by their fee.

It's not the fee that matters. It's the results. It's the track record. It is the performance. Would you rather pay someone 1.5% who has proven that they can make you real sizable returns year in and year out...

Or 1% to someone who's absolutely brand new.

Untested.

And simply hoping to save that half a percent and to help them out.

You have to know the answer to that. You just have to know.

And the lesson here is: friendship is not a financial plan. Guilt is not a strategy. Do you get this, everybody? And loyalty does not grow your money. It does not. So I want you to write this one lesson down. You must protect your own financial security, even if that means saying no to someone you care about.

All right, so now that we know that friendship isn't a financial plan, the next thing I want you to learn is about tax-loss harvesting the correct way. And the reason that I say the correct way is because a few weeks ago I talked about this, and I told you some of the things that I was doing in my own account, and then you go to do it and you write me and I go, no, no, don't do that.

So, let's try this again.

Tax-loss harvesting is when you have gains in your investment account outside of a retirement account and possibly losses as well.

And you want to offset your gains with your losses so you don't owe as much in income tax as you would if all you had was gains. So let's talk about this. You need to first know the difference between realized gains versus unrealized gains.

So what is a realized gain? A realized gain. Think of the words that I'm using. A realized gain is obviously you realized your gain. You actually got it, which means you sold something. You took a profit, and you took a profit because you sold it for more than you paid, and that's a realized gain. The IRS sees it, and then the IRS taxes you on it. Just that simple. What is an unrealized gain? And this again is just a fancy word for you haven't realized them. You have a profit, but you haven't sold it yet, so the gain lives only on paper. You haven't realized it, so there's nothing taxable yet.

So how does tax-loss harvesting work? All right, just listen. Let's say you have a stock you don't want anymore, and it's sitting at a loss. You can sell that stock, realize the loss, and use that loss to offset any realized gains that you already have.

That's one way that you can do it. Now, sometimes you actually have more of a loss than you do gains. So if you don't use up all of your loss, you can carry it forward to future years.

If you don't have any gain at all, you can take $3,000 off and keep doing that every year.

So why am I telling you all this? Because a lot of you heard me say you sell your losses against your gains so you don't owe income taxes. But here's the problem: you never ever sell a stock at a loss if you want to own that stock, and you best write that down.

You never sell a stock just to take a tax loss if you believe in that stock.

Because listen to me, when a stock you love goes down, that is not the time to run from it. That is the time to do what, everybody? Dollar cost average into it. That is the time to buy more. So let's say you love Apple.

And it drops. It's down. You don't sell it to take a tax loss. You buy more shares at a lower price and bring down your average cost. So can we just get that one thing straight? If you still want the stock, you keep it. You only sell a losing stock if you wanna get rid of it and you don't wanna own it anymore. Got that?

So you really need to understand that. Because some of you are doing this because you're writing me.

You have some losses in stocks that you actually like, stocks like Oracle.

Stocks like PayPal, great stocks.

And you wanna sell those stocks to take a loss, to offset some realized gains that you have in your portfolio, obviously outside of a retirement account.

And I'm like, please don't do that. And people are asking me, well, why shouldn't I do that? And the reason you shouldn't do that is when you take a loss in a stock, you cannot buy that stock back for at least 30 days. Now, 30 days may seem like a really short period of time.

But not in these markets. I have seen stocks go down 40 points and all of a sudden in two weeks they're up 60 points. So you think you're gonna outsmart these markets and all of a sudden you sold for a little loss and now 30 days hasn't passed and now you sold it at let's just say $50 a share.

You bought it at 60.

And now it's at 80, but you weren't able to still be in it because you sold it at a loss simply to take a loss? No.

Again, you only sell a loss when you no longer want to own that stock, and you can use that loss to help yourself for tax purposes. Anything else? I don't think so.

So you're confused about that. If you have, however, a stock that you no longer want, which was true in my case, there were two stocks that I had a loss on, and I no longer wanted to own those stocks. I made a mistake. Fine, I'm going to take the loss.

But at the time when I did that, I didn't have any realized gains to offset that loss.

I didn't realize any gains yet. I had a lot of unrealized gains, lots of unrealized gains, but no realized gains, cause I still like all the stocks that I own, except for those two. OK.

So what did I do? And this was just an example.

I sold the number of shares of stock that I had a big gain in that was equivalent to the loss that I was taking, so they offset each other directly.

So what did I do then? I immediately bought the stock that I had the gain in back, the exact same number of shares. Now, what did I gain by doing that?

Let's just say I bought that stock at seven.

And now that stock is 160 or 170.

Which is true in this one particular stock, Palantir.

So even if I just sold 10 shares of Palantir to offset my loss, let's say that was true.

And I bought those 10 shares back immediately. Now my cost basis on those 10 shares is $170 a share. If Palantir continues up, and I now sell it at, let's just say $300 a share...

I'm only going to have a gain of 130 points versus $7 to $300. Do you understand what I did?

So don't think it's just so simple where you sell stocks to offset gains.

You only sell stocks that have a loss in it to offset gains if you don't wanna own those stocks ever again.

Am I clear on that now?

So, I have one more Suze school for you today. And this lesson is about we live in a day and age where scamming is rampant.

And you cannot be somebody who just sticks your head in the sand, and you don't check your statements, you don't check your accounts, you don't check your credit reports, you don't look at your credit score. You cannot do that in a day and age like this. You have to freeze your credit reports. You have to do things that protect you.

And by the way, I'm just going to say, and to that end, come March next year, I will have something that will seriously protect you and would have protected you in this particular situation, but you're going to have to wait for March to see that, OK.

And here's how it goes from Cheryl...

And here's how it goes from Cheryl.

I've been a fan of yours and always have been grateful for your advice and wisdom. In 2022, I purchased two I bonds.

With all the financial fraud, I check all my investments at the beginning of every month.

On July 4th I was unable to access my Treasury Direct account.

As I never received an OTP—and an OTP is, once you go to sign in, they send you a one-time password, and that's the password that you use.

Again, Treasury Direct is a governmental institution.

And most people who want to buy Series I bonds, inflation bonds, you have to buy them through Treasury Direct and have a Treasury Direct account, OK? So you would imagine, wouldn't you, that they were safe and sound. Please listen to this story.

To make a long story short, someone changed the bank linked to my account and requested a distribution which was completed on July 8th. No one from Treasury Direct verified that it was me, and my account of just $11,000 was emptied.

Even worse, my account was still locked. I called repeatedly with no adequate response and did not find out about this fraud until TD sent an email to my secondary email in October. This was July. Now it's October. Because I don't always check that email. Oh, I will do it daily now.

I only found out about it at that time.

I called at 8 o'clock in the morning asking to speak with a fraud specialist.

And I was told that the only communication available to me was to respond to the email. When I continued to argue with the person that I was talking to—her name was Rose, by the way—she hung up on me.

I did respond to the email, but I Googled Treasury Direct complaints and found many similar stories. Every person posting about these problems had their money sent to a checking account at Pathword National Association.

And it goes on and on. Now I obviously wrote Cheryl back a variety of things that she should do and she should try, but the first thing I wanna say to all of you, if any of you are connected with Pathword National Association or if you have any account that does business with them...

I am warning you right here and right now, I would change that account. If you look them up, if you Google them and everything, you can see all the complaints that they have against them.

But the reason that I'm telling you this story is that you would think that the money that you have in your Treasury Direct account is the safest of them all.

Obviously it may be, but it may not be.

So it wouldn't kill you to check it all the time—meaning at least once a month, twice a month—and pay attention to your secondary email addresses just in case Treasury Direct happens to contact you.

All right. Do I think that's enough for Suze School today?

I think I do. So what did we learn? We learned that friendship is not a financial plan. We learned that you only sell stocks at a loss to offset gains when you no longer want to own those stocks. And we learned that we have to be on top of all of our accounts.

Everywhere we have an account and continuously check our credit reports, our credit scores, our statements, and make sure that everything is as it should be. So until Thursday when Miss Travis joins us again...

For another Ask KT and Suze and me thing, there's only one thing that I want you to know when it comes to your money, and it's this: people first, then money, then things. Now you stay safe.