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Suze: February 9, 2025. Welcome everybody to the Women and Money

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Suze: podcast and everybody smart enough to listen. Today is...

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KT: Super Bowl Sunday!

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Suze: And Suze School with KT KT, it's Super Bowl.

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KT: Who's gonna wait, who's gonna win?

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Suze: Wait, how long

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Suze: have Colo and I waited for this day.

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KT: They... since last Super Bowl. They both love football so much

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KT: and it's like Colo's #2 sport. His number one is

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KT: really soccer, you know, which is European football, but he

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KT: loves this with Suze more than life itself, and they

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KT: both laugh because I'm a very newcomer to the sport

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KT: of American football.

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Suze: Yeah, 20 some odd years, KT, you have to get

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Suze: that you have been watching football Super Bowls with me

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Suze: for over 20 years, so don't, don't go blaming it

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Suze: on that you're a newcomer when it's 20 years old.

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KT: I still am a newcomer.

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Suze: No, you're somebody who just like with a Roth IRA,

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Suze: you refuse to get it.

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KT: No, it's not true.

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KT: What isn't true?

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Suze: I never grew up with football ever, so you're the

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Suze: only person that I ever experienced football with.

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Suze: For 20 some odd years now 24 years.

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KT: Ok, so 20 Super Bowls, that's not a big deal.

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KT: OK, let's continue. Chiefs are gonna win, everybody.

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Suze: So did you all like my little Suze thing that

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Suze: I put out yesterday, everybody, you know, that little character

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Suze: I that...

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KT: Yeah, her little emoji.

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Suze: My emoji. Do you like...

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KT: Her football emoji.

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Suze: I love it. That was so sweet. Oh my God, I loved it,

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KT: She tried to do one of me, but it didn't work.

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Suze: And everybody, do you know why it didn't work?

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KT: I didn't like the way my hair looked.

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Suze: On an emoji. Can you imagine?

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KT: I said, Suze, that looks like my face, but my

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KT: hair doesn't look like that.

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KT: She had this funny like hairstyle and it was gray.

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KT: I said, I have white hair. I have silver white hair.

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KT: I don't have gray hair. It's, it never went gray.

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KT: It just went from...

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Suze: Can you believe this everybody went from an emoji. Wait, KT,

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Suze: tell them about the little ad we did the other

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Suze: day for the, so everybody, the Ultimate Retirement Guide

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Suze: For 50+ is finally coming out in paperback on February 18th,

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Suze: so Barnes and Noble, la da da, they all requested,

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Suze: would I just do a little blurb on it, you know,

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Suze: just tell everybody about it, tell them what I did, KT.

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KT: She's in bed. She just, um, woke up and she said, KT,

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KT: can you take a video of me? And I said,

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KT: doing what?

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KT: And she had on her bathrobe and she said just

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KT: take a just put the camera on. So I turned

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KT: it on and she did this whole thirty second commercial in bed

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KT: in her pajamas with her book...

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Suze: In my robe.

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KT: In her robe. It's hysterical.

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Suze: I don't wear pajams.

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KT: She does. She wears a night shirt.

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Suze: Not often.

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KT: You wear a night shirt. You love your night shirt.

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KT: I know you love it. All right, so, so wait,

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KT: let's go back to the Chiefs versus the Eagles. I

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KT: want the Chiefs to win because I want to see

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KT: history take place. Repeat.

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Suze: It would be a three-peat. That's what it's called it

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Suze: 3 times he's done it.

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KT: Three-peat?

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KT: Instead of it sounds like a repeat, but no one's

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KT: done this.

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Suze: Three, three times.

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KT: Three consecutives.

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Suze: It's called a three-peat. Pat Riley owns the trademark on

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Suze: that word, by the way.

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KT: Does he?

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Suze: I think so.

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Suze: One day you'll have to tell when Pat Riley called,

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Suze: but that's besides the point.

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KT: I didn't know who that guy was either.

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Suze: Anyway.

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KT: So Super Bowl Sunday today, I can't wait and my

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KT: biggest excitement is I get to watch the commercials, which

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KT: is what I love around Super Bowl.

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Suze: OK, today is Suze School, however, KT and this is

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Suze: where I think it's important.

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Suze: That people know the difference truly dollar wise between three

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Suze: different ways to invest. One is lump sum investing. One

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Suze: is dollar cost averaging, which I've been talking about for years,

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Suze: and the third is value cost averaging. So are you

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Suze: ready

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Suze: to get out your Suze notebooks, you need to write

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Suze: this down for the Suze school. OK, so now listen

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Suze: KT now just wait, don't say anything. I can see

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Suze: you want to say something. Don't say anything. I'm going

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Suze: to give a detailed example now.

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Suze: Where I am actually going to use numbers and compare

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Suze: lump sum investing with dollar cost averaging with value cost averaging.

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KT: OK.

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Suze: All right, so let's just say.

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Suze: You had an inheritance. You got a bonus. I don't

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Suze: know what happened, but all of a sudden you have

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Suze: $12,000 that you want to put into the market. Now

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Suze: whether it's an individual stock, an exchange traded fund, it

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Suze: does not matter, but let's just say you want to

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Suze: invest $12,000 in an ETF an exchange traded fund. Let's

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Suze: just say that's true for right now.

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Suze: And the ETF or the stock, whatever it may be,

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Suze: is trading at $120 per share.

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Suze: For lump sum investing, you simply take the entire lump

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Suze: sum of $12,000. January 1st of let's just say 2024,

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Suze: and what do you do? You buy 100 shares of

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Suze: this stock or ETF.

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Suze: And therefore you're done for the year you bought it

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Suze: you don't do anything else and during the year it

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Suze: goes up a little, it goes down maybe a lot

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Suze: up it's all over the place, but at the end

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Suze: of the year it's back to $120 a share.

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Suze: That means at the end of the year after 12

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Suze: months your investment is still worth $12,000 and you're kind

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Suze: of happy because at least you're not down even though

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Suze: you're not up you haven't lost anything.

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Suze: Dollar cost averaging.

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Suze: This is where you take the amount of money, the

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Suze: $12,000 that you want to commit for this year.

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Suze: But rather than investing it all at once, you divide

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Suze: the amount you want to invest for the year by 12.

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Suze: 12 months. So what that means in this case is

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Suze: you divide $12,000 by 12, and you now know you

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Suze: are going to invest $1000 of fixed $1000 every single month.

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Suze: For one full year.

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Suze: And let's say you start to do that. The very

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Suze: first month, you're going to invest $1000 and this stock

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Suze: or ETF is at $120 a share.

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Suze: That allows you to buy 8.33 shares. Just simply divide

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Suze: $1000 by the price of the share. This case $120

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Suze: and that gives you the number of shares you can

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Suze: buy in month two. It's at $100 per share.

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Suze: You now are investing $1000 so $1000 divided by 100

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Suze: is $10 so that allows you to buy 10 shares.

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Suze: Now it goes down to $90 per share.

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Suze: So you can buy 11.1 shares with your $1000 the

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Suze: third month. The fourth month it goes back up to

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Suze: $100 per share, allowing you to buy 10 shares for

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Suze: your $1000 investment. Month 5, it stays at $100 per share.

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Suze: Again, allowing you to buy 10 shares and just for

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Suze: ease here, let's just say month 6 through 12, it

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Suze: goes up big, it goes up 20%, it goes up

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Suze: to $120 a share again.

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Suze: So each month you get to for your $1000 per month,

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Suze: you get to buy 8.33 shares.

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Suze: So at the end of all this, you have approximately

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Suze: 107.74 shares at the ending value of $120 a share.

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Suze: So now you have $12,928.20. Now this is a gain

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Suze: compared to lump sum investing, which is why over all

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Suze: these years.

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Suze: I've been telling you all to do dollar cost averaging.

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Suze: However

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Suze: Value cost averaging is something that I have been trying

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Suze: to figure out. Keith Fitzgerald absolutely loves it. He's been

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Suze: able to automate it just so you know. However, it's

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Suze: something that I really had a hard time figuring out,

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Suze: so I sat down and I really put my mind

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Suze: to it and I finally get it. Now even though

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Suze: in this particular situation.

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Suze: You're going to see it's not a lot of difference,

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Suze: but remember the goal this year is to make your

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Suze: money make more money, but any amount of money that's

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Suze: more than something else is more money. So just listen

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Suze: closely now. With value cost averaging instead of investing a

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Suze: fixed amount each month.

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Suze: Like we just did $1000 a month with dollar cost averaging.

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Suze: You adjust your investment to maintain a target portfolio value.

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Suze: As if you had invested $1000 per month.

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Suze: So you want your portfolio value every single month.

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Suze: To go from 1000 to 2000 to $3000 all the

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Suze: way up to where you had essentially invested $12,000 but

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Suze: you want that to be the portfolio value every single time,

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Suze: all right.

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Suze: So are you ready now? Month one...

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Suze: the stock or ETF is at $120 so these are

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Suze: the exact same share prices as dollar cost averaging, right?

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Suze: Month one, the stock or ETF is valued at $120

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Suze: a share.

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Suze: And you want your target portfolio value to be $1000

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Suze: so you are going to invest $1000 and you're gonna

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Suze: be able to buy 8.33 shares, but now month two.

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Suze: It drops to $100 so your portfolio value though is

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Suze: only worth at this moment in time $833. That's because

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Suze: in month one you got to buy 8.33 shares. Now

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Suze: when you're getting ready to invest again, the stock or

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Suze: ETF is only worth $100 so your portfolio is worth

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Suze: only $833.

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Suze: But this is your second month and you have a

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Suze: portfolio value target of $2000. So to reach the $2000 target.

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Suze: You have to subtract $833 from the $2000 portfolio value target,

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Suze: and that means you are short by $1,166.67 so you

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Suze: now have to buy 11.67 shares.

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Suze: Of the stock or ETF, did that make sense to you?

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Suze: In the first case of dollar cost averaging, you always

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Suze: are investing a fixed $1000. Here you are changing the

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Suze: amount that you are investing every month so that you

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Suze: can meet your target portfolio value which is going to

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Suze: go up by $1000 a month.

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Suze: Month 3.

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Suze: Now the stock drops to $90 but now remember you

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Suze: have a total of 20 shares at this point.

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Suze: And therefore at $90 a share your portfolio value is

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Suze: only worth $1800 but this is the 3rd month so

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Suze: you're supposed to have $3000 so now you're going to

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Suze: have to invest $1200.

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Suze: Or 13.33 shares to bring the entire value up to $3000.

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Suze: So now you have a total of 33.33 shares. Are

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Suze: you getting this, everybody? I'll do a few more. Month four,

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Suze: the stock now, let's just say goes back to $100.

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Suze: And because you have 33.33 shares, your portfolio value is $3,333.33.

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Suze: But this is month 4 and you're supposed to have $4000.

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Suze: So if you subtract $3,333 essentially from $4000 you have

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Suze: to invest $667 approximately so that you can buy 6.67 shares,

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Suze: but now you have a total of 40 shares, but again.

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Suze: 40 shares is going to give you $4000 of an

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Suze: investment portfolio value because it's worth $100 a share. Month 5,

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Suze: it remains at $100 a share. So now though because

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Suze: it's month 5 and you need to have $5000 of

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Suze: a portfolio value, you're now going to buy 10 shares.

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Suze: All right, you have a total of 50 shares, but

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Suze: now month 6 through 12.

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Suze: We're just going to say that the stock rises to

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Suze: $120 a share.

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Suze: And it's gonna stay there for all 7 months, so

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Suze: you are going to have to invest essentially $1000 a

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Suze: month for the next 7 months to keep your portfolio

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Suze: value at where it should be just that simple.

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Suze: Now by the end of the year you are going

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Suze: to own 108.31 shares at $120 a share.

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Suze: Is $12,997 at the final price.

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Suze: Now pay attention here closely. The lump sum.

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Suze: At 100 shares at $120 a share, you only have $12,000.

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Suze: Dollar cost averaging.

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Suze: You have 107.74 shares at $120 a share. You now

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Suze: have $12,928.80 in your portfolio.

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Suze: Value cost averaging even after all that work.

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Suze: You have 108.31 shares at $120 a share. You now

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Suze: have $12,997.20.

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Suze: Lump sum...

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Suze: Value cost averaging your $997.20 a head.

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Suze: But compared to dollar cost averaging, you're only $68.40 ahead. Now,

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Suze: While that's only a little bit of gain, as I

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Suze: said previously, what you really have to understand is these

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Suze: were just numbers that I picked out of the hat

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Suze: so that it would make it easier for you to understand.

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Suze: But I can tell you

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Suze: that Keith Fitzgerald, who I think is a genius when

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Suze: it comes to picking stocks, to how to do things,

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Suze: he loves value cost averaging.

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Suze: He's able to automate it, all of that.

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Suze: But in the long run, depending on what the stock

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Suze: does or the ETF does, value cost averaging can really

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Suze: make you more money.

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Suze: Now again a lot of you are gonna look at

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Suze: this and say I know Suze that's a whole lot

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Suze: of work and I can tell you I can see

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Suze: KT's don't, don't no no KT don't say anything yet. No, no,

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Suze: she's just sitting there and she's got her little finger

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Suze: above her little lips, but anyway, OK, I get that

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Suze: it's small.

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Suze: But again, more is always better than less. Just remember

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Suze: that I said that. By the way, I'm going to

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Suze: put an example of this, a written example of this,

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Suze: up on the Women and Money Community app that you

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Suze: can download by going to Apple Apps or Google Play.

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Suze: It's written out for you so you can see the

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Suze: main point of me doing this is just so that

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Suze: you can understand.

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Suze: The difference between lump sum, dollar cost averaging, and value

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Suze: cost averaging. OK, KT take it away.

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KT: Here's my question. Suppose because I, you, I'm following you

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KT: until I get to month 3 where the price went

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KT: to $90 a share. So with my $1000 I have

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KT: 13.33 shares.

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KT: And my question is...

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Suze: Not with your thousand...

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KT: No, no, no, no, no, no, no, wait, wait, wait, sorry,

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KT: I had to in order to have the value of

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KT: the portfolio reach let's say 5000...

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Suze: No, 3000 because it's month 3.

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KT: All right, so month 3, all right.

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KT: Here's what I want to say. What if I'm in

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KT: month like 8 and I run out of money?

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Suze: No, you have $12,000 to begin with to spend. You

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Suze: have it. It's sitting in a money market account. There

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00:20:25,829 --> 00:20:29,630
Suze: is no way you can run out of money because

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Suze: the more the stock rises, why are you laughing?

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Suze: Why are you laughing? I just did a great explanation.

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KT: Are you sure you want me to come to this

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KT: class because I'm sitting here thinking, all right, I get

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KT: month 1, 2, 3, and even month 4. Now all

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KT: of a sudden I go to month 5 and I'm

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KT: still ahead of the game, but then I'm at 6

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KT: till the end of the year and it's back at 120.

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KT: So I'm wondering why, why did I have to figure

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KT: out all of this when...

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KT: I probably could a dollar cost averaged.

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Suze: So you're saying why not just dollar cost average?

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KT: It's a lot of work.

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Suze: It's a lot of work, but it's not that much work.

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Suze: It's sounds like a lot.

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KT: Well you have to pay attention every single month.

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Suze: When you go to actually invest, KT. All you have

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Suze: to do is remember what your target value goal is, which is...

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KT: I set that myself, right?

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Suze: Well, obviously if it's $12,000 divided by 12, it's $1000

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Suze: a month.

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Suze: So you know by the 3rd month, you need to

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Suze: have $3000 of portfolio value. That's why it's value cost averaging.

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Suze: Value in that account.

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Suze: With dollar cost averaging, you want to just invest $1000

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Suze: a month.

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KT: And and see what it buys.

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Suze: Right with value cost averaging you're getting more value for

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Suze: your dollars because when the stock goes up, you buy

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Suze: less when the stock goes down you actually buy more.

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Suze: And in the long run you make more money. So

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Suze: all you have to do, everybody, if you're going to

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Suze: do this, which I suggest you start doing it, is

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Suze: just look at how many shares you own.

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Suze: What those shares are worth, what your portfolio is worth

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Suze: that month. If it's the 3rd month, the portfolio needs

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Suze: to be worth $3000 if you're doing $1000 a month,

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Suze: so to speak, value.

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Suze: And you just top it up in terms of how

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Suze: many shares, how much do you need to invest dollar

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00:22:48,479 --> 00:22:53,550
Suze: wise to make the portfolio worth $3000 and what will

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Suze: the dollars that you need to top it up with

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Suze: buy in shares.

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KT: So Suze, out of these three, your favorite now is

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KT: value cost averaging.

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Suze: Yes.

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KT: Let's go back to Super Bowl, everybody, where we began.

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Suze: I just want Kansas City.

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KT: We're gonna do a lump sum win with Kansas City Chiefs, baby!

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Suze: All right, darling. So go Kansas City. Go Kansas City.

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KT: Patrick, Suze's watching you.

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Suze: I got news, everybody. If he wins this Super Bowl,

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Suze: he's gonna be the very 1st $1 billion man in

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Suze: terms of a contract.

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KT: Is that right?

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Suze: In my opinion, without a shadow of a doubt.

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KT: Oh my God, the GOAT. The rich GOAT.

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00:23:34,104 --> 00:23:38,734
Suze: He then will be the GOAT over Tom Brady.

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Suze: In terms of Tom never won 3 in a row.

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Suze: No one won 3 consecutives.

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Suze: This is the first time, so everybody...

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KT: Let's make history tonight.

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Suze: All right, so everybody, there's only one thing that I

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Suze: want you to remember when it comes to your money,

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00:23:54,479 --> 00:23:58,640
Suze: and it's this: Value cost averaging is better than dollar

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00:23:58,640 --> 00:24:01,948
Suze: cost averaging. That's all I want you to know. All right,

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Suze: go Kansas City. Bye bye.