Suze: October 20th, 2024. Welcome everybody to the Women and Money podcast.
Suze: And everybody smart enough to listen. Before I even go
Suze: on to tell you that today is Suze School, which
Suze: it is. So get out your Suze notebooks. It is
Suze: so important when you hear me say and one smart
Suze: enough to listen. This is not a podcast that is
Suze: just for women.
Suze: It is a podcast for every single person out there.
Suze: But it is so important that we understand that women
Suze: are very, very different in my opinion when it comes
Suze: to what they do, how they feel, how they think,
Suze: then men, for instance. So you cannot have in my opinion,
Suze: a successful financial relationship unless you both understand how you
Suze: feel about money, how you feel about who you are.
Suze: Because it's not just about money. When I talk about money,
Suze: I am talking about you cause money cannot do anything
Suze: without you.
Suze: And women feel different than men and do things differently
Suze: and men do things differently. So you have to understand
Suze: how you both work in order to have a successful relationship,
Suze: which is what this podcast is also all about. So,
Suze: it is for all of you,
Suze: no matter who you are out there, I just want
Suze: to make that point because I got an email the
Suze: other day saying Suze, it's great that you have a
Suze: Women and Money podcast. But what about us men, don't
Suze: you think you should do something for us? Men? Well, men,
Suze: you better understand how the women in your life work,
Suze: feel and act with money for you to have a
Suze: successful relationship. And so there you go.
Suze: It's for everybody and obviously it's for everybody no matter
Suze: what your sexual preference is, especially given my situation. All right, everybody.
Suze: So many times it seems that a lot of you
Suze: are seriously confused in terms of you don't know what
Suze: to do with your money. And even though I've given
Suze: you individual stocks and investments, you still are confused because
Suze: maybe you didn't take advantage of it way back when,
Suze: when I talked about them
Suze: and you feel like you've missed the boat and you
Suze: just don't know what to do. And briefly in a
Suze: few podcasts ago, I said, listen,
Suze: just keep investing. If you don't know what to do,
Suze: you don't want to wait till maybe Keith does come
Suze: out with his program that he's going to have, if
Suze: you don't know what to do,
Suze: just keep investing in index funds. And I want to
Suze: go back to that at this point in time because
Suze: I think it's really, really important that you understand,
Suze: doesn't matter if you could have invested in something that's
Suze: up 1000% or whatever, what matters is consistency, write that
Suze: word down, consistency in your investment behaviors,
Suze: meaning that you do something and you do it all
Suze: the time, you just don't buy something and you never
Suze: buy something again. But you make a plan that you
Suze: can invest every single month or every three months or
Suze: whatever it is. But you invest multiple times during a year,
Suze: month in, months in, month out, months out, whatever it
Suze: may be, you keep
Suze: consistent in your investment behavior, which is why truthfully, I
Suze: like retirement plans at work so much because they're doing
Suze: it for you. If you have a 401k, a 403B
Suze: or a TSP every single month. If you're signed up
Suze: for your employer sponsored plan, you have a specific sum
Suze: of money taken out of your checks every month and
Suze: invested in that plan. And hopefully it is a Roth.
Suze: You wanna make sure if your company offers a Roth
Suze: retirement plan, regardless in my opinion of how much income
Suze: you make, you better take advantage of it, especially. I
Suze: just have to say this if you're making a lot
Suze: of money and you no longer qualify for an individual
Suze: Roth IRA because you're over the modified adjusted gross income limits.
Suze: Then of course, you want to take advantage of your
Suze: ROTH in your employer plan because there are no income
Suze: limits to do that.
Suze: So what are you all thinking? But that is a
Suze: whole another podcast. So you're taking advantage of consistency, month
Suze: in and month out. But where you all get confused
Suze: even in your plan is you don't know what to
Suze: invest in. You look at all the options and you're
Suze: just totally like, they've given you 20 different choices and
Suze: you don't know what to do.
Suze: I'm gonna be telling you what to do in a second.
Suze: So just stick with me here.
Suze: But a lot of you who do invest on your own,
Suze: you hear me simply say, buy this, buy that, maybe
Suze: you're tuning into one podcast and that's the stock that
Suze: you buy, but you don't do it on a dollar
Suze: cost averaging basis, which is consistency.
Suze: So the other day I was talking to my friend
Suze: Nicholas and he's about 20 some odd years old now,
Suze: I think, and I told Nicholas a few stocks to
Suze: buy because I'm very good friends with his mother and
Suze: I like him so much. I can't tell you this kid.
Suze: I also like his brother Alex, but I like them
Suze: all fabulous kids. And
Suze: I told Nicholas to buy a specific stock a while
Suze: ago and the stock happened to be pretty high. It
Suze: was actually at $240 a share when I told him
Suze: and I said, but Nicholas, as the stock goes down,
Suze: you have to buy more. So only invest a little
Suze: and then as it continues down, if it does go down,
Suze: you'll put more in it. Well, that stock did, it
Suze: continued down to about $140 a share.
Suze: And so the other day I texted Nicholas because now
Suze: it's back up to 220.
Suze: And I was like, Nicholas, how much money now have
Suze: you made on this stock? And essentially, he said, I didn't,
Suze: I bought it at 240. And I said, well, why
Suze: didn't you continue buying it more as it went down?
Suze: And he said, because I didn't have any more money
Suze: to invest. That's all I had.
Suze: So I gave Nicholas a formula which is a formula
Suze: for all of you to follow from this point on
Suze: if you haven't been dollar cost averaging and again, dollar
Suze: cost averaging is where you take a specific sum of
Suze: dollars and you invest it month in or every three
Suze: months into whatever you are investing in.
Suze: So I said, all right, here's what we're gonna do
Suze: from now on Nicholas, let's say you're going to buy something,
Suze: doesn't matter what you buy, you're gonna buy something and
Suze: you know that maybe you have $1200 to invest totally.
Suze: And that's it. You don't have any more than that.
Suze: Therefore, when you invest, you are only going to invest
Suze: $300 of that $1200. You are not gonna buy $1200
Suze: worth of whatever you're going to buy, you're gonna buy
Suze: $300 worth of it.
Suze: And then three months later, especially if the stock is
Suze: going down or whenever you see the stock going down,
Suze: especially if it's going down big, you're going to buy
Suze: $300 more.
Suze: Then a few months later, you're gonna buy $300 more.
Suze: And then maybe after a year, you will put in
Suze: the last $300 whether it goes up, whether it goes down,
Suze: that is how you are going to invest. Because if
Suze: Nicholas had done that, he actually, rather than being down
Suze: $20 a share right now, he would be up significantly.
Suze: So it's important that you understand, you never just buy
Suze: number one, 1 stock and nothing else, which I talked
Suze: about a while ago, but you never put all of
Suze: your money that you're investing in that one stock at
Suze: one time.
Suze: Now, how do you know when it's time to sell?
Suze: You have to ask a question to yourself and many
Suze: of you who have purchased Devon over the years are
Suze: writing me and saying, Suze, should I sell Devon, which
Suze: is an energy company. Should I get out? The dividend
Suze: has gone down. Number one, I cannot tell you what
Suze: to do because I do not know your individual situations.
Suze: I do not know your tax brackets. I do not
Suze: know anything about you.
Suze: Therefore, you need to ask yourself this question if you're
Suze: even asking me, should you sell? It's because you want
Suze: to sell because you're not happy. That's number one, number two,
Suze: let's say you look at Devon's stock and whatever it's
Suze: worth right now, you look at the cash value of
Suze: it and let's just say right now, the cash value
Suze: of it if you were to sell is $10,000. Ok.
Suze: Listen to me closely. Now,
Suze: you are to ask yourself the question. If you didn't
Suze: own that stock.
Suze: If you had $10,000 in cash, you didn't own Devon yet.
Suze: Would you take that $10,000? And would you buy Devon today?
Suze: If the answer to that question is no, I would not.
Suze: I want you to sell Devon just that simple. If
Suze: the answer to that question is yes, I would still
Suze: buy Devon. Then keep what you have. If the answer
Suze: to that question is, I don't know what I would do,
Suze: then sell half. You do not have to be what
Suze: I call all or nothing investors.
Suze: If you're out there, let's just say you are because
Suze: I want to give you an example of dollar cost
Suze: averaging and I might as well do it with Devon's
Suze: stock is that, let's just say in June of 2022.
Suze: It was the first time you heard me say, buy Devon,
Suze: like the dividend, whatever, buy it.
Suze: And let's say that you decided you were going to
Suze: buy 50 shares
Suze: every three months. Because back then, if you remember, I
Suze: told all of you, if you're gonna dollar cost average,
Suze: let's switch from dollar cost averaging every month to every
Suze: three months.
Suze: So let's say from June 2022 all the way till
Suze: right about now, every three months, you bought 50 shares
Suze: of Devon. Now during that entire time between now and essentially,
Suze: then
Suze: Devon has paid out to you approximately $4176 in dividends.
Suze: Because whenever you own a stock that pays dividends, it's
Suze: paying you. So you have to take the fact into
Suze: consideration that you got money during the years that you
Suze: owned it.
Suze: And over those years, you bought approximately 450 shares for
Suze: a total cost of about $25,000. Totally. All right.
Suze: Therefore, your average cost right now in Devon would be
Suze: about $47.72 once you have minus
Suze: the $4176 in dividends from your original amount of money
Suze: that you purchased as I speak to you right now,
Suze: Devon is about $40 a share.
Suze: So in reality, you're not down that much money if
Suze: you think about it.
Suze: So there's a big difference. Do you see, if you
Suze: simply had bought Devon in June of 22 which was
Suze: its high at 75. You never purchased it again. After that,
Suze: you would be down $35 a share,
Suze: which is 46%.
Suze: So Devon would have to go up 85% from where
Suze: it is right now. Just for you to break even.
Suze: That is why it is essential that you dollar cost
Suze: average into something. Because otherwise that's a lot for a
Suze: stock to have to go up.
Suze: Remember when something goes from 100 to 50 right? That's
Suze: a 50% decline. But to go from 50 back up
Suze: to 100 is 100% increase.
Suze: So when something is going down, you have to participate
Suze: in its decline. And if you're just holding it and
Suze: doing nothing, you're gonna find yourself in a situation possibly
Suze: where maybe you did buy Devon in June of 2022
Suze: and you're still holding it.
Suze: So, what do you do now? You are to ask
Suze: yourselves the questions that I just asked you. There are
Suze: many things out there that if you sold, especially if
Suze: it is outside of a retirement account, you could take
Suze: the loss of your taxes, you could do many things
Suze: with the money that's actually paid higher dividends right now.
Suze: So just something for you to think about. All right
Suze: now, I'm sure you're saying, well, Suze, if I sell,
Suze: what other stock could I go into if I don't
Suze: want to buy an index fund? I don't want to
Suze: buy that. I just want to buy another stock that
Suze: pays me a really great dividend. I'm starting to think
Suze: that Whirlpool WHR might be a good investment for dollar cost. Averaging.
Suze: It's about $107 a share right now
Suze: because it's paying about a 6.53% dividend yield, which is
Suze: a fabulous yield. But let me tell you why. And
Suze: I could be so wrong on this. I can't tell you.
Suze: So you're gonna have to do your research and decide
Suze: if you agree with me or not
Suze: is that there were thousands and thousands of homes in
Suze: the past two hurricanes and the floods and the tornadoes
Suze: and everything that has been happening that have been destroyed
Suze: and all those appliances within all those homes were also destroyed.
Suze: And I personally think, you know what,
Suze: probably those appliances are going to have to be replaced
Suze: and when somebody thinks about replacing an appliance or whatever,
Suze: they usually think about Whirlpool appliances with that type of recognition.
Suze: So I'm willing to kind of think, you know what,
Suze: maybe just maybe Whirlpool might be a great place for
Suze: a good dividend yield.
Suze: And if we just have to wait for a while
Suze: to see what the stock does again, we're being paid
Suze: to wait. So that's just a thought for you. However,
Suze: I also want to talk to you about where we
Suze: are right now in the stock market.
Suze: As of last Friday,
Suze: the Standard and Poor's 500 index closed at its all
Suze: time high in the entire history of the standard and
Suze: Poor's 500 index, it closed, the number it closed at
Suze: and I want you to write these down. So you
Suze: have comparisons for yourself
Suze: when you hear these numbers, you know, is it up,
Suze: is it down? You know, it's all time high now
Suze: is 5864. The Dow Jones industrial average closed at 43,275. So,
Suze: you know what's funny is I will never forget obviously
Suze: being a financial advisor, stockbroker at Merrill Lynch
Suze: and the Dow Jones industrial average in 1980 was all
Suze: over the place. It was like at, I think it
Suze: started the year at about 800 right in there at
Suze: the end of the year, we were all so excited
Suze: because it ended the year. I'll never forget this at
Suze: about 964. It almost hit 1000
Suze: 1000. The Dow Jones industrial average. Remember I just told
Suze: you it was at 43,000 the other day when it closed.
Suze: And what was so fascinating is that we are like,
Suze: come on, come on, come on. And then there it
Suze: was in really early in 1981 where it broke 1000
Suze: several times and then it retreated and things like that.
Suze: But then it started to increase and increase and increase.
Suze: But we were
Suze: all so excited as if, oh my God. Can you
Suze: believe it's going into four digits? And I'll never forget
Suze: reading this book. I forget by the name of who
Suze: it was. That one day, the Dow Jones Industrial Average
Suze: was gonna be 25,000. And I'm like, yeah, and I'll
Suze: buy you a bridge and here we are at 43,000,
Suze: the NASDAQ closed at 18,483. And just for curiosity's sake,
Suze: the 10 year Treasury was at 4.073%. And Bitcoin
Suze: is at 68,418.
Suze: So why am I telling you this? Because it's really,
Suze: really important that you understand the differences between all of
Suze: these indexes? So you kind of understand where you should
Suze: be investing, especially in your 401k. So let's just do
Suze: a very brief
Suze: education. And what are the differences? Because I tell you
Suze: these indexes are at that and you're, I'm sure thinking, well,
Suze: what's in those indexes? Why are there so many different indexes?
Suze: And therefore, what does Suze want me to know about
Suze: those indexes? So I'm gonna tell you right now. So again,
Suze: the Dow Jones Industrial Average simply consist of 30 large
Suze: publicly owned companies. Now, even though I know that its
Suze: name is the Dow Jones Industrial Average,
Suze: it no longer just includes industrial companies, right. So in
Suze: order to be listed in there, the companies are selected
Suze: and based on their reputation, their sustained growth, all this
Suze: kind of stuff. So that is an index that's made
Suze: up of only 30 large publicly owned companies. Now, I
Suze: stress that
Suze: because 30 companies doesn't necessarily say a whole lot about
Suze: the entire stock market.
Suze: So a more popular index today, in my opinion is
Suze: the Standard and Poor's 500 Index and that index tracks
Suze: 500 of the largest US companies. So 500 companies sounds
Suze: like a lot, right, everybody. But that's only about 75%
Suze: of all the stocks that are listed on the US
Suze: stock market.
Suze: All right, especially in terms of the value of the
Suze: entire stock market for a company to be listed on
Suze: the Standard and Poor's 500 Index. Those companies again have
Suze: to obviously meet certain criteria
Suze: and they have to be based in the United States
Suze: and they have to have a market cap. So what
Suze: is their company work? What is the market capitalization of
Suze: their company? And it has to exceed $18 billion. So
Suze: the companies on the Standard and Poor's 500 Index are
Suze: large companies
Suze: and they also have to demonstrate the fact that they
Suze: can have positive earnings over specific times that they are
Suze: good quality stocks.
Suze: The NASDAQ is an index that really includes about 2500
Suze: companies that are listed on the NASDAQ stock exchange and
Suze: they're heavily weighted towards technology companies. All right, everybody, you
Suze: just need to know that. Also, I'm just gonna throw
Suze: this in for you. There is another index called the
Suze: Russell 2000 index
Suze: which tracks 2000 small cap, meaning they're very small us companies. Now,
Suze: what's important for you to know is how have these
Suze: indexes done if you had simply invested in the index
Suze: and simply the index, how would you have done
Suze: over this past year?
Suze: So if you simply invested in the Standard and Poor's
Suze: 500 Index, you would be up approximately 23%. The Dow
Suze: Jones Industrial Average, you'd be up about 14.8%. The NASDAQ,
Suze: you would be up about 23.2%.
Suze: And the Russell index, by the way, if you happen
Suze: to invest in that, you'd be up 12.3%.
Suze: So what's important again, going back to the beginning of
Suze: this podcast, which is if you've missed in the individual
Suze: stocks that have been named over the past year or
Suze: whatever you want. More diversification, as I've said it over
Suze: and over again.
Suze: There is nothing wrong with simply dollar cost averaging in
Suze: to an index fund or ETF just that simple, everybody,
Suze: I mean, who in the world would be upset with
Suze: the return of approximately 23% now. Yes, I know. Maybe
Suze: you could have just bought NVIDIA, maybe you could have
Suze: bought something else and you'd be up 1000% or whatever.
Suze: But when you are buying individual stocks, I personally believe
Suze: you need serious guidance. What to buy when to buy
Suze: it all of those things. So it's important that if
Suze: you don't have that guidance, if you don't know what
Suze: to do that, you simply look at indexes next question.
Suze: All right, Suze, so which index would you buy
Suze: now? Very recently, I did a comparison for all of you.
Suze: And just again, so, you know, I like exchange traded
Suze: funds more than I like mutual funds. If you're in
Suze: a retirement account, all you can do is buy, most
Suze: likely mutual funds don't have a problem with that.
Suze: But outside of retirement accounts, I like exchange traded funds
Suze: that trade like stocks on the stock market, you can
Suze: buy and sell them any time versus a mutual fund
Suze: that can only be bought or sold at the end
Suze: of business for the market that day. So just so,
Suze: you know, so I did this in depth comparison between
Suze: the ETF VOO - VOO, which is the Vanguard Standard
Suze: and Poor's 500 ETF and the Spider S and P
Suze: 500 ETF symbol SPY.
Suze: And if you go back, you can listen to it.
Suze: And my conclusion was I liked VOO - VOO better
Suze: than the SPY. It's just a little better. It's not
Suze: a big deal. If you're invested in the spy ETF
Suze: fine versus VOO, don't have a problem with that.
Suze: But VOO comes out just a little tiny bit ahead,
Suze: like 1/10 of a percent. Then the Standard and Poor's
Suze: 500 ETF. So a lot of you then wrote in
Suze: and you said, all right, Suze, for years, you've been
Suze: saying to buy the Vanguard Total Stock market index, the
Suze: symbol VTI
Suze: versus anything else. And one of the reasons I was
Suze: telling you that is because the Vanguard US Total Stock
Suze: Market Index covers 100% of the stock market.
Suze: So let's just briefly talk about the difference between the
Suze: two
Suze: and their returns. So just follow along again, I just
Suze: said VTI holds approximately 3500 stocks which includes small mid
Suze: and large cap companies. VOO holds approximately 500 stocks simply
Suze: focusing on large cap companies.
Suze: So VTI is going to offer you broader market exposure
Suze: than VOO. However, VOO has slightly outperformed VTI really over
Suze: many different time periods. So let's just go back 10 years.
Suze: VOO's average annual return
Suze: is 12.61% versus VTI is 12.07%.
Suze: So essentially VOO has outperformed VTI by about 0.53% annually
Suze: since 2014, I could go on and on with it.
Suze: But if you have to pick one or the other,
Suze: then I would have to go with VOO. Now,
Suze: I do think there is absolutely nothing wrong with any
Suze: of those ETFs whether they're VIT, VOO, whether it's QQQ, what,
Suze: whatever it may be,
Suze: the point of the matter here is, you have got
Suze: to be involved in investing in the stock markets at
Suze: this point in time,
Suze: whether they're going up more, whether they start to go down,
Suze: whatever it is over, the majority of the time
Suze: markets tend to go up more than they tend to
Suze: go down. Therefore,
Suze: I want you to be dollar cost averaging and diversifying
Suze: your money in index funds or index ETFs if you
Suze: can't buy ETFs because you're in a retirement account
Suze: and be involved in this market and don't be upset
Suze: if you're not in individual stocks that maybe I named
Suze: or I mentioned or whatever because again, I truly believe
Suze: if you're going to be buying individual stocks, you need
Suze: professional guidance because you have to know a whole lot
Suze: about those individual stocks.
Suze: And if you don't have that guidance, I rather see
Suze: you truthfully in an index fund because making 15% a
Suze: year or 12% a year or whatever it may be
Suze: or even more is far better than making a few
Suze: percent in your money market account or anything else. Obviously,
Suze: for safe money, you wanna lock in certificates of deposits.
Suze: I still like the interest rates at Alliant Credit Union.
Suze: You might want to go to my alliant.com and check
Suze: it out
Suze: if you live in a high state income tax brackets,
Suze: be looking at 3, 5 and seven year treasuries don't
Suze: have a problem with you locking that in. And for
Suze: those of you who do want to lock in a
Suze: little higher interest rate, I don't have a problem with
Suze: you doing small amounts in the 30 year treasury bond.
Suze: All right. So that was quite the Suze school for today.
Suze: So, until Thursday, when KT and I will be back
Suze: with another KT and Suze anything. There's only one thing
Suze: that I want you to remember when it comes to
Suze: your money and it is this people first, then money,
Suze: then things.
Suze: And if you do that, you stay educated, you listen
Suze: to a podcast like this over and over and over again.
Suze: So you understand what I am trying to teach you.
Suze: So you then become powerful enough to control your own destiny,
Suze: then I promise you you will be unstoppable.