1 00:00:00,200 --> 00:00:05,329 Robert, Suze & Music: It's Sunday, July 30th 2023 Suze. Are you ready for 2 00:00:05,340 --> 00:00:10,170 Robert, Suze & Music: today's podcast? Oh, you bet I am because I'm unstoppable (music in). 3 00:00:32,659 --> 00:00:35,860 Suze: Welcome everybody to the Women and Money podcast as well 4 00:00:35,869 --> 00:00:42,169 Suze: as everybody smart enough to listen, Suze O here. 5 00:00:42,799 --> 00:00:44,990 Suze: So a little bit ago, KT came in and said, 6 00:00:45,000 --> 00:00:46,918 Suze: do you need me to help you? You look like 7 00:00:46,930 --> 00:00:49,509 Suze: you're stuck. And I said, why do I look like 8 00:00:49,520 --> 00:00:52,540 Suze: I'm stuck? Just, well, you're just kind of sitting there. 9 00:00:52,639 --> 00:00:54,650 Suze: And I said, yeah, I'm sitting here because I'm thinking 10 00:00:54,659 --> 00:00:57,849 Suze: about what topic should I talk about today? 11 00:00:58,520 --> 00:01:01,529 Suze: She said, well, I can help you. I said, can 12 00:01:01,540 --> 00:01:05,449 Suze: you just not help me so that I can decide 13 00:01:05,459 --> 00:01:09,569 Suze: what topic I want to talk about today? And she said, 14 00:01:09,580 --> 00:01:11,720 Suze: so what are you thinking about? I said, well, I 15 00:01:11,730 --> 00:01:14,839 Suze: was thinking about before you came in and interrupted me, 16 00:01:14,849 --> 00:01:19,529 Suze: KT about the increase in the fed funds rate that 17 00:01:19,540 --> 00:01:24,930 Suze: happened last Wednesday. And with that, she said, ok, I 18 00:01:24,940 --> 00:01:30,169 Suze: can't help you with that and she just left. So, that's 19 00:01:30,180 --> 00:01:35,279 Suze: what we're gonna talk about. Do you know that one 20 00:01:35,290 --> 00:01:43,260 Suze: year ago, the FED funds rate was at 1.75% 21 00:01:44,379 --> 00:01:54,330 Suze: today. It is at 5.5% and possibly can even go higher. 22 00:01:54,809 --> 00:01:58,430 Suze: So why should you care about that? Why am I 23 00:01:58,440 --> 00:02:02,589 Suze: doing a podcast on that? And how does it affect you? 24 00:02:02,949 --> 00:02:07,290 Suze: So take out your Suze notebooks for today, Suze School 25 00:02:07,300 --> 00:02:10,979 Suze: is going to be about the FED funds rate and 26 00:02:10,990 --> 00:02:15,820 Suze: how that affects mortgage rates and therefore what that does 27 00:02:15,830 --> 00:02:19,500 Suze: for the projection for the housing market for the rest 28 00:02:19,508 --> 00:02:23,660 Suze: of the year of 2023. 29 00:02:24,410 --> 00:02:28,299 Suze: So now I know I know I've explained it before, 30 00:02:28,309 --> 00:02:32,500 Suze: but just in case you forgot or you missed that podcast, 31 00:02:32,610 --> 00:02:35,220 Suze: here's what you need to understand. 32 00:02:36,169 --> 00:02:41,990 Suze: The fed funds rate is the rate that banks essentially 33 00:02:42,000 --> 00:02:47,660 Suze: charge to lend money to each other on an overnight basis. 34 00:02:48,410 --> 00:02:52,490 Suze: So you have to be wondering like why financial institutions 35 00:02:52,500 --> 00:02:56,399 Suze: like banks need to lend money to each other just 36 00:02:56,410 --> 00:02:57,359 Suze: for a night. 37 00:02:58,029 --> 00:03:03,579 Suze: And the answer to that question is because all financial 38 00:03:03,589 --> 00:03:08,100 Suze: institutions that take deposits, you know, usually they're known as 39 00:03:08,110 --> 00:03:11,529 Suze: depository institutions such as Bank Credit Union, so on and 40 00:03:11,538 --> 00:03:16,419 Suze: so forth. They have to keep by law everybody, a 41 00:03:16,429 --> 00:03:22,869 Suze: certain percentage of their customers money on reserve. So if 42 00:03:22,880 --> 00:03:25,519 Suze: you want money or whatever they have 43 00:03:25,788 --> 00:03:28,339 Suze: it to give to you, you go to the ATMs 44 00:03:28,380 --> 00:03:32,440 Suze: whatever it is, it has to be a certain percentage, 45 00:03:32,449 --> 00:03:35,100 Suze: I don't think the percentage is big enough, but it 46 00:03:35,110 --> 00:03:39,119 Suze: has to be a certain percentage of all the money 47 00:03:39,139 --> 00:03:40,479 Suze: that they have 48 00:03:41,210 --> 00:03:44,860 Suze: and they need to keep that money in reserve. But 49 00:03:44,869 --> 00:03:49,550 Suze: here's what's interesting, the money that the banks or other 50 00:03:49,559 --> 00:03:55,160 Suze: depository institutions that they keep in reserve, they are not 51 00:03:55,169 --> 00:04:00,309 Suze: allowed to earn money on that money so they can't 52 00:04:00,320 --> 00:04:05,059 Suze: earn interest on the money that they keep in reserve. 53 00:04:05,149 --> 00:04:06,699 Suze: Why does this matter? 54 00:04:07,699 --> 00:04:11,410 Suze: It matters? Because since they're not making any money on 55 00:04:11,419 --> 00:04:15,889 Suze: that money, they keep that amount as close to the 56 00:04:15,899 --> 00:04:18,709 Suze: reserve requirement as possible. 57 00:04:19,498 --> 00:04:23,308 Suze: Not a penny more. In most cases, with the hopes 58 00:04:23,319 --> 00:04:27,609 Suze: that they never go under the amount required. But if 59 00:04:27,618 --> 00:04:31,368 Suze: they find that they are, what do they do, then 60 00:04:31,378 --> 00:04:34,908 Suze: they lend money to each other for the night simply 61 00:04:34,919 --> 00:04:39,438 Suze: to meet the reserve requirements that are required of them. 62 00:04:39,528 --> 00:04:41,229 Suze: Did that make sense to you? 63 00:04:41,899 --> 00:04:46,308 Suze: But when the feds raise the rates that these banks 64 00:04:46,320 --> 00:04:49,500 Suze: need to pay each other for overnight money, 65 00:04:50,399 --> 00:04:56,170 Suze: what that does is this the higher the fed funds rate, 66 00:04:56,720 --> 00:05:01,488 Suze: the more expensive it is for these financial institutions to 67 00:05:01,500 --> 00:05:07,230 Suze: borrow from each other to meet the reserves. So when 68 00:05:07,238 --> 00:05:11,989 Suze: this happens, believe it or not, it tends to lower 69 00:05:12,000 --> 00:05:16,250 Suze: the supply of money that's in the economy 70 00:05:16,649 --> 00:05:22,880 Suze: which then increases short term interest rates. And all of this, 71 00:05:22,890 --> 00:05:27,799 Suze: by the way is supposed to help keep inflation going 72 00:05:27,809 --> 00:05:32,940 Suze: lower and lower. And they lower interest rates, by the way, 73 00:05:32,950 --> 00:05:38,409 Suze: they do the exact opposite when inflation is low, which 74 00:05:38,420 --> 00:05:43,269 Suze: is why years ago, the fed funds rate was essentially 75 00:05:43,279 --> 00:05:44,339 Suze: at nil 76 00:05:45,070 --> 00:05:48,820 Suze: now. Maybe that confused you, maybe it didn't, but you 77 00:05:48,829 --> 00:05:53,140 Suze: just need to know that's what the fed funds rate 78 00:05:53,149 --> 00:05:57,920 Suze: is and why there's always so much hubbub about what 79 00:05:57,928 --> 00:06:00,119 Suze: is the fed going to do. 80 00:06:01,190 --> 00:06:05,640 Suze: But all of this, as you know, has totally done 81 00:06:05,649 --> 00:06:09,450 Suze: what it just doesn't increase the amount of money that 82 00:06:09,459 --> 00:06:12,380 Suze: the banks have to pay one another to lend money 83 00:06:12,390 --> 00:06:16,238 Suze: to each other for the night. It also has increased 84 00:06:16,250 --> 00:06:22,359 Suze: the interest rates that you pay on credit cards, mortgages, 85 00:06:22,369 --> 00:06:24,380 Suze: home equity lines of credit, 86 00:06:24,779 --> 00:06:28,630 Suze: as well as the interest rate that the banks, credit unions, 87 00:06:28,640 --> 00:06:33,510 Suze: et cetera pay you on your savings, your money market accounts, 88 00:06:33,519 --> 00:06:37,350 Suze: certificates of deposits, treasuries and things like that. 89 00:06:38,570 --> 00:06:41,969 Suze: But the real question at hand for this Suze School 90 00:06:41,980 --> 00:06:42,649 Suze: today 91 00:06:43,380 --> 00:06:48,289 Suze: is how does this affect what's happening when it comes 92 00:06:48,299 --> 00:06:52,440 Suze: to real estate prices and what is going to happen 93 00:06:52,540 --> 00:06:59,670 Suze: to real estate prices for the rest of 2023? Now 94 00:06:59,678 --> 00:07:04,149 Suze: you may remember that at the end of 2022 95 00:07:04,799 --> 00:07:07,488 Suze: home value started to go down 96 00:07:08,238 --> 00:07:12,619 Suze: but then that quickly reversed and now they are going 97 00:07:12,630 --> 00:07:18,190 Suze: higher again. Many of you keep asking me how is 98 00:07:18,200 --> 00:07:23,029 Suze: it possible, Suze, that homes can continue to increase in 99 00:07:23,040 --> 00:07:28,350 Suze: value when mortgage rates are at 7 7.5% and could 100 00:07:28,359 --> 00:07:30,450 Suze: possibly go higher. 101 00:07:31,130 --> 00:07:34,799 Suze: What all of you have to understand is that the 102 00:07:34,809 --> 00:07:39,600 Suze: main reason that housing prices are continuing to go up 103 00:07:39,609 --> 00:07:43,619 Suze: is simply because of the lack of inventory 104 00:07:44,359 --> 00:07:48,660 Suze: and why do we have lack of inventory? Well, that 105 00:07:48,670 --> 00:07:55,279 Suze: one actually is simple. Do you know that 92% of 106 00:07:55,290 --> 00:07:58,049 Suze: Americans who have a mortgage, 107 00:07:58,890 --> 00:08:02,640 Suze: their mortgage is below 6%. 108 00:08:03,510 --> 00:08:10,779 Suze: 61% of those people have a mortgage, that's below 4% 109 00:08:11,390 --> 00:08:19,290 Suze: and 23% have a mortgage that is below 3%. Who 110 00:08:19,299 --> 00:08:24,619 Suze: in their right mind wants to sell a house with 111 00:08:24,630 --> 00:08:28,160 Suze: a mortgage that's currently under 6,4 or 3% 112 00:08:28,970 --> 00:08:32,799 Suze: simply to buy another home 113 00:08:33,799 --> 00:08:38,568 Suze: where they need a mortgage that will be at 7% 114 00:08:38,578 --> 00:08:41,689 Suze: or more. Would you want to do that? 115 00:08:42,409 --> 00:08:45,789 Suze: Chances are the only reason that you would want to 116 00:08:45,799 --> 00:08:48,140 Suze: sell a home now and buy another 117 00:08:48,799 --> 00:08:51,900 Suze: is that you had made enough money on the home 118 00:08:51,909 --> 00:08:55,690 Suze: that you currently have. So that when you buy another, 119 00:08:55,700 --> 00:08:58,849 Suze: maybe you're downsizing as you know, I want all of 120 00:08:58,859 --> 00:09:03,429 Suze: you to do as you get older, but you're downsizing 121 00:09:03,440 --> 00:09:05,270 Suze: and just gonna pay cash for it. 122 00:09:06,020 --> 00:09:09,229 Suze: That's what a lot of you are doing. But for 123 00:09:09,239 --> 00:09:13,880 Suze: those people, a lot of people, the majority of people 124 00:09:14,669 --> 00:09:19,359 Suze: when they sell a home and they buy another home, 125 00:09:20,140 --> 00:09:24,700 Suze: they need to finance it. So not many people want 126 00:09:24,710 --> 00:09:29,000 Suze: to do that and that is why since there is 127 00:09:29,010 --> 00:09:34,569 Suze: no inventory because the majority of people who currently own homes, 128 00:09:34,580 --> 00:09:37,969 Suze: they're living in them, they don't want to sell it 129 00:09:37,979 --> 00:09:41,349 Suze: because of the new mortgage rate that they will have 130 00:09:41,359 --> 00:09:41,969 Suze: to pay. 131 00:09:42,580 --> 00:09:48,348 Suze: But that is also why new construction, new home sales 132 00:09:49,000 --> 00:09:52,640 Suze: are so over the top because as all these home 133 00:09:52,650 --> 00:09:56,859 Suze: builders are building more and more and more homes, more 134 00:09:56,869 --> 00:10:01,989 Suze: and more condos, whatever it may be, they are available 135 00:10:02,000 --> 00:10:05,218 Suze: for all of you to just simply purchase 136 00:10:06,090 --> 00:10:10,960 Suze: because you can't purchase anything else other than in most cases, 137 00:10:11,409 --> 00:10:18,039 Suze: brand new homes, knowing all of that. Then the question 138 00:10:18,049 --> 00:10:22,530 Suze: really becomes what is going to happen to the price 139 00:10:22,539 --> 00:10:26,619 Suze: of real estate in 2023? Because a lot of you 140 00:10:26,630 --> 00:10:29,189 Suze: are wondering, should I wait till I buy, should I 141 00:10:29,200 --> 00:10:33,299 Suze: wait till I sell? What should I do? And when 142 00:10:33,330 --> 00:10:35,239 Suze: you have a question like that, 143 00:10:35,799 --> 00:10:39,689 Suze: then one has to go to the very top expert 144 00:10:39,700 --> 00:10:43,520 Suze: in my opinion in the United States when it comes 145 00:10:43,530 --> 00:10:47,979 Suze: to projecting what is going to happen with real estate 146 00:10:47,989 --> 00:10:51,710 Suze: mortgage rates and all of that. And there is one 147 00:10:51,719 --> 00:10:55,929 Suze: person that has called it over the years more correct 148 00:10:55,940 --> 00:11:00,969 Suze: than anybody else. And his name is Barry Habib 149 00:11:01,630 --> 00:11:07,549 Suze: of MBS Highways. Who again, in my opinion is really 150 00:11:07,559 --> 00:11:11,059 Suze: one of the most brilliant people out there when it 151 00:11:11,070 --> 00:11:14,340 Suze: comes to this and calling it right? 152 00:11:14,940 --> 00:11:18,309 Suze: So when Barry was asked that question 153 00:11:19,169 --> 00:11:21,820 Suze: what he said is 154 00:11:22,440 --> 00:11:27,840 Suze: he is projecting that for the year 2023 155 00:11:28,729 --> 00:11:35,849 Suze: that real estate will still appreciate about 5.8%. So that's 156 00:11:35,859 --> 00:11:40,549 Suze: not so bad. Everybody. Now, obviously, if you're looking at 157 00:11:40,559 --> 00:11:44,119 Suze: this as an investment, I don't know, you can get 158 00:11:44,130 --> 00:11:50,150 Suze: close to 5, 5.5% or whatever in dividend, paying stocks, 159 00:11:50,159 --> 00:11:55,848 Suze: you can get close to that. Absolutely. In certificates of deposits, 160 00:11:56,150 --> 00:11:58,520 Suze: you may get really close to that 161 00:11:59,000 --> 00:12:04,400 Suze: in treasuries, especially longer term ones shortly here. But there 162 00:12:04,409 --> 00:12:09,960 Suze: are many ways that you could get 5.8% because remember 163 00:12:09,969 --> 00:12:13,919 Suze: with real estate, even though you may see real estate 164 00:12:13,929 --> 00:12:21,010 Suze: appreciate by 5.8% there are costs to owning real estate. 165 00:12:21,679 --> 00:12:28,500 Suze: You have property taxes, you have maintenance, you have utilities. 166 00:12:29,140 --> 00:12:32,880 Suze: And one thing that you all have to keep in 167 00:12:32,890 --> 00:12:35,210 Suze: mind is 168 00:12:35,919 --> 00:12:40,820 Suze: insurance on that piece of real estate. Now, I don't 169 00:12:40,830 --> 00:12:45,530 Suze: know about you, but I did a podcast on this 170 00:12:45,539 --> 00:12:49,270 Suze: quite a while ago and I was saying it is 171 00:12:49,280 --> 00:12:52,969 Suze: not enough everybody for you, if you're going to buy 172 00:12:52,979 --> 00:12:55,978 Suze: a piece of real estate and take out a mortgage 173 00:12:55,989 --> 00:12:58,969 Suze: to just figure out can you afford the mortgage payment? 174 00:12:59,380 --> 00:13:03,390 Suze: That is not enough. It's not just the mortgage payment, 175 00:13:03,859 --> 00:13:06,619 Suze: it has to be the property taxes, it has to 176 00:13:06,630 --> 00:13:11,630 Suze: be maintenance on that property. But now more than ever before, 177 00:13:11,700 --> 00:13:15,270 Suze: it has to be, what is it going to cost 178 00:13:15,280 --> 00:13:17,150 Suze: you to insure 179 00:13:17,950 --> 00:13:21,789 Suze: that property. The other day, KT was looking at the 180 00:13:21,799 --> 00:13:25,479 Suze: bills and she said, Suze, am I seeing this? Right? 181 00:13:25,750 --> 00:13:29,010 Suze: And I said, what are you seeing? She said to 182 00:13:29,020 --> 00:13:34,598 Suze: insure our condo in Florida with flood insurance, everything it 183 00:13:34,609 --> 00:13:42,400 Suze: has gone up now to $25,000 a year. 184 00:13:43,299 --> 00:13:50,549 Suze: That's like an extra $2000 a month. What happened to 185 00:13:50,559 --> 00:13:55,549 Suze: when insurance was like $2500 a year? Everybody 186 00:13:56,219 --> 00:13:59,419 Suze: and good luck even being able to find at least 187 00:13:59,429 --> 00:14:04,750 Suze: in Florida an insurance company that will insure you little 188 00:14:04,760 --> 00:14:09,400 Suze: by little because of the climate, disasters that are out there, 189 00:14:09,969 --> 00:14:15,549 Suze: whether they are hurricanes, tornadoes, floods, you name it. 190 00:14:17,309 --> 00:14:22,400 Suze: The insurance companies don't want to insure homes anymore. It 191 00:14:22,409 --> 00:14:26,950 Suze: was almost impossible for me to find an insurance company 192 00:14:26,960 --> 00:14:29,140 Suze: that would insure my boat. 193 00:14:30,270 --> 00:14:37,179 Suze: It is crazy. So you have to figure that in with, 194 00:14:37,190 --> 00:14:41,700 Suze: does it make sense more seriously when you own a 195 00:14:41,710 --> 00:14:46,760 Suze: home in particular areas because of the cost simply to 196 00:14:46,770 --> 00:14:51,619 Suze: maintain the home, repair the home and insure the home 197 00:14:51,630 --> 00:14:54,500 Suze: and take a mortgage out on the home? 198 00:14:55,179 --> 00:15:00,429 Suze: Regardless of what your decision is. The projection still is 199 00:15:00,440 --> 00:15:08,570 Suze: approximately a 5.8% appreciation on real estate on homes this 200 00:15:08,580 --> 00:15:12,169 Suze: year that does not include commercial real estate. We are 201 00:15:12,179 --> 00:15:14,950 Suze: talking about homes. Ok. 202 00:15:15,700 --> 00:15:18,469 Suze: So then the next question really is 203 00:15:19,390 --> 00:15:24,309 Suze: what happens when the Feds finally decide 204 00:15:25,090 --> 00:15:26,619 Suze: that in fact, 205 00:15:27,380 --> 00:15:29,159 Suze: inflation is under control 206 00:15:29,840 --> 00:15:34,849 Suze: and now they can start bringing the fed funds rate 207 00:15:34,859 --> 00:15:36,849 Suze: back down again. 208 00:15:37,739 --> 00:15:41,260 Suze: And when the fed funds rate comes back down again, 209 00:15:41,630 --> 00:15:45,330 Suze: the interest rates that you are charged on everything also 210 00:15:45,340 --> 00:15:49,229 Suze: goes down. It's not just that simple because the truth 211 00:15:49,239 --> 00:15:54,070 Suze: of the matter is that mortgage rates on homes are 212 00:15:54,080 --> 00:15:57,409 Suze: created with mortgage backed securities and all these other things. 213 00:15:57,419 --> 00:16:01,609 Suze: And it's a very complicated formula as to how they 214 00:16:01,619 --> 00:16:02,809 Suze: figure it out. 215 00:16:03,489 --> 00:16:06,979 Suze: But what you should really know is that in normal 216 00:16:06,989 --> 00:16:09,659 Suze: situations and this is not normal, by the way, 217 00:16:10,630 --> 00:16:17,799 Suze: a mortgage rate is usually one in three quarters percent 218 00:16:17,960 --> 00:16:20,119 Suze: to 2% 219 00:16:20,830 --> 00:16:26,280 Suze: above what the 10 year Treasury note happens to be. 220 00:16:26,799 --> 00:16:31,760 Suze: So in normal times, if the 10 year Treasury note 221 00:16:31,799 --> 00:16:33,859 Suze: was at 4% 222 00:16:35,039 --> 00:16:39,159 Suze: you could estimate that mortgage rates were going to be 223 00:16:39,169 --> 00:16:43,309 Suze: at five and three quarters percent or 6% 224 00:16:44,099 --> 00:16:50,679 Suze: today. What's happened is that mortgage rates are at 3% 225 00:16:50,690 --> 00:16:56,820 Suze: approximately above what the 10 year Treasury is. And there 226 00:16:56,830 --> 00:17:01,119 Suze: are many reasons for that just so, you know, but 227 00:17:01,219 --> 00:17:04,709 Suze: that's essentially right now how it is working. 228 00:17:05,400 --> 00:17:09,630 Suze: So if interest rates start to go down because the 229 00:17:09,640 --> 00:17:14,229 Suze: Feds have started to lower the fed funds rate, then 230 00:17:14,239 --> 00:17:18,930 Suze: the question has to be asked and answered. When that happens, 231 00:17:18,939 --> 00:17:24,869 Suze: will real estate prices go down? And again, Barry Habib 232 00:17:24,880 --> 00:17:28,688 Suze: answers and he says he does not think so. 233 00:17:29,430 --> 00:17:33,800 Suze: He thinks that if the Feds bring inflation down and 234 00:17:33,810 --> 00:17:38,219 Suze: the interest rates go down and eventually mortgage rates go down, 235 00:17:38,310 --> 00:17:41,718 Suze: that that could keep the prices of homes up there 236 00:17:41,729 --> 00:17:47,040 Suze: as well. So either way you look at it, it 237 00:17:47,050 --> 00:17:52,719 Suze: seems like real estate prices are here to stay for 238 00:17:52,729 --> 00:17:55,599 Suze: a while yet. I don't know what would bring them 239 00:17:55,609 --> 00:17:58,939 Suze: down to tell you the truth besides a recession. 240 00:17:59,449 --> 00:18:03,150 Suze: And it is totally possible even though everybody now is 241 00:18:03,160 --> 00:18:06,599 Suze: saying that we're not gonna go into recession. But if 242 00:18:06,609 --> 00:18:11,479 Suze: they keep raising the fed funds rate, you never ever 243 00:18:11,489 --> 00:18:17,479 Suze: know what can happen. So as I would always tell you, 244 00:18:17,640 --> 00:18:21,639 Suze: you plan for the worst and you hope for the 245 00:18:21,650 --> 00:18:26,599 Suze: best and when you do that, no matter what happens, 246 00:18:26,969 --> 00:18:30,889 Suze: then you are absolutely ok. 247 00:18:31,760 --> 00:18:34,129 Suze: One other thing that I just want to talk about 248 00:18:34,140 --> 00:18:36,709 Suze: because I said I would tell all of you this 249 00:18:36,719 --> 00:18:38,250 Suze: when the time was coming, 250 00:18:38,890 --> 00:18:44,339 Suze: is that right now? When it just comes to treasuries 251 00:18:44,349 --> 00:18:48,300 Suze: and bonds, do you remember the lesson of me teaching 252 00:18:48,310 --> 00:18:54,219 Suze: you that when a bond has a long maturity, 253 00:18:55,400 --> 00:19:00,930 Suze: that when interest rates go down, then the bond price 254 00:19:00,939 --> 00:19:04,849 Suze: of that particular bond, the longer the maturity, the price 255 00:19:04,859 --> 00:19:06,810 Suze: goes up further 256 00:19:07,839 --> 00:19:11,500 Suze: than if it were a short term maturity. So when 257 00:19:11,510 --> 00:19:14,639 Suze: interest rates do start to go down, if they ever 258 00:19:14,650 --> 00:19:15,250 Suze: do 259 00:19:16,109 --> 00:19:23,079 Suze: right, the price of a long term bond, 30 years 260 00:19:23,089 --> 00:19:27,319 Suze: will go up higher than a 20 year bond, the 261 00:19:27,329 --> 00:19:30,800 Suze: price of a 20 year bond will go up higher 262 00:19:30,810 --> 00:19:34,030 Suze: than the price of a 10 year note, which will 263 00:19:34,040 --> 00:19:36,660 Suze: go up higher than the price of a seven year 264 00:19:36,670 --> 00:19:40,910 Suze: note or a five year note or a two year note. 265 00:19:41,199 --> 00:19:46,609 Suze: So the longer out you go, if interest rates go down, 266 00:19:47,890 --> 00:19:51,459 Suze: the higher the price of that bond will go. 267 00:19:52,489 --> 00:19:56,699 Suze: Therefore, I just want you to know that I'm starting 268 00:19:56,709 --> 00:20:01,900 Suze: to invest in 30 year treasury bonds with money that 269 00:20:01,910 --> 00:20:06,560 Suze: I absolutely know I am not going to need. So 270 00:20:06,569 --> 00:20:10,069 Suze: right now I'm getting a little bit over 4% for 271 00:20:10,079 --> 00:20:10,900 Suze: that money. 272 00:20:11,569 --> 00:20:14,218 Suze: I am not putting a lot of money into it. 273 00:20:14,229 --> 00:20:17,280 Suze: I'm starting to stage into it just so I can 274 00:20:17,290 --> 00:20:20,540 Suze: see where are interest rates going to go. 275 00:20:21,510 --> 00:20:25,839 Suze: If I'm wrong in and interest rates go higher, then 276 00:20:25,849 --> 00:20:27,560 Suze: I'll put in more money 277 00:20:28,189 --> 00:20:30,159 Suze: and I'll stage into it. 278 00:20:30,780 --> 00:20:35,659 Suze: But with that money, worst case scenario is it's safe 279 00:20:35,670 --> 00:20:41,750 Suze: and sound and I'm making without any risk at all, 4% 280 00:20:41,760 --> 00:20:47,030 Suze: maybe 4.5% one day. But if interest rates go down 281 00:20:47,069 --> 00:20:50,510 Suze: to 3% or so, 282 00:20:51,180 --> 00:20:55,380 Suze: the price of that 30 year treasury is going to 283 00:20:55,390 --> 00:21:00,810 Suze: go up significantly and my return will not be 4%. 284 00:21:00,979 --> 00:21:04,420 Suze: It will be a whole lot higher than that. If 285 00:21:04,430 --> 00:21:07,760 Suze: at that point in time, I decide I want to 286 00:21:07,770 --> 00:21:10,130 Suze: sell the bond. 287 00:21:10,540 --> 00:21:14,119 Suze: So I told you, I would tell you when I 288 00:21:14,130 --> 00:21:17,140 Suze: would start to do that, many of you may feel 289 00:21:17,150 --> 00:21:22,099 Suze: more comfortable in 10 year treasury notes or a 20 290 00:21:22,109 --> 00:21:26,469 Suze: year treasury bond because you don't want to go out further, 291 00:21:26,479 --> 00:21:29,869 Suze: but I'm going out for 30 years because that is 292 00:21:29,880 --> 00:21:34,709 Suze: where the largest price appreciation will be eventually 293 00:21:35,359 --> 00:21:42,169 Suze: when interest rates if ever start to go down. So 294 00:21:42,180 --> 00:21:44,609 Suze: that's what I'm doing. And I told you that I 295 00:21:44,619 --> 00:21:49,619 Suze: would tell you that for those of you, however, who 296 00:21:49,630 --> 00:21:54,469 Suze: are still wanting to invest and you're looking to invest 297 00:21:54,479 --> 00:21:58,530 Suze: for shorter terms, you don't want to go out that long. 298 00:21:58,930 --> 00:22:02,670 Suze: I'm telling you you should all still be looking at 299 00:22:02,680 --> 00:22:10,479 Suze: the 12 or 18 month certificate of deposits at Alliant 300 00:22:10,489 --> 00:22:14,209 Suze: Credit Union. Look at them, the rates are going to 301 00:22:14,219 --> 00:22:18,198 Suze: change on August 1st. So go and look, go to 302 00:22:18,209 --> 00:22:20,239 Suze: my alliant dot com 303 00:22:20,849 --> 00:22:24,089 Suze: and check that out and see what the rates are 304 00:22:24,099 --> 00:22:28,719 Suze: going to be and see if they interest you. But 305 00:22:28,729 --> 00:22:32,979 Suze: I still would be going out a little bit longer 306 00:22:32,989 --> 00:22:37,140 Suze: than three months or six months. I think it is 307 00:22:37,150 --> 00:22:42,280 Suze: worth it to go longer and lock those rates in. 308 00:22:43,359 --> 00:22:51,050 Suze: Ok. Now, that was your Suze School for today. As always, 309 00:22:51,060 --> 00:22:53,500 Suze: there's only one thing that I want you to do 310 00:22:54,069 --> 00:22:58,550 Suze: every single day and that is for you to say 311 00:22:58,560 --> 00:23:04,420 Suze: the following today. Wherever I go, I will create a 312 00:23:04,969 --> 00:23:09,188 Suze: more peaceful, joyful and loving world. 313 00:23:09,479 --> 00:23:14,339 Suze: And as always, if you do so, I promise you 314 00:23:14,560 --> 00:23:20,390 Suze: you will be unstoppable. See you Thursday, everybody with Miss 315 00:23:20,400 --> 00:23:23,540 Suze: Travis herself. Bye bye now. 316 00:23:28,449 --> 00:23:29,469 Music: Music (out).