1 00:00:28,659 --> 00:00:34,040 Suze: October 1st 2023. Welcome everybody to the Women and Money podcast. 2 00:00:34,049 --> 00:00:37,290 Suze: As well as everybody smart enough to listen, Suze O 3 00:00:37,299 --> 00:00:42,569 Suze: here and a few things before we have Suze school today, 4 00:00:42,580 --> 00:00:46,029 Suze: which will be on Bonds. So get out your little 5 00:00:46,040 --> 00:00:50,990 Suze: Suze notebooks there. Number one, I just want to send 6 00:00:51,000 --> 00:00:54,970 Suze: my condolences to Dianne Feinstein's family. 7 00:00:55,380 --> 00:00:59,369 Suze: Diane passed away a few days ago. I just want 8 00:00:59,380 --> 00:01:05,949 Suze: to say what an incredibly strong, courageous and brilliant woman 9 00:01:06,400 --> 00:01:11,150 Suze: she was, oh my God. Remember I spent most of 10 00:01:11,160 --> 00:01:15,500 Suze: my life in California. She was the mayor when I 11 00:01:15,510 --> 00:01:19,419 Suze: was there. I'll never forget November 27th, 1978 12 00:01:19,989 --> 00:01:24,959 Suze: when she stepped in to be mayor. Because why Mayor 13 00:01:24,970 --> 00:01:29,760 Suze: Mosconi and Harvey Milk were assassinated. And that was just 14 00:01:29,769 --> 00:01:33,839 Suze: an incredible time for her life as well as everybody 15 00:01:33,849 --> 00:01:38,480 Suze: that lived in San Francisco. And I watched her come 16 00:01:38,489 --> 00:01:41,180 Suze: into her power and oh my God, 17 00:01:41,919 --> 00:01:46,250 Suze: we will miss you very, very much, my friend. Also, 18 00:01:46,260 --> 00:01:48,949 Suze: I just want to quickly say something here as well 19 00:01:48,959 --> 00:01:50,269 Suze: since I'm talking about 20 00:01:50,879 --> 00:01:56,739 Suze: people passing. Diane passing. Is that yes, yes, Jimmy Buffett. 21 00:01:56,750 --> 00:02:00,400 Suze: I know passed away a little bit ago. And you're 22 00:02:00,410 --> 00:02:04,180 Suze: wondering why KT and I haven't talked about it to 23 00:02:04,510 --> 00:02:08,448 Suze: tell you the truth. KT can't get through it without crying. 24 00:02:08,460 --> 00:02:09,250 Suze: We tried. 25 00:02:09,960 --> 00:02:14,130 Suze: She's, she's not ready to talk about it yet and 26 00:02:14,139 --> 00:02:18,019 Suze: the loss for us is really on me. You can't 27 00:02:18,029 --> 00:02:21,728 Suze: even measure the loss for us. So we're not ready. 28 00:02:21,740 --> 00:02:25,619 Suze: KT especially isn't ready to talk about it yet. But 29 00:02:25,639 --> 00:02:30,470 Suze: she will one day. His daughter, Savannah will be coming 30 00:02:30,479 --> 00:02:33,910 Suze: to the island shortly and we will have the great 31 00:02:33,919 --> 00:02:37,309 Suze: honor of helping her get through this hard time 32 00:02:37,600 --> 00:02:41,389 Suze: and possibly spreading his ashes wherever he wanted them to 33 00:02:41,399 --> 00:02:43,610 Suze: be spread some of them anyway. But 34 00:02:44,369 --> 00:02:47,198 Suze: it was a hard one. It was a really, really 35 00:02:47,210 --> 00:02:50,520 Suze: hard one and we knew that he was gonna be 36 00:02:50,529 --> 00:02:55,070 Suze: passing shortly. We had talked to him via Savannah because 37 00:02:55,080 --> 00:02:58,179 Suze: he had lost his voice at this time through a 38 00:02:58,190 --> 00:03:02,720 Suze: facetime call that he had wanted Savannah to make where 39 00:03:02,729 --> 00:03:04,839 Suze: essentially we said goodbye. 40 00:03:05,119 --> 00:03:08,300 Suze: And the message to us was you are to go 41 00:03:08,309 --> 00:03:11,490 Suze: to Europe. You are to have a great time and 42 00:03:11,500 --> 00:03:14,169 Suze: you are to have KT because I don't really drink, 43 00:03:14,190 --> 00:03:18,289 Suze: have KT drink a whole bottle of wine just for me. 44 00:03:19,339 --> 00:03:21,529 Suze: You know, we just didn't want to leave, but we 45 00:03:21,538 --> 00:03:26,110 Suze: were told by him via Savannah that we should. So 46 00:03:26,119 --> 00:03:29,369 Suze: maybe that's enough and we won't talk about it anymore again. 47 00:03:29,380 --> 00:03:33,809 Suze: But it's a loss. That's beyond what I can even 48 00:03:33,820 --> 00:03:35,110 Suze: talk about. All right. 49 00:03:35,770 --> 00:03:38,149 Suze: So that's out of the way there because a lot 50 00:03:38,160 --> 00:03:43,419 Suze: of you have been wondering about it next is 51 00:03:44,389 --> 00:03:48,820 Suze: I cannot believe that they actually got their act together 52 00:03:48,830 --> 00:03:51,860 Suze: and they did a proposal. It was passed and the 53 00:03:51,869 --> 00:03:57,339 Suze: government was not shut down. Can somebody just ask them 54 00:03:57,880 --> 00:04:01,339 Suze: to stop waiting for the last moment? Because it is 55 00:04:01,350 --> 00:04:04,729 Suze: just so crazy that all of us should be wondering 56 00:04:04,740 --> 00:04:09,240 Suze: what's gonna happen, what's gonna happen just because they push 57 00:04:09,250 --> 00:04:12,419 Suze: it till the very last moment. 58 00:04:13,729 --> 00:04:17,820 Suze: But with that said, one more little announcement, Alliant has 59 00:04:17,829 --> 00:04:21,950 Suze: raised their interest rate on their 12 month certificate of 60 00:04:21,959 --> 00:04:25,410 Suze: deposit to 5.25%. 61 00:04:25,920 --> 00:04:29,140 Suze: So for those of you who have accounts at Alliant, 62 00:04:29,420 --> 00:04:33,450 Suze: you might want to take advantage of that up to you. Also, 63 00:04:33,529 --> 00:04:38,250 Suze: I have to say we have had a tremendous response 64 00:04:38,260 --> 00:04:43,380 Suze: to the ultimate opportunity savings account for kids and teens. 65 00:04:43,570 --> 00:04:46,750 Suze: So if you are interested, if you are a parent 66 00:04:46,910 --> 00:04:50,070 Suze: and you want your kids to start learning how to 67 00:04:50,079 --> 00:04:53,609 Suze: save money and get the biggest bang for their buck, 68 00:04:53,890 --> 00:04:56,350 Suze: all you have to do is go to my alliant 69 00:04:56,359 --> 00:05:00,670 Suze: dot com and you will see three things there if 70 00:05:00,678 --> 00:05:05,059 Suze: you don't already have an ultimate opportunity, savings account for yourself. 71 00:05:05,070 --> 00:05:08,709 Suze: As a parent, you need to have one first. That's 72 00:05:08,720 --> 00:05:10,700 Suze: where you put in $100 a month, 73 00:05:11,510 --> 00:05:14,919 Suze: every month for 12 months. In the 12th month afterwards, 74 00:05:14,928 --> 00:05:19,690 Suze: you will get $100 plus currently 3.10%. When you figure 75 00:05:19,700 --> 00:05:23,480 Suze: that out altogether, it's a double digit return on your money. 76 00:05:23,970 --> 00:05:28,790 Suze: And if you have one, then your kid could have 77 00:05:28,799 --> 00:05:33,019 Suze: one where they put in $100 a month and after 78 00:05:33,029 --> 00:05:37,170 Suze: 12 months they get $100. So, so many of you 79 00:05:37,178 --> 00:05:40,760 Suze: had asked for that because it's such an incredible deal. 80 00:05:41,059 --> 00:05:45,200 Suze: Now, it's available for you. So check it out at 81 00:05:45,209 --> 00:05:51,940 Suze: my alliant dot com. Now, remember everybody, this opportunity is 82 00:05:51,950 --> 00:05:57,350 Suze: only good till December 31st of this year. So you 83 00:05:57,359 --> 00:05:59,630 Suze: best get on it right now. 84 00:06:00,738 --> 00:06:06,700 Suze: Ok. Are we ready to start Suze School? I hope so. 85 00:06:07,329 --> 00:06:10,829 Suze: Listen to me, everybody. There are a few topics that 86 00:06:10,839 --> 00:06:15,869 Suze: have confused many of you. One happens to be an 87 00:06:15,880 --> 00:06:20,178 Suze: inherited retirement account and how does it really work? Ok. 88 00:06:20,190 --> 00:06:24,380 Suze: I get that because it's complicated. The five year rule 89 00:06:24,390 --> 00:06:29,760 Suze: for Roth retirement accounts, I get it because it's complicated. 90 00:06:30,450 --> 00:06:35,428 Suze: But the other one that has confused you are bonds 91 00:06:35,500 --> 00:06:38,988 Suze: and the 30 year bond versus a s ix month 92 00:06:39,000 --> 00:06:44,039 Suze: bond versus an ETF and a bond fund versus, you know, 93 00:06:44,049 --> 00:06:48,578 Suze: individual bond. You're so confused about it. So I told 94 00:06:48,589 --> 00:06:53,480 Suze: you I would do a brief primer on bonds today. 95 00:06:54,000 --> 00:06:56,320 Suze: I do just want to talk about something that I 96 00:06:56,329 --> 00:06:59,239 Suze: haven't talked about in terms of bonds. 97 00:06:59,559 --> 00:07:02,690 Suze: And that happens to be that 98 00:07:03,540 --> 00:07:07,928 Suze: there are four major types of bonds. They're more than that. 99 00:07:08,059 --> 00:07:10,869 Suze: But these are the four types of bonds that most 100 00:07:10,880 --> 00:07:17,380 Suze: people know about corporate bonds. And a corporate bond is 101 00:07:17,390 --> 00:07:22,290 Suze: your Suze notebook out? Ok. And a corporate bond is a bond 102 00:07:22,299 --> 00:07:27,790 Suze: that is issued by a corporation to fund their business. 103 00:07:28,239 --> 00:07:33,250 Suze: And corporate bonds usually pay a higher interest rate 104 00:07:34,239 --> 00:07:38,299 Suze: then possibly a treasury bond. Why is that? Because there's 105 00:07:38,309 --> 00:07:43,790 Suze: greater risk in a corporate bond not paying your money 106 00:07:43,799 --> 00:07:47,929 Suze: back to you than a treasury bill bond or no. 107 00:07:48,500 --> 00:07:53,070 Suze: So just remember that and corporate bonds can become even 108 00:07:53,079 --> 00:07:57,880 Suze: more and more dangerous right now because interest rates are 109 00:07:57,890 --> 00:07:58,489 Suze: high 110 00:07:59,239 --> 00:08:02,609 Suze: and as their loans that they have out 111 00:08:03,260 --> 00:08:07,760 Suze: to fund their businesses come due and now they have 112 00:08:07,769 --> 00:08:11,220 Suze: to refinance them at a possible higher interest rate than 113 00:08:11,230 --> 00:08:15,029 Suze: what they were at. The corporations can get in trouble. 114 00:08:15,049 --> 00:08:18,390 Suze: If you also look at the number of bankruptcies happening 115 00:08:18,399 --> 00:08:20,350 Suze: now within the corporate world, 116 00:08:21,049 --> 00:08:24,290 Suze: they are on the rise. So if you're gonna do 117 00:08:24,299 --> 00:08:28,570 Suze: corporate bonds, you best know what you are doing. The 118 00:08:28,579 --> 00:08:34,530 Suze: next category of bonds are municipal bonds and municipal bonds 119 00:08:34,539 --> 00:08:42,479 Suze: are generally federally tax free always, but they're also state 120 00:08:42,489 --> 00:08:47,098 Suze: tax free if you happen to buy a municipal bond 121 00:08:47,109 --> 00:08:50,840 Suze: issued by the state that you live in, 122 00:08:51,369 --> 00:08:54,340 Suze: if you happen to live in a state like Florida 123 00:08:54,429 --> 00:08:59,858 Suze: where there are no state income taxes. I for instance, 124 00:08:59,869 --> 00:09:03,789 Suze: could buy a municipal bond from any state and the 125 00:09:03,799 --> 00:09:09,080 Suze: interest rate would be federally and state tax free. 126 00:09:09,729 --> 00:09:14,659 Suze: However, if I lived in the state of California, which 127 00:09:14,669 --> 00:09:19,179 Suze: has a very high state income tax and I happened 128 00:09:19,190 --> 00:09:24,340 Suze: to buy a New York municipal bomb. I would still 129 00:09:24,349 --> 00:09:28,739 Suze: have it federally tax free, but I would owe taxes 130 00:09:28,750 --> 00:09:31,479 Suze: to the state of California on it. 131 00:09:32,080 --> 00:09:38,650 Suze: Municipal bonds are issued to fund state and local government 132 00:09:38,659 --> 00:09:43,950 Suze: things that they do such as schools, road hospitals, toll bridges, 133 00:09:43,960 --> 00:09:45,829 Suze: things like that. 134 00:09:46,500 --> 00:09:50,010 Suze: Now, many of you for some reason have been writing 135 00:09:50,020 --> 00:09:54,330 Suze: me about, I can get a utility municipal bond for, 136 00:09:54,340 --> 00:09:56,599 Suze: I forget what percent you say. And da da da 137 00:09:56,710 --> 00:09:59,909 Suze: da do you, what do you think I should do that? Whatever. Listen, 138 00:10:00,700 --> 00:10:04,080 Suze: you really have to know what you're doing when it 139 00:10:04,090 --> 00:10:08,959 Suze: comes to municipal bonds. You have to know that the 140 00:10:08,969 --> 00:10:12,919 Suze: state that is issuing that municipal bond 141 00:10:13,719 --> 00:10:21,449 Suze: has a great financial outlook for themselves. Not many states do, 142 00:10:21,460 --> 00:10:25,419 Suze: you best be careful with it? So, I don't have 143 00:10:25,429 --> 00:10:28,049 Suze: a problem with you doing municipal bonds, 144 00:10:28,650 --> 00:10:31,159 Suze: but you need to be in a high income tax 145 00:10:31,169 --> 00:10:33,700 Suze: bracket to make them really worth your while. 146 00:10:34,609 --> 00:10:39,640 Suze: And again, you better know a lot about the municipality 147 00:10:39,710 --> 00:10:45,039 Suze: that you are purchasing that municipal bond from for me. 148 00:10:45,049 --> 00:10:47,460 Suze: And I'm in a really high tax bracket. 149 00:10:48,159 --> 00:10:51,659 Suze: I bought a whole lot of municipal bonds all the 150 00:10:51,669 --> 00:10:57,108 Suze: way back in 2006 when the actual yield on them 151 00:10:57,549 --> 00:11:02,669 Suze: was 6% back then five and 6%. And I still 152 00:11:02,679 --> 00:11:04,309 Suze: have those bonds. 153 00:11:04,989 --> 00:11:08,250 Suze: But I also did a lot of research on the 154 00:11:08,260 --> 00:11:14,559 Suze: municipality before I purchased it. So just be careful interest 155 00:11:14,570 --> 00:11:19,250 Suze: rates on municipal bonds today are not that high. So 156 00:11:19,260 --> 00:11:21,390 Suze: I know a lot of people say, hey, you can 157 00:11:21,400 --> 00:11:25,169 Suze: get 3.5% on a municipal bond tax free and maybe 158 00:11:25,179 --> 00:11:28,858 Suze: that's equivalent to 6% or 7% taxable. 159 00:11:29,369 --> 00:11:31,900 Suze: I don't know. I'd rather know that I had a 160 00:11:31,909 --> 00:11:35,599 Suze: bond that was backed by the full faith and credit 161 00:11:35,609 --> 00:11:37,718 Suze: of the US government 162 00:11:38,650 --> 00:11:41,400 Suze: then take a chance on something that I didn't know 163 00:11:41,409 --> 00:11:44,770 Suze: a lot about. That's just my comment on that. But 164 00:11:44,780 --> 00:11:49,590 Suze: if you're knowledgeable, if you have somebody who's knowledgeable, whatever, ok. 165 00:11:49,599 --> 00:11:54,130 Suze: But now you know about municipal bonds and my opinion 166 00:11:54,140 --> 00:11:58,609 Suze: on them, the next type of bonds are government bonds 167 00:11:58,619 --> 00:12:02,460 Suze: and those bonds are issued to fund government spending 168 00:12:03,109 --> 00:12:05,699 Suze: the next type and the type that we are going 169 00:12:05,710 --> 00:12:09,140 Suze: to focus on today, which are really the only kind 170 00:12:09,150 --> 00:12:11,390 Suze: of bonds that I want you all to be buying 171 00:12:11,409 --> 00:12:17,710 Suze: are treasuries and treasuries are used to fund the national debt. 172 00:12:18,250 --> 00:12:21,619 Suze: And as I just said, they are considered the safest 173 00:12:21,630 --> 00:12:24,960 Suze: of all bonds because they are backed by the full 174 00:12:24,969 --> 00:12:28,780 Suze: faith and credit of the United States government. However, 175 00:12:29,400 --> 00:12:32,929 Suze: we a while ago weren't quite sure about that because 176 00:12:32,940 --> 00:12:38,579 Suze: of the state of our government and their economic situation. 177 00:12:38,679 --> 00:12:41,890 Suze: But given, compared to all the other bonds, they are 178 00:12:41,900 --> 00:12:44,689 Suze: still the safest. Now, 179 00:12:45,619 --> 00:12:49,330 Suze: I just said we're gonna concentrate on in this Suze 180 00:12:49,340 --> 00:12:56,090 Suze: School on treasuries. But I did a master class on 181 00:12:56,270 --> 00:13:04,750 Suze: Treasury Bills Bonds and Notes on May 29th 2022. 182 00:13:05,419 --> 00:13:08,359 Suze: So if you don't know about them, I want you 183 00:13:08,369 --> 00:13:11,869 Suze: to go back and listen to that podcast. I did 184 00:13:11,880 --> 00:13:17,609 Suze: another podcast on 30 year Treasury Bonds just recently on 185 00:13:17,619 --> 00:13:23,900 Suze: August 6th, 2023. So for those of you who don't 186 00:13:23,909 --> 00:13:26,770 Suze: know about them, go back and listen to those two 187 00:13:26,780 --> 00:13:31,239 Suze: podcasts because I'm not gonna be repeating things that I've 188 00:13:31,250 --> 00:13:33,030 Suze: already done. 189 00:13:33,739 --> 00:13:38,450 Suze: The big question at hand is what do I want 190 00:13:38,460 --> 00:13:43,069 Suze: you to be doing with your money as you know, 191 00:13:43,650 --> 00:13:47,659 Suze: this is a podcast that mainly caters to those that 192 00:13:47,669 --> 00:13:53,239 Suze: are 50, 60, 70, 80 years of age. And normally 193 00:13:53,250 --> 00:13:57,978 Suze: one would say, oh, as you get older, you should 194 00:13:57,989 --> 00:14:01,689 Suze: have more of your money conservative and in bonds. 195 00:14:02,119 --> 00:14:06,770 Suze: And I just wanna say that I don't believe in that. 196 00:14:07,179 --> 00:14:11,589 Suze: You don't invest in my opinion according to age you 197 00:14:11,599 --> 00:14:16,849 Suze: invest according to what's happening in the economy. So what 198 00:14:16,859 --> 00:14:19,049 Suze: is happening in the economy 199 00:14:20,000 --> 00:14:23,289 Suze: as days go by? Like I said a little bit 200 00:14:23,299 --> 00:14:24,969 Suze: ago about corporations, 201 00:14:25,890 --> 00:14:31,309 Suze: we're seeing more and more people claim bankruptcy, more and 202 00:14:31,320 --> 00:14:35,780 Suze: more corporations going out of business. We're seeing the real 203 00:14:35,789 --> 00:14:41,619 Suze: estate market starting to change. We're seeing that as of today, 204 00:14:41,630 --> 00:14:45,099 Suze: you have so many people whose student loans happen to 205 00:14:45,109 --> 00:14:48,450 Suze: be due and payable now and half of them aren't 206 00:14:48,460 --> 00:14:50,760 Suze: going to pay it. They're just decided they're just not 207 00:14:50,770 --> 00:14:51,780 Suze: going to do it. 208 00:14:52,919 --> 00:14:57,590 Suze: And we have an environment where the market goes up, 209 00:14:57,599 --> 00:15:03,280 Suze: the market goes down and where many, many pension funds 210 00:15:03,440 --> 00:15:08,609 Suze: rather than investing in the market, they've decided why not 211 00:15:08,630 --> 00:15:12,289 Suze: just do something that's safe and secure. And let's see 212 00:15:12,299 --> 00:15:16,250 Suze: where the economy goes. So many of them are putting 213 00:15:16,260 --> 00:15:21,469 Suze: their money into bonds, probably treasury bonds. 214 00:15:22,200 --> 00:15:26,530 Suze: Now, I've been telling all of you since we don't 215 00:15:26,539 --> 00:15:30,729 Suze: know for sure what's gonna happen. Although if I were 216 00:15:30,739 --> 00:15:34,130 Suze: to project what I think it's going to happen is 217 00:15:34,140 --> 00:15:37,849 Suze: I do think Jay Powell, chairman of the Fed might 218 00:15:37,859 --> 00:15:41,299 Suze: raise interest rates again one more time, another quarter of 219 00:15:41,309 --> 00:15:44,190 Suze: a percent, but that's not gonna do anything one way 220 00:15:44,200 --> 00:15:46,010 Suze: or the other truthfully. 221 00:15:46,440 --> 00:15:51,280 Suze: And that over time, somewhere in 2024 because of what's 222 00:15:51,289 --> 00:15:55,989 Suze: happening in the economy and the economy slowing down. And possibly, 223 00:15:56,000 --> 00:16:00,530 Suze: I still think we have a possibility of recession in 2024. 224 00:16:00,539 --> 00:16:04,380 Suze: That's just my belief and all we may then see 225 00:16:04,390 --> 00:16:10,890 Suze: interest rates slowly, slowly start to come down, 226 00:16:11,919 --> 00:16:14,770 Suze: however, we don't know for sure. 227 00:16:15,510 --> 00:16:19,559 Suze: So what I have been doing with my own money. 228 00:16:19,570 --> 00:16:23,719 Suze: And I am asking you to possibly think about doing 229 00:16:23,729 --> 00:16:26,530 Suze: this with a portion of your money as well. You 230 00:16:26,539 --> 00:16:30,820 Suze: have to decide what percentage that is. Is I still 231 00:16:30,830 --> 00:16:36,270 Suze: think it is wise to be investing in the three 232 00:16:36,280 --> 00:16:39,679 Suze: and six month treasury bill, 233 00:16:40,020 --> 00:16:45,010 Suze: which is short term treasury bill or CD if the 234 00:16:45,020 --> 00:16:50,270 Suze: CD is paying as much as the treasury bills. 235 00:16:50,909 --> 00:16:54,880 Suze: So a three and six month treasury bill, so that 236 00:16:54,890 --> 00:16:59,109 Suze: every three or six months your money comes due. And 237 00:16:59,119 --> 00:17:03,929 Suze: then at that time, you're able to see what are 238 00:17:03,940 --> 00:17:07,219 Suze: the two year notes paying the 10 year notes pay 239 00:17:07,410 --> 00:17:10,839 Suze: the 20 year bond paying, the 30 year bond paying 240 00:17:10,849 --> 00:17:13,699 Suze: when it comes to treasuries 241 00:17:13,989 --> 00:17:19,270 Suze: As I am recording this, the rates on a three 242 00:17:19,280 --> 00:17:26,819 Suze: month treasury is about 5.471%. 6 month is at 5.5%. 243 00:17:27,199 --> 00:17:34,280 Suze: 2 year is at about 5%. 5 year is at 4.6%. 244 00:17:34,599 --> 00:17:39,060 Suze: The 10 year is at 4.5% 245 00:17:39,290 --> 00:17:45,239 Suze: and the 30 year now is at 4.7%. When I 246 00:17:45,250 --> 00:17:50,810 Suze: started talking about starting to go a little bit long 247 00:17:50,819 --> 00:17:57,459 Suze: term and dollar cost average into a 30 year treasury 248 00:17:57,469 --> 00:18:01,459 Suze: bond or a 10 year treasury note. If you feel 249 00:18:01,469 --> 00:18:03,079 Suze: more comfortable with that. 250 00:18:03,780 --> 00:18:06,949 Suze: The reason that I wanted you to do that is 251 00:18:06,959 --> 00:18:10,500 Suze: I have a belief that it is probable that the 252 00:18:10,510 --> 00:18:16,050 Suze: 10 year treasury note and the 30 year treasury bond 253 00:18:16,060 --> 00:18:22,469 Suze: or 20 year will go to about 5% maybe even 254 00:18:22,479 --> 00:18:23,708 Suze: a little bit higher. 255 00:18:24,459 --> 00:18:27,390 Suze: But because I don't know for sure, 256 00:18:28,050 --> 00:18:30,859 Suze: I started too and this is what I meant by 257 00:18:30,869 --> 00:18:34,520 Suze: dollar cost averaging because that seems to have confused you 258 00:18:35,050 --> 00:18:40,250 Suze: is that to put small amounts of money into a 259 00:18:40,270 --> 00:18:41,959 Suze: 30 year bond. 260 00:18:43,060 --> 00:18:45,229 Suze: Then as I saw interest rates go up a little 261 00:18:45,239 --> 00:18:48,810 Suze: bit more, I put even more into a 30 year 262 00:18:48,819 --> 00:18:53,550 Suze: bond but still a very relatively small amount given that 263 00:18:53,560 --> 00:18:56,229 Suze: I think they're going to 5% but I don't know 264 00:18:56,239 --> 00:18:56,989 Suze: for sure. 265 00:18:57,719 --> 00:19:01,609 Suze: Then they went up again to like 4.5%. And I 266 00:19:01,619 --> 00:19:04,770 Suze: put in again, a small amount of money 267 00:19:05,560 --> 00:19:10,869 Suze: at 4.7%. I put in again a small amount of 268 00:19:10,880 --> 00:19:14,119 Suze: money and I'll keep doing that 269 00:19:14,719 --> 00:19:18,478 Suze: until it gets to about 5% or more. And maybe 270 00:19:18,489 --> 00:19:23,170 Suze: at that time I'll start putting in larger sums of 271 00:19:23,180 --> 00:19:27,349 Suze: money just depends what's happening in the economy at the 272 00:19:27,359 --> 00:19:32,390 Suze: same time. However, and I'm calling this the dumbbell approach 273 00:19:32,609 --> 00:19:34,910 Suze: and not that you're a dumbbell, but you know, you 274 00:19:34,920 --> 00:19:39,229 Suze: have weights on both sides and all of a dumbbell 275 00:19:39,239 --> 00:19:43,369 Suze: when you're lifting weights, larger amounts of money. For me 276 00:19:44,000 --> 00:19:47,640 Suze: that I want to take advantage of are in three 277 00:19:47,650 --> 00:19:52,719 Suze: and six month treasury bills and, or a treasury money 278 00:19:52,729 --> 00:19:56,689 Suze: market account where I am getting the interest rates of 279 00:19:56,699 --> 00:20:01,629 Suze: about combined with everything about five and a quarter, 5.5%. 280 00:20:02,339 --> 00:20:07,949 Suze: So I'm getting higher rates on short term as they mature. 281 00:20:08,040 --> 00:20:11,649 Suze: I'm then looking at what's happening and maybe that money 282 00:20:11,660 --> 00:20:15,510 Suze: goes back into another three month t bill. Or if 283 00:20:15,520 --> 00:20:18,209 Suze: interest rates are higher, maybe I'll take a little bit 284 00:20:18,219 --> 00:20:22,689 Suze: of that money and put it in the 30 year bond, 285 00:20:23,310 --> 00:20:28,938 Suze: but little by little tiny amounts, if you have $10,000 286 00:20:28,949 --> 00:20:32,459 Suze: to invest, I would be putting maybe 8000 of my 287 00:20:32,469 --> 00:20:35,359 Suze: $10,000 into three and six months. 288 00:20:36,000 --> 00:20:39,419 Suze: And then you would put maybe $1000 in a 10 289 00:20:39,430 --> 00:20:43,359 Suze: year note and another $1000 in a 30 year note 290 00:20:43,369 --> 00:20:48,410 Suze: or whatever combination of money amounts of money you feel 291 00:20:48,420 --> 00:20:52,530 Suze: comfortable with, but the majority of your money should be 292 00:20:52,540 --> 00:20:53,810 Suze: short term. 293 00:20:54,349 --> 00:20:57,889 Suze: And then as they mature, I would look and see 294 00:20:57,900 --> 00:21:00,880 Suze: what the 10 year or the 20 or the 30 295 00:21:00,890 --> 00:21:04,229 Suze: year bond is paying and I maybe would take 1000 296 00:21:04,239 --> 00:21:07,349 Suze: or 2000 of that and put it into the 30 297 00:21:07,579 --> 00:21:10,079 Suze: the rest into another three or six month. Are you 298 00:21:10,089 --> 00:21:15,060 Suze: getting the idea, small amounts of money? Because this is 299 00:21:15,069 --> 00:21:17,579 Suze: not going to happen overnight. 300 00:21:18,410 --> 00:21:21,020 Suze: It's not going to be all of a sudden that 301 00:21:21,030 --> 00:21:23,968 Suze: interest rates are gonna skyrocket or the interest rates are 302 00:21:23,979 --> 00:21:30,149 Suze: gonna come down. It's going to be a long process. Again, 303 00:21:30,239 --> 00:21:33,770 Suze: I am not doing this to hold the long term 304 00:21:33,780 --> 00:21:38,290 Suze: maturities until they mature because what you need to understand 305 00:21:38,469 --> 00:21:41,780 Suze: is when interest rates go up, the value of bonds 306 00:21:41,790 --> 00:21:42,599 Suze: go down 307 00:21:42,849 --> 00:21:46,060 Suze: and when interest rates go down, the value of bonds 308 00:21:46,069 --> 00:21:50,800 Suze: go up. So over time, if interest rates do start 309 00:21:50,810 --> 00:21:52,099 Suze: to go down, 310 00:21:52,969 --> 00:21:55,140 Suze: and I feel like they have to start to go 311 00:21:55,150 --> 00:22:00,540 Suze: down to help corporations that need to refinance some of 312 00:22:00,550 --> 00:22:04,219 Suze: their debt and they can't do it at these high 313 00:22:04,229 --> 00:22:08,199 Suze: interest rates. And if they're stuck at these high interest rates, 314 00:22:08,209 --> 00:22:09,959 Suze: they may go bankrupt. 315 00:22:10,189 --> 00:22:12,938 Suze: And if they go bankrupt or they have to close, 316 00:22:12,949 --> 00:22:16,630 Suze: that means people are out of jobs, which means less 317 00:22:16,640 --> 00:22:20,439 Suze: people are paying into the tax structure, which then affects 318 00:22:20,449 --> 00:22:24,649 Suze: the economy because less people have money to spend and 319 00:22:24,660 --> 00:22:27,599 Suze: then they have to adjust interest rates because of that 320 00:22:27,609 --> 00:22:32,900 Suze: as well. It's not all about inflation, believe it or not. 321 00:22:33,630 --> 00:22:38,770 Suze: So that's the strategy. I hope you understand that. Why 322 00:22:38,780 --> 00:22:43,599 Suze: do I want you to do individual bonds versus an 323 00:22:43,609 --> 00:22:48,719 Suze: exchange traded fund and or a mutual fund, 324 00:22:49,349 --> 00:22:54,699 Suze: individual bonds have a maturity date, you usually buy a 325 00:22:54,709 --> 00:22:59,139 Suze: bond at par, which is $1000. If you're buying it 326 00:22:59,150 --> 00:23:04,069 Suze: when it is first issued, when it matures, it matures 327 00:23:04,079 --> 00:23:08,698 Suze: at $1000. But between the time that you bought it 328 00:23:08,900 --> 00:23:12,780 Suze: and the time it matures it goes up and down 329 00:23:12,790 --> 00:23:17,180 Suze: in value according to what's happening with interest rates. 330 00:23:17,599 --> 00:23:20,589 Suze: So if you want to sell that bond on the 331 00:23:20,599 --> 00:23:26,389 Suze: secondary market, you might get more than $1000 or you 332 00:23:26,400 --> 00:23:32,550 Suze: might get less than $1000 depending on interest rates. But 333 00:23:32,560 --> 00:23:37,829 Suze: if you hold it to maturity, you will get $1000 334 00:23:37,839 --> 00:23:39,689 Suze: per bond back 335 00:23:40,589 --> 00:23:45,458 Suze: backed by the full faith and credit of the US government. 336 00:23:46,150 --> 00:23:51,540 Suze: When you buy a bond fund, a bond fund is 337 00:23:51,550 --> 00:23:55,939 Suze: made up of many individual bonds, 338 00:23:56,729 --> 00:24:01,400 Suze: but a bond fund, you own a share of that 339 00:24:01,410 --> 00:24:06,218 Suze: bond fund and it does not have a maturity date. 340 00:24:07,010 --> 00:24:11,199 Suze: So it goes up and down in value based on 341 00:24:11,209 --> 00:24:14,300 Suze: what interest rates are doing, but you are not 342 00:24:14,920 --> 00:24:20,199 Suze: guaranteed to get your money back at a specific date. 343 00:24:20,739 --> 00:24:23,989 Suze: So many of you saw that happen in the long 344 00:24:24,000 --> 00:24:27,699 Suze: term bond funds that you had when interest rates started 345 00:24:27,709 --> 00:24:31,560 Suze: to go up, you watched the net asset value, that's 346 00:24:31,569 --> 00:24:35,050 Suze: what it's called, but it is priced at per share. 347 00:24:35,060 --> 00:24:38,790 Suze: The net asset value you saw it started to go 348 00:24:38,800 --> 00:24:39,530 Suze: down 349 00:24:40,260 --> 00:24:43,969 Suze: and many of you were down 40% 350 00:24:45,050 --> 00:24:48,579 Suze: but you couldn't say, oh, it's ok. I'm still getting 351 00:24:48,589 --> 00:24:51,989 Suze: my interest rate and I know in a few years 352 00:24:52,000 --> 00:24:56,349 Suze: I'll get back what I invested. You can't do that 353 00:24:56,640 --> 00:25:02,560 Suze: in an exchange traded fund or a bond fund. Also, 354 00:25:02,729 --> 00:25:06,660 Suze: you have to remember that in an individual bond, the 355 00:25:06,670 --> 00:25:10,500 Suze: interest rate is fixed for the life of the bond 356 00:25:11,060 --> 00:25:15,910 Suze: in a bond mutual fund or ETF it is not fixed. 357 00:25:16,089 --> 00:25:18,189 Suze: So if you get in at a great rate, a 358 00:25:18,199 --> 00:25:22,688 Suze: great interest rate and interest rates do start to go down, 359 00:25:22,699 --> 00:25:27,290 Suze: then your interest rate will also start to go down 360 00:25:27,300 --> 00:25:34,069 Suze: in your bond fund or ETF. So I like individual 361 00:25:34,079 --> 00:25:36,770 Suze: bonds better. Number one, number two, 362 00:25:37,349 --> 00:25:43,359 Suze: all bond funds usually have an expense ratio and that 363 00:25:43,369 --> 00:25:48,520 Suze: expense ratio goes to the portfolio manager who is buying 364 00:25:48,530 --> 00:25:52,859 Suze: and selling the bonds within that portfolio that comes off 365 00:25:52,869 --> 00:25:57,760 Suze: of your return. When you buy an individual bond, there 366 00:25:57,770 --> 00:26:00,438 Suze: is no expense ratio. 367 00:26:00,949 --> 00:26:04,319 Suze: So for those of you writing me saying, well, should 368 00:26:04,329 --> 00:26:07,198 Suze: I buy TLT or should I buy this ETF or 369 00:26:07,209 --> 00:26:12,189 Suze: whatever I am talking about individual bonds, then you write 370 00:26:12,199 --> 00:26:15,800 Suze: me and you say, I don't know how to do it. Well, 371 00:26:15,810 --> 00:26:20,359 Suze: then just open up an account at any brokerage firm 372 00:26:21,140 --> 00:26:23,729 Suze: and have them help you do it. 373 00:26:24,430 --> 00:26:27,260 Suze: You don't have to always do everything on your own. 374 00:26:27,270 --> 00:26:30,659 Suze: Sometimes I know it's hard for you. So if you 375 00:26:30,670 --> 00:26:34,140 Suze: don't understand it and you don't know what to do, 376 00:26:34,150 --> 00:26:38,280 Suze: simply go to fidelity e trade, whatever it may be. 377 00:26:39,250 --> 00:26:43,390 Suze: Get yourself somebody on the desk there when you call in, 378 00:26:43,400 --> 00:26:46,479 Suze: when you open up your account and they will help 379 00:26:46,489 --> 00:26:49,919 Suze: you do it. The next thing is what you need 380 00:26:49,930 --> 00:26:54,000 Suze: to know. A lot of you are really confused when 381 00:26:54,010 --> 00:26:57,900 Suze: it comes to you bought a bond on the secondary 382 00:26:57,910 --> 00:26:58,699 Suze: market 383 00:26:59,359 --> 00:27:02,800 Suze: and you look at the coupon and it's only paying 384 00:27:02,810 --> 00:27:07,930 Suze: you 2.5% and you think that you absolutely made a 385 00:27:07,939 --> 00:27:09,010 Suze: mistake 386 00:27:09,699 --> 00:27:17,310 Suze: on your investment. No, because remember when a bond is issued, 387 00:27:17,319 --> 00:27:19,150 Suze: it's issued at par, 388 00:27:19,819 --> 00:27:22,889 Suze: the interest rate is always fixed. It's not like a 389 00:27:22,900 --> 00:27:26,290 Suze: stock where the dividend goes up or down. So if 390 00:27:26,300 --> 00:27:29,899 Suze: you bought a bond at $1000 a bond and it 391 00:27:29,910 --> 00:27:33,709 Suze: paid you 2% that would be $20 a year 392 00:27:34,599 --> 00:27:38,510 Suze: when interest rates go up, the value of the bond 393 00:27:38,520 --> 00:27:41,890 Suze: has to go down because who would buy that bond 394 00:27:41,900 --> 00:27:46,260 Suze: from you to only get 2% or $20 a year 395 00:27:46,880 --> 00:27:51,010 Suze: when a new bond maybe is paying you 4% or 396 00:27:51,020 --> 00:27:55,169 Suze: $40 a year. So the value has to go down 397 00:27:55,609 --> 00:27:58,599 Suze: and let's say it goes down to $500 398 00:28:00,010 --> 00:28:05,060 Suze: right? It's still only paying you $20 a year, 399 00:28:05,729 --> 00:28:07,979 Suze: but $20 a year 400 00:28:08,689 --> 00:28:12,938 Suze: on $500 is 4%. 401 00:28:13,920 --> 00:28:17,560 Suze: Did that make sense to you? So, even though your 402 00:28:17,569 --> 00:28:21,489 Suze: certificate or your paper may say you just bought a bond, 403 00:28:21,500 --> 00:28:25,790 Suze: but it's only paying you 2.3% or 3%. 404 00:28:26,410 --> 00:28:32,069 Suze: Look at what that amount of money is in comparison 405 00:28:32,280 --> 00:28:37,079 Suze: to the amount of money that you paid for the bond. 406 00:28:38,219 --> 00:28:41,180 Suze: I hope that made sense to you because a lot 407 00:28:41,189 --> 00:28:43,369 Suze: of you are so upset thinking that you bought the 408 00:28:43,380 --> 00:28:44,390 Suze: wrong bond. 409 00:28:45,000 --> 00:28:49,229 Suze: But if you only paid $500 for that bond, it's 410 00:28:49,239 --> 00:28:55,209 Suze: paying $20 a year, that's a 4% return on your money. 411 00:28:55,219 --> 00:28:56,020 Suze: Plus 412 00:28:57,010 --> 00:29:05,300 Suze: when the bond matures, you will get also $1000 a bond. 413 00:29:06,180 --> 00:29:10,530 Suze: So all of that has to be taken into consideration. 414 00:29:10,680 --> 00:29:14,229 Suze: What will you get if you hold it till maturity? 415 00:29:15,209 --> 00:29:19,420 Suze: And that's called the yield to maturity. And those are 416 00:29:19,430 --> 00:29:22,359 Suze: the things that you have to look at and talk 417 00:29:22,369 --> 00:29:25,729 Suze: to your finance person about when you are buying a 418 00:29:25,739 --> 00:29:31,010 Suze: bond on the secondary market. Now listen to me, everybody. 419 00:29:31,089 --> 00:29:35,500 Suze: The numbers that I just used in these examples are 420 00:29:35,510 --> 00:29:40,500 Suze: just for illustration purposes. It doesn't work exactly like that, 421 00:29:40,689 --> 00:29:45,020 Suze: but I just want you to understand the concept. OK? 422 00:29:45,819 --> 00:29:48,670 Suze: Now, I know that a lot of you want to 423 00:29:48,680 --> 00:29:51,989 Suze: buy the bond when they're first issued, but sometimes that 424 00:29:52,000 --> 00:29:55,689 Suze: can be a little complicated. I don't have a problem 425 00:29:55,699 --> 00:30:00,550 Suze: on any level buying my bonds on a secondary market 426 00:30:00,560 --> 00:30:03,030 Suze: with my financial advisor. 427 00:30:03,709 --> 00:30:07,310 Suze: So I hope that put that to rest a little 428 00:30:07,319 --> 00:30:10,859 Suze: bit so that a lot of you can stop worrying about, 429 00:30:10,869 --> 00:30:14,660 Suze: oh my God, you bought the wrong bond. Always figure 430 00:30:14,670 --> 00:30:18,859 Suze: out what your true yield is based on what you 431 00:30:18,869 --> 00:30:23,920 Suze: paid for the bond. Just that simple. 432 00:30:24,400 --> 00:30:29,410 Suze: So I hope this cleared up certain things about why 433 00:30:29,420 --> 00:30:32,469 Suze: I want you to do individual bonds over bond funds 434 00:30:32,479 --> 00:30:36,290 Suze: or ETF s why you should not be freaking out 435 00:30:36,300 --> 00:30:39,390 Suze: if you bought a bond on the secondary market. And 436 00:30:39,400 --> 00:30:43,489 Suze: all of a sudden you see their coupon is only 2.5% 437 00:30:43,500 --> 00:30:44,390 Suze: or whatever. 438 00:30:44,719 --> 00:30:48,189 Suze: Just remember what you paid for the bond and figure 439 00:30:48,199 --> 00:30:51,790 Suze: out what your true yield is. And if you intend 440 00:30:51,800 --> 00:30:55,369 Suze: to keep the bond until it matures, make sure you 441 00:30:55,380 --> 00:31:01,810 Suze: know what your yield to maturity will be. All right, everybody. 442 00:31:02,229 --> 00:31:05,609 Suze: So I think that does it. I hope that made 443 00:31:05,619 --> 00:31:08,790 Suze: it clear what I want you to do, why I 444 00:31:08,800 --> 00:31:12,380 Suze: want you to do it. But small amounts of money 445 00:31:12,390 --> 00:31:15,640 Suze: for the 30 year or the 20 year. A lot 446 00:31:15,650 --> 00:31:19,130 Suze: of people, I just want to say, feel more comfortable 447 00:31:19,140 --> 00:31:22,349 Suze: doing the 10 year rather than the 30 448 00:31:23,119 --> 00:31:25,540 Suze: because the 10 year has less risk in it because 449 00:31:25,550 --> 00:31:29,170 Suze: it's a shorter term and it will pay you essentially 450 00:31:29,180 --> 00:31:32,829 Suze: the same amount of money as the 30 year bond. 451 00:31:33,050 --> 00:31:35,449 Suze: So a lot of people think it's not worth going 452 00:31:35,459 --> 00:31:40,569 Suze: up for 30 years. Remember the longer the maturities when 453 00:31:40,579 --> 00:31:45,329 Suze: interest rates go down, the more the longer maturities go 454 00:31:45,339 --> 00:31:49,030 Suze: up in value. So you just have to weigh that 455 00:31:49,349 --> 00:31:54,739 Suze: and decide what maturity are you comfortable with? All right. 456 00:31:55,140 --> 00:32:00,040 Suze: There you go. So until Thursday when Miss Travis joins 457 00:32:00,050 --> 00:32:02,880 Suze: us again, there's really only one thing that I want 458 00:32:02,890 --> 00:32:05,839 Suze: you to say every single day and it goes like 459 00:32:05,849 --> 00:32:06,599 Suze: this 460 00:32:07,290 --> 00:32:12,160 Suze: today, wherever I go, I will create a more joyful, 461 00:32:12,469 --> 00:32:17,020 Suze: peaceful and loving world. And if you do that, I 462 00:32:17,030 --> 00:32:21,699 Suze: promise you you will be unstoppable.