So Money with Farnoosh Torabi

Episode 1917: Ask Farnoosh: Invest in Gold? 401(k) Changes? Buying a Home Without Raiding Retirement?
Date: December 12, 2025
Host: Farnoosh Torabi

Overview

In this Ask Farnoosh Friday episode, Farnoosh Torabi tackles the week’s most pressing money questions from listeners and unpacks key financial news with clarity and candid perspective. She covers recent Federal Reserve actions and their implications, explains important 401(k) changes coming in 2026, and gives thoughtful, practical advice on investing in gold, making use of high-yield online banks, handling old 401(k) accounts, and the risks of tapping retirement savings for a first home purchase. The episode is rich in actionable advice, relatable anecdotes, and Farnoosh’s signature blend of empathy and straight talk.

Key Discussion Points & Insights

1. The Latest from the Federal Reserve & Economic Outlook

• Summary of the Fed's Move:
  • The Fed cut rates again, but the decision was closely split (9-3), underscoring internal uncertainty.
  • Only one more rate cut projected in 2026 and another in 2027 (“the dot plot”).
  • Inflation is about 3%; labor market is weakening but not in recession territory.
  • Fed will buy $40 billion in Treasury bills, signaling a need for economic cushioning.
• Impact on Consumers:
  • Mortgage rates (currently ~6.3%) won’t fall sharply in the short term; they react more to inflation and long-term bond yields.
  • Market outlook is “the messy middle”—not crashing, not booming.
• Farnoosh’s Guidance:
  • Hang tight and don’t make big financial moves based only on recent Fed news.
  • "If the Fed policymakers are scratching their heads, that means we also can't be too certain either. We're also in this holding pattern... stay the course, continue to pay down debt, continue to save. Don't take huge risks right now unless you can afford it." (05:56)

2. Upcoming 401(k) Changes in 2026

• Higher Contribution Limits:
  • Under 50: Up to $24,500 annually (up $1,000).
  • 50-59 or over 64: Up to $32,500 (catch-up contribution).
  • Special window for ages 60-63: Up to $35,750.
• Annual Additions Limit:
  • Total employee + employer contributions jump to $72,000 (up $2,000).
• Higher Compensation Cap:
  • Max salary considered for matches rises to $360,000.
• Actionable Steps:
  • Review your 2026 budget to increase contributions.
  • Ask HR about changes to your employer match.
  • Revisit your investment mix and avoid leaving matching dollars unclaimed.
• Memorable Moment:
  • Potential future interview with Senator Elizabeth Warren, architect of the 50/30/20 budgeting rule.
  • "We're going to need all the experts on this show in 2026 to help guide us." (13:49)

3. Listener Mailbag

A. Should I Invest in Gold? (19:16)

• Why People Buy Gold:
  • Hedge against inflation, asset diversification, can cushion portfolios during market chaos.
  • Not a growth asset—gold lags behind stocks long-term; no earnings or dividends.
• Ways to Buy Gold:
  • Physical (bars, coins, bullion): Not tied to the financial system; requires storage/insurance and can be illiquid/carry markups.
    • Anecdote: “I told this story about... a guy at Costco was doing a gold transaction... the gold bars he was buying, which you can do at Costco, it was something like $2,000…” (13:27)
  • Gold ETFs: Easy, low fees, more liquid, but you don’t hold physical gold.
  • Gold mining stocks: More volatile, potential for higher returns, tied to company performance.
  • Gold IRAs: Offers tax advantages, but can come with higher fees and stricter rules.
• How Much Should You Own?
  • “I would say between 5 and 7% of your overall portfolio. It’s enough to diversify, but not enough to derail your long-term growth… like I said, it’s a seasoning, it’s not the entrée.” (21:18)
• Farnoosh’s Overall Stance:
  • Gold should only be a small part of your diversified portfolio, preferably through low-fee ETFs.
  • "If it helps you feel better at night knowing that we're heading into volatile times… go for it, but don't use it to replace stocks, bonds, cash." (22:36)

B. Are Online Banks Worth It for Big Lump Sums? (23:17)

• When to Use High-Yield Online Savings:
  • Best for money you don't need to transact with daily or for immediate emergencies.
  • Annual yields only matter if funds aren’t withdrawn for a year.
• Features to Look For:
  • Quick access, solid customer service, strong bank rating.
  • Compare options using sites like NerdWallet and Bankrate.
• Caution:
  • Don't pick a bank for yield alone; research all features before moving large funds.

C. Should I Keep Money in an Old 401(k) or Move It? (26:29)

• Farnoosh’s Advice:
  • “The big con here is that you’re now getting charged for a dormant retirement plan.”
  • Rolling over to a traditional IRA or new employer's plan is recommended to avoid fees, consolidation is easier, and more investment options may be available.
  • "It’s time to move on from your previous employer’s plan." (27:47)

D. Is It Wise to Tap My 401(k) to Buy a Home? (29:16)

• Listener’s Scenario:
  • 30 years old, $87k in 401(k), wants to withdraw $40k for down payment and renovations.
• Pros (of 401(k) loan):
  • Pay interest back to yourself, credit not impacted, predictable repayment.
• Cons (which outweigh pros):
  • Massive opportunity cost: $40,000 at age 30 could grow to $300,000+ by retirement.
  • Loan is due immediately if job is lost—failure to repay means taxes and penalties.
  • Renovation costs are hard to predict and often balloon.
• Farnoosh’s Verdict:
  • "So if you ask me, and you are, I would say don't do it. The long-term cost is just too high." (30:26)
  • Suggests keeping money in 401(k), saving cash over time, and re-evaluating home-buying plans.

Notable Quotes & Memorable Moments

• “When things are uncertain, what do we do? We control what we can control, which is that we just stay the course, we continue to pay down our debt, we continue to save. We don't take huge risks right now unless we can afford it.” (05:56)
• On gold: “It’s a seasoning, it’s not the entrée... If it helps you feel better at night… go for it, but don’t use it to replace stocks, bonds, cash.” (22:10)
• On using 401(k) for a home: “You're not losing $40k, you're losing 3-, $300,000. So let that sink in.” (30:12)
• On uncertain times: “Every year, it always feels like the new year is going to be crazy... it's human nature. Who knows, who knows? Let's be optimistic too.” (22:54)
• Possible upcoming guest: “Maybe this is geeky, but I had a call with Senator Elizabeth Warren's communications team today... She invented that. She is the architect of that 50/30/20 rule.” (13:49)

Timestamps for Important Segments

• The Fed’s Latest Rate Cut & Market Outlook – 02:21 to 09:08
• 2026 401(k) Changes – 09:09 to 13:49
• Senator Elizabeth Warren Guest Tease – 13:50 to 14:30
• Listener Q1: Investing in Gold – 19:16 to 23:12
• Listener Q2: Using Online Banks for Savings – 23:13 to 24:41
• Listener Q3: Moving an Old 401(k) – 26:29 to 27:55
• Listener Q4: Borrowing from 401(k) for Home Purchase – 29:16 to 32:35

Summary

This Ask Farnoosh is an information-packed episode suited for anyone navigating financial decision-making in an uncertain economy. Farnoosh breaks down complex topics with warmth, realism, and actionable, detailed advice—empowering listeners to be thoughtful and strategic with their money. Whether planning for retirement, considering alternative investments, or weighing the real cost of owning a home, this episode delivers relatable, expert counsel for today’s changing world.