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Suze Orman's Women & Money (And Everyone Smart Enough To Listen)
Suze School: Now Is Not The Time To Panic
00:26:37
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Hi everybody. Suzio here. Now, what is the goal of money? The goal of money is for you to be secure. And there is no better way for you to be secure than having an emergency savings account. It is essential for your financial foundation. So all of you should be participating in the Ultimate Opportunity savings account at Alliant Credit Union. Go to myalliant.com to find out more. And be secure.
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We are strong we are wise we will not apologize we are here we will die Together we will rise we're the little bit of faith and everything it takes we are strong we are wise Together we will rise.
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January 30, 2025 welcome everybody to the Women and Money podcast as well as everybody smart enough to listen. AM today is going to be Susie School and Sunday is going to be Ask KT and Susie Anything. We're doing a little switcheroonio here. I kind of like that switcheroonio. Anyway, and the reason is because so many of you are freaked out about what happened in the stock market a few days ago when all of a sudden all your sweethearts, the Magnificent Seven, your future that you thought you were going to make a fortune on, and you loved watching go up and up and up and, and up, all of a sudden tanked and now you are just depressed. You don't know what to do. You've been writing me, I've been getting more emails than ever before about Susie, Susie, what should we do? Should we sell Nvidia? Should we sell this? Should we sell that? And I thought I got to do something about this. So Susie's school is now in session. Before we get to the stock market, however, I think it's important to recognize what happened at the Fed meeting yesterday where the Fed funds rate were left the same. And personally, I think it will be absolutely amazing if in this entire year of 2025 we get one more rate cut, maybe two, but I doubt it, but absolutely no more than two. So things are kind of strange that way. When we were expecting they were going to cut rates and then when you heard him announce it yesterday, you saw the market start to go down, you saw all kinds of things start to happen. But what happened really that affected many of you, especially if you want to buy a home, is you saw the 10 year interest rate on the 10 year treasury tick up. And as I've told you many, many times, mortgages are directly attached to the ten year treasury. So for those of you who were hoping that interest rates were going to be coming down for mortgages, I don't think your hope is going to be answered. Mortgages are around 7% right now, and I think they're going to stay at around 7% here for quite a while. So what does that mean? Also for those of you who are thinking about buying, if I were going to be buying real estate right now and I had to take out a mortgage, I have to tell you, I think I would probably wait till about September to do so. I would not be rushing to go ahead and buy right now at a 7% interest rate. Just saying maybe I'm wrong. Who knows, Maybe you can get a steal of a deal and it makes sense for you to do it right now. But if you're not in a serious hurry, you might want to just wait. For those of you who are selling well, your 3% interest rate that you probably locked in years ago is still looking better, is it not? Than ever. So if you have to sell and buy something else and you need to get a new mortgage, you might want to think about it as well. Just same. That's real estate. So now let's talk about the stock market. Did I not say a while ago that this was going to be a very volatile year? And I could swear that I probably just did a podcast on this not so long ago where I repeated that I had said that and did I not say to you, so you have to prepare for the ups and the downs and you have to take advantage when things go down. If you're in this for the long run and if you know that you are invested in great quality stocks. Now I get that they came out the other day and they freaked everybody out with this deep seek new AI that China has come out with. And that is the reason that everything went down, especially the technology stocks, because China was able to do something for a fraction of the cost doing it here in the United States. Now everybody's thinking they're going to stop buying Nvidia chips. Oh my God, it's over here. Just stop. The other day KT said, susie, did you download the app Deepseek? And I looked at her, I said, are you out of your mind? And she said, why? I said, KT, everybody is having a fight right now over TikTok. And why are they doing that? Because China has made it so that everybody that's on that app, they are gathering the information, they are finding out everything about them. They're recording every keystroke, everything that they do. And now the government wants them to sell TikTok to somebody or they're going to close them down. I said, do you think for a second that Deep Seek isn't exactly the same? So there is no way that I am going to download this app and probably all the information that everybody is using on it, the questions that they're asking, everything is going to be gathered and somehow be weaponized against the United States states. Now, call me crazy, call me paranoid, or call me realistic, but I don't need Deep Seek because there are so many great AI apps right here in the United States. Listen, they don't cost you anything. Most of them are free. So why do you care? If you go on an AI app that cost a fraction of what it takes to make, why do you care? You just curious about giving all your information away. So I am giving you my personal warning. I would stay as far away from Deep Seek as I possibly can. Now, even with that said, how do I think that is going to affect Nvidia and all the other AI stocks in the long run? I don't think so. Not at all. Yeah, it's freaky to think that everybody's spending more money than they need to be spending, but I don't think that it's really going to disrupt the brilliance behind some of the AI stocks here in the United States, especially Nvidia. They already can't fulfill most of the orders, if not all of them that they have. So I would not be freaking out. I would not be selling in particular my Nvidia stock here. I would, however, be prepared that it could go lower and to dollar cost average into it. If I were you, I would put a low ball offer at about $110 a share, about $10 under where it's trading right now. And if you want more, let's just see if it goes down there and you can pick some up at a really great price. But you have all really got to remember, are you an investor or are you a speculator? And if you're speculating, okay, buy, sell, buy, sell. But if you're an investor, you have to wait for the long run, for the true results to come in. A friend of mine emailed me the other day and said, I'm so afraid I can't stand watching my profits go down the drain. I think I'm going to sell Nvidia. And then Nvidia went up shortly after that. And I wrote him and I said, well, did you sell? And he said, no, no. I said, are you glad you didn't sell? And he said, yes. And I said, you have to understand the role that emotions play in investing. Now. I'm sure he's absolutely freaked again that he didn't sell. But if you love a stock and the stock itself really is a solid, good stock and the whole future is all about AI and where the growth is really going to come from in the future, then you stick with it. So many of you are so fickle, especially with the stock Apple, which, you know, is one of my favorite stocks because it hasn't really been participating and it's just kind of doing its thing. You give up hope on it. And it's like, why do you do that? Everybody? You have to look at something and you have to have patience. Now, you have heard me say over and over again that money that you need within five years, hopefully longer than five years, does not belong in the stock market. It does not. Because of things like this, anything can happen at any time. We can have another nine, 11 here. We can have all kinds of things happen that could send this market all the way down 50% down. And normally, you know, when something goes from 100 to 50, that's a 50% decline. But for it to go from 50 back up to 100 is 100% increase. And that takes time. So normally when a market or a stock or something goes down significantly, it takes anywhere from three to five years for it to come back. And the longer time you have, the more money you're going to make when it does come back. And good stocks always come back. So if you need this money within five years, it does not belong in the stock market, if the fluctuations of this market or the stocks that you happen to be in, because maybe you're only in Nvidia or some of these stocks, which is a mistake, by the way, but let's just say that's true. And you are losing sleep. You are freaking out. You just can't stand it. You don't belong in the stock market either. The goal of money is what? Everybody, let me hear you say it all at once. The goal of money is for you to be secure. And when you invest your money in a stock, it needs to make you feel secure. I feel secure with every single investment that I have. And when I don't feel secure with it, I sell it. Just that simple. It doesn't matter if I love it, if Keith loves it, if every analyst out there loves it, if you, it's your money. If you don't feel secure, then you have to sell. And there are so many great places for you if you don't want to be in the stock market that you can be invested in. Obviously I still like intermediate bonds. I don't like long term for right now. I know you all think, but Susie used to love 20 and 30 year bonds. I know until after everything started to happen and bonds started to react differently to interest rate moves than they ever did. And so therefore I really still like the three and the five and seven year term. If you're going into Treasuries, I just do. I like that. Why? Because you can get a nice yield 4.5% or a little bit more right in there. And I like that because there is a slew of Treasuries that are coming due where people got it at zero percent, half a percent and they're coming due. And I just think eventually the long end bond is going to go up and up again and then you'll hear me say okay, now is the time but I don't want your money invested long term if you don't plan to keep it in there for the entire 20 or 30 year maturity. Because chances are if you need your money, unlike what I expected to happen, if you need your money, chances are you're going to sell at a loss. There will come a time again when the long term will be skyrocketed in my opinion, but not now. So just keep your money relatively liquid for yourself in the intermediate term bonds in the Treasury. I also think there are other things that you can invest in and especially right now. I know a lot of you have money in CDs at Alliant Credit Union that are coming due. And luckily for you, Alliant Credit Union happened to increase their interest rates about three weeks ago. For those of you who have CDs coming due at Alliant Credit Union and you want to re up, I want you to re up for the 12 month one that currently is at 4.25% for under 75,000, 4.30% for 75,000 or more. But I want you to listen to me. Remember Alliant does this crazy thing where when you do a 12 month, it can be 12 month, 13 month, 14 month, 15 month, 16 month or 17 months for the exact same interest rate. So you could lock in for 17 months at that rate. And that is a great deal. For those of you, by the way, who aren't invested yet with Alliant Credit Union you would go to Myalliant A L L I A N t dot com and do either their Ultimate Opportunity Savings account which is a fabulous deal, go there and learn about it or their certificates of deposits. But for all of you who either want to invest in a CD or are having your CD there mature and you want to re up, I want you to re up for the 12 month to 17 month. You choose your maturity there. That's what I want you to do. So there are safe places for you to keep money. You can even keep it in a money market account at 4 some odd percent. They're out there. So you don't have to have money invested in the stock market if in fact that it scares you. However, for those of you who aren't invested in individual stocks, you're invested in the Standard and Poor's 500, the spiders, for instance, symbol spy for the ETF, you've watched it go down greatly as well and that scares you and you don't know what to do and you're thinking about selling. And when you send me these emails that say, Susie, I think I'm going to sell my Spiders, I'm like, no, you have to be invested in the market. Just keep dollar cost averaging in it. And one of you wrote me and you said, Susie, isn't there something that I could buy the standard and poor's 500 and it's not as speculative as the Spiders. So here is where I really want to do a Susi school. And the Susi school is let's talk about the difference between a market weighted ETF and an equal weighted etf. Now the Standard and Poor's index is made up of 500 stocks and those 500 stocks run the gamut, mid cap, so on and so forth. When you buy the Spider Spy, that's known as a market weighted index, that etf. And what market weighted means is that they weight the amount of money that they put into each stock based on their market capitalization. So the top seven stocks of Spiders Spy are of course your magnificent seven Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla. And those seven stocks make up 31% of the SPY because they are market weighted. So when those stocks all technology go down, they crash. Of course your etf, your SPY goes down big time as well. Okay, so that's why that happens. However, there is what's known as, as an equal weighted ETF that invests in the Standard and Poor's 500 index and it's the Invesco ETF that's equal weighted symbol is RSP. Okay? And that's a fund where all 500 stocks have equal weighting. So since there's essentially 500 stocks each one of them has a 0.02% weighting. So it's not like seven stocks make up 31%. So for instance, if those seven stocks that I just mentioned, Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla were in the equal weighted ETF, they would have in total 0.02% of it in each one or a total of 0.14% in all seven versus 31% in the market weighted ETF. So when they went down this last week, the equal weighted ETF did not go down as much. So for those of you who still want to be invested in the market and you don't want those fluctuations with technology and everything, then start to invest your money in the R S. Like in Susie P. Like in profit. Right. R S, P, E, T, F. Now I personally love the spy or the VTI. I like the market weighted ETFs because I think in the long run, given where technology is going, a lot of you will probably make more money in that. However, for those of you who just want to stay invested, but you don't feel secure and you just want a truly diversified portfolio where everything is equal weighted and it's across the board, then you should look into the RSP etf. However, here's what you need to know. In the equal weighted etf, every single quarter, the fund needs to rebalance all of its stocks. So every quarter to maintain that equal weighting. Therefore their expense ratio is higher than the spy. So for instance, the RSP's expense ratio is 0.20%. The spy's expense ratio is is 0.09% because they don't really have to do anything. So that's just something that you should know. So that's a little bit of a downside, but not a big one if that's what you are looking for. So that's kind of what you need to know about the two, just in case for those of you who are interested. Well, Susie, what happened this last month? Just this last 29 days as of yesterday. Right. What happened in terms of how did the RSP do versus the spy? The spy as of yesterday was up 1.60%. Not bad for 29 days. The RSP however, was up 2.67%. So there are times when the RSP can outperform the spys. And it just depends what's happening and what the trends are. Again, I'm just going to state, I think long term the trend favors technology stocks, but you have to be willing to be on that trend and if that trend makes you feel insecure, then that is not a trend that you should be on. Just that simple. Okay, everybody, I do just want to say that in 2024, just out of curiosity, the SPYs outperform the RSPs by 12.4%. So depending on the trend, it can absolutely make a difference. Those are the things that I want you to know. What are the rules of investing, especially in this kind of market? The rules of investing are dollar cost averaging or value cost averaging. And maybe next week I'm going to give you a Susie School value cost averaging and how it differs than dollar cost averaging. So you really get the difference between the two. But this is not the market that you go in and you just put all your money in and then that's that. This is a market that you go in little by little. You keep cash on the sideline. When opportunity strikes, you take advantage of it. If you feel secure doing that. And you have faith in the stocks that you are invested in. I still have faith in Nvidia. I still have faith in Palantir. I still have faith in the stocks and the ETFs that I've talked to you about. And of course they're going to go down when things like this happen, but of course they're going to go up eventually. So I hope that's calmed you down on some level. But until Sunday when Ms. Travis joins us, there's only one thing that I want you to remember, and that's people first. And that means you, everybody. You have to know how you feel, think, and therefore how you want to act with your money. So people first, then you'll know what to do with your money and then things. So until then, there's only one thing I want you to remember, and that is this. Together we will rise we are strong.
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We are wise we will not apologize we are here we will thrive Together we will rise we're going to face and everything it takes we are strong, we are wise Together we will rise.