July 11, 2024 • 31 mins
On this edition of Ask KT and Suze Anything, Suze answers questions about paying fees for investments, types of pre-tax retirement accounts and financial intimacy. Plus, a great quizzy and so much more!
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Suze (00:46):
July 11th, 2024. Welcome everybody to the Women and Money
podcast as well as everybody smart enough to listen. This
is the,
what is it? KT?
KT (00:58):
Ask KT Anything with a bad cough and cold. I celebrated too
much on July 4th, Suze.
Suze (01:06):
You think?
KT (01:06):
Yes.
Suze (01:07):
Anyway, after July 4th, KT did catch a cold and
let's just hope she doesn't give it to me.
KT (01:15):
That's why we're as far apart in the studio as
we can be, which is a very, really small studio.
Suze (01:22):
Anyway, wait, before we begin,
I just want to thank all of you for the
tremendous love sent my way for last Sunday's podcast, which
was the loss of my good friend Judy Jacqueline Belushi.
Thanks everybody. It totally touched my heart. But before we begin,
(01:48):
we wanna wish somebody a happy birthday today.
KT (01:51):
Mila, Mila, Mila Feliz Cumpleaños. Mila is our incredible friend here
on the island and she's from Peru and she cooks
every day, the most amazing lunch. For Colo and her
husband Motto,
and Mila and Motto are Colo's best friends. And we
(02:13):
just want to wish our sweet Mila a very, very
happy and lucky day today.
Suze (02:20):
Sweet. Let's get to it, KT since we haven't been
able to do this for a little bit.
What's that that you're holding in your hand?
KT (02:29):
So, Suze, what I'm holding in my hand is a Fourth
of July story that actually came in from someone, you know,
by the name of Laurie Seligman.
Suze (02:38):
Laurie is who I lived with in Champagne Urbana. She
was my girlfriend at the time.
KT (02:42):
Yes, she said it was July 4th and off, we
went in your car. It might have been the Volvo,
I'm not sure.
Suze (02:49):
It was a 510 Datsun.
KT (02:51):
Ok. She said we, so they were going to the
stadium in Champagne Urbana. She said there was...
Suze (02:57):
KT, it's Urbana.
KT (02:58):
Allright. They were going into the stadium at in Champagne Urbanna. Well,
that's because you're from the Midwest. Everyone says Urbanna, you got (imitates a Mid-west accent) "Kaathy," right?
And Laurie wrote, Suze said we aren't going and Laurie said,
(03:20):
I wondered, you said we don't need to go inside
and she said, Suze, you parked outside and told me
it was the same sky without a parking fee and
we weren't gonna be covered in ashes. Nor was the
car when we left. And then Laurie wrote
so clever and you always were.
Suze (03:40):
Oh, sweet. Right. It's true, KT though, we went to
this little field
because in Champagne Urbana, there are fields everywhere. And I
just parked the car. We got out, I took out
a little blanket that I kept in the back of
the car. Right. Just because I for picnics and things
like that
and we lay down, looked up and literally it was
(04:02):
maybe one of the best fire work nights...
KT (04:05):
And you didn't get covered in ashes.
Suze (04:07):
And we didn't have to pay for it.
KT (04:10):
Clever, clever girl. Ok. So my first question, Suze is
from Linda.
Hi, KT and Suze. My husband and I have a
brokerage account where we pay a 0.7% fee while we
trust our financial advisor. I'm not sure it makes sense
for our children to pay a fee as they start
(04:30):
their investing careers. Any advice?
Suze (04:34):
Well, obviously their kids must be young still because they
haven't even started anything. The true advice is before they
invest any money anywhere. They should be investing in a
Roth IRA. If they have earned income, they should be
participating in their company Roth 401k or 403 B or TSP.
(04:57):
And they should absolutely be investing that way. If they
are maxing out those accounts,
then should they be paying a fee? I don't think so.
I think that they're better off just dollar cost averaging
into the Vanguard Total Stock market index fund or something
like that. Or even buying slices of stocks that they like.
(05:22):
And you know, we all love still Palantir, Tesla, Microsoft NVIDIA.
So I personally would be telling my kids how much
do you want to invest, open up an account at
a discount brokerage firm and buy slices every single month
of those accounts, especially Apple and Palantir. All right.
KT (05:44):
And wait, I have one more message for Linda
for Linda and her twin brother Bob. Happy birthday. It's
my twin Lynn and I, our birthday is July 21st.
I don't know when your birthday is, but I know
it's in July.
Suze (06:00):
Oh, sweet KT.
KT (06:03):
All right. My next question is from Sandra.
Suze (06:06):
That was a twin win.
KT (06:07):
That was a twin win. Yeah, twin win. All right.
From Sandra
question is my husband opened a small business and makes
good money. We've opened a pre tax retirement account. We
wanted the tax deduction to offset the taxes of a
new business.
Should we continue with the pretax account? Which puts $3000
(06:30):
in our pocket instead of Uncle Sam's this year? Or
should we switch to a Roth? Thank you for your help.
You are both wonderful.
Suze (06:39):
Listen, Sandra, please listen to the podcast called Don't Be
Partners with Uncle Sam.
That's obviously on the Women and Money podcast and that
will answer your question and for all of you that
are writing me, should I convert? Should I do a raw,
(07:01):
should I do a traditional, make sure you listen to
that podcast. Don't be partners with Uncle Sam and you
will have no doubt what to do after that.
Also, one more thing, a lot of you are writing
and you are asking, I have $200,000 I have X
(07:22):
amount of money. Should I be converting it? I am
not going to be answering any of those emails that
you have written that are asking me that all of
you need to go to see a CPA
and let that person know everything about your financial situation
and let them decide if financially it makes sense for
(07:45):
you in your particular situation, if you should be converting
to a Roth or not, especially when you are near retirement,
some of you need money to live on from your
retirement account. Maybe then it doesn't make sense to convert.
Some of you are a lot younger
and it will make sense to convert. But I would
(08:07):
check with a CPA to know your tax situation if
you convert and how much you should convert every single
year or not. All right, KT.
KT (08:18):
Ok. Next question from Cheryl.
Thank you, Suze and KT for sharing all your financial
wisdom and challenges in the quizzes. That's, that's for me...
Suze (08:28):
Wait till you hear her quizzy today and for all of you.
KT (08:31):
Question for you, is there an investment opportunity for high
yield notes for a minimum of $10,000
for this investment? I believe they would pay 15 percent
interest per Annum sending a check monthly. My complete investment
will be returned at maturity. So is that, is that possible, Suze?
Suze (08:54):
Listen, here's what all of you need to understand, right.
I'm gonna tell you just a little Suze Story, KT.
If it's all right with you, we'll save your voice today.
It was when I was seeing clients way, way, way
back when and an opportunity came where if a client
(09:15):
invested X amount of money,
they would get almost twice the amount of interest that
bonds and things were paying at that time. And I
thought it was such a great idea, why not?
And I did it with two people's money, KT, right?
I'll never forget this and everything was good. And then
(09:39):
all of a sudden I read in the paper how
this company has gone belly up and all of these
things and it was never a legit company to begin with.
It wasn't registered, it wasn't on the stock exchange. And
I learned a really, really big lesson at that time
and the clients lost all of their money.
(09:59):
I felt so bad about that because I hadn't done
my homework. I went for a higher yield than what
everybody was getting at the time thinking I was just
so smart. Remember everybody's got to learn,
you learn the hard way sometimes when you're kind of
starting out. And I remember once I made money, I
(10:22):
paid those clients back, everything that they had lost you
bet I did. Right. Helen Winter was one of the
women I paid back and obviously she died many years ago,
but I paid her estate back
and, um, I can't remember the name of the other woman,
but I paid her back as well. Her estate because
(10:44):
they both had died. By the time that I had
made money, they're both very wealthy women and they didn't
care because they could afford to lose the money. But
I cared.
So the answer to this question, Cheryl is you're asking,
is this too good to be true? Even the fact
that you are asking that question it is you say
(11:06):
that they're gonna pay you back 15% a year, but
they're going to pay you back monthly. Sounds like a
Ponzi scheme to me. I don't care if it's
legitimate. If it's not legitimate, you aren't to experiment on
money that you have. Do you understand me? Either? The
company is registered. It's on the stock exchange. It's a
(11:27):
legitimate bond account or whatever. I wouldn't touch it with
a 10 ft pole. Don't learn the lesson that my
two clients happened to learn. But I'm sure if this
went bad on you
and that people aren't going to give you your money back.
All right. Go on KT.
KT (11:45):
Suze. Next is from Moni. I love that name. You know,
I love that. Last week. I think last Thursday I
had a name Peachy and this week I have Moni.
Suze (11:56):
You know why I like the name Moni?
KT (11:57):
It's like money. How's your money doing, Moni? How your money?
You got money, money, money, money, money. Ok. Moni said, Suze...
If you and I had a kid? Do you think we would have
named them Bill or Penny
Suze (12:10):
or Buck?
KT (12:11):
No?
Suze (12:11):
All right.
KT (12:12):
God, that's the oldest joke you've been telling for way
too many years. All right, ready. This is for, this
is Moni's question. What are the top 3 to 5
things to do financially when getting married?
And where do we get the advice on these 3
to 5 things? So, Suze, you're gonna go for five?
Suze (12:33):
We'll see how many come out of my mouth as
I see.
KT (12:36):
What are the top three?
Suze (12:37):
What advice do you get on these things? I think
it's in the book, Courage To Be Rich. There is
a whole chapter called For Love
and Money that talks about everything that you should know
about each other. The questions you should ask one another.
All of those things before you say I do, you
(12:58):
take vows when you get married, part of the ceremony
sometimes ends with till death do us part. I have
learned
that's hopefully true. But usually that saying might be till
debt do us part. Because when you have debt, the
number one reason for divorce today and one out of
(13:22):
two people that get married, get divorced is arguments over money.
So therefore before you get married, what do you do financially?
You become as financially intimate with each other, you know,
the person's financial habits. So, what does that mean? You
(13:43):
have to know, are they a spender or are they
a saver?
Are they a big tipper? Even though they don't have money?
You have to know what are their FICO scores? You
have to each look at each other's credit reports, you
have to make sure that when you do get married,
that you pay all the bills together, you make all
(14:06):
the investment decisions together. You have to have three accounts, yours,
theirs and a joint account. You really have to know,
how do the families come into play?
Do they have big families? Are you expected to buy
gifts and do all these things for all the family
(14:26):
members at, you know, holidays and things like that? Regardless
of how much money you have, you have to know
everything about them financially intimately speaking.
And the number one thing for financial success is to
stay out of debt. If all of a sudden you
(14:48):
find that one of you is carrying a balance on
your credit cards and only paying the minimum payment due,
they have started going down the path of financial debt,
credit card debt, which really can be the ruination of
a relationship.
(15:09):
There you go. Did I miss anything, KT?
KT (15:11):
No, you covered it, Suze makes you not want to
get married
Suze (15:15):
And do not make any large purchase without the spouse saying, ok,
we can do that.
KT (15:25):
Financial intimacy is more difficult than personal intimacy. We both
learned that from years and years of listening to what husband, wives, partners,
spouses don't know about each other.
Suze (15:38):
And one last thing KT, don't spend a lot of
money on a wedding. And if anybody has to finance
the wedding by putting it on a credit card,
you cannot afford it. You are denied, don't do it,
don't do it, don't do it. Allright KT.
KT (15:59):
Ok. Next question is from John. Hi, Suze, my wife
and I recently got the trust completed. Yay John. Congratulations.
Do we put the trust as a primary beneficiary on
all accounts, brokerage, retirement savings, et cetera. I know you
have answered this before.
So if you wanna just direct me to the podcast,
(16:22):
I can try to find it. Thank you for all
you do. You are awesome.
Suze (16:26):
So John, the only advice I'm gonna tell you is yes,
in my opinion, you should put everything, meaning things that
have a title, not your car, not things like that,
but your brokerage account, your bank accounts, all of those
things in trust. The one account
(16:47):
that you have to be very, very careful of is
if you are married, you are not to put that
or in hs a
beneficiary as a revocable trust, especially the primary beneficiary needs
to be the spouse and truthfully on a retirement account.
(17:07):
If your kids are of age, meaning they are now
no longer minors. They could be the secondary beneficiaries if
you want on those accounts. But a trust
should never be a primary beneficiary in my opinion of
a retirement account of any kind or an HSA account
(17:30):
which stands for a health savings account. All right, KT.
KT (17:33):
So just to follow up to that question and answer,
this is from Carol, pick me, pick me, pick me.
I'm so confused and just want to make sure I'm
handling our estate correctly.
My husband and I live in Ohio in 2016. We
had all the must have documents completed. Now, 2024 we
(17:53):
want to change our documents to turn over to our
daughters to handle as they are of sufficient age.
I updated all of our must have documents. We contacted
a lawyer and he said a trust was not required
that transfer on death is sufficient, but informed him what
(18:14):
if one of us becomes incapacitated, will we still be
able to sell our house? He said for $350 he
can come out and discuss the reason. A trust is
not required,
Suze, what do you have to say about that?
Suze (18:30):
Listen to me closely. Everybody. Now it is true. If
all you simply want to do is avoid probate for
your children or your beneficiaries and have your assets passed
to them without probate
just then do a transfer on death account or pay
(18:51):
on death account, put them as beneficiaries of your retirement accounts,
whatever it may be life insurance and it will avoid probate.
But for me, avoiding probate is not the main reason
that you want a living revocable trust. Many people become
(19:11):
incapacitated
and who's gonna pay your bills, who's going to write
your checks for you, lot of decisions have to be made.
And while it's true that many of you think you
can avoid that
and not need to have a trust that has an
incapacity clause in it that says who will make the
(19:33):
decisions if you can't do it yourself when you're still alive,
that a general financial power of attorney or a durable
power of attorney and all those things can come into
place and that may be true.
But there are many financial institutions and I have experienced
this not 10 times, not 30 times, not even a
(19:57):
few 100 times over my career.
When there was an incapacity, the client's children had a
durable power of attorney. They had a springing power of attorney,
they took it to the bank, they did certain things
like that and the bank or the financial brokerage firm
(20:20):
did not want to accept it because they did not know,
was it still in effect or not?
Because it's possible that they could have given you power
of attorney
and taking it back
and the financial institutions don't know, is it still valid
(20:40):
or is it not? So they're very, very careful when
they have a trust,
the trust is dated and normally if there's been a
change in the trust, a new trust is provided, whatever
it may be, so they feel more secure in following
the directions of a trust than a power of attorney,
(21:04):
of any kind. So, Carol, what I would say to
you is in my opinion, there is no downside of
having a living revocable trust.
There are many, many upsides to it. Many you say
you have a power of attorney that allows your beneficiaries.
(21:24):
If you become incapacitated to buy or sell real estate,
who cares about the real estate?
I care about who's going to manage your money, who's
making those decisions, who is going to write your checks
for you, who is going to pay your bills for
you all of those things? And what happens if you
(21:50):
happen to be in an accident and you have the
pay on death account and the durable powers in everything
and you're incapacitated and that person happens to have died.
Then what happens? Have you thought it all the way
through the mere fact that this attorney said for $350
(22:10):
which is far more than you paid for. The must
have documents to come out and do such a thing,
tells the story there one last thing and I know
I'm going along with this KT, but it's important for
those of you who are being told that a living
revocable trust is not necessary.
(22:32):
What I would do is whatever lawyer is telling you
that to simply say, ok, then here's what I want
you to do on your letterhead
with you signing it. I want you to tell me
that if I were to die today,
what would my beneficiaries have to pay in probate fees
(22:55):
or for your services?
So that I know that it makes sense and I
am going to give that to my beneficiaries to make
sure that they hold you to that.
That's what I used to tell people when they would
come see me when I was seeing them as a
(23:16):
financial advisor and Janet, the trust lawyer at the time
that I shared an office with, it would be all right,
if you don't want to believe us, go to the attorney,
that's telling you that and ask them that question, what
would it cost if I become incapacitated?
(23:36):
And these documents didn't hold up, what does it cost
to go through probate to get a conservatorship and all
of those things and see what they say. It's very
easy to say you don't need one.
But what would it actually cost today? Given how you
have set everything up? And it's not just about going
(24:00):
through probate, it's about incapacity as well. Check it out
for those of you who are interested in the must
have documents that Carol is asking about. Go to must
have docs.com and that is where you will find the,
must have docs
(24:20):
$2500 worth of state of the art documents good in
all 50 states. Currently, if you go there, I believe
it's $99, right now.
KT (24:31):
It's an incredible, incredible investment and great value. Just do it.
Suze (24:37):
Right. But want to know why it's such a great investment, KT?
KT (24:40):
Because they need to.
Suze (24:41):
No, because they can share it with all their family
members every time they make a change on it, they
can come back and it doesn't cost anything, just something
to think about. All right, KT, what else do you have?
KT (24:53):
So, Susie, I have a question from Susan. Hi, Suze.
I have a 20 year $100,000 term life policy. It
has come to an end and I can't afford the
monthly amount. Can I sell it?
I've been paying $50 a month now. It's going up
to $435 a month. So I'm in a grace period
(25:15):
of 30 days. What should I do? Any advice?
Suze (25:19):
I hope that this came June 14th. So you're still,
you're still a good girlfriend. You have just a few
days left, obviously. So here's the thing.
The first question is why do you need insurance? I
get that you needed it 20 years ago. But now
do you still need it if you were to die?
(25:40):
Is there somebody still financially dependent upon you? If the
answer to that question is no, then you don't need
any type of insurance anymore whatsoever. I don't think you
can sell it
because it's already come due. It's up. If let's say
(26:02):
you had a 20 year level term policy, you were
five years into it and maybe you wanted to sell it.
There are places that you can sell it. Normally people
can sell it when it's a whole life or a
universal life or whenever it may be. But there are
some companies that will purchase
(26:23):
term life insurances through what's called life settlements, the best
known companies. And one of the largest is Coventry Direct.
There's Abacos Life and all kinds of ones like that.
But those two really are the biggest. But at this point,
I don't think you can, but hopefully you do not
(26:45):
need life insurance any more. All right. Ready for your quizzy?
KT (26:51):
I think my voice is gone. Right. All right, I'll
give it a shot.
Suze (26:55):
All right, everybody. This is for KT and all of you.
Very short.
Hi KT and Suze, this is from Kathy. Is it
ok to have taxable bonds in my Roth Ira. You
should see her face. Think about it, KT. A Roth
(27:17):
IRA
is a tax free retirement account.
You invest in it, you buy things in it and
when you go to take it out, if you've had it,
had it for at least five years and you're 59.5,
everything in it is tax free. But can you put
a taxable bond in a Roth?
KT (27:41):
Well, you know what, Suze? It sounds like. It's a no,
but I'm gonna say yes because it's a bond.
Suze (27:49):
No, not because it's a bond.
KT (27:51):
It's a taxable bond.
Suze (27:53):
All right. But you're gonna say yes. But you're not
sure why you're saying yes. Come on. Just be honest.
It's a yes or no?
KT (27:59):
I'm going for the yes.
Suze (28:01):
Ding, ding, ding, ding it. Right. But for the wrong
reason.
KT (28:07):
Yeah, I guessed it.
Suze (28:07):
Listen, you guessed it. I need everybody to use their
logic here who just guessed it?
KT (28:17):
And I'm not ashamed to tell you all that.
Suze (28:20):
They're not ashamed to hear it either. Which is
everything outside of a Roth IRA is taxable. If you
buy stock and you do whatever with it, KT you're
gonna pay income tax on it. If you buy a
bond within a
additional IRA, a taxable bond, you don't pay taxes while
(28:43):
it's in there. But when you go to take it
out everything you take out, you pay tax on it
as ordinary income, no matter what you put in a
Roth Ira doesn't matter if it's taxable.
It doesn't. Oh, now she's laughing.
Oh my God.
(29:05):
I.. tell everybody why you're laughing.
KT (29:07):
Don't make me laugh.
I can't, my, my laugh sounds horrible. Um I have
a cold. All right. Just get to the point.
Suze (29:16):
The point is because I brought is a tax free
holding vehicle no matter what investments you put in there
become tax free. The only investment you would not put
in there is a municipal bond because it's already tax
free and the interest rates are lower. So, yeah. Is
(29:36):
it ok to put in a taxable bond?
Yeah. And you pick this and it makes sense because
her name is Kathy.
KT (29:45):
The reason I'm giggling here because Suze, Suze knows, I
would never know the answer to that one.
Suze (29:53):
Suze doesn't understand why you would not.
KT (29:57):
If any of you out there knew that answer. Let
me know. I want to know how many, what percentage
of listeners knew that answer.
Suze (30:05):
Maybe I'll put a poll on the Women and Money app.
But KT there's no such thing as tax on a
Roth IRA if you meet the guidelines. So, what difference
would it have made?
KT (30:20):
Ok. You're right.
Suze (30:22):
Of course, I'm right. Oh God. See. And it's, what
are you gonna say about it? It's my fault. Right.
KT (30:30):
I lost my voice. Now. I can't talk it. I
can't talk and you're not supposed to whisper when you
lose your voice. It's worse.
I can't talk.
Suze (30:40):
Don't whisper.
KT (30:42):
Let's tell them how I'm going to be unstoppable.
Suze (30:45):
All right, everybody. So until Sunday for another Susie school,
I have to decide what that is going to be.
I have no idea yet.
There's only really one thing that we want. You to
remember when it comes to your money and that is
anything that you put in a Roth IRA if you
follow the guidelines is tax free, so stop it everybody
(31:08):
just understand that and just know it's people first then
things
KT (31:16):
and if you follow those rules and listen to that
Roth business,
you will be unstoppable.
July 11th, 2024. Welcome everybody to the Women and Money
podcast as well as everybody smart enough to listen. This
is the,
what is it? KT?
KT (00:58):
Ask KT Anything with a bad cough and cold. I celebrated too
much on July 4th, Suze.
Suze (01:06):
You think?
KT (01:06):
Yes.
Suze (01:07):
Anyway, after July 4th, KT did catch a cold and
let's just hope she doesn't give it to me.
KT (01:15):
That's why we're as far apart in the studio as
we can be, which is a very, really small studio.
Suze (01:22):
Anyway, wait, before we begin,
I just want to thank all of you for the
tremendous love sent my way for last Sunday's podcast, which
was the loss of my good friend Judy Jacqueline Belushi.
Thanks everybody. It totally touched my heart. But before we begin,
(01:48):
we wanna wish somebody a happy birthday today.
KT (01:51):
Mila, Mila, Mila Feliz Cumpleaños. Mila is our incredible friend here
on the island and she's from Peru and she cooks
every day, the most amazing lunch. For Colo and her
husband Motto,
and Mila and Motto are Colo's best friends. And we
(02:13):
just want to wish our sweet Mila a very, very
happy and lucky day today.
Suze (02:20):
Sweet. Let's get to it, KT since we haven't been
able to do this for a little bit.
What's that that you're holding in your hand?
KT (02:29):
So, Suze, what I'm holding in my hand is a Fourth
of July story that actually came in from someone, you know,
by the name of Laurie Seligman.
Suze (02:38):
Laurie is who I lived with in Champagne Urbana. She
was my girlfriend at the time.
KT (02:42):
Yes, she said it was July 4th and off, we
went in your car. It might have been the Volvo,
I'm not sure.
Suze (02:49):
It was a 510 Datsun.
KT (02:51):
Ok. She said we, so they were going to the
stadium in Champagne Urbana. She said there was...
Suze (02:57):
KT, it's Urbana.
KT (02:58):
Allright. They were going into the stadium at in Champagne Urbanna. Well,
that's because you're from the Midwest. Everyone says Urbanna, you got (imitates a Mid-west accent) "Kaathy," right?
And Laurie wrote, Suze said we aren't going and Laurie said,
(03:20):
I wondered, you said we don't need to go inside
and she said, Suze, you parked outside and told me
it was the same sky without a parking fee and
we weren't gonna be covered in ashes. Nor was the
car when we left. And then Laurie wrote
so clever and you always were.
Suze (03:40):
Oh, sweet. Right. It's true, KT though, we went to
this little field
because in Champagne Urbana, there are fields everywhere. And I
just parked the car. We got out, I took out
a little blanket that I kept in the back of
the car. Right. Just because I for picnics and things
like that
and we lay down, looked up and literally it was
(04:02):
maybe one of the best fire work nights...
KT (04:05):
And you didn't get covered in ashes.
Suze (04:07):
And we didn't have to pay for it.
KT (04:10):
Clever, clever girl. Ok. So my first question, Suze is
from Linda.
Hi, KT and Suze. My husband and I have a
brokerage account where we pay a 0.7% fee while we
trust our financial advisor. I'm not sure it makes sense
for our children to pay a fee as they start
(04:30):
their investing careers. Any advice?
Suze (04:34):
Well, obviously their kids must be young still because they
haven't even started anything. The true advice is before they
invest any money anywhere. They should be investing in a
Roth IRA. If they have earned income, they should be
participating in their company Roth 401k or 403 B or TSP.
(04:57):
And they should absolutely be investing that way. If they
are maxing out those accounts,
then should they be paying a fee? I don't think so.
I think that they're better off just dollar cost averaging
into the Vanguard Total Stock market index fund or something
like that. Or even buying slices of stocks that they like.
(05:22):
And you know, we all love still Palantir, Tesla, Microsoft NVIDIA.
So I personally would be telling my kids how much
do you want to invest, open up an account at
a discount brokerage firm and buy slices every single month
of those accounts, especially Apple and Palantir. All right.
KT (05:44):
And wait, I have one more message for Linda
for Linda and her twin brother Bob. Happy birthday. It's
my twin Lynn and I, our birthday is July 21st.
I don't know when your birthday is, but I know
it's in July.
Suze (06:00):
Oh, sweet KT.
KT (06:03):
All right. My next question is from Sandra.
Suze (06:06):
That was a twin win.
KT (06:07):
That was a twin win. Yeah, twin win. All right.
From Sandra
question is my husband opened a small business and makes
good money. We've opened a pre tax retirement account. We
wanted the tax deduction to offset the taxes of a
new business.
Should we continue with the pretax account? Which puts $3000
(06:30):
in our pocket instead of Uncle Sam's this year? Or
should we switch to a Roth? Thank you for your help.
You are both wonderful.
Suze (06:39):
Listen, Sandra, please listen to the podcast called Don't Be
Partners with Uncle Sam.
That's obviously on the Women and Money podcast and that
will answer your question and for all of you that
are writing me, should I convert? Should I do a raw,
(07:01):
should I do a traditional, make sure you listen to
that podcast. Don't be partners with Uncle Sam and you
will have no doubt what to do after that.
Also, one more thing, a lot of you are writing
and you are asking, I have $200,000 I have X
(07:22):
amount of money. Should I be converting it? I am
not going to be answering any of those emails that
you have written that are asking me that all of
you need to go to see a CPA
and let that person know everything about your financial situation
and let them decide if financially it makes sense for
(07:45):
you in your particular situation, if you should be converting
to a Roth or not, especially when you are near retirement,
some of you need money to live on from your
retirement account. Maybe then it doesn't make sense to convert.
Some of you are a lot younger
and it will make sense to convert. But I would
(08:07):
check with a CPA to know your tax situation if
you convert and how much you should convert every single
year or not. All right, KT.
KT (08:18):
Ok. Next question from Cheryl.
Thank you, Suze and KT for sharing all your financial
wisdom and challenges in the quizzes. That's, that's for me...
Suze (08:28):
Wait till you hear her quizzy today and for all of you.
KT (08:31):
Question for you, is there an investment opportunity for high
yield notes for a minimum of $10,000
for this investment? I believe they would pay 15 percent
interest per Annum sending a check monthly. My complete investment
will be returned at maturity. So is that, is that possible, Suze?
Suze (08:54):
Listen, here's what all of you need to understand, right.
I'm gonna tell you just a little Suze Story, KT.
If it's all right with you, we'll save your voice today.
It was when I was seeing clients way, way, way
back when and an opportunity came where if a client
(09:15):
invested X amount of money,
they would get almost twice the amount of interest that
bonds and things were paying at that time. And I
thought it was such a great idea, why not?
And I did it with two people's money, KT, right?
I'll never forget this and everything was good. And then
(09:39):
all of a sudden I read in the paper how
this company has gone belly up and all of these
things and it was never a legit company to begin with.
It wasn't registered, it wasn't on the stock exchange. And
I learned a really, really big lesson at that time
and the clients lost all of their money.
(09:59):
I felt so bad about that because I hadn't done
my homework. I went for a higher yield than what
everybody was getting at the time thinking I was just
so smart. Remember everybody's got to learn,
you learn the hard way sometimes when you're kind of
starting out. And I remember once I made money, I
(10:22):
paid those clients back, everything that they had lost you
bet I did. Right. Helen Winter was one of the
women I paid back and obviously she died many years ago,
but I paid her estate back
and, um, I can't remember the name of the other woman,
but I paid her back as well. Her estate because
(10:44):
they both had died. By the time that I had
made money, they're both very wealthy women and they didn't
care because they could afford to lose the money. But
I cared.
So the answer to this question, Cheryl is you're asking,
is this too good to be true? Even the fact
that you are asking that question it is you say
(11:06):
that they're gonna pay you back 15% a year, but
they're going to pay you back monthly. Sounds like a
Ponzi scheme to me. I don't care if it's
legitimate. If it's not legitimate, you aren't to experiment on
money that you have. Do you understand me? Either? The
company is registered. It's on the stock exchange. It's a
(11:27):
legitimate bond account or whatever. I wouldn't touch it with
a 10 ft pole. Don't learn the lesson that my
two clients happened to learn. But I'm sure if this
went bad on you
and that people aren't going to give you your money back.
All right. Go on KT.
KT (11:45):
Suze. Next is from Moni. I love that name. You know,
I love that. Last week. I think last Thursday I
had a name Peachy and this week I have Moni.
Suze (11:56):
You know why I like the name Moni?
KT (11:57):
It's like money. How's your money doing, Moni? How your money?
You got money, money, money, money, money. Ok. Moni said, Suze...
If you and I had a kid? Do you think we would have
named them Bill or Penny
Suze (12:10):
or Buck?
KT (12:11):
No?
Suze (12:11):
All right.
KT (12:12):
God, that's the oldest joke you've been telling for way
too many years. All right, ready. This is for, this
is Moni's question. What are the top 3 to 5
things to do financially when getting married?
And where do we get the advice on these 3
to 5 things? So, Suze, you're gonna go for five?
Suze (12:33):
We'll see how many come out of my mouth as
I see.
KT (12:36):
What are the top three?
Suze (12:37):
What advice do you get on these things? I think
it's in the book, Courage To Be Rich. There is
a whole chapter called For Love
and Money that talks about everything that you should know
about each other. The questions you should ask one another.
All of those things before you say I do, you
(12:58):
take vows when you get married, part of the ceremony
sometimes ends with till death do us part. I have
learned
that's hopefully true. But usually that saying might be till
debt do us part. Because when you have debt, the
number one reason for divorce today and one out of
(13:22):
two people that get married, get divorced is arguments over money.
So therefore before you get married, what do you do financially?
You become as financially intimate with each other, you know,
the person's financial habits. So, what does that mean? You
(13:43):
have to know, are they a spender or are they
a saver?
Are they a big tipper? Even though they don't have money?
You have to know what are their FICO scores? You
have to each look at each other's credit reports, you
have to make sure that when you do get married,
that you pay all the bills together, you make all
(14:06):
the investment decisions together. You have to have three accounts, yours,
theirs and a joint account. You really have to know,
how do the families come into play?
Do they have big families? Are you expected to buy
gifts and do all these things for all the family
(14:26):
members at, you know, holidays and things like that? Regardless
of how much money you have, you have to know
everything about them financially intimately speaking.
And the number one thing for financial success is to
stay out of debt. If all of a sudden you
(14:48):
find that one of you is carrying a balance on
your credit cards and only paying the minimum payment due,
they have started going down the path of financial debt,
credit card debt, which really can be the ruination of
a relationship.
(15:09):
There you go. Did I miss anything, KT?
KT (15:11):
No, you covered it, Suze makes you not want to
get married
Suze (15:15):
And do not make any large purchase without the spouse saying, ok,
we can do that.
KT (15:25):
Financial intimacy is more difficult than personal intimacy. We both
learned that from years and years of listening to what husband, wives, partners,
spouses don't know about each other.
Suze (15:38):
And one last thing KT, don't spend a lot of
money on a wedding. And if anybody has to finance
the wedding by putting it on a credit card,
you cannot afford it. You are denied, don't do it,
don't do it, don't do it. Allright KT.
KT (15:59):
Ok. Next question is from John. Hi, Suze, my wife
and I recently got the trust completed. Yay John. Congratulations.
Do we put the trust as a primary beneficiary on
all accounts, brokerage, retirement savings, et cetera. I know you
have answered this before.
So if you wanna just direct me to the podcast,
(16:22):
I can try to find it. Thank you for all
you do. You are awesome.
Suze (16:26):
So John, the only advice I'm gonna tell you is yes,
in my opinion, you should put everything, meaning things that
have a title, not your car, not things like that,
but your brokerage account, your bank accounts, all of those
things in trust. The one account
(16:47):
that you have to be very, very careful of is
if you are married, you are not to put that
or in hs a
beneficiary as a revocable trust, especially the primary beneficiary needs
to be the spouse and truthfully on a retirement account.
(17:07):
If your kids are of age, meaning they are now
no longer minors. They could be the secondary beneficiaries if
you want on those accounts. But a trust
should never be a primary beneficiary in my opinion of
a retirement account of any kind or an HSA account
(17:30):
which stands for a health savings account. All right, KT.
KT (17:33):
So just to follow up to that question and answer,
this is from Carol, pick me, pick me, pick me.
I'm so confused and just want to make sure I'm
handling our estate correctly.
My husband and I live in Ohio in 2016. We
had all the must have documents completed. Now, 2024 we
(17:53):
want to change our documents to turn over to our
daughters to handle as they are of sufficient age.
I updated all of our must have documents. We contacted
a lawyer and he said a trust was not required
that transfer on death is sufficient, but informed him what
(18:14):
if one of us becomes incapacitated, will we still be
able to sell our house? He said for $350 he
can come out and discuss the reason. A trust is
not required,
Suze, what do you have to say about that?
Suze (18:30):
Listen to me closely. Everybody. Now it is true. If
all you simply want to do is avoid probate for
your children or your beneficiaries and have your assets passed
to them without probate
just then do a transfer on death account or pay
(18:51):
on death account, put them as beneficiaries of your retirement accounts,
whatever it may be life insurance and it will avoid probate.
But for me, avoiding probate is not the main reason
that you want a living revocable trust. Many people become
(19:11):
incapacitated
and who's gonna pay your bills, who's going to write
your checks for you, lot of decisions have to be made.
And while it's true that many of you think you
can avoid that
and not need to have a trust that has an
incapacity clause in it that says who will make the
(19:33):
decisions if you can't do it yourself when you're still alive,
that a general financial power of attorney or a durable
power of attorney and all those things can come into
place and that may be true.
But there are many financial institutions and I have experienced
this not 10 times, not 30 times, not even a
(19:57):
few 100 times over my career.
When there was an incapacity, the client's children had a
durable power of attorney. They had a springing power of attorney,
they took it to the bank, they did certain things
like that and the bank or the financial brokerage firm
(20:20):
did not want to accept it because they did not know,
was it still in effect or not?
Because it's possible that they could have given you power
of attorney
and taking it back
and the financial institutions don't know, is it still valid
(20:40):
or is it not? So they're very, very careful when
they have a trust,
the trust is dated and normally if there's been a
change in the trust, a new trust is provided, whatever
it may be, so they feel more secure in following
the directions of a trust than a power of attorney,
(21:04):
of any kind. So, Carol, what I would say to
you is in my opinion, there is no downside of
having a living revocable trust.
There are many, many upsides to it. Many you say
you have a power of attorney that allows your beneficiaries.
(21:24):
If you become incapacitated to buy or sell real estate,
who cares about the real estate?
I care about who's going to manage your money, who's
making those decisions, who is going to write your checks
for you, who is going to pay your bills for
you all of those things? And what happens if you
(21:50):
happen to be in an accident and you have the
pay on death account and the durable powers in everything
and you're incapacitated and that person happens to have died.
Then what happens? Have you thought it all the way
through the mere fact that this attorney said for $350
(22:10):
which is far more than you paid for. The must
have documents to come out and do such a thing,
tells the story there one last thing and I know
I'm going along with this KT, but it's important for
those of you who are being told that a living
revocable trust is not necessary.
(22:32):
What I would do is whatever lawyer is telling you
that to simply say, ok, then here's what I want
you to do on your letterhead
with you signing it. I want you to tell me
that if I were to die today,
what would my beneficiaries have to pay in probate fees
(22:55):
or for your services?
So that I know that it makes sense and I
am going to give that to my beneficiaries to make
sure that they hold you to that.
That's what I used to tell people when they would
come see me when I was seeing them as a
(23:16):
financial advisor and Janet, the trust lawyer at the time
that I shared an office with, it would be all right,
if you don't want to believe us, go to the attorney,
that's telling you that and ask them that question, what
would it cost if I become incapacitated?
(23:36):
And these documents didn't hold up, what does it cost
to go through probate to get a conservatorship and all
of those things and see what they say. It's very
easy to say you don't need one.
But what would it actually cost today? Given how you
have set everything up? And it's not just about going
(24:00):
through probate, it's about incapacity as well. Check it out
for those of you who are interested in the must
have documents that Carol is asking about. Go to must
have docs.com and that is where you will find the,
must have docs
(24:20):
$2500 worth of state of the art documents good in
all 50 states. Currently, if you go there, I believe
it's $99, right now.
KT (24:31):
It's an incredible, incredible investment and great value. Just do it.
Suze (24:37):
Right. But want to know why it's such a great investment, KT?
KT (24:40):
Because they need to.
Suze (24:41):
No, because they can share it with all their family
members every time they make a change on it, they
can come back and it doesn't cost anything, just something
to think about. All right, KT, what else do you have?
KT (24:53):
So, Susie, I have a question from Susan. Hi, Suze.
I have a 20 year $100,000 term life policy. It
has come to an end and I can't afford the
monthly amount. Can I sell it?
I've been paying $50 a month now. It's going up
to $435 a month. So I'm in a grace period
(25:15):
of 30 days. What should I do? Any advice?
Suze (25:19):
I hope that this came June 14th. So you're still,
you're still a good girlfriend. You have just a few
days left, obviously. So here's the thing.
The first question is why do you need insurance? I
get that you needed it 20 years ago. But now
do you still need it if you were to die?
(25:40):
Is there somebody still financially dependent upon you? If the
answer to that question is no, then you don't need
any type of insurance anymore whatsoever. I don't think you
can sell it
because it's already come due. It's up. If let's say
(26:02):
you had a 20 year level term policy, you were
five years into it and maybe you wanted to sell it.
There are places that you can sell it. Normally people
can sell it when it's a whole life or a
universal life or whenever it may be. But there are
some companies that will purchase
(26:23):
term life insurances through what's called life settlements, the best
known companies. And one of the largest is Coventry Direct.
There's Abacos Life and all kinds of ones like that.
But those two really are the biggest. But at this point,
I don't think you can, but hopefully you do not
(26:45):
need life insurance any more. All right. Ready for your quizzy?
KT (26:51):
I think my voice is gone. Right. All right, I'll
give it a shot.
Suze (26:55):
All right, everybody. This is for KT and all of you.
Very short.
Hi KT and Suze, this is from Kathy. Is it
ok to have taxable bonds in my Roth Ira. You
should see her face. Think about it, KT. A Roth
(27:17):
IRA
is a tax free retirement account.
You invest in it, you buy things in it and
when you go to take it out, if you've had it,
had it for at least five years and you're 59.5,
everything in it is tax free. But can you put
a taxable bond in a Roth?
KT (27:41):
Well, you know what, Suze? It sounds like. It's a no,
but I'm gonna say yes because it's a bond.
Suze (27:49):
No, not because it's a bond.
KT (27:51):
It's a taxable bond.
Suze (27:53):
All right. But you're gonna say yes. But you're not
sure why you're saying yes. Come on. Just be honest.
It's a yes or no?
KT (27:59):
I'm going for the yes.
Suze (28:01):
Ding, ding, ding, ding it. Right. But for the wrong
reason.
KT (28:07):
Yeah, I guessed it.
Suze (28:07):
Listen, you guessed it. I need everybody to use their
logic here who just guessed it?
KT (28:17):
And I'm not ashamed to tell you all that.
Suze (28:20):
They're not ashamed to hear it either. Which is
everything outside of a Roth IRA is taxable. If you
buy stock and you do whatever with it, KT you're
gonna pay income tax on it. If you buy a
bond within a
additional IRA, a taxable bond, you don't pay taxes while
(28:43):
it's in there. But when you go to take it
out everything you take out, you pay tax on it
as ordinary income, no matter what you put in a
Roth Ira doesn't matter if it's taxable.
It doesn't. Oh, now she's laughing.
Oh my God.
(29:05):
I.. tell everybody why you're laughing.
KT (29:07):
Don't make me laugh.
I can't, my, my laugh sounds horrible. Um I have
a cold. All right. Just get to the point.
Suze (29:16):
The point is because I brought is a tax free
holding vehicle no matter what investments you put in there
become tax free. The only investment you would not put
in there is a municipal bond because it's already tax
free and the interest rates are lower. So, yeah. Is
(29:36):
it ok to put in a taxable bond?
Yeah. And you pick this and it makes sense because
her name is Kathy.
KT (29:45):
The reason I'm giggling here because Suze, Suze knows, I
would never know the answer to that one.
Suze (29:53):
Suze doesn't understand why you would not.
KT (29:57):
If any of you out there knew that answer. Let
me know. I want to know how many, what percentage
of listeners knew that answer.
Suze (30:05):
Maybe I'll put a poll on the Women and Money app.
But KT there's no such thing as tax on a
Roth IRA if you meet the guidelines. So, what difference
would it have made?
KT (30:20):
Ok. You're right.
Suze (30:22):
Of course, I'm right. Oh God. See. And it's, what
are you gonna say about it? It's my fault. Right.
KT (30:30):
I lost my voice. Now. I can't talk it. I
can't talk and you're not supposed to whisper when you
lose your voice. It's worse.
I can't talk.
Suze (30:40):
Don't whisper.
KT (30:42):
Let's tell them how I'm going to be unstoppable.
Suze (30:45):
All right, everybody. So until Sunday for another Susie school,
I have to decide what that is going to be.
I have no idea yet.
There's only really one thing that we want. You to
remember when it comes to your money and that is
anything that you put in a Roth IRA if you
follow the guidelines is tax free, so stop it everybody
(31:08):
just understand that and just know it's people first then
things
KT (31:16):
and if you follow those rules and listen to that
Roth business,
you will be unstoppable.
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