Podcast Episode - Ask KT & Suze Anything: Should We Stay in the Stock Market?

On this Ask KT and Suze Anything, Suze answers questions about annuities, capital gains tax, and IRA transfers.  Plus, a ROTH quizzy and so much more.

Listen to Podcast Episode:

Podcast Transcript:

Suze: December 5th, 2024. Welcome everyone.

KT: Happy birthday to you. Happy happy birthday to you. Happy to Suze. Happy half, half, half birthday to you. December 5th is her half birthday which she celebrates more than her birthday on June 5th. So happy birthday, Suze.

Suze: Thank you, my dear KT 73 and a halh. How's that feel? Pretty good? The next one? 74.

KT: Ok. All right. All right. Let's, let's get on with it. Also, my sister's coming today. Barbara's coming today.

Suze: Her little sister and today is Leslie Lynn's full birthday and Leslie is one of my oldest friends from grammar school. I love her so much. I can't tell you happy birthday, Leslie. However, where was I welcome everybody to the Women and Money podcast as well as everybody smart enough to listen today happens to be Ask KT and Suze Anything.

Suze: So, all you need to do is send in a question to ask Suze podcast at gmail.com. And if KT picks it, we will answer it on this podcast and you just never know when I will answer it personally directly to you myself.

KT: I picked a great um selection today because I picked all the ones that I didn't know the answers to. So everyone I get to. No, I get to learn a lot today.

Suze: Wait, KT. How many of the questions that come in that you look at, you, be honest with me now.

KT: 50%.

Suze: Do you know the answer to?

KT: 50%? About 50% after all these years of listening to you? I think I know about 50% soon. I'll be able to take over this podcast.

Suze: I'm sure you will. All right, sweetheart. What do you got?

KT: First one is sad, but one that I know so many people write about. It's from Katina. It's not really sad, but it's just true. She said hi, Suze. My mother's almost 71 years old and has no burial or life insurance.

KT: She keeps applying for whole life or modified whole life insurance policies. I keep trying to explain to her that she's just throwing away her money. She won't live long enough for it to pay due to her health. So, Susie, what should we be doing with her money that would pay the most towards her funeral expenses. That will ease her worries.

Suze: So, Katina, here's what I don't understand you say in this email, she won't live long enough for it to pay due to her health. That makes absolutely no sense because the reasons that she's getting this is that if she dies sooner than later, she has some money to pay for her burial. What you need to do is sit down with her and find out how much money she has.

Suze: Does she have enough money right now to pay for her funeral expenses? And just simply do a prepaid funeral, just do that so she knows that is covered and therefore she doesn't have to buy insurance anymore to do it. Obviously, she's buying the insurance that she sees on TV, for only $9.99 a month, regardless of your health conditions, you can get this policy and that's what she pays into. 

Suze: So if you don't want her to continue to do that, you have to solve her fear of why she's doing that and look at her moneyand get a prepaid funeral plan. It's as simple as that. Now, if she doesn't have enough money for a prepaid funeral plan, can you prepay her funeral for her? Do you have enough money. If you don't have enough money for that either?

Suze: Then I have to tell you maybe these little policies of $30 a month that might pay for her funeral expenses, especially if she is not healthy, might be the way to go, believe it or not. Next KT

KT: Ok. Next question is from Stephanie dear Suze. I'm so excited to finally speak to you.

Suze: Are we speaking, Steph? How are you girlfriend?

KT: I hope you have the time to answer my sincere question. A few months ago. I finally got brave enough to take control of an old 403 B I had from a job 20 years ago, I set up a roll over 401k account with Vanguard in preparation because that is where I have my Roth IRA. Thanks to you.

KT: Then I called Voya and asked them to do a custodian to custodian transfer. They tried to send me the money and I said, absolutely not. I don't want it sent anywhere other than Vanguard and gave them the address. The woman said she understood and a check would be sent out. But when she said the amount, it was less than what it should be.

KT: When I questioned her, she said they had to withhold 20%. I said, no, I'm not taking the money. I don't need taxes withheld.

KT: So at the end of the day, she said almost 8000 was left behind. I asked her what would happen to this money and she did not reply, Suze, who got it wrong? And how do I get my money back under control? Thank you for everything you've taught me.

Suze: Stephanie. I cannot tell you that the representative at Voya not necessarily Voya itself, but the person working there could not be more wrong if they tried when you do a custodian to custodian transfer, 20% is not withheld if they were to send you directly the check made out to Vanguard, 20% does not have to be withheld. The fact that they held 20%. I'll tell you what happens to that $8000. If you don't take $8000 out of your own money right now and put it into your Vanguard account out of your own money, then what's gonna happen is that $8000 is going to be taxed to you as ordinary income.

Suze: The only way around that, believe it or not is to take $8000 out of your own money right now and make up for it and put it in to the account to make up for that. But that makes absolutely no sense. I would be so aggravated at Voya's representative. I can't tell you, you need to go above this person's head. You need to go to the manager of Voya, you need to go to anybody at Voya and you need to say I want that $8000 that you withheld transferred right now into my Vanguard account right now.

Suze: You never should have withheld it. You made a mistake and you are 100% wrong. They'll know that they are wrong. It's just this one person does not understand the rules and it's just that simple, but it's very sad. People never ever make that mistake. All right, KT.

KT: Yeah, that, that's a big mistake.

Suze: Yeah, but she could take $8000 and put it in and make up the difference there. And then when she got the $8000 refund, it's just a refund to her. But if she doesn't do that, that $8000 will be taxable if she can't fix it through Voya.

KT: How much time do you have to do that?

Suze: 60 days from the day that they did the transfers.

KT: So next question from Shannon dear Suze, my financial advisor has recommended a fixed income annuity. I am retired at 67 and already getting social security plus a small pension. She says income guaranteed for life example, 360,000 into and receive 24,000 a year for life. What should I ask at our meeting?

Suze: So Shannon, here's what I want you to do. Your question to me is what should I ask at our meetings?

Suze: Even before you go into your meeting, you have to decide, do you have any beneficiaries that you want to leave this money to? Do you have children, nieces, nephews? Do you even have like a hospital or any charity that you wanna leave it to? Because guaranteed for life? Great.

Suze: However, you don't know how long your life is going to go on for. You are only 67 years of age. Hopefully you will live for a long period of time, but you could also die - accident, whatever it is very shortly. So therefore that money will be gone the day that you die. So that's a question. 

Suze: If you don't care, if you don't have beneficiaries, all you want is a guaranteed income. Ok? That is a 6.6% return on your money, but that does not take into consideration inflation or anything like that. Is it possible that you could invest that $360,000 and take out $24,000 a year for a long time and probably achieve the exact same thing. Yeah, if you know how to invest in bonds in dividend, paying stocks and things like that and you want to manage your money, you could probably do better than that, believe it or not, and have money to leave to your beneficiaries. But if you just want 24,000 a year coming in for the rest of your life and you don't have to think about it. 

Suze: Ok, I don't have a problem with that. So what should you ask at your meeting? Number one: I just think it's important for you to know how much commission this woman is going to get, if you put $360,000 into this. Next, you also say in this, right? That even though KT didn't mention it that you have another $370,000 invested in equity.

Suze: What do you have That's just safe and sound. Do you have a 12 month emergency fund? Do you have even more than that? Because if this is all you have and you have 360,000 that you're never gonna be able to touch again. 370,000 already invested in equities that hopefully are generating income for you. And something goes wrong at the time when the market has plummeted. Where is your money? Where's it gonna come from also? 

Suze: So I would just want her to look at your entire situation. Not just Shannon, just let's put this in and you have 24,000 a year. Let's look at every aspect of your financial life and you should ask her those things. How does this fit in? What happens if I need more money and you'll find out that. Really? Maybe you wanna do this, maybe you don't wanna do it with $360,000. Maybe you're like, you know what?

Suze: I'm 67. I'm getting social security. I have a small pension. I'm doing all right. Maybe, maybe I own a mortgage on my house and it's better off paying the mortgage off on my house. There are other things for you to consider. But what should I ask at our meeting? I just gave you an example of a few things that I want you to think about and what that spurs in you that you should ask. All right.

KT: Ok. Next question, I love this. Next question ready?

KT: This is from Susan. She said hi, Suze and KT. Thank you for all your knowledge within the last two years. Listen, everybody within the last two years I was able to go from $0 in retirement and investments to close to 350,000 today.

KT: She said, Suze, I wouldn't be here without you. I can't. Thank you enough. I have a question about individual brokerage account and gains. This is my first year investing into individual brokerage accounts. If I sell my stock in Palantir, ready. Thanks to your suggestions, Suze, I bought it at $16. What is it today?

Suze: It's around 70 KT.

KT: Yeah. Ok. So if I sold, do I have to pay capital gains? Can I avoid being taxed in any way? So, and then she says, thank you so much. That's from Susan.

Suze: So first, let me set the record straight, Everybody. It was Keith Fitzgerald that recommended Palantir across the board at $7 a share seven. And that's when I started to talk about it and everything even I went on CNBC and I said, everybody, you should buy it and now it's up like three or 400% since then. So hopefully you listened when we first started to talk about it or when Keith first mentioned it. So is there any way if you sell it to avoid capital gains? No, the real question is you really think you should sell it?

Suze: This is like a once in a lifetime kind of stock that very probably according to Keith will go from 70 to 85 up to in the 100 area, will it or will it not? I don't know. But Keith also has a thing of once you have doubled your money in your situation, if it went from 16 to 32 you should take those shares off the table.

Suze: And that is because now everything else that's in there, it's a free trade. You took the money, you originally invested off the table and maybe you just hold it on the sidelines for a while. And if Palantir goes back down, you reinvest it or you take that money and you invest it in something else. You could also sell half, if it's making you nervous, you don't have to be an all or nothing investor.

Suze: I own Palantir. I own a lot of Palantir, KT owns a lot of Palantir. We listened to Keith and there were many times when it went from 7 to 14 to 28 to 30 we were tempted, right? We're still holding, I'm going to listen to him about this because he chose it for a reason and I think it's up to you. But the answer to your question is if you sell it, you absolutely have to pay capital gains tax on it. All right.

KT: Hi, Suze. And, and this name I said I'm, I'm gonna use her name because I love the name Ma Angelina. I think her name, she's the mom and her email is Ma Angelina.

Suze: Hi, Mama.

KT: I'm 64 years old and I have a special needs son who's 26. I underwent a divorce a year ago. I have updated my estate trust and advanced directives with power of attorney. I have a 401k Roth IRA and an annuity with Equitable. My banker is asking me to invest in a nationwide variable annuity for my retirement which will help me with my son's future.

KT: I'm not retired yet and would like to in a year or two. Should I invest 100,000 in a variable annuity ready for this Suze? My net worth is about a million dollars.

KT: Ok. She's 64.

Suze: Look at my face,

KT: I know I'm not gonna describe,

Suze: Describe my face. Come on. Just describe it.

KT: Her face is getting red. It has that expression of like, are you kidding me?

Suze: Are you kidding me?

KT: All right. So let's tell her what to do.

Suze: Mama bear. The very first thing that's important is that you have a special needs son, which most likely means that he's on SSI social security income. All right. And if he inherits money from you after you have died, he will be disqualified from SSI and good luck ever getting back on it. So your main thing that you need to be doing is getting a special needs trust. You need to see a lawyer set up a special needs trust. So any money you have goes into the special needs trust that can be accessed by him or by somebody who's his trustee and it won't disqualify him. In terms of a variable annuity for your retirement.

Suze: Listen, I have a top 10 hate list of investments that I hate and I don't use that word lightly. I understand when I say that word that it absolutely sends Shriver, send shrivers...

KT: Shivers, shivers.

Suze: All right. So it absolutely sends splinters. It sends something and like it sends shivers down KT's spine. She hates that word hate. Ok. So one of the things that I hate the most are variable annuities. There is not one circumstance on any level where it makes sense to do. Not one, not one.

Suze: So therefore, the answer to that question is not only should you not invest $100,000 you should never ever invest in a variable annuity. If you wanna buy mutual funds, if you wanna do things like that, exchange traded funds, individual stocks, I don't have a problem with that.

Suze: I don't like variable annuities and it seems like you already have an annuity with equitable. Hopefully it's a single premium deferred annuity and not a variable annuity. All right KT, next.

KT: Ok. This is my last question.

KT: This is from Mary. Hi, KT and Suze. Stock market keeps going higher and higher. When do I take profits? I'm 57 and working full time for a modest salary. I don't need the money now, but I'm counting on it for retirement. If the market takes a major hit, how long will it take to recover?

KT: Ready, Suze? She said, I hope you have a crystal ball. I wanna say Mary, you need a crystal ball for these questions.

Suze: Well, here's what I can tell you. It is very possible if the market were to go down significantly, it could take 3, 5 or 10 years, believe it or not, for it to recover.

Suze: So you have to ask yourself the question. How long have you been invested in the stocks that you are invested in? If you were to sell some of them, would it be capital gains or ordinary income tax, number one. Because you don't want to sell it before you have held them for at least one year or longer? Ok. Next, you really have to look at your emotion quotient, which means how nervous are you?

Suze: Because the goal of money is for you to be secure. And if you currently have enough money right now that if you were to sell after taxes and you put away safe and sound that if you were counting on that money for retirement, that it would absolutely be there because it would be invested in either bonds or whatever that is absolutely safe and sound.

Suze: You are still young. You are 57 years of age. So I don't know how long you plan to work, but you may plan to work till you're 70 because that really should be the new retirement age today, everybody. Because that's when full Social Security will kick in - perfect age to retire.

Suze: The market seem like they're going to continue up into 2025. So I probably would not be selling right now if I were you. But anything could happen at any time. Sometimes when you don't know what to do, sell half. Do something that makes you feel secure. But I like that you're invested and if you're invested in stocks or even an index fund that went up 30% this year, ok. Maybe you just continue to hold on for now. But it all comes down to what stocks are you invested in? What investments do you have? And how do they make you feel at this point in time.

Suze: If you are afraid, well, there's only one way to squelch that far and that's to sell. But then you cannot look back and go. Why did I do that? So you might wanna look at, do you have anything that's doubled in value? And if it's doubled in value, do what Keith calls a free trade, sell those shares that doubled and let the rest ride. All right, KT. You know what time it is right now.

KT: Quizzy time.

Suze: Are you excited?

KT: Yes, Suze. Quizzy's are not my favorite, but I'll never stop trying. I'm gonna go for the gold ring.

Suze: Who's giving you a gold ring?

KT: The gold ring is, is a metaphor. It's a saying when you're on a merry go round, you try to grab the gold ring.

Suze: It was never gold when I went on a merry go round. So this is from Linda, which is, this is, this is my half birthday. You have to be nice to me.

KT: Ok.

Suze: Did you get me a present?

KT: I did. You'll get it, you'll get it at dinner time.

Suze: Are they my favorite things?

KT: Maybe, maybe let's not talk about it, let's not talk about.

Suze: All right. My question is, again, this is from Linda. What would be better to open a traditional Roth, a Roth IRA or mutual funds for five years? Which one would be better KT?

KT: Probably it says for five years. Oh, that's a mutual fund. Probably the Roth IRA.

Suze: Are you sure? What about traditional Roth?

KT: I think the Roth a traditional Roth. Well, one is, um, I think the Roth Ira will give her more benefits. Does say say how old she is?

Suze: No.

KT: Oh. Maybe the Roth IRA.

Suze: Maybe?

KT: Definitely. I mean, that's my final answer.

Suze: Ding Ding Ding Ding.

KT: See Roth Ira.

Suze: I gave you a ding ding ding ding. Linda, you need to listen to me. First of all, there's no such thing as a traditional Roth. It's a traditional IRA, which simply means it is pre taxed.

Suze: A Roth IRA is after tax and mutual funds are just simply an investment. What you need to understand is that within the Roth IRA, you can buy mutual funds so they're not mutually exclusive. It's not like, oh, you can just do mutual funds or you can just do a Roth. A Roth IRA is a tax free house for money and within that house you have to hold an investment and the investments you can hold are mutual funds, exchange traded funds, individual stocks, whatever it is that you want. So a Roth IRA and within the Roth IRA you decide what you want to buy. All right, everybody. Party time, party, time, party time.

Suze: Ok. Are you getting ready for your sister? She's gonna land in just a few hours.

KT: So, Suze, let's do a sister's podcast on Sunday, Sunday sisters.

Suze: With Barbara?

KT: Let's do it with Barbara. Let's tell... Barbara, by the way, everyone is the mom of Travis and Sophia, she's our little sister.

Suze: Sophia is my favorite. Travis is KT's favorite. Oh God, these kids are so great.

KT: So let's um let's do a sister's podcast. That will be fun if you want that. Everyone right into the women and Money app and tell Suze. Yes. Yes. Yes. Do it, do it, do it.

Suze: And by the way, the Women and Money app is something that I love. You can download it for free at Apple Apps or Google Play. Just search for women and Money and you are in all right, everybody. So it is my half birthday and I do have a wish.

KT: What is it?

Suze: My wish is that for all of you, for all of you to be safe and sound, to know that you all have the ability to be the masters of your own financial destiny and may financial freedom bless really every one of your doorsteps and may God bless every single one of you and may you always be unstoppable.