Podcast Episode - Suze School: Your 2024 Financial Game Plan

In this episode, Suze goes deep on what investments, like dividend paying stocks, you should consider having in your retirement accounts, so you can be ready for next year.

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Podcast Transcript:

December 10th 2023. Welcome everybody to the Women and Money podcast as well as everyone smart enough to listen. Suze O here and today is Suze School. So take out your Suze notebooks because I have a feeling you are going to need them.

Now, a few comments on the women and Money community app have been, " Suze, We love this podcast, but we need more financial guidance as to what stocks to buy things like that." Ok, I hear you.

However, I have given you some stock picks in the past but to that end, we then decided, ok, let's do a poll and let's see if all of you or some of you, how you would vote would like a service that gave you the stocks for, uh let's say an ultimate opportunity, portfolio like 10 or 15 stocks that every single one of you should have and when you should buy them, how you should buy them, possibly when you should sell them and guidance such as that.

And so we did it, we put a poll up on the women and money community app and by the way, if you're not part of it, you should download that app because a lot of things happen there that you just might want to be aware of. Anyway, the thousands of you that voted and there were so many that voted, I can't believe it. 96% of you said. Yes, absolutely do that. So I have started to work on that for you and maybe that will appear March, April or May of next year. Let's keep our fingers crossed.

Ok? But for right now, let me just give you an overview of what I really, really think is happening.

I really think that inflation is coming down. Why do I think that because KT went into the store the other day and bought a dozen eggs and they were only $6.

So when eggs start to come down, gasoline is coming down overall, I do think inflation is coming down, which is why I did not want you to buy Series I bonds. I stands for inflation because I thought that there would be better investments out there as you know, next week. Or maybe you don't know, the feds will be announcing if they are going to be raising the fed funds rate or will they be holding or will they be decreasing? I have absolutely no doubt in my opinion. We'll see if I'm right or wrong that the feds will absolutely hold where they are right now, they won't make a change. But in 2024 which is only a few days away, they will make several, several cuts over that next year.

And the question has to be asked and answered. Well, how will that affect all of you?

And so given that and given that we've already seen interest rates start to come down. I mean, and I think it was the last Suze School podcast that I did. I was telling you what I thought about people who had money and money market funds, people who had money and short term treasury bills that eventually the interest rates on money market funds and short term treasury bills will come down and down and then when you go to renew the interest rates won't be as high. And then what will you do?

There's approximately $6 trillion in those kinds of investments. And I have absolutely no doubt that when interest rates really do start to come down and the people in those investments are no longer happy with the interest rate that they are getting, that money will flow where it will flow into growth stocks that pay a dividend yield. Listen closely everybody.

It will not just flow into technology stocks, it will flow into growth stocks, stocks that will go up but also pay a dividend to replace the income that they were getting from their treasury bills and money market accounts. Does that make sense to you?

I hope so because that's exactly what I think is going to happen now, for those of you who don't know what a dividend stock is, is that as, you know, a stock is in equity, you get to buy it on the stock market and you own a little tiny piece of equity in that company. Just that simple. And some companies when they're making enough money, they distribute some of their earnings, some of their profits back to their shareholders in the form of what's known as a dividend. Most dividends are paid every three months to you.

Some companies pay their dividends monthly. It just depends on the company. That's number one. If you look in the past year, if you just look at the mutual funds, the exchange traded funds, whatever it may be that have been dividend paying or dividend oriented stocks or mutual funds or exchange traded funds. They did not do squat, they were just kind of solid for the year. They didn't really go up, they didn't really go down that much, but they did not perform. And why was that? Everybody? It was because people did not have to risk their money in the stock market in order to get a safe income.

And that's what especially a lot of people that listen to this particular podcast.

You were looking for safe money. Why risk it when you could get 5.5% or so. In short term treasury bills and 5% in money market funds without having to lock up your money, you still can get 5.3% or 5.35% in the 18 month to 23 months certificate of deposit at Alliant Credit Union.

And I have suggest to you over and over and over and over again. You should absolutely, if you are still looking for a high yield, that's going to stay there for at least 18 months to almost two years, depending on which maturity you get.

That. You should really take advantage of it. Now, before they probably will lower those rates you do. So by going to my alliant.com, that's myalliant.com and you should think about that. Now, that would be for money that you don't think you need for two years, but it's now paying you more than a two year treasury note, a two year Treasury note right now is paying about 4.6%. And even though I know that treasury notes are state tax free, the difference in the interest rate from 4.6 to either 5.3 or 5.35% for deposits of $75,000 or more. That's why there's a little interest rate difference there that most of you will come out equal even if you are in a relatively high state income tax bracket just say everybody, but that is not the point that I really wanna make here.

A lot of money $6 trillion is going to go where into growth? Dividend stocks growth are stocks that you expect to grow. They will go from $20 to 22 or $23 a share and continue up there.

Now, that means I really think your game plan for a specific part of your money, not all of it should be looking to be geared at dividend growth stocks. Now, I have given you the name in past podcasts of what I feel are some pretty good dividend paying growth stocks and just to reiterate those stocks were Verizon, Pfizer

Reality Income Care Trust just to name a few.

So a portion of your money needs to go into growth dividend paying stocks or ETFs or mutual funds. And even though they did not perform for you last year,

I have a feeling that as interest rates again start to go down, the feds start to decrease their interest rates, guess what? Those stocks are positioned to take off again because that's where I think the six trillion dollars is going to go. That is currently in money market funds and short term tea bills. Now the role that dividends play in your life and why for the past year

or more, actually, it's probably been the past four years. In fact, it's been for the past 20 years because every time I was on the Suze Orman Show and I would tell you what to invest in and things like that. What would I say? Dividends, dividends, dividends. And the reason that I love dividend paying stocks is that when these markets do go against you and they do start to go down, which we have seen many times happen in the four years now that we have been together, at least you are still getting income from those stocks. And if it's a good quality growth dividend stock, even if it goes way down and the dividend has been safe, you still get your income and that income allows you time to let that stock recover and possibly make you money on that end as well.

But what is key? What is really, really key when you purchase a dividend paying stock, especially if you do not currently need the income. You listen closely to me right now, you have got to reinvest those dividends into that stock. You are not to take the dividend in interest and then do what with it, leave it in your money market account whose interest rate is going to start to go down in my opinion. No, you invest it back into that stock so that the dividend is also earning a dividend that is called compounding.

Now, you may not know this. But if you were to look at a chart going all the way back to 1926. That is a long time ago. And if you looked at that chart, you would see that over all these years, how the standard and Poor's 500 index has climbed up and up and up over the decades. So the truth of the matter is the stock market does go up over time, doesn't want to go down over time. If you look at that chart, it wants to go up and up and up. I remember when I first started in 1980 the Dow Jones Industrial Average, which is another index that many of you follow was at like 800. I'll never forget the day that it passed 1000 and the whole room erupted. Are you kidding?

And do you know where the Dow Jones Industrial average is today? It's at 36,247 as the years went on, there was somebody who wrote a thesis saying one day the Dow Jones Industrial average would be at 35,000 and I'll never forget thinking. Oh, yeah. Right. And I have a bridge to sell you. Well, look at it now, the Standard and Poor's 500 index back then, believe it or not was at 118 today. It is at 4604. And that's just from 1980 till now.

So think about if you were to chart that the chart goes up and up and up. So over time when you bet against the stock market for the long run. You are betting against yourself and making money if you ask me. But what's really important to realize is that a good portion of those gains is due to dividends? So now going back to 1926 the total dividend contribution to the Standard and Poor's 500 index stands at 31.6%. Those dividends are responsible for nearly one third. Let's say your retirement account is invested in this one third of your retirement portfolio gains.

So if you are not focused on dividends, all right, we have problems here, then that's why you hear me harping on dividends, dividends, dividends. OK? So we have a game plan here that I've just given you as to what I think is going to happen in 2024 and how I want you to start thinking about your money.

The next thing that I want you to be aware of is that a lot of, you know, that I have wanted you to invest in either the vanguard total stock market index fund or the Standard and Poor's 500 index fund. And that is where if you wanted an index fund, I wanted you to go.

And I would tell you that the reason I wanted you to invest in that is because their top 10 holdings, many of them were invested in Apple Microsoft Meta Amazon and those stocks because it was those stocks. Do you know that just seven stocks? Apple,

Google, Microsoft, Amazon, Meta, Tesla and NVIDIA. Those seven stocks versus the 493 other stocks in the Standard and Poor's 500 index. Remember there's 500 stocks in that index. Do you know that those seven stocks in comparison to the 493 stocks?

Those seven stocks had a 71% gain. The 493 stocks had only a 6% gain.

So if you are wondering why you saw the Standard and Poor's 500 index go up and up and up, but you were invested in all different kinds of stocks, but yet you didn't see your stocks go up that much because probably one of your stocks was part of the 493 stocks versus one of the seven stocks that dominated the market.

Now, the question again has to be asked and answered. Will those seven stocks continue to dominate the market again in 2024?

And I have a feeling they most probably will. Again, those seven stocks are Apple,

Google, Microsoft, Amazon, Meta, Tesla, and NVIDIA. Now, some of you may say like, but Suze,

I don't know, is there just an easy way for me to invest in those stocks? Like, is there an ETF that would give me diversification but also give me diversification in mainly just those seven stocks or so. And the answer to that question is yes. The ETF known as QQQ, that is the symbol, the top 10 holdings of QQQ include those seven stocks. But those seven stocks in the QQQ make up 44% of all the stocks in the QQQ.

So you have tremendous exposure to those seven stocks in the QQQ. Far more than you have with the same stocks with exposure in the SPY ETF. So if you want serious exposure to those seven stocks, the best way to do it is in the QQQ.

But if you're going to do that, that is for more speculative money. And you should just know that if you still want exposure to those stocks, but on a more conservative and diversified basis, then you stick with the SPY ETF. So that is one way if you want to be invested and you want to do it in a diversified way, you might put some of your money into growth, dividend stocks that pay you a dividend that are pretty much safe and sound because of the dividend.

And then for possibly your more speculative money or money that you have a period of time that you don't need QQQ just may be the way to go again. It's something that you might want to consider dollar cost averaging into, but there are many ways to invest.

And today is your primer of what I want you to be thinking about for 2024 and hopefully somewhere in 2024 we can have a service that seriously helps you with all of this and guides you through to your retirement years.

But until then, there's only one thing that I want you to say every single day, come on, we only have about 21 more days to do this. Because after that, I'm going to switch obviously to another ending to the Women and Money podcast. So I won't be there to remind you. So you might want to put up a little thing on your refrigerator. But every single day I want you to say today, wherever I go, I will create a more peaceful, joyful, and loving world. And if you do that, I promise you, you will be unstoppable.