0:03

It seems like only

0:05

yesterday. The

0:15

best interest rate you could get on pretty

0:17

much anything was a fraction

0:20

of 1%. You

0:24

bemoaned the

0:26

lack of returns on your

0:28

safe investments. And

0:33

a lot of people still

0:35

kept a lot of money in

0:37

fixed income investments. Now,

0:39

now you can get 5% on your

0:42

safe money. But

0:49

can you get 5% over a long period

0:51

of time? Can

0:54

you sustain a return of 5%

0:56

per year over a period of many years? That

1:01

my friends is the big

1:03

question. And the answer

1:05

is with some money market funds and

1:07

high yield savings accounts still sporting 5%,

1:10

it might be easy

1:12

to be complacent and let the cash sit.

1:16

But with the

1:18

Federal Reserve likely to

1:20

begin cutting interest rates later this year, recent

1:24

hot inflation readings notwithstanding, such high

1:26

yields are likely to come down

1:29

quickly. And according to this article to

1:31

get ahead of Fed rate cuts whenever they may come,

1:34

investment managers are looking to lock in

1:36

leads to the ones who are prospecting.

1:43

Lock in yields from

1:45

1 to 5 years to preserve today's higher income.

1:47

So how do you do that? How do you

1:49

lock in 5%? I

1:52

think you called it safe money or something? Safe

1:54

return, a safe 5% on your

1:56

money for the rest of time. Tell

2:00

us, I would be totally happy to

2:03

just get 5% forever on my

2:05

money and not have to worry about what

2:07

the market does. Yeah, well,

2:09

there's not very many ideas and I don't really love

2:12

any of these ideas, but here they are according to

2:14

the Wall Street Journal. Number one- Oh,

2:16

this is the Wall Street Journal. We'll

2:18

take that with a grain of salt.

2:20

Their number one suggestion, multi-year guaranteed annuities

2:23

or fixed rate annuities. For example, immediateannuities.com

2:25

listed a 10,000 five year where you're

2:27

getting 5.4 and

2:34

4.6% top rate for a five

2:36

year bank CD listed at bankrate.com. So

2:38

you could buy that immediate annuity and

2:41

you get the 5.4% for the next five years. Now

2:46

in one planner they quoted said, this is the best I've seen

2:48

in 25 years, which may be about right, by the way. I

2:50

don't know. I'm going to look because

2:52

immediate annuities have come up a lot with the

2:54

interest rates being higher. But remember, the

2:57

money is no longer yours, right?

2:59

It's somebody else's. If you

3:01

need it for an emergency, guess what? No, no, no. We're

3:03

talking about an immediate or a fixed? We have an- Immediate.

3:06

Oh, it's an immediate. Okay. Multi-year

3:09

guaranteed- No, no, no. I

3:11

think those are fixed. It's fixed rate

3:13

annuity, 5.4. No, but that's not

3:16

an immediate. That's not an immediate. You're

3:18

confusing- Well, it says in here in

3:20

the article that immediateannuities.com quoted it. Yeah,

3:22

but immediateannuities.com, there's multiple kinds of annuities.

3:24

There's the immediate where you give them

3:26

your money and then you take payments-

3:29

Let's make it more confusing. Yeah. Oh,

3:31

the insurance companies are known for making the- Okay, so

3:33

when can you start drawing the money out in this

3:35

particular- You can take the money out anytime you want,

3:38

but you will pay taxes on the return.

3:42

And you'll also pay, it says, early surrender charge, give you up

3:44

from 5% to 8% of the value. Yes,

3:48

that's because the person who sold you the

3:50

annuity got a big fat commission. So

3:53

It's the surrender charge. They Tell you the surrender

3:55

charges so that you don't mess with it. But

3:58

The reality is- Yeah, it goes around, Yeah. They

4:00

get paid back. The commission they okay.

4:02

But in this particular circumstance, the Liberty

4:04

Bankers Life had five point four. When

4:06

can you start drawing that money out?

4:10

You. Technically can start drawing it. Anytime

4:12

you want but there's gonna be annulled to

4:14

they're gonna. they're gonna be audible these on

4:16

owing so so yeah there's nothing. The

4:19

the fixed a new what he pays

4:21

slightly more. Yep, what's the term on

4:23

this one? Five. Years.

4:26

Five. Years. so guess it's paying about

4:28

when. What was the rates? Five Point

4:30

Four. Okay, so you can get a

4:32

five year C D that pays about

4:35

four point four. Yeah, Royale. Yep!

4:37

So you're getting a percentage point more

4:39

now. What's the difference between a Cd

4:41

and an annuity? Who's.

4:44

Back to get guaranteed. Want Guaranteed by the

4:46

bank. Ones guaranteed by no one can, Three

4:48

by the government, The government. Okay, the bank

4:50

that is. You know, Back. The

4:52

other is guaranteed by a private company.

4:55

Yes, that's true. That's. True. So

4:57

yes, you might get a higher yield. You're also

4:59

going to make somebody a big fat commissions and

5:01

you have to be very, very careful about these

5:03

things because the fine print. Ten.

5:06

Have to hide all, I'm not recommending

5:08

those. I'm not recommending. I know, I'm

5:10

just saying okay well I just want

5:12

to be furious. We're on what they

5:14

are. People hear us talking about the

5:17

stuff and then I get an email

5:19

like okay, which one did you say

5:21

to go bottle Why any any annuities

5:23

in your product is you hear annuity?

5:25

Just don't go ago Number two, How

5:27

about a defined maturity exchange traded fund.

5:32

Okay can you give me that me out

5:34

there that the of. The

5:36

Girl Love the Ticker Be as in

5:38

Boy Ss and Sam. See.

5:41

As in cat oh is an Oscar.

5:43

B. S. Seal. off

5:46

all these of the the bullet

5:48

shares yemeni glasgow yeah no idea

5:50

what they're doing is they're going

5:52

out and buying corporate bond yes

5:54

they are with a maturity rates

5:57

of whatever it might or a

5:59

mature of whatever the maturity is

6:01

of that portfolio. That's right. And

6:04

the, okay, a couple of things. One,

6:07

yes, you can get

6:09

out, if you hold it to

6:11

maturity, you get everything back. But along the way,

6:14

you can have volatility. This one

6:16

that you mentioned, BSCO, lost

6:18

4% in 2022. Okay.

6:24

So you could take a bit of a hit down. You could

6:26

take a loss along the way. Okay. Like

6:28

a ballpoint. If you hold to maturity, then you

6:30

get your money. Yeah. So there's nothing wrong

6:32

with that. Okay. Here's one. I have no

6:34

idea why they included this, but maybe you

6:36

will know, preferred stocks. Wow.

6:42

They included them because preferred stocks have

6:44

a, and

6:47

I have to put this in gigantic air

6:49

quotes, guaranteed,

6:51

not really guaranteed, dividend. Yes. Okay. The

6:53

only thing that guarantees it is if

6:55

they suspend the dividend, they can't pay

6:57

a dividend to common shareholders until they

7:00

make the preferred shareholders whole again. But

7:02

that doesn't mean a darn thing for

7:04

a company in trouble. If

7:07

the company gets in trouble, the risks are

7:09

much higher on preferred stock than on bonds,

7:12

much higher. Yeah. And they recommend the

7:16

iShares preferred and income

7:18

security VTF. P as

7:20

in Paul, F as in Frank, PFF,

7:23

which they say has a yield of 6.5%.

7:26

5%. That's its SEC

7:28

yield. Yeah.

7:30

But again, you can get 5% on treasuries. So if

7:33

you're getting 6.51, what would your guess

7:39

be about the level of risk involved?

7:42

Higher. Right. And

7:45

it's reflected in the portfolio. 95%

7:53

of their portfolio is in preferred stocks

7:56

in companies rated triple B

7:58

or lower. Triple B

8:00

or lower really or lower

8:03

Wow there There

8:05

is only in a to triple

8:07

a rated paper. There is little

8:09

over 5% of the portfolio So

8:12

you're investing in the companies

8:14

that are paying a higher interest rate.

8:16

That's not familiar. Yeah, okay

8:20

Number four exchange traded

8:23

debt baby bonds I Be

8:28

there are derivatives these are derivatives

8:30

they have callable yields of yeah

8:32

to nine percent This advisor

8:35

likes them over preferred shares because

8:37

of the higher yields and volatility

8:39

versus preferred stock. Oh Oh,

8:41

oh These

8:44

are lower volatilities because they

8:46

don't trade very often

8:48

and these things are incredibly

8:50

dangerous And

8:53

they are down the list

8:56

in the hierarchy They're

8:59

often They're often lower

9:03

Rated they often are lower down

9:05

the list in Priorities

9:08

they're often debent

9:10

there. They're not highly secured

9:12

debt again. This

9:14

is such a simple Equation

9:17

the higher the number The

9:20

greater the risk eight to nine is still

9:22

pretty high number for it pretty high Ridiculously

9:26

high and funny thing is I'm looking at a

9:28

bunch of baby bonds and I

9:31

don't see any That

9:34

are yielding that much. I see one

9:36

from Gladstone Capital that's

9:38

yielding about eight But

9:40

other than that good companies high

9:42

quality companies not even high

9:45

quality companies I mean AT&T's baby bonds

9:47

are yielding about five That's

9:50

it. Yeah, so and couldn't you

9:52

say didn't you say something about treasuries paying about

9:54

the same five? Yeah,

9:57

and CDs paying about

10:00

five and high yield savings

10:02

account paying. I mean, Brookfield

10:04

properties, which are, you know, Brookfield is

10:06

a big, uh, uh, real estate company.

10:09

They're paying four and a half to

10:11

five. And here, when I read these things,

10:13

here's what I think it's people

10:15

have a tendency to chase

10:18

returns. They, they, they've seen this a

10:20

little bit higher now. And

10:22

I want to keep that because as you said, Don, if

10:24

I could just get an easy five and don't have to

10:26

worry about the market, I'm

10:28

going to be so much happier. The reality

10:30

is any money like this, I think you,

10:32

what'd you call it? Emergency money or safe

10:34

money, safe money. Yeah.

10:38

Part of your portfolio should be in that, right?

10:40

Because you may need to replace the refrigerator. I

10:43

get that, but that's all that you're

10:45

going to put that in something like a

10:48

CD or high yield savings account. Well,

10:50

but it doesn't matter. I think it's also

10:52

that portion of the portfolio in many cases,

10:55

that is the stability portion for your mental

10:57

health. It's fair and the mental health portion,

10:59

not just the emergency money, but it's the

11:01

fixed income. It can be in the form

11:03

of bonds or it can be in the

11:05

form of CDs. I was getting to that

11:08

because I think what people instead of have

11:10

deciding what the portfolio is going to be

11:12

first. I'm going

11:14

to have this much in stocks, this much in bonds

11:17

and this much in an emergency cash, whatever you want

11:19

to call it. That's the first

11:21

decision instead of waking up and saying,

11:23

wow, I'm getting 5% in that. And

11:26

I think you can get that in the Schwab money market right now,

11:28

5.2. I'll

11:30

just load it all into that and get the 5.2. The

11:33

article correctly points out that nobody knows how

11:35

long that will last. That's

11:38

what I worry about, sort of this

11:40

timing aspect. I'm chasing it to there.

11:42

Cash, CDs, money market, that's

11:45

a short term investment. Short term.

11:47

Could, let's say you buy that one year

11:50

CD or you get in a money market

11:52

fund yielding five and interest rates, I'm

11:55

not saying they will, I'm not making

11:57

a prediction. Let's say they fund. Down

12:00

to one or two percent. Could.

12:02

Happen goodness go as yeah yeah.

12:05

Where do you stand then? You'll.

12:08

Be rid, you'll be earning one or two

12:10

percent. That five percent is not going to

12:12

carry on into the future on short term

12:14

paper. It's not gonna do it. And that's

12:16

why when you want to go out to

12:19

longer term paper if you look right now

12:21

and a five year Cd Howe privacy rights

12:23

and the for or point I applied x

12:25

Yep, Yep. Still

12:27

of the and version right. Get the.

12:30

Override is inverted. It's very strange

12:32

situation so well is because of

12:34

expectations. Rice you you see in

12:36

biggest lesson you can ever learn.

12:38

Listen to this again. I know

12:40

most of you refuse to gear

12:42

it but listen carefully. The. The

12:45

financial markets are markets

12:47

of expectation. They

12:50

are not reacting to news

12:52

they are moving in anticipation

12:54

of future news that everybody

12:56

at the time agrees is

12:59

likely to happen. So

13:01

in less, the news is

13:03

dramatically different than the expectation.

13:06

That. Future. News is built

13:09

into the price, which is why you

13:11

see longer term bonds yielding less. The

13:13

expectation is that rates will go down

13:15

in the future. It. Is baked

13:17

into the cake. You should be ignoring

13:19

the kids. Thank you. You should be

13:21

ignoring. The. Interest rate roller coaster.

13:23

That's what I'm try to get to. You

13:25

should have a portfolio is designed for your

13:27

needs. right? Stocks, bonds and

13:30

yes some cash instruments for shorter

13:32

term thing and just. Don't.

13:35

Pay attention to the rest of it because silly

13:37

articles like this are going to keep coming at

13:39

you. People on T are going to tell you

13:41

Here's what you gotta do now and we know

13:44

that advice is poor. And the people

13:46

to do that. The people chasing things just frankly

13:48

end up with less money and more heart ache

13:50

in many ways Because again if you put it

13:52

in something you think I'm a to get that

13:54

forever. You. Won't. i

13:58

think he just said it's a big wages said it This

14:00

is not a game you can succeed at playing.

14:03

You may think you're smarter than the market, but

14:06

you're not. You're not. We're

14:08

not. You're not. Nope.

14:12

Nobody is. Question time. Man enough to admit

14:14

it. This comes from Terry in Livermore, California.

14:17

Through a broker half a dozen years

14:19

ago before you guys, Terry says, I

14:21

purchased... It's always that,

14:24

right? I didn't do this after listening. I didn't... No,

14:26

no, no, no, no. I get it. I get it.

14:29

I listened to me too. Oh, wait. I

14:31

was listening to me. I know. Sorry. We

14:35

got smarter. I purchased $25,000 worth

14:37

of a non-publicly traded REIT, the

14:40

Cyla Reality Trust. Pardon

14:43

me. It must be the

14:45

Cyla Realty Trust. Can't be the reality

14:47

trust. Anyway, I mean,

14:49

it's a better story if it's a

14:51

reality trust, Terry, but rollover

14:54

IRA funds. Oh, right. Hopefully,

14:57

my questions added to your REIT discussion will be

14:59

helpful to others. Number one, she says, can I

15:01

hold these REIT shares just in my name to

15:03

get them out of the hands of the AUM

15:06

broker? She says she's paying 1% as

15:10

an asset manager for somebody where

15:12

the money's custodian. Can't you just move it

15:15

to a different custodian? I think she can, even though it's

15:17

non-public traded. Right. She can move

15:19

it to another custodian. That might not be true. I

15:21

think. But Cyla is going to have

15:23

to make that happen. It'll have to be an approved,

15:26

yeah. It's going to have to be

15:28

a private transfer. Yeah. Not

15:32

everybody's going to hold that security. That's

15:34

the issue. Yeah. And

15:36

wow. I'm just looking

15:38

at some lawsuits against Cyla. Which

15:42

one, the reality or the Realty Trust? Both.

15:45

Yeah. It depends on where

15:47

you put it. Whose reality we're talking about here?

15:50

It depends on whether there's a typo or not

15:52

a typo or just happens to see an eye

15:54

where none exists. It's going to have to be

15:56

true as well. Yeah. In the

15:58

very weak. Yeah. secondary

16:01

market. Yeah, what

16:03

are you making? The

16:05

shares have plunged by,

16:08

well, more than half. Depends

16:13

on who's, and this is the problem with

16:15

non-publicly traded, is that it

16:18

depends on who's doing the

16:20

appraising. They were

16:22

offered at $10 a share and some recent

16:25

trades have been at $5 per

16:27

share on an unregulated

16:30

sort of private secondary market.

16:33

Now, it looks like

16:35

there may be some

16:37

lawsuits pending because-

16:41

That doesn't sound good, by the way.

16:43

Yeah, it doesn't sound good. It really

16:46

doesn't. It sounds, I

16:49

mean, we've heard of some of these that

16:51

have turned out to be pure Ponzi schemes

16:54

after they got investigated. Wow.

16:57

She does write, every six months or

16:59

so, I receive an offer from either

17:01

Comrit or CMG. They troll to purchase

17:03

shares at a deeply discounted rate.

17:07

Have you ever heard of these outfits?

17:09

Yeah, no, no. Comrit is trying to

17:11

buy these things up cheap. Of course

17:13

they are because they

17:16

know that they're not worth what

17:18

they claimed or what they were originally

17:20

worth, but they're probably betting that they're

17:23

worth a little more than

17:25

the secondary market is pricing

17:28

them. So a

17:30

lot of machinations going on here. If you

17:33

ever- Okay, but let's go back to the- If

17:35

you ever get an opportunity, a liquidation event, let's

17:38

not call it a liquidation event, it's called a- I

17:42

don't know what that's called when you have a- It's got

17:44

an A. It's got a redemption event. If

17:46

they'll ever let you redeem your shares back to them,

17:48

do it. Just do it. Do it, do

17:51

it, do it. But in this case, she should find

17:53

out from Sila where she

17:55

could custodian. There's no reason to pay

17:57

somebody 1% a year on

17:59

time. top of the fact that you

18:01

paid a big commission to buy this product. No,

18:05

I would be finding a different custodian and hold it

18:07

there. By the way, and you

18:09

know it, she knows it. I just want to let you all know

18:11

it. We

18:13

hate non-publicly traded security. Disaster. And

18:17

the argument they'll make is

18:19

non-publicly traded securities are safer

18:21

because they're less volatile. No.

18:25

That's because they're not traded. They're only less volatile

18:27

because you don't know what they're worth. It's kind

18:29

of like you think your house is

18:31

a less volatile investment than your stocks. But

18:36

that's only because your house is not being

18:39

priced, although now with Zillow, but it's not

18:41

being priced every second or every minute of

18:43

every day. I think people make a lot

18:45

worse decisions with real estate if it were. All

18:48

right. So yes, find another custodian.

18:51

And as Don said, pay attention to possible

18:53

redemption. By the way, if you get

18:55

redemption for us, we'd appreciate it as well. James

18:59

from Coleman, Alabama writes, I'm

19:02

considering taking my small Federal Express

19:04

pension in April or May, or

19:07

I may wait until later this

19:09

year. I'm wondering what happens to

19:11

pension payouts if the Fed raises

19:13

or lowers interest rates. Will

19:15

this affect my payout even so slightly? I only

19:17

work there 10 years. The answer is yes, because

19:20

every year they analyze this based on current interest

19:22

rates. I know that happens at Boeing. Well,

19:25

yeah, most of these things have some sort

19:27

of an adjustment

19:31

or inflation. Yeah. Okay.

19:34

Well, that was easy. Anything else? So

19:36

if I were sitting here in March

19:38

and I didn't need the money,

19:40

I probably would wait. I think you

19:43

usually find out about this in October or November, what

19:46

they'll pay for the early part of the following year. I'd

19:49

probably be following along and paying attention and

19:51

try to make a decision based on that. Really?

19:54

Isn't that trying to predict the future? No,

19:56

no, you're not. You wait. I see. Because you're right.

20:00

they go you're making a bet

20:02

about the future being better than it is today that's

20:04

here that's what I said about needing the money to

20:06

me it would just be about any if for any

20:08

of us to be it's about when you need the

20:10

money right take money when you need the money that

20:12

you don't need the money don't take the money because

20:14

otherwise that's more simple because then that it that that

20:17

adds a level of discipline if you

20:19

don't need the money don't take the

20:21

money yeah don't play games good

20:23

very good okay all right what

20:25

questions answered we like doing that all

20:28

you have to do is go to

20:30

talking real money comm and click on

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it if you prefer speaking they're more fun

20:41

in many ways and they're more fun to

20:43

listen to because I like when you comment

20:45

on people that call in it's fun sounds

20:48

good and it seems like

20:50

every week now we're getting like two

20:53

crypto crazies somebody's got

20:55

your number I guess huh every week

20:59

and you're gonna get I don't know

21:01

why they keep calling because you're gonna

21:03

get the exact same and change your

21:05

mind yet even though it's a different

21:07

price and I'm pretty confident that

21:10

there is nothing that will

21:13

change my mind about crypto

21:15

in its current form nothing

21:18

not a thing but there's something there's a challenge

21:20

I like that you know it's

21:22

mine going down the gauntlet go for it

21:24

good luck to you thank you for listening

21:26

by the way we appreciate it very much

21:28

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21:30

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21:46

the opinion the music that's the podcast for current on

21:48

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