This week on The Money Puzzle Podcast Brian Ramsey & Eric Douglas put a little twist on what we have been talking about the last several weeks, which is all the negativity in the market. But there are some positive, believe it or not, and that’s what we to talk about today.

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Speaker 1 [00:00:03] All right. Welcome to the Money Puzzle. I am Brian Ramsay. That is Eric Douglas. And today we’re talking about we’re going to put a little twist on what we have been talking about the last several weeks, which is a lot of negativity in the market. Right. I mean.

Speaker 2 [00:00:18] Well, it’s been hard to avoid it. Right. That’s pretty much all the negative headlines that you that are coming across. And as we’re sitting here filming this today, we are retesting officially the year to date lows in the market. This is Friday, the 23rd right here. 23rd. So this is September 23rd. Yeah, you probably see this next week, but it hasn’t been a ton of wonderful news right there lately.

Speaker 1 [00:00:40] And that’s what we’ve been told about the last couple of weeks, only because that’s what clients talk about when they come in. Right. They want to know what’s going on in the market. What’s the Federal Reserve doing? You know, what’s going to happen to my money over the next couple of months or whatever. But what we always like to do is we like to look for something positive that’s coming in any particular market situation. So there are some positive, believe it or not, and that’s what we to talk about today. It’s really short term interest rates. Now, I think it’s important that we talk about short term interest rates. We got to talk about what the Federal Reserve is doing, not to any huge degree right now, but they are changing the interest rates and it affects us. Well, I’ll give you a background. So the Federal Reserve this quick is a sort of quick tutorial. The Federal Reserve doesn’t they don’t have a direct effect on what you get in your bank account, but they have an indirect effect. So they charge banks for borrowing money on an overnight basis. Long story how that works. We will get into that on this podcast, but that’s how it effective work. So what banks do is they say, okay, interest rates are going up, they can charge more for loans and so they start to provide a higher interest on your savings account, checking accounts, CDs, things like that. All right. So it is somewhat correlated, not directly related, but it’s correlated. So as interest rates have gone up, what we have seen is interest rates on short term securities go up. And that’s been a good thing. It’s been a good thing for some of our clients. And we’re going to talk about a couple of those. Some we’ll go with one that is going to what just going to go back and forth here. So what client that came in about a week ago and we got it. Oh, that’s hilarious. We had a phone ringing. She’s, like, ducking under the camera. Turn that off. All right, so here’s where the client come in. And they had a CD at the bank that was coming due. And so they said, Hey, I got the CD at the bank. Come on, do you know what should I do? We’re like, Well, let’s call the bank. So we literally called the bank and said, Okay, what’s this? Is 50,000 bucks. What’s going to be the renewal rate? And it was on a I think it was a two year, 24 month CD and it was like two point above something like that. And we’re like, well, let’s see what else is available. And so we looked at a couple of options and we found that other options were paying more than what that bank CD was. And that’s what we’re going to talk about is sort of the other stuff that that are yielding higher in our experience than just the bank CD So amateur. So you go until that and then I’ll come back and talk about what we actually wound up doing. But go ahead.

Speaker 2 [00:03:25] Yeah, well, it’s worth noting anything that we talk about is not going to be world breaking by any means. I mean, we’re talking about we’re trying to find needles in haystacks, you know, areas of bright light in a really bad thunderstorm right now. Right. So so ultimately, when we talk about raising rates, it’s horrible if you’re trying to go get a refinance or buy a new mortgage. And, you know, obviously you’re paying a lot more to take out debt, business loans, etc.. Credit cards, credit cards. Absolutely. Any kind of debt is becoming far more expensive. And that’s ultimately what they’re trying to do is get people to stop, you know, taking out debt and they’re trying to decrease the money supply. So that’s what the Fed’s doing with that, though. When you start raising rates, one of the positive effects is things like fixed annuities or CDs. And you said the CD rates are increasing, but they’re actually increasing to a greater degree in other places. US Treasuries, the types of guaranteed interest rates that you can get on other types of products out there has increased exponentially because rates have been so low, artificially and historically low due to the Fed funds rate or federal policy over the last several years. You’re not getting any kind of a yield on your money market, your savings, its CDs. All that stuff has been basically worthless over the last several years. That’s not the case anymore. So if you’re looking for protection, if you’re looking for cash alternatives, you can easily yield. You know, you can get upwards of three and a half, four, sometimes even 5% on fixed products where you’re going to get a guaranteed rate of return. It may not be enough to keep up with inflation, but, you know, it is beating right now a lot of other things in the market that you can invest in.

Speaker 1 [00:05:01] Well, yeah. For sure. I mean, we so so this caller mentioned just a few minutes ago, we want to we want to spending some money, but we took a chunk of money and we bought a treasury. Now, I will tell you, I couldn’t eat last time I bought a treasury. Oh, yeah. Because the yields have been so low. But we looked on we looked at our trading platform. We’re like, well, let’s just see what trading let’s see what the Treasury is, is, are, are yielding. And we literally pulled it up and we were looking at it just a little bit ago. The six month Treasury is 3.92%. When was the last time you could put your money into an instrument that six months or not, you’re going to get, you know, the equivalent of 3.92%?

Speaker 2 [00:05:40] The three month was 3.3.

Speaker 1 [00:05:41] Yeah, exactly.

Speaker 2 [00:05:43] Which is insane.

Speaker 1 [00:05:43] Yeah. So what we want to do to one year, we got 4.1 to I think 4.1 to 5, but still 4% on cash over a one year. Now it’s yes, we could go out and sell it tomorrow so it’s illiquid but we don’t want to was just cash it was going to sit in this CD anyway. There was going to be a two year CD at 2.0. It was a two point something percent. And yet we could put that money in Treasury and get 4.125. So that’s what we did with that particular client was we took that cash, we rolled into our checking account, then we moved over to the Schwab account and we, we bought a one month’s ah one year treasury. So good deal.

Speaker 2 [00:06:21] Right. I mean all this to say, I mean, it was what we’re hearing a lot now. We’re starting to hear a little bit more. Most of our clients are okay and they get less. And it’s a it’s a bad market. We’re going to get through it. And all the things that we’ve spent the last, however many months talking about on our podcast. Right. But, you know, we are getting to that point where clients are starting to reach their breaking point and you’re starting to hear more clients and prospects coming in the door. Just general conversations that I have, you know, out in the community, that they’re really nervous and they’re starting to hit their breaking point and they’re like, I’m just sitting on cash. I don’t I don’t want to do anything else. I just want to move to cash. These are cash alternatives where you can at least get some type of a yield over the next three, six months, year, couple of years right there, because rates are so high now, much higher than they’ve been over the last decade. Really, you have an opportunity to get a much better return on your cash. And so it’s important to note that there are pieces of good news floating around out there if you choose to take advantage of them.

Speaker 1 [00:07:18] Yeah, absolutely. We also had a client that came in. This is probably been two weeks ago now, but they came in and they had what they call a fixed annuity. The fixed note is just like a CD. It’s there’s no difference in a well, there’s a little bit difference, but it’s a whole lot different doing that in a traditional bank CD.

Speaker 2 [00:07:37] Not much. Yeah.

Speaker 1 [00:07:38] It’s you put your money in over that particular time period, whatever it is, three years, five or seven or whatever it is at, you accrue interest over that time period and then when the annuity matures or the CD matures, you get your money back, plus interest. And so this this happened to be a client was a newer client for us, but they had had a five year year guarantee annuity and it was coming due it came due on September 1st. And so we brought them in. We said, hey, let’s look at some alternatives. So we looked around and we looked at some fixed income rates and we found a three year and I will explain why we did a three year, but we looked at a three year, five year and a seven year. In our opinion, the three year was yielding right at 4%. The five year was like four and a quarter and the seven years like four and a half or 4.8. Bob We just felt like that let’s look over a three year period, keep it fairly short because it’s equivalent, sort of like a bank CD like a 24, 36 year, a 36 month bank CD. So let’s keep it fairly short. But we didn’t feel like you got paid enough to go out the extra two years or four years on that five and seven year. So we just decided to do a three year great deal, three years for a little over 4%. They weren’t using the money anyway. It’s it’s money that was in these in a CD like annuity to begin with. All we do is roll it into something new. And by the way, the rate that they were quoted to keep it at that particular insurance company was 2.6% or 2.65 or something like that. So 2.6% if they’d left it there, had we moved it, it went up to a little over four. So it made all the sense in the world to move it. So again, another alternative to what Eric was saying, which you just have to be a little creative sometimes about I’ve got some cash I need, do something with it. If it just sits in my savings account earning nothing. If it’s in my money market account, you might. If you’re online, you might be able to get 2% at your bank. You’re probably getting half of a percent.

Speaker 2 [00:09:45] I think course, I think the highest rates I saw because actually I just looked these up last week, as a matter of fact, the highest rates I was seen for online yield savings accounts was about 2.3, give or take. Yeah.

Speaker 1 [00:09:56] Yeah. So we we also will direct clients from time to time to online bank. Institutions. Now, here’s here’s here’s what you need to know about money market accounts and banks. If you’re if you bank at a very large, large, huge bank and there’s several here in town, typically they don’t need your deposit sitting up very much on their deposits because they just don’t need it because they have a lot of corporate deposits, they just don’t need you. And to put in $5,000 in a savings account, they just don’t need it. So pay very much. However, there are some institutions online and if you want to know where we direct clients, just send us an email and Whitney will make sure you get that link. Get the link out to you and we’ll show you where we send clients. But we pull it up and look and and you can find online institutions, most of which you’ve never heard of. Although from time to time you’ll get Sallie Mae on. That’s where I have some money is Sallie Mae. You might get American Express. There’ll be some there’ll be some names that you recognize.

Speaker 2 [00:10:54] Right? These are two of the better ones.

Speaker 1 [00:10:55] Yeah, but you also see some names you’ve never heard of. You be direct. Was one of them. Are you D or you be directors? I don’t know anything about them, but they were yielding the highest at the time. Those those banks are actually looking for deposits. They need the deposits. So they will will have a higher yield because they are trying to attract money into that bank. And what body banks do with that, they turn lend on it. That’s why they need your deposit. So do it. That’s a that’s another great option, especially if you’re just looking for immediate liquidity and you don’t want to put it in something that Neal locks it up for 12, 24 months or whatever. It’s a pretty good deal. So anyway, that’s just a couple of examples of where you can find a bright spot in sort of a stormy cloud, right?

Speaker 2 [00:11:44] Yeah. I mean, like I said, none of these things that we’re talking about, a world beaters, these are these are not vehicles for long term growth. Right. But we’re in a period we’re in a recessionary period and we’re in a bear market recession at this point, which typically those tend to last for quite a bit longer than just your average, normal, everyday recession, which we talked about earlier this year when that’s what we were hoping we were going to get. Yeah, we’re going to snap out of it after a few months. Hasn’t happened, so we’re probably going to be in this thing for a while, to be perfectly blunt. And I’ve tried to prepare as many of our our clients for that and most of them get it and are really good about it. But so many times we’re getting the question, what do I do with cash? I’m scared of the market. What can I do? Right. These are some really there are some really viable alternatives right now for your cash that are going to yield you greater than 0%. If it’s just sitting in your checking or savings account at your bank that are not going to fully expose you to the market risk that you get with your with your investments or your more traditional investments anyway. So, you know, typically we’re not we’re not saying dump everything you’ve got into anything like this that’s irresponsible. We would certainly never recommend that. Of course, in order to make any recommendations, we need to do a plan. Right that’s always talked about doing, putting, putting together the financial plan itself. But if you’re sitting on cash, you have questions around what to do with it. We have some really good options right now that can make a lot of sense.

Speaker 1 [00:13:08] Yeah, it does. And again, it comes down to, you know, kind of where they were saying earlier, this is not anything that would be long term. This is sort of a temporary. Yeah, and it’s only temporary because we’re just in a weird market cycle and sometimes we have cash on the sidelines and it’s not a great. Now there’s yes, we get we’re going to get some emails, we get the argument the markets pull back 20%. It’s great time to put money in the market. We totally get that. But there are folks that say, I just don’t want this money in any market exposure no matter what. And I’m more of a, you know, a saver. And I’m trying to put money into something that there’s no principle of volatility. This is what we’re talking about. And this is why we want to do this podcast where we’re getting a lot of conversations the last couple of weeks. It has, you know, the conversations we’ve had about cash and what to do with cash. And short term, no prince volatility has literally gone up exponentially. And we have a couple of really solid options for clients now. And we tell you when they walk out this door and they know they’ve either done a, you know, a one year treasury or we’ve done a three year multi-year guarantee from from an insurance company. You wouldn’t believe how I mean, they’re like darts are now. Well, not really, but they’re similar dancing out here, knowing that you want to have accomplished what I want to accomplish. I put some money to work and I’m getting the best yield I can at the time. 4% are in that ballpark and I’m just happy as I can be. I have no principal volatility. I’ve got other stuff that’s in the market that’s volatile, but I know this money. There’s no guarantee or there’s no prince volatility. And in whatever period, one year, 24 months, 36 months, whatever it is, I’ll get my money back. Plus interest. They’re happy as they can be. So that conversation has increased exponentially. And again, we’re happy to have those conversations. So, you know, if you’ve got cash on the sidelines, you’re like, hey. I wouldn’t mind entertaining some alternatives. I’ve got enough in the market, but I’m interested in doing something with some cash on a short term basis. Call us and we’ll be happy to kind of walk you through it.

Speaker 2 [00:15:13] As I’m sure when you can throw a number up on the screen. Yeah.

Speaker 1 [00:15:16] Yeah. And if you’re.

Speaker 2 [00:15:17] Not already up there.

Speaker 1 [00:15:18] And if you listen, our podcast, our phone number, we should do this earlier is 5022005214. Of course, if you’re watching us on YouTube channel, it’s already up there. So don’t worry about that. And our other partner is making me super nervous. He’s pacing over here because he’s got a bottle of bourbon in his hand because we are getting ready to record our bourbon podcast, which leads us to that’s can any closing thoughts or argument or thoughts on that piece? No.

Speaker 2 [00:15:43] Like I said, it’s all about, you know, your time horizon. So the things that we’re talking about right now are obviously going to be tailored to someone who’s probably closer or already in retirement. If you’re 25 years old contributing to your Roth. Yeah. Everything. Stocks are on sale right now. You absolutely should be doubling down on a lot of those things because in ten years, I’m you know, you can never make a guarantee. Right. But we can make a very, very educated guess of what stocks are going to look like ten years from now. And that’s where you should be allocating a lot of your money because you have the ability to take that market risk right now with someone who’s closer or already in retirement that is looking for an alternative to cash. We have some great options out there for you right now.

Speaker 1 [00:16:21] Yeah. Yeah. So anyway, what I was mentioned a minute ago was we are about 5 minutes away from recording our podcast that we do each and every week. So make sure you tune in. It’s called Burgers and Bourbon, although we call it Friday at the firm because we don’t have any other better name. But we we review bourbon. So this week is a follow up to the ones we’ve done over the last couple of weeks, which is old old forester, you know, first row series.

Speaker 2 [00:16:47] The Whiskey Row series.

Speaker 1 [00:16:48] Yeah, we’re getting ready. We did the 1870 in the 1890. And I think over the next two weeks we’re doing 1910, 1920. So make sure you tune in to that. That is something you can subscribe to. So look us up on YouTube and type in or yeah, look it up on YouTube and just put in burgers and bourbon. You’ll find us, hit the subscribe button and you’ll get our content. We put that out every week. We also do this show every week, so make sure you tune in to that. There’s something that we like to do just a little bit different set up today because we’re getting ready to shoot our bourbon and burger burgers and bourbon. And also we do a TV show that comes out every Saturday morning. You can look at go to your you know, whatever the searches you have, it’s on the ABC affiliate, although we got wind today that it may be changing channels coming up depending on availability. But just just Google the money puzzle. You’ll find it. Also, you can go to our Web page or you can go to YouTube and Google the money puzzle. You’ll find our TV show there as well. So that being said, we’re about 3 minutes away from drinking some bourbon, some of that Eric Salazar for this week on the Money Puzzle now.

Speaker 2 [00:17:54] Thanks for listening. Thanks for watching on whatever platform you may be enjoying our content on. If you find anything that we have to say today relevant maybe for any family members or friends, please feel free. We would greatly appreciate if you would share our content with him and direct him to the show. We greatly appreciate it. In the meantime, if you yourself would like to schedule a call to discuss some of the solutions we talked about today, give us a ring at 502 200 5210 or check out our website FWB Partners dot com. Thank you.