Friday Flight - Rates for Savers Sink Lower, Housing is Hot, and Saving Halloween #258
Fractional shares trading is now available for all fidelity customers on the fidelity mobile APP by US stocks. An ETF commission free based on how much you want to spend. Instead of by the share fractional share quantities can be entered out to three decimal places as long as the value of the order is at least a penny dollar trades can be out to two decimal places. Sell orders are subject to an activity assessment fee from one to three cents per one thousand dollars of principal fidelity brokerage services, member, NYSE SIPC Zai-qing, what's going on? I know it's been awhile since you may have been out of the house living life like you used to, but you know what? There is the open road. That still is out there and you should probably reintroduce yourself to it in a Mazda I was lucky enough to drive around in nine the last couple of months and I have to say the V lineup by Mazda is pretty wonderful. These vehicles are masterfully crafted. They have elevated design that's reflected in every detail from the controller knobs to the steering wheel. It's all there. So if you want more information on the MAZDAS UV lineup including the first ever see X. Thirty Goethe Mazda USA dot com slash iheart and don't forget to explore their strongest finance options. Welcome to how the money I'm Joel Into I. Am Matt's Today we're discussing rates for sabres sinking lower housing is hot and saving Halloween. Joey have a lot of stories to get to you on this Friday flight episode where we cover some different news stories that we've seen in the headlines, how they pertain to our personal finances. But I mean I've got frugal cheap for you. Bring it five, twenty, nine plans we've talked about them. Before on our show, they are accounts that allow you to invest money in the markets That's going go towards higher education right A. Lot of times folks will set them up for their kids, but anybody can use them. But my question for you is frugal or cheap to ask family members to donate to a five twenty, nine plan that you might set up for a child Oh that's a good question, and so the reason I wanted to ask you this is because we've had some birthdays recently and we have either been getting cash for the kids or even toys. This is problematic for a couple of reasons right? You know we have plenty of toys. We don't necessarily need more of pieces of plastic or games or books around the house necessarily like we go to the library. So that's problematic but secondly, cash. Little cash dollar bills, and that's kind of an issue these days because a lot of places aren't actually taken cash when it comes to actually spending the money and we don't have a local bank anymore we're online only. So I also can't just deposit in kind of siphon that money over into one of the kids accounts where we kind of save up their money for them personally, and so we're stuck with toys or cash sitting around, and we're not really sure what to do. Yeah. That is the one downside of online banks is like when you need to deposit cash when you get some cash and you're like, I can't take it somewhere. Most done is not an issue because he can. You know it's pretty easy to spend it. But these days we have found it's a little bit tougher. We're doing some accounting where we're like, okay. Well, let's budget less maybe one hundred dollars less for groceries this month, and we'll put that hundred dollar bill towards groceries but even that is not necessarily ideal. Yeah. True I think it's it's okay to ask parents grandparents loved ones to donate to a five twenty nine plan may be in lieu of gifts but I. Think. It can be a touchy thing as well because oftentimes grandparents just get so much joy from from giving their grandkids tangible physical gift that they can play with, and so I don't know maybe it's kind of a split the baby here where where you say, Hey, listen maybe take half of the money that you're going to spend on birthday or Christmas gifts and put that towards a five twenty, nine plan please and then the other half if you could maybe get you know toys or maybe one bigger toy because I. Completely, agree with you were inundated with toys and things in our house. We don't need more of them, but I know how much joy it brings to my parents to give them something special in particular we love outdoor toys because they don't clutter the House as much like a scooter or something bike related whatever is great. But yeah, we're starting to get into board games a little more to those are those are good. We could use more games I guess but I I love the idea of asking people to do that. But maybe a little bit of both is the way to go. Nice man. Yeah that's a good thought. It's a good way of doing it. We haven't covered this yet with any of our parents you know, but it's something that was on our minds recently, we're like you know what? Like instead of doing this like maybe they could do this. But sure we don't want to deprive our parents of them having joy being able to give some of those gifts to the grandkids as well. Yeah for sure. All right. Well, it's. Friday flight. Now that we've I, think answered that question and I don't think it's cheap it's frugal but you had to do it the right way because you don't want her any feelings when you're when you're making that request that's the right way to do it I. Agree. All right. Let's get to the stories. We found interesting this week matt a couple of weeks ago we talked about civic duty and while voting we did. We did and it's obviously it's incredibly important with the passing of John Lewis who was our congressman here in Atlanta. You know he he has a quote about about voting and how it's essentially the most powerful non-violent tool that we have, and we agree we think voting is just an incredibly important thing for for everybody who lives in a democracy to do. Well, we wanted to mention that many companies are being more understanding when. It comes to the time it takes to vote more than eight hundred corporations have signed onto the time to vote pledge. So not only are employees getting paid time off to vote some companies are even offering that Pto if employees volunteer to work the polls, which I think is so cool older volunteers are staying home to Kobe of course, this is a pretty timely benefit though that's worth considering alongside other benefits like healthcare coverage and Retirement offerings like a company match like does your employer care enough about you to give you time off in order to vote. So yeah, it's great to see companies prioritizing not just pay and benefits, but also saying, Hey, you know what you should have and you deserve the time to be able to participate in our democratic system. Yeah and you know if your company isn't offering this if this isn't necessarily something that they have. Sought to introduce I think that's something that you could even advocate for as an employee is something you can ask for it. All kind of depends on just your company, the culture of your company because really we work, it makes all the difference you know like not only in the benefits that they offer but also to when it comes to pay we saw recently that hobby lobby. They just raised their minimum wage to seven dollars. An hour target is now at fifteen dollars an hour minimum as of July and now Walmart man they are doing a great job raising pay for a lot of workers beginning in October, and they're not just raising pay across the board. You know they're doing it by introducing some of these different roles, some of these like new team leadership roles. This should give a lot of employees more room for career growth for pay growth, and so if you are looking for work, make sure to know what the pay structure is like is that could have a big impact on your career and your earning potential. Yes. Great to see some of these companies institute a minimum wage. That's that's even higher than what you know some politicians in Washington proposing there's another interesting story Matt about Oetzi and how essentially some people have done incredibly well, making masks and selling them on. NC. April June this year shoppers purchase more than three hundred and forty, six, million dollars worth of facemask justin facemasks, Justin facemask. That's these. Stores so much money. It's incredible and as many individuals found themselves in a precarious financial position spring, more than a hundred thousand sellers started selling masks and position themselves to grow their business by providing for for the massive demand that was out there four facemasks. It's this really cool story of resiliency that shows that there is opportunity. If you're out there looking for it, right if you're willing to pivot and you have a needle and thread and maybe some fabric, you can start making some asks and start making real money building a business on not as cool to see how a bunch of different sellers have done that slow as you're not making like crocheted mask. Big Gaps in exactly doesn't work now doesn't work at all have you bought any of that CD favorite facemask that you always go to well, I got one that my mom gave me anywhere in that like the whole time I just wash it from time to time. That's so funny like that. Now US also my mom gave us really. Okay. Thanks mom. Yeah. There's some local artists that released massive I've thought about getting one of those but I time pulled the trigger yet but. Some point brewery mask would be good to right yeah. It'd be pretty sweet. Our local bike shop they actually they make like those different bags that you can put on your bike for like by camping and you know for holding different things like I forget what they're called necessarily but they can strap on your bike, but they have been making some some different mass than they actually look really cool because they're really handy with the sewing machine and look pretty dope. So. Let's get to our Halloween story man her she's. Trying to save Halloween. They created a website that is dedicated to trying to help you make a smart decision as to whether or not. You should trigger treat this year Halloween twenty, twenty dot org. But makers in general are. Nervous about how code is going to affect Halloween plans as well as their sales. Of course, some cities have outright ban Halloween festivities and health officials in other cities have issued just strong warnings about staying safe and so you know I'll different folks are gonNA take varying approaches. This Halloween I think that site might be helpful as individuals out their families are going to make their decision I was also interested to see that Halloween. It only makes one tenth of her she's annual sales. I was expecting it to be more like thirty percent. Yeah. 'cause like for me like ninety percent or ninety, five percent of the candy that I buy all year is because of Halloween right. But I guess other folks out there they're kind of snacking all year long. I think for me personally because Halloween is such a big deal on our street and it's on a Saturday night there's just no way it's going to get shot to I. Remember looking at last year looking ahead and be like, Oh, next year is going to be. It's GonNa be on a Saturday twice as many kids as usual. Yeah. So I don't think there's any way to actually shut it down. So I'm just going to get one of those long arms and reach into the candy bowl with it and drop and kids bags or something like that I. Think. I. Saw something about some neighbors creating this pipe where you can drop candy into pipe you. Kinda. Like feed it down towards I guess if your houses slightly elevated, what's yours is by the that's brilliant that would be a good way to deliver the candy I might have to. Make that happen still kind of feels a little early to start having these. Halloween conversations. But yeah, we love Halloween around here never too early. Let's talk about to me of the housing market There is a shrinking supply of homes. These days as fewer Americans are listening their homes for sale an top with interest rates hovering at all time lows home prices are continuing to rise. So while the housing market typically it. Cools off with the weather. We might not see that this year the demand is there, but there's just not enough supply I is. This is natural. Right? Folks are hesitant to open their house and allow strangers to walk through their house winters virus that you know folks are afraid of catching, and so you know it looks like we'll see a supercharged housing market continue to drive up prices for the time being at least. Ya took just twenty two days to sell a home in August and that's the fastest on record. If you're a buyer, you gotta be really careful right now though not to bite off more than you can chew, it's great to score a low interest rate but a bidding war and there are lots of those right now could easily wipe out any savings that you might realize from these historically low rates true and if. You do end up buying. It's so much more important now than even normally as to plan to stay in that home for a minimum of seven years, there's certainly no guarantee that prices continue to rise like this and in all likelihood at some point, right things have to to chill out. So if you're buying a home, make sure it's a long term decision, not a short term fix and if you're selling a home congrats. Because you're probably going to do all right, enjoy reading those awards and maybe go rent something for a while why not let's talk to you a little bit about and. This is something that I think a lot of folks here about, but they're not totally sure like what does it mean to invest into an IPO? It's in the headlines A lot. You know there are a lot of them. Lately an initial public offering is when a company when they go public and the issue stock for the first time typically allows them. To to raise a lot of money, we don't invest in individual stocks you know IPO or not. But because of the press attention that mini IPO's get, it's I think it's even more important to avoid them and I. It's at least a talk about them you know and if you are really interested maybe in investing in an IPO to invest with caution. IPO's do garner a lot of headlines. It's. It's something that that financial writers can write about get some eyeballs people get excited about a company that has been around for a while and has been successful finally can invest in that company. Sweet. There's typically a Lotta hype, right? Yeah. Surrounding and you take a historical example of Facebook, for instance and IPO time for Facebook and May Twenty twelve, the stock sold for thirty dollars a share. But by fall, it was down to eighteen dollars a share and it took over a year for that stock to hit the price again historically, that's on par that's average for an IPO. They don't typically do well in the short term since then of course, facebook's been a great stone but make sure that you're investing in a company for the long term when you buy that stock because quick payday is unlikely an investing with short term hope is just a bad investing strategy individual stock investing I don't think is something that most people should participate in and investing in an IPO is something that even fewer people should consider armoured got more to get to including just how bad savings rates have gotten for people that have money stashed away and we'll get to that in some other stories right after this break. Fractional shares trading is now available for all fidelity customers on the FIDELITY MOBILE APP by US stocks ATF's commission free based on how much you WANNA spend instead of by the share fractional share quantities can be entered out to three decimal places as long as the value of the order is at least a penny dollar-based trades can be in and out to two decimal places. Sell orders are subject to inactivity assessment e from once to three cents per one thousand. Dollars of principal fidelity brokerage services member in my se SIPC. When you need your bank capital, one is right in the palm of your hand. So you can check your balance deposit checks, pay bills, and transfer money from your phone with a top rated APP and when you're done banking, put it back in your pocket, a banking experience built around you and your life. This is banking reimagined get started online anytime. What's in your Wallet Capital One NA member FDIC. We're back from the break this flight episode where we talk through a bunch of different stories here in a little bit we're GonNa talk about student loans, as well as a fiduciary rule that didn't quite happen, but we'll get to those in a second first though let's talk about savings interest rates man they totally suck right now if you've got some money stashed away in a savings account, you are likely earning very little money but here's the thing low rates are there are a little Yin and a little Yang for folks who own a home you know the opportunity to refinance has been incredible. You're able to to lock in a thirty year mortgage right now. At a rates at or below three percent like that is virtually unheard of you know even though as we mentioned home prices, Arthur, the roof that was a pun for your fun. but at the same time, anyone who has been a decent saver is feeling the crunch of these lower rates earning close to nothing. In their savings accounts. All right. So why the low rates? Why is this happening? Well, the reason that rates are so low is because the Federal Reserve announced last week that they would keep their benchmark interest rate near zero until twenty, twenty three or as long as it takes to help the economy bounced back from the impacts of Covid by keeping rates low. The idea is that the Fed can help to encourage borrowing. So think low mortgages, more affordable student loans, even lower credit. Card rates maybe although credit card rates seem to stay pretty high unfortunately but this increase borrowing stimulates the economy. But at the same time, it hurts money listeners the most probably because they're the ones who are most focused on building up meaningful savings. Yeah and even though borrowing rates are low like we're, we're definitely not going to encourage you to go and get a loan to help the economy. We're not asking you stimulate the economy for us by taking on more data right now. We still want you to save your money even if savings interest rates are terrible one of the best ways you can make is to find a bank that is paying a great rates and then also to definitely make sure you aren't paying a monthly fee in order to have an account with them you know, and so that means gravitating away from the big banks even though you will lose the ability to deposit cash locally going planning about earlier. It's still worth it, and instead that probably means moving to a credit union where you can deposit locally or an online bank were big fans of online banks check out discover ally cit or yeah. One of the other banks that pays a reasonable rate without charging necessary fees, and if you're looking for the best rate out there right now, well, it's hard to find right because anybody who has signed up. For an online bank in recent months, they've noticed the rates of drop precipitously and so what looks like a decent rate now looks pitiful but access is a bank that talked about before their rate is incredibly strong. It's it's much better right now than than even some of the banks, we typically talk about all mine free business checking account with them for years for Photography Company Yeah and now they're offering. Interest. Rates out there up to one point five percent, which is like double. What most of the actually sounds pretty good compared to what a lot of the other banks are offering. Under normal circumstances that's terrible. Rate Savings but right now it's great. Their mobile APP and user interface aren't incredible. But if you're just looking for some place to park in the fund well check them out will link to that account in the show notes and the national average rate being paid to sabres right now is point zero, five percent. So I, it's essentially miniscule almost nonexistent credibly small. So we know that that access rate isn't anything to to write home about it. Is By far better than the average and it's better than than some of the best rates out there to being offered by these other banks that we also like. Yes or rates are low for savers there also for borrowers on the note of taking out loans right on borrowing an interesting impact of the coronavirus is the number of new federal student loans declined forty-two percent during the recent summer months. Obviously, this is due to the uncertainty of higher education was going to look like for colleges. To students and their parents are hesitant to borrow a ton of money to pay maybe for face your schools in particular with so many classes going online right now or or a lot of colleges implementing online only like after Thanksgiving you know when when so much of the semester doesn't include the things that you are paying for those non tangible elements. It's tough to forecast a ton of money for. That yeah for sure and it'll be interesting to see the longer term effects of pandemic on higher education. There's a big shift this year, but will it last when the cost of college has easily outpaced the rate of inflation since the eighties by nearly four hundred percent it's possible that this could be a turning point or at least we might see a slowing the insane increase of the cost of tuition and Books if you know a high school senior now more than ever, it seems like a great time to consider a local community college for a couple years to get those core classes out of the way without taking on almost any debt and hopefully, either your state offers free access to community college or you're able to pay for it in cash because the cost is so inexpensive and you can always transfer. After two years and finish up at a different school, just make sure you read the fine print and he know what classes transfer, right? Yeah. There was a interesting facebook kerfuffle about whether community college credits transfer, and and certainly important to do your due diligence beforehand to know which classes you're taking are going to transfer. But for the most part, that's not an issue in on the note student loans Beyond just interesting. Some great student Loan News. I saw that Mike Bloomberg is He's donating one hundred million dollars to four historically black medical schools, Charles drew medical, school, Howard. Harry and Morehouse School of Medicine here in Atlanta they are all receiving that donation which is pretty awesome man. Yeah. So probably just a drop in the bucket low for Bloomberg net worth. I'm guessing that's true. That's true. But I will say when when rich people donate vassal money I feel like there's always the headlines that are like but that's not much of what they actually own and I'm like, who cares man? Amazing Generous. It's generous and it's great and I don't WanNa diminish his gift that's huge and mad props to Bloomberg for for making that happen and also to typically sometimes donations like that will spur on other wealthier folks who might be expected to make a similar donation. It kind of encourages them to do something similar. There's different pledges folks sign up where they'll agree to to donate a certain amount of their net worth. You know when they die that kind of thing, it's like setting a good example basically. Yeah. Let's get to our last story of the day. This one was about the fiduciary rule that was proposed a long time ago when Barack Obama was still president and it's interesting that rule was basically never implemented because of a change in administration, and basically what that role attempted to do was it would have required all registered investment advisers to make investment decisions that were in the best interests of their clients, which sounds like a novel concept right should be that way anyway, right. Exactly. It's not always the case right? Like we said that rule was implemented, but it's interesting to see. There was a new study that found that because firms were forced to prepare and make changes anyway while they thought that rule is going to be implemented many of those firms who does the fiduciary standard and stopped selling bad products to their customers have actually continued to do so and so that means that even though there isn't a legal obligation for these investment companies many of the giant advisory firms adopted the standard anyway in essence even though they didn't have to. Just. The threat of that fiduciary rule being implemented was enough to kind of like Zap these investing firms into good behavior. Exactly. Yeah and so for example, the worst kinds of annuities out there right they have super high fees which are terrible. Almost all people they saw a dramatic decline in sales a few years back as the fiduciary rule was was moving towards implementation, right. But even now that we are moving towards a fiduciary standard, those awful products aren't being offered at nearly the same rate and so let's let's hope that trend continues because yeah. Hi Fi complex products like variable annuities they are not in the best interest of almost anyone. So we recommend for you to stay away from those annuities maybe stay away from single stock investing as well unless you are really into it and you're doing all. Your research instead go with just simple widely diversified low cost index funds, and if you do feel the need to talk to a financial adviser about your investments and about your financial future, we'll make sure they are a fiduciary make sure they're willing to sign a pledge that says that they are going to what's in your best interest not what's in their best interest not selling you products that benefit them yeah. That's where the problem comes in because with the newest, like some of the fees on those things were around ten percents. Yeah. Ten percent of the cost of the actual product was dedicated to commissions. That's mind-blowing times those costs casket a little bearing the paperwork to so. You don't notice them but that was encouraging to see that even though the rule wasn't implemented like we would have liked to see that it's still had a really important impact on the industry. Trend Yeah all right that's going to do it for this episode provokes that want the show Naughton links to some of the sites we mentioned in this episode just go to our website at how to money dot com. Yeah. We'll be sure to link to that Halloween website as well as that access site as well where you can find that one percent interest rate being paid savers so we. Hope that you are having a Good Friday that you've got a good weekend plans maybe at some point during the weekend. If you hadn't left US review, you can head over to apple podcasts because if you like our show if you find it helpful, we would love for you to leave us a positive solid review over there. Those reviews always really help us out perfect Sunday afternoon activists. Riding a review podcast. All right now that's going to do it for this episode. Then until next time best friends out best friends out. It has been awhile since we have been out on the road, but it's all still out there say hello again with a Mazda man, I love the feeling of hitting the road and exploring somewhere new with my family and MAZDAS CV's they have interiors that are crafted with an essential EST approach that allow the journey to be just as fun as the destination yen Mazda is known for making reliable vehicles are family his own demise data for years and one of the leading independent testing companies recently gave Mazda top marks for being incredibly reliable car manufacturer. So if you're in the market for a new vehicle than had to. Mazda USA DOT COM SLASH IHEART for more information on the MAZDAS UV lineup including the first ever see thirty fractional shares. Trading is now available for all fidelity customers on the fidelity mobile. APP BY US stocks, ATS Commission, free based on how much you want to spend. Instead of by the share fractional share quantities can be entered out to three decimal places as long as the value of the order is at least a penny dollar-based trades can be Internet to two decimal places. Sell orders are subject to an activity assessment fee from one to three cents per one thousand dollars of principal fidelity brokerage services member in. Se SIPC.