Suze Orman: The Road to Wealth VHS (2001) (USA)

HI EVERYBODY, I'M SUZE ORMAN. IN A FEW MINUTES, THIS STUDIO WILL BE FILLED WITH HUNDREDS OF PEOPLE ASKING ME QUESTIONS ABOUT THEIR MONEY. BUT REALLY, THIS SHOW IS FOR YOU, FOR EACH AND EVERY QUESTION AND ANSWER CONTAINS VITAL INFORMATION THAT I REALLY BELIEVE YOU NEED TO KNOW. SO PLEASE STAY TUNED BECAUSE YOU CAN'T AFFORD TO MISS THIS ONE.

[piano, drums & bass play rhythmic music] ♪ ♪

(man) SUPPORT FOR THIS PROGRAM HAS BEEN PROVIDED BY THE VANGUARD GROUP. VANGUARD IS COMMITTED TO DIRECTLY SERVING INVESTOR NEEDS WITH PERFORMANCE, VALUE, AND PERSONAL SERVICE. MILLIONS OF INVESTORS NATIONWIDE ENTRUST THEIR MUTUAL FUNDS, RETIREMENT AND BROKERAGE ASSETS TO VANGUARD. THIS PROGRAM IS ALSO MADE POSSIBLE BY CONTRIBUTIONS TO YOUR PBS STATION FROM VIEWERS LIKE YOU. THANK YOU!

[loud applause]

THANK YOU! THANK YOU FOR COMING. I HAVE TO TELL YOU THERE HAS NEVER BEEN A MORE IMPORTANT TIME IN HISTORY, IN MY OPINION, TO KNOW WHAT YOU NEED TO KNOW ABOUT YOUR MONEY. TIMES ARE CONFUSING, ARE THEY NOT? IT IS NOT LIKE IT WAS BACK IN 1999 AND THE YEAR 2000, NO MATTER WHAT YOU DID, YOU MADE MONEY. TODAY, AS WE'RE APPROACHING 2002 AND WE'RE INTO 2002, IT'S NOT QUITE SO EASY. THE NAME OF THIS SHOW, "THE ROAD TO WEALTH," HERE'S THE SCOOP, MY FRIENDS-- YOU ALL BELIEVE THAT YOUR MONEY DETERMINES WHERE YOU GO ON THE ROAD TO WEALTH. YOU THINK THAT IT'S YOUR MONEY THAT DETERMINES WHAT YOU HAVE, WHO YOU GET TO BE, WHAT KIND OF LIFE YOU GET TO LIVE. WRONG! THE ROAD TO WEALTH IS DETERMINED BY *YOU*. *YOU* ARE THE DRIVER OF YOUR MONEY. YOU ARE THE ONES WHO ARE IN CONTROL, REALLY, BUT YOU DON'T THINK THAT. YOU THINK YOUR MONEY HAS CONTROL OVER YOU AND NONE OF YOU, NOT ONE OF YOU OUT THERE HAS A CLUE AS TO THE POWER THAT RESIDES WITHIN YOU AND HOW EASY IT IS TO DRIVE YOUR MONEY DIRECTLY TO WHERE YOU WANT IT TO GO. THE ONE THING I FOUND OVER LIFE IS MONEY IS EXTREMELY FASCINATING IN THAT I DON'T CARE WHAT AGE YOU ARE, WHAT SEX YOU ARE, WHAT RELIGION YOU ARE, WHAT ANYTHING YOU ARE. MONEY TOUCHES EACH AND EVERY ONE OF YOU. AND I HAVE TO TELL YOU, IT TOUCHES YOU IN THE SAME WAY. THE PROBLEM IS YOU ARE NOT TOUCHING YOUR MONEY. YOU'RE REALLY NOT. YOU WORK 40 TO 60 HOURS A WEEK TO EARN IT. HOW MANY OF YOU NOW, BE HONEST WITH ME REALLY, HOW MANY OF YOU SPEND MORE THAN ONE TO TWO HOURS AN ENTIRE YEAR TO LEARN HOW TO INVEST IT? USUALLY IT IS AROUND APRIL 15TH. YOU ARE FORCED TO LOOK, IT'S TRUE, ISN'T IT, YOU ARE FORCED TO LOOK AT YOUR TAXES TO GATHER EVERYTHING TOGETHER AND THEN YOU DEAL WITH YOUR MONEY. YOU TAKE THESE LITTLE BABIES THAT YOU EARN, EVERY SINGLE WEEK AND YOU KNOW WHAT YOU WANT TO DO WITH THEM? YOU WANT TO TAKE THEM IN AND GO AND GIVE THEM TO SOME STRANGER FOR THIS STRANGER TO TAKE CARE OF YOUR MONEY FOR YOU. BOTTOM LINE, THIS IS WHAT YOU NEED TO KNOW, YOU WILL NEVER BE POWERFUL IN LIFE UNTIL YOU ARE POWERFUL OVER YOUR OWN MONEY. HOW YOU THINK ABOUT IT, HOW YOU FEEL ABOUT IT AND HOW YOU INVEST IT. #2: NOBODY, NOBODY IS GOING TO CARE ABOUT YOUR MONEY MORE THAN YOU DO. WHAT DIRECTLY HAPPENS TO YOUR MONEY AFFECTS THE QUALITY OF YOUR LIFE, NOT MY LIFE, NOT SOME FINANCIAL ADVISOR'S LIFE, BUT *YOUR* LIFE. SO TODAY, THIS ENTIRE NEXT HOUR, THIS IS ABOUT PUTTING YOU ON THE ROAD TO WEALTH, YOUR OWN ROAD TO WEALTH, DECIDING WHERE DO YOU WANT TO GO? HOW DO YOU GET THERE? WHAT DO YOU NEED TO TAKE WITH YOU TO ASSURE A SAFE ARRIVAL? OVER ALL THE YEARS OF DEALING WITH MONEY, I REALIZED WE ALL GO THROUGH VARIOUS STAGES OF OUR MONEY. AND I DON'T CARE HOW OLD WE ARE. AGE HAS NOTHING TO DO WITH HOW WE FEEL ABOUT MONEY. AGE HAS NOTHING TO DO WITH HOW MUCH MONEY WE SHOULD HAVE OR WE DON'T HAVE. YOU EACH HAVE YOUR OWN FINANCIAL AGE. SO THERE ARE SOME OF YOU OUT THERE THAT MAY BE 50 AND HAVE TONS OF MONEY. THERE MAY BE SOMEBODY OUT THERE WHO IS 50 AND THEY DON'T HAVE A POT TO PEE IN! IT DOESN'T MATTER WHERE YOU ARE BUT WE ALL HAVE THESE FINANCIAL AGES AND MOST OF US FIRST START OUT IN DEBT, WHETHER IT'S STUDENT LOAN DEBT OR CREDIT CARD DEBT, AND THEN FROM THERE WE PROGRESS TO USUALLY WANTING TO INVEST FOR OUR FUTURE, BUT WHAT KIND OF RETIREMENT ACCOUNT SHOULD WE HAVE, A ROTH IRA, A TRADITIONAL IRA, A SIMPLE PLAN, A KEO PLAN, DO YOU EVEN KNOW WHAT I'M TALKING ABOUT? YOU WILL BY THE TIME THIS HOUR IS OVER. FROM THERE, WHAT DO WE NEED TO DO? WE NEED TO MAKE SURE THE RIGHT KIND OF INSURANCE IS IN PLACE. DO YOU HAVE WHOLE LIFE, TERM INSURANCE, LONG-TERM CARE INSURANCE, WHAT DO YOU GOT? WHAT DO YOU HAVE THAT YOU DON'T NEED? NOW YOU WANT TO BUY A HOME? BUT SOME OF YOU WITH THIS GREAT AMERICAN DREAM OF WANTING TO HAVE A HOME, IT ENDS UP TO YOUR GREATEST FINANCIAL NIGHTMARE BECAUSE YOU BUY A HOME THAT'S TOO EXPENSIVE OR YOU WAIT AND YOU GET THE WRONG KIND OF MORTGAGE. SHOULD YOU HAVE A FIXED MORTGAGE? A VARIABLE MORTGAGE? SHOULD IT BE 15 YEAR, 30 YEAR? HOW DO YOU EVEN HOLD THE TITLE OF YOUR REAL ESTATE? AS YOU GO DOWN THAT ROAD TO WEALTH, USUALLY NEXT, YOU ARE IN THESE RETIREMENT ACCOUNTS. AND ALL THESE MUTUAL FUNDS ARE BEING OFFERED TO YOU. WHICH MUTUAL FUND SHOULD YOU BUY? WHAT IF YOU'RE NOT IN A RETIREMENT ACCOUNT. DO YOU KNOW TODAY THERE ARE OVER 12,000 MUTUAL FUNDS THAT ARE BEING OFFERED, LOADED, NO LOADED, 12-B1S, DO YOU BUY THEM ON YOUR OWN? THROUGH A STOCKBROKER? WHAT DO YOU DO? THEN YOU HAVE STOCKS. HOW MANY STOCKS SHOULD YOU OWN? WHICH STOCKS? A LOT OF YOU ARE STILL HOLDING ONTO STOCK FROM A YEAR OR TWO AGO THAT YOU SHOULD HAVE SOLD BUT WHAT PREVENTED YOU FROM DOING SO? WE'RE GOING TO TALK ABOUT THAT. THEN WE START TO GET INTO THINGS LIKE WILLS AND TRUSTS. FOR INSTANCE, OUT HERE I WANT YOU TO BE HONEST WITH ME, HOW MANY OF YOU RIGHT HERE AND RIGHT NOW DO NOT HAVE A LIVING TRUST *AND* A WILL IN PLACE AS YOU SIT HERE? PLEASE RAISE YOUR HANDS. OKAY MY FRIENDS, LOOK AROUND. THAT WAS ALMOST 99% OF THE PEOPLE IN THIS ROOM TODAY, AND I'M SURE THOSE WATCHING THIS AT HOME DON'T HAVE A WILL AND A TRUST. CAN YOU TELL ME WHY? IT'S NOT IF YOU'RE GOING TO DIE, IT'S WHEN. DO YOU KNOW THIS? I'M VERY SERIOUS. EACH AND EVERY ONE OF YOU KNOWS YOU SHOULD HAVE A WILL AND A TRUST SO WHAT IS PREVENTING YOU FROM DOING IT? YOU WANT TO KNOW WHAT'S PREVENTING YOU FROM DOING A WILL, A TRUST, THE RIGHT TYPES OF MUTUAL FUNDS, THE RIGHT TYPES OF INSURANCE, THE RIGHT TYPES OF MORTGAGES FOR YOURSELVES, THE RIGHT TYPES OF TITLES FOR YOU? IT'S BECAUSE YOU DON'T KNOW WHO TO ASK YOUR QUESTIONS TO. AND WHEN YOU DO ASK A QUESTION, YOU ARE NOT EVEN SURE IF THE ANSWER THAT YOU ARE GETTING IS THE CORRECT ANSWER. THERE IS SO MUCH INFORMATION OUT THERE TODAY THAT ALL OF US HAVE BECOME PARALYZED BECAUSE WE DON'T KNOW WHERE TO GO. AND, AGAIN, THIS IS WHAT TODAY IS ALL ABOUT. I'M ASKING YOU TO COME HERE, RIGHT HERE WITH ME. WE DON'T WANT ANYTHING FROM YOU. IT IS NOT LIKE I WANT YOU TO BECOME A CLIENT OF MINE BECAUSE I DON'T TAKE CLIENTS. IT IS NOT LIKE I HAVE A MUTUAL FUND TO SELL YOU OR SOMETHING LIKE THAT. THE INFORMATION THAT YOU ARE ABOUT TO HEAR THROUGHOUT THIS NEXT HOUR IS UNBIASED INFORMATION, INFORMATION TO HELP YOU GET FROM HERE WHERE YOU ARE SITTING TODAY TO POINT X, WHICH IS YOUR DESTINATION POINT ON THIS ROAD TO WEALTH. BUT BEFORE YOU CAN GET TO WHERE YOU WANT TO GO, SOMETIMES IT'S GOOD, SOMETIMES IT IS VERY GOOD TO LOOK IN THE MIRROR AND SEE WHERE HAVE WE COME FROM? AND WHY ARE MANY OF US SITTING IN A SITUATION WHERE MAYBE WE HAVE A PORTFOLIO THAT IS DOWN 50 OR 60% FROM WHERE IT WAS A YEAR OR TWO AGO. WHY DID THIS HAPPEN IN THE YEAR 2001, THAT THE STOCK MARKET IS DOWN CONSIDERABLY? SO A VERY BRIEF HISTORY OF THE PAST. HERE IT WAS 1999. EVERYBODY THOUGHT THAT THE MARKET WAS LITERALLY GOING TO CLOSE DOWN IN THE YEAR 2000 WHEN JANUARY 1ST HIT. NOT ONLY DID YOU INDIVIDUALS THINK THAT, BUT THE GOVERNMENT THOUGHT THAT AS WELL. THEY THOUGHT THE BANKING SYSTEM WAS GOING TO COLLAPSE SO THEY INFUSED THE BANKING SYSTEM WITH MILLIONS AND MILLIONS OF DOLLARS, SO IF THERE WAS A RUN ON MONEY, THERE WOULD BE MONEY IN THE SYSTEM FOR YOU TO ACCESS. NEXT WHAT HAPPENED? ALL OF THESE COMPANIES DECIDED OH, MY GOD, EVERYTHING IS GOING TO SHUT DOWN, SO WE'RE GOING TO ORDER EXCESS INVENTORY SO THAT IN CASE EVERYTHING STOPS JANUARY 1ST, 2000, WE DON'T HAVE TO WORRY BECAUSE WE'RE GOING TO HAVE ALL THIS INVENTORY IN OUR STOREROOMS TO SELL TO ALL OF YOU. SO WE DON'T HAVE TO WORRY. THINK ABOUT THIS. THE MORE INVENTORY A COMPANY ORDERS FROM ANOTHER COMPANY, THE COMPANY THEY ARE ORDERING IT FROM-- GUESS WHAT HAPPENS TO THAT COMPANY? THEIR EARNINGS GO UP. THE ECONOMY LOOKS LIKE IT'S DOING FABULOUS BECAUSE EVERYBODY IS ORDERING ALL THIS INVENTORY. THERE IS ALL THIS MONEY IN THE SYSTEM, AND EVERYTHING SEEMS FABULOUS. WHILE THAT IS GOING ON, MR. ALAN GREENSPAN IS COMING OUT AND HE IS SAYING IN MAY OF 1999, HE WAS SAYING TO ALL OF YOU, YOU KNOW WHAT? THIS ECONOMY IS GROWING TOO QUICKLY. I NEED TO CLOSE IT DOWN. SO I'M GOING TO START TO RAISE INTEREST RATES. AND I'M GOING TO RAISE INTEREST RATES ALL THE WAY UP UNTIL THE ECONOMY STOPS. DID YOU LISTEN TO HIM? MOST OF US DIDN'T. MOST OF US DIDN'T KNOW TO LISTEN TO HIM. IT IS NOT BECAUSE YOU DIDN'T KNOW WHAT TO DO. YOU KNOW, IT IS EASY FOR ME TO STAND UP HERE AND SAY OH, LOOK WHAT HAPPENED A FEW YEARS AGO? WHEN YOU'RE CAUGHT IN THIS WHIRLWIND, IT'S VERY, VERY DIFFICULT TO SEE THE FORCES THAT ARE COMING AT YOU, SO THE REASON THAT I'M TELLING YOU ALL ABOUT THIS RIGHT NOW IS THAT IF IT EVER HAPPENS AGAIN, AND IT WILL, YOU WILL KNOW THESE ROAD SIGNS TO LOOK FOR AS YOU ARE TRAVELING DOWN THIS ROAD TO WEALTH. SO THAT'S WHY I WANT TO GO OVER THIS QUICK PAST WITH YOU SO IN THE FUTURE WHEN IT HAPPENS AGAIN, YOU'LL UNDERSTAND IT. SO HERE WE ARE. ALAN GREENSPAN IS RAISING INTEREST RATES. EXCESS INVENTORY. ALL THIS MONEY IN THE SYSTEM. JANUARY 1ST, 2000 HAPPENS AND GUESS WHAT? NOTHING GOES WRONG. COMPUTERS DON'T SHUT DOWN. BANKS ARE STILL THERE. EVERYTHING IS GOING RIGHT AND NOW EVERYTHING STARTS TO GO WRONG. WHY? BECAUSE THE LITTLE GUY WHO HADN'T BEEN IN THE MARKET UP UNTIL THIS POINT, THEY HAD BEEN ON THE SIDELINES SO AFRAID THAT THEY WERE GOING TO LOSE EVERYTHING, BECAUSE OF Y2K, THEY DECIDED THEY WERE JUST GOING TO SIT ON THE SIDELINES. Y2K IS OVER. NOW THEY START RUSHING INTO THE STOCK MARKET. DO YOU NOTICE? WHEN WAS THE HIGH OF THE DOW JONES INDUSTRIAL AVERAGE? IN THE MIDDLE OF JANUARY OF THE YEAR 2000. AND THEN WHAT DO WE HAVE? WE HAVE A SITUATION WHERE THE LITTLE GUY HAS COME INTO THE MARKET, THE EFFECTS ARE BEING FELT, AND NOW WE HAVE EXCESS INVENTORY. ALL OF A SUDDEN ALL THIS INVENTORY THAT ALL THESE CORPORATIONS ORDERED ISN'T BEING USED. THERE IS NOBODY TO SELL IT TO. AND THE FEDS ARE STARTING TO PULL MONEY BACK OUT OF THE SYSTEM, WHICH STARTS TO DRY UP THE ECONOMY, AND ALL OF A SUDDEN WE'RE AT THE TOP OF THE STOCK MARKET AND THEN EVERYTHING STARTS TO GO DOWN. SO DO YOU SEE WHY WE HAD SUCH PROBLEMS IN THE ECONOMY? NOW LET'S LOOK AT YOUR OWN PERSONAL ECONOMY. WHAT WAS GOING ON WITH ALL OF US, SO LOOK INSIDE NOW, YOU HAD A STOCK THAT WENT FROM 10, TO 20, TO 50, TO 120 TO 100, TO 80, TO 60, AND WHY IS IT THAT WE DIDN'T SELL? AND YOU SHOULDN'T FEEL BAD ABOUT NOT SELLING, MY FRIENDS, BECAUSE NOBODY IN THE UNITED STATES SOLD. EVERYTHING STILL WAS KIND OF GOING UP. IT LOOKED GOOD. WHO WAS THERE TO TELL US TO SELL? FINANCIAL ADVISORS DIDN'T KNOW WHAT TO DO. THEY'RE HUMAN JUST LIKE ALL OF US. AND THAT IS WHY IT IS ESSENTIAL THAT WE KNOW THE CORRECT QUESTIONS TO ASK TO GET THE CORRECT ANSWERS. BECAUSE THIS IS WHERE WE GET INTO TROUBLE. A ROAD SIGN THAT WE SHOULD HAVE SEEN HAPPENING-- AS SOMETHING STARTS TO GO DOWN, LOOK AT YOUR OWN FINANCIAL HABITS. WE'RE ALL OR NOTHING, AREN'T WE? WE EITHER BUY EVERYTHING OR WE SELL EVERYTHING. WHEN SOMETHING GOES FROM 120 TO 100, YOU CAN SELL 20% OF WHAT YOU OWN. WHEN IT GOES FROM 100 DOWN TO 80, YOU CAN SELL ANOTHER 20%. YOU DON'T HAVE TO DO *EVERYTHING* WITH ALL OF THE MONEY THAT YOU HAVE. STAGE IN AND STAGE OUT. THE TWO BIGGEST EMOTIONAL DANGER SIGNS WHEN IT COMES TO INVESTING-- FEAR AND HOPE. THE FEAR OF: YOU ARE GOING TO SELL AND, GUESS WHAT, IT'S GOING TO GO HIGHER? THE HOPE THAT, OF COURSE, IT WILL. THE HOPE THAT WHEN SOMETHING GOES DOWN IT WILL GO UP HIGHER. DO YOU KNOW THAT IN 1987 WHEN THERE WAS THAT CRASH AND THE MARKET WENT DOWN SIGNIFICANTLY, DO YOU KNOW WHAT ALL OF YOU WERE THINKING? NOT I WANT IT TO COME BACK AND MAKE MONEY. YOU WERE JUST ALL HOPING THAT IT WOULD COME BACK SO YOU COULD BE *EVEN*. YOU JUST WANTED TO BE EVEN BECAUSE THE FACT THAT YOU MAY LOSE MONEY, YOU CAN'T DO THAT. YOU ARE AFRAID. THERE IS SOMETHING THAT EMOTIONALLY KEEPS YOU BACK FROM DOING SO. SO YOU KNOW WHAT HAPPENED? 1988 CAME, 1989. EVERYTHING MADE THEIR MONEY BACK AND THEN YOU SOLD. AND THEN WE HAD SOME OF THE BEST YEARS EVER IN THE STOCK MARKET AND ALL OF YOU MISSED OUT ON IT. SO I WANT YOU TO UNDERSTAND NUMBERS AND HOW MONEY WORKS BECAUSE THE NUMBER ONE QUESTION I'M BEING ASKED NOW: WHEN WILL IT COME BACK? WHAT SHOULD I DO NOW? NOW I AM DOWN SIGNIFICANTLY AND I CAN TELL YOU, WHEN THE DAY COMES THAT I'M WALKING DOWN THE STREET AND SOMEBODY STOPS SAYING TO ME SUZE, IS IT TIME TO BUY CISCO? THEY ARE ALL SAYING THIS, IS IT TIME TO BUY CISCO? WHEN THAT QUESTION STOPS, THEN I WILL KNOW THAT THIS MARKET HAS HIT ITS BOTTOM. BUT UNTIL THEN, I WANT YOU TO UNDERSTAND HOW NUMBERS WORK. WHEN SOMETHING GOES FROM 100 TO 50, THAT IS A 50% DECLINE, IS IT NOT? FOR SOMETHING TO GO FROM 50 BACK TO 100, THAT IS A 100% INCREASE. SO I'M GOING TO GIVE YOU A LITTLE TEST HERE. I'LL GIVE YOU TWO CHOICES, A AND B. I HAVE EACH GIVEN YOU $10,000 OUT THERE, AND TRUST ME, I'M GOING TO ASK YOU FOR IT BACK WHEN THE SHOW IS OVER. IT IS NOT YOURS TO KEEP. YOU HAVE TWO CHOICES. #1: ON THAT $10,000, I GUARANTEE YOU 80% THE FIRST YEAR ON YOUR MONEY, BUT THE SECOND YEAR YOU WILL LOSE 50%, SO 80, 50, MAYBE YOU WILL STILL BE UP 30%. THAT'S CHOICE A. OR CHOICE B: I GUARANTEE YOU 5% THE FIRST YEAR, AND 5% THE SECOND. WHICH CHOICE DO YOU REALLY WANT? DO YOU WANT TO MAKE MAYBE 30% OR 10? WHICH ONE? WE ALL WANT A, DON'T WE. THAT'S WHAT EVERYBODY IN THE UNITED STATES THOUGHT IN 1999 AND THE YEAR 2000 BECAUSE IN 1999 THE NASDAQ, WHICH IS THE INDEX THAT CONTROLS MOST OF THE TECHNOLOGY STOCKS, WENT UP 80, 85% THAT YEAR. IT WENT DOWN 50 TO 55% IN THE YEAR 2000. SO LET ME DO THE NUMBERS FOR YOU. $10,000 GOES UP 80% THE FIRST YEAR, THAT'S $8,000, SO NOW YOU HAVE $18,000. BUT NOW IT GOES DOWN 50% YEAR TWO. THAT'S $9,000. RIGHT? 50% OF 18,000, IS 9,000. THAT LEAVES YOU $9,000 LEFT OR YOU ARE DOWN 10% FROM WHERE YOU STARTED. YOU THOUGHT YOU WERE GOING TO BE UP $3,000, DIDN'T YOU? UH-UH OPTION B, THINK ABOUT THIS-- $10,000, AT 5% IS $10,500. $10,500 AT ANOTHER 5% THE NEXT YEAR IS $525. FOR A TOTAL OF $11,025. WHICH ONE DID YOU WANT? YOU WANT B, YOU WANT A. YOU REALLY ALL WANTED B, DO YOU SEE THAT? SO AS WE GO DOWN THE ROAD TO WEALTH DON'T GO DOWN IN A SPORTS CAR. DON'T GO DOWN IN THIS FLASHY VEHICLE THAT CAN GO 80 MILES AN HOUR, CAN GO BACKWARDS AT 50 MILES AN HOUR. YES--I WOULD MUCH RATHER BE ON THIS LITTLE PUTT-PUTT THAT GOES 5 MILES AN HOUR THIS YEAR AND NEXT YEAR I WILL GET TO MY GOAL A LOT SOONER. SO YOU HAVE TO UNDERSTAND NUMBERS AND HOW THEY WORK. AND WITH THAT SAID, THESE MARKETS ARE IN TURMOIL. ARE THESE GOOD TIMES? ARE THESE BAD TIMES? WHAT KIND OF TIMES ARE WE SERIOUSLY IN? WE ARE IN MEDIOCRE TIMES. IN MY OPINION, THERE HAS NEVER BEEN A BETTER TIME TO BE INVESTING IN THE STOCK MARKET IF YOU HAVE 10, 15, OR 20 YEARS UNTIL YOU NEED YOUR MONEY. YOU SHOULD BE THRILLED THAT THE MARKET IS DOWN BECAUSE AS THE MARKET GOES DOWN, EVERYTHING IS CHEAPER. AND AS EVERYTHING IS CHEAPER, YOUR DOLLARS BUY MORE STOCK. AND THAT IS ESSENTIAL BECAUSE THE MORE SHARES YOU HAVE OF SOMETHING WHEN IT EVENTUALLY GOES BACK UP, THE MORE WEALTH YOU HAVE. BUT, NO, ALL OF YOU, YOU WANT THE MARKETS TO GO UP RIGHT HERE SO EVERYTHING YOU INVEST IN CAN BE MORE EXPENSIVE. WHAT ARE YOU THINKING? THAT IS NOT HOW IT SHOULD BE. BUT WITH THAT SAID, IT IS ESSENTIAL THAT YOU ALL KNOW THAT THERE ARE MORE WAYS TO GO DOWN THE ROAD TO WEALTH THAN JUST SIMPLY INVESTING IN THE STOCK MARKET. THERE ARE ALL KINDS OF THINGS THAT YOU HAVE TO PUT INTO PLACE TO MAKE SURE THAT YOUR STAGES OF YOUR FINANCIAL LIFE ARE IN ORDER. YOU ALREADY TOLD ME THAT 99% OF YOU IN THIS ROOM DON'T HAVE A WILL, DON'T HAVE A TRUST. WHEN YOU DON'T KNOW WHAT TO DO IN THE STOCK MARKET, START GETTING YOUR OTHER FINANCIAL LIFE IN ORDER. START DOING THE THINGS THAT YOU SHOULD HAVE DONE ALL ALONG BUT YOU HAVE BEEN CONCENTRATING ON THE STOCK MARKET. SO THAT'S WHAT I WANT TODAY TO BE ABOUT. I WANT TO BRIEFLY TALK ABOUT THESE NEW TAX LAWS THAT HAVE RECENTLY BEEN PASSED. YOU *HAVE GOT* TO TAKE ADVANTAGE OF THEM. VERY FEW OF YOU MAY BE AWARE THAT WHILE THE TAX LAWS ARE HAPPENING RIGHT NOW, DO YOU KNOW IN THE YEAR 2111 EVERYTHING GOES BACK TO WHERE IT IS RIGHT HERE TODAY, IF WE EVEN GET TO THE YEAR 2111. THE GOVERNMENT HAS THE RIGHT TO GO BACK TOMORROW AND CHANGE EVERYTHING SO THAT NONE OF THESE TAX LAWS GO INTO EFFECT. THERE IS ONE AREA THAT YOU HAVE GOT TO TAKE ADVANTAGE OF AND YOU HAVE GOT TO TAKE ADVANTAGE OF IT AS LONG AS IT IS IN PLACE. AS YOU KNOW, PART OF THIS NEW TAX ACT WAS THIS-- THAT THE AMOUNTS THAT YOU CAN CONTRIBUTE INTO YOUR IRAS, YOUR RETIREMENT ACCOUNTS HAVE INCREASED, SO STARTING IN THE YEAR 2002, FROM 2002, 2003, 2004, YOU CAN PUT $3,000 A YEAR INTO AN IRA ACCOUNT. IF, HOWEVER, YOU ARE 50 YEARS OF AGE OR OLDER, YOU CAN DO WHAT THEY CALL THE CATCH-UP PROVISION, AND PUT $3,500 IN FOR THOSE THREE YEARS. STARTING AFTER THAT IT INCREASES ALL THE WAY UP, BUT I JUST WANT TO MAKE THIS POINT. IF YOU DID NOT TAKE ADVANTAGE OF IT, LET'S SAY YOU JUST CONTINUED TO PUT $2,000 A YEAR INTO AN IRA FOR THE NEXT 9 YEARS, BECAUSE THAT'S HOW MANY YEARS WE'RE GOING TO HAVE STARTING IN THE YEAR 2002 TO ACTUALLY TAKE ADVANTAGE OF THIS. DO YOU KNOW THAT AT A 9% RETURN YOU WOULD HAVE $26,000 IN YOUR IRA? BUT IF YOU ARE UNDER 50 AND PUT THE MAXIMUM EVERY SINGLE YEAR THEY ALLOW YOU TO PUT IN, DO YOU KNOW 9 YEARS FROM NOW AT THAT 9% RETURN YOU WOULD HAVE $50,000? HOWEVER, IF YOU ARE 50 OR OLDER, AND YOU DID IT, YOU WOULD HAVE $60,000. THE DIFFERENCE BETWEEN $60,000 AND $26,000 IS A LOT OF MONEY, MY FRIENDS. THAT IS MONEY THAT THE GOVERNMENT IS ESSENTIALLY SAYING TO YOU, INVEST IT, PUT IT AWAY FOR YOUR FUTURE, TAKE ADVANTAGE OF THIS. IF YOU DON'T TAKE ADVANTAGE OF IT, IT IS LIKE THROWING OUT $34,000 THAT YOU COULD HAVE IN A RETIREMENT ACCOUNT JUST SIMPLY BECAUSE YOU DIDN'T GET AROUND TO IT. SAME THING WITH THE 401(K). IN A 401(K) PLAN STARTING NEXT YEAR, IF YOU ARE UNDER 50 YOU WILL BE ABLE TO PUT IN $11,000, THEN 12,000, THEN 13,000, THEN 14,000, THEN 15,000. BUT, HOWEVER, IF YOU ARE 50 OR OLDER, YOU'RE GOING TO BE ABLE TO PUT IN MORE THAN THAT-- 12,000, 14,000, 16,000, 18,000, AND THEN $20,000. AND YOU WILL BE ABLE TO DO THAT ALL THE WAY FOR THOSE 9 YEARS UNTIL 9 YEARS ARE UP. WHAT'S THE DIFFERENCE? IF YOU SIMPLY CONTRIBUTED THE MAXIMUM TO A 401(K) ACCOUNT, WHICH IS $10,000 THIS YEAR, IN THE YEAR 2001, IF YOU DID THAT FOR 9 YEARS AT THAT 9% RETURN, YOU WOULD HAVE $142,000. BUT IF YOU ARE UNDER 50 AND YOU CONTRIBUTE THE ABSOLUTE MAXIMUM THAT THEY ALLOW YOU TO DO, YOU WILL HAVE $184,000. IF YOU ARE 50 OR OLDER AND YOU DO IT TO THE MAXIMUM, YOU WOULD HAVE $233,000. THAT IS $91,000 MORE THAN IF THE LAWS WERE JUST LIKE THEY ARE TODAY. TIME IS OF THE ESSENCE FOR EACH AND EVERY ONE OF YOU. YOU HAVE GOT TO TAKE ADVANTAGE OF WHAT'S HAPPENING WITH THESE LAWS BECAUSE EVENTUALLY THEY WILL REVERT BACK. SO IF YOU DON'T TAKE ADVANTAGE OF IT, YOU ARE TAKING YOUR OWN ROAD TO WEALTH DOWN INTO THE WRONG DIRECTION, INTO THE DIRECTION OF NOT AS MUCH AS YOU SHOULD HAVE. THESE ARE THE THINGS THAT I WANT TO TALK TO YOU ABOUT TODAY. THIS IS WHY IT IS ESSENTIAL BECAUSE, YOU KNOW, NOBODY ELSE IS TALKING ABOUT THESE THINGS. EVERYBODY ELSE, AGAIN, IS SIMPLY TALKING ABOUT STOCKS. OVER THIS NEXT HOUR THIS SHOW IS FOR EACH AND EVERY ONE OF YOU TO ASK THE QUESTIONS THAT YOU DON'T EVEN KNOW WHO TO ASK THEM OF. AND FOR THOSE OF YOU WHO DON'T KNOW WHICH QUESTIONS TO ASK, LISTEN TO EVERYBODY IN THIS AUDIENCE BECAUSE EACH AND EVERY ONE OF US ARE ALMOST IDENTICAL MIRRORS OF EACH OTHER. IF I HAVE A QUESTION, CHANCES ARE THE ANSWER TO THAT QUESTION WILL PERTAIN TO THE PERSON NEXT TO YOU, AND YOU AND YOU. MONEY IS UNIVERSAL. IT TOUCHES EACH AND EVERY ONE OF US. I JUST WANT TO END BEFORE WE GO TO PLEDGE BREAK HERE BY SAYING WHILE I WOULD BE THE LAST PERSON IN THIS WORLD TO EVER TELL YOU THAT MONEY ALONE WILL EVER MAKE YOU HAPPY, FOR IT WILL NOT, I WOULD BE THE ABSOLUTE FIRST PERSON TO TELL YOU LACK OF MONEY-- SURE WILL MAKE YOU MISERABLE. THERE IS NOTHING WRONG WITH HAVING MORE AND BEING MORE. THERE IS NOTHING WRONG WITH ENDING YOUR ROAD TO WEALTH WITH MORE MONEY THAN YOU KNOW WHAT TO DO WITH. WHEN YOU LEAVE, YOU ARE GOING TO TAKE WHATEVER YOU HAVE WITH YOU, YOUR MEMORIES. THERE IS ONE THING THAT YOU ARE GOING TO LEAVE ON THIS EARTH AND THAT IS THE WEALTH THAT YOU HAVE CREATED. MONEY GOES ON TO LIVE FAR AFTER YOU HAVE GONE. IT GOES ON TO HELP YOUR CHILDREN, YOUR OTHER FAMILY MEMBERS, MAYBE EVEN NONPROFIT ORGANIZATIONS, EVERYBODY. SO PLEASE, LET'S DRIVE DOWN THAT ROAD TO WEALTH SO THAT OUR DESTINATION IS ONE THAT WE ALL WANT TO BE AT. SO THAT'S WHAT WE'RE GOING TO TALK ABOUT. AND NOW WE'RE GOING TO GO TO PLEDGE BREAK BUT WHEN WE COME BACK, I'M GOING TO TAKE EACH AND EVERY ONE OF YOUR QUESTIONS. SEE YOU SOON.

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[applause]

THANK YOU VERY MUCH, THANK YOU. SO RIGHT NOW WE'RE GOING TO GO TAKE QUESTIONS AND ANSWERS BUT I JUST WANT TO POINT OUT SOMETHING FOR ALL OF YOU TO TAKE NOTE OF. IN MY OPINION, A GOOD FINANCIAL ADVISOR SHOULD BE ABLE TO ANSWER ANY QUESTION THAT YOU HAVE ON THE SPOT. AND THEY SHOULD ALSO ASK QUESTIONS BACK TO YOU TO INTERVIEW YOU BECAUSE EACH AND EVERY ONE OF YOU ARE DIFFERENT. SO POSSIBLY WHAT'S RIGHT FOR YOU VERSUS WHAT'S RIGHT FOR YOU MAY BE VERY DIFFERENT. SO LEARN FROM ME NOW. LEARN AS TO HOW I INTERVIEW YOU AS YOU ARE ASKING SOMETHING FROM ME BECAUSE WHEN YOU GO TO SEE A FINANCIAL ADVISOR, IF ALL THEY ARE SAYING TO YOU IS SO, MS. JONES, HOW MUCH MONEY DO YOU HAVE? AND THEY HAPPEN TO SAY BACK, $10,000. AND THEN THE FINANCIAL ADVISOR SAYS OKAY, NOW I WANT YOU TO BUY X, Y AND Z. HOW WOULD THE FINANCIAL ADVISOR KNOW THAT? MAYBE THE FINANCIAL ADVISOR NEEDS TO SAY BUT, MRS. JONES, DO YOU HAVE ANY CREDIT CARD DEBT? MRS. JONES, HOW IS YOUR HEALTH? MRS. JONES, IS THERE ANYTHING THAT YOU ARE GOING TO NEED TO PURCHASE SUCH AS A NEW CAR OR DO YOU NEED TO FIX THE ROOF ON YOUR HOUSE? SO PLEASE PAY ATTENTION TO HOW I ANSWER YOUR QUESTIONS BECAUSE THEN YOU WILL LEARN AS TO HOW A GOOD FINANCIAL ADVISOR SHOULD BE TALKING TO YOU AND WITH YOU WHEN YOU GO TO SEE THEM.

YES, MY DEAR, WHAT CAN I DO FOR YOU? HI, MY NAME IS KEN BAROS. WHEN I HEARD THE FIRST SEGMENT I THOUGHT WELL, THE IRA EXPANSION, THAT'S GREAT, YOU PUT AWAY 2,500 MORE A YEAR UP TO A MAXIMUM, BUT THEN I THOUGHT IT MIGHT BE DIFFICULT FOR MANY PEOPLE TO GET TO THE POINT WHERE THEY CAN PUT *ANY* MONEY AWAY, MAYBE I'M ANTICIPATING WHAT WILL HAPPEN LATER IN THE SHOW, BUT HOW DO PEOPLE GET TO THE POINT WHERE THEY CAN SAVE MONEY, ESPECIALLY WHEN AMERICANS HAVE SUCH A LOW SAVINGS RATE TO BEGIN WITH?

SO LET ME. . .

(Ken) I'M SORRY. NO--GOOD FOR YOU, APOLOGIZE TO ME, I LIKE A MAN WHO APOLOGIZES TO ME. THAT'S A GOOD THING. LET ME ASK YOU THIS, IS IT HARD FOR YOU TO SAVE? LET'S NOT WORRY ABOUT AMERICA, THAT'S THEIR PROBLEM. YOU TELL ME IS IT HARD FOR YOU TO PUT THE MAXIMUM EVERY SINGLE YEAR INTO A RETIREMENT ACCOUNT?

AT THIS POINT, YES.

SO YOUR QUESTION TO ME REALLY IS, SUZE, IT IS DIFFICULT FOR ME TO SAVE. HOW DO I GO ABOUT DOING THAT, CORRECT?

SO A GOOD FINANCIAL ADVISOR WOULD SAY TO YOU WELL, FINE, BEFORE WE LOOK AT RETIREMENT ACCOUNTS, DO YOU HAVE ANY CREDIT CARD DEBT?

(Ken) NO.

(Suze) NONE. SO YOU DON'T HAVE ANY DEBT, CAR LOAN DEBT?

I HAVE A STUDENT LOAN.

(Suze) SO A STUDENT LOAN DEBT IS THE ONLY DEBT YOU HAVE. ARE YOU AWARE THAT STARTING IN THE YEAR 2002 YOU WILL BE ABLE TO TAKE OFF ANY AND ALL INTEREST THAT YOU HAVE BEEN PAYING ON THESE STUDENT LOANS OFF YOUR TAXES?

I'M AWARE, I HAVE DONE IT ALREADY.

FOR THOSE OF YOU WHO ARE NOT, THIS YEAR THE MAXIMUM IN INTEREST YOU CAN TAKE OFF IF YOU QUALIFY FOR IT IS $2,500 A YEAR IF YOU'RE WITHIN THE FIRST 60 MONTHS OF HAVING REPAID BACK THAT LOAN. STARTING NEXT YEAR NO MATTER HOW MUCH YOU OWE EACH YEAR OR YOU PAY BACK EACH YEAR OR HOW LONG YOU ARE INTO THAT LOAN, YOU GET TO TAKE IT OFF YOUR TAXES IF YOU QUALIFY. SO THAT MAY BE A LARGER TAX SAVINGS FOR YOU THAT YOU THEN CAN TAKE AND PUT TOWARDS YOUR RETIREMENT. TIME IS OF THE ESSENCE. THE ROAD TO WEALTH IS PAVED WITH TIME. TIME IS THE MOST IMPORTANT INGREDIENT IN ANY FINANCIAL FREEDOM RECIPE, BAR NONE. QUICK EXAMPLE FOR YOU-- YOU START $100 TODAY, PUTTING $100 TODAY, YOU ARE 25 YEARS OF AGE, INTO A GOOD NO LOAD MUTUAL FUND, ONE WITHOUT A COMMISSION, AND YOU DO SO EVERY SINGLE MONTH UNTIL YOU ARE 65 YEARS OF AGE. IF YOU DO SO, YOU WILL HAVE APPROXIMATELY ONE MILLION DOLLARS AT 65, AT $100 A MONTH, AT AN AVERAGE RETURN OF ABOUT 12%. IF YOU WAIT JUST 10 YEARS, THINK, NO BIG DEAL, 25, IF I WAIT UNTIL I'M 35, $100 A MONTH IS $1200 A YEAR, OVER 10 YEARS, THAT'S $12,000. WHAT DIFFERENCE CAN $12,000 MAKE? IF YOU WAIT UNTIL YOU ARE 35 TO START, RATHER THAN 25, AT THE AGE OF 65 YOU WOULD HAVE ONLY $300,000. THAT $12,000 TRANSLATES INTO $700,000 LESS FOR YOU. WHAT'S THE DIFFERENCE? TIME. THIS IS WHAT I WOULD LIKE YOU TO START TRYING. FROM THIS DAY FORWARD I NEVER WANT YOU TO SPEND ANY MORE CHANGE. YOU GO INTO A PLACE AND YOU BUY SOMETHING FOR $4.50 AND GIVE THEM A $5.00 BILL AND YOU GET 50 CENTS IN CHANGE PUT THAT 50 CENTS IN YOUR POCKET. NEXT PLACE YOU GO INTO, YOU BUY A PACK OF GUM FOR 50 CENTS, DON'T TAKE THE 50 CENTS OUT OF YOUR POCKET, TAKE ANOTHER DOLLAR, GIVE IT TO THEM, PUT THE 50 CENTS IN. I PROMISE YOU THAT IF YOU DO THAT EVERY SINGLE DAY FROM HERE ON, YOU WILL HAVE 50 TO 100 DOLLARS AT THE END OF THE MONTH OF EXTRA MONEY THAT YOU DON'T EVEN KNOW ABOUT. YOU DIDN'T EVEN KNOW WHERE IT WENT. SO MANY TIMES WE USE IT AS AN EXCUSE THAT WE DON'T HAVE ENOUGH MONEY. IT IS NOT ABOUT MAKING MORE MONEY. IT IS ABOUT KNOWING MORE ABOUT THE MONEY THAT YOU ALREADY MAKE. A MAJOR LAW OF MONEY--THE MORE YOU MAKE, THE MORE YOU SPEND. ISN'T IT TRUE? THE LESS YOU *THINK* YOU MAKE, THE LESS YOU WILL SPEND. SO BESIDES NOT SPENDING CHANGE, I WANT YOU TO JUST TRY THIS. STARTING NEXT WEEK, START TAKING FOR THIS YEAR WHATEVER YOU CAN AND PUT IT AWAY EVERY SINGLE MONTH INTO AN IRA, A ROTH IRA, WHATEVER SAVINGS VEHICLE YOU HAVE. I PROMISE YOU YOU WON'T EVEN MISS THE MONEY. ALL OF A SUDDEN YOUR SPENDING HABITS WILL DECREASE ACCORDING TO THE AMOUNT OF MONEY THAT YOU HAVE ACCESS TO. BEFORE YOU KNOW IT, YOU'RE PUTTING $2,000 AWAY THIS YEAR, $3,000 NEXT YEAR, $3,000 THE YEAR AFTER THAT, $3,000 AFTER THAT, $4,000, BEFORE YOU KNOW IT, YOU'LL BE SAVING AND ON YOUR ROAD TO WEALTH.

YES.

HI, SUZE, I'M JUDY BRANTING. IF I FEEL I DO NEED FINANCIAL ADVISE, WHERE DO I GO? DO I GO TO A BROKER? A FINANCIAL PLANNER? IF I DO GO TO AN ADVISOR, DO I PAY A FEE OR A PERCENTAGE OF ASSETS? HOW DOES THE AVERAGE PERSON FIND ADVICE?

I TRULY BELIEVE FROM THE BOTTOM OF MY HEART IF YOU WANT TO FIND THE BEST FINANCIAL ADVISOR OUT THERE, LOOK IN THE MIRROR. I BELIEVE THAT. I CAN'T TELL YOU HOW MUCH I BELIEVE THAT. WITH THAT SAID, SOMETIMES PEOPLE WANT HELP. ESPECIALLY WHEN THE MARKETS ARE GOING UP, THEY'RE GOING DOWN, THEY DON'T KNOW WHERE TO GO, SO WHAT DO YOU LOOK FOR? ESSENTIALLY THERE ARE 3 DIFFERENT TYPES OF FINANCIAL ADVISORS OUT THERE. COMMISSION-BASED ADVISOR. NOTICE HOW YOU SAID WHERE DO YOU FIND A BROKER? DO YOU EVER WONDER WHY THEY CALL THEM STOCK BROKERS? MAKE THEY MAKE YOU BROKER! POSSIBLY--JUST A THOUGHT! BUT WITH THAT SAID, A COMMISSION-BASED BROKER OR FINANCIAL ADVISOR IS SOMEBODY WHO USUALLY WORKS FOR A MAJOR BROKERAGE FIRM. THEN YOU HAVE PEOPLE WHO WORK FOR THEMSELVES THAT ARE KNOWN AS CERTIFIED FINANCIAL PLANNERS OR FINANCIAL PLANNERS. SO YOU HAVE PEOPLE THAT WORK FOR BROKERAGE FIRMS. YOU HAVE PEOPLE WHO NORMALLY WORK FOR THEMSELVES, CERTIFIED FINANCIAL PLANNERS, OR YOU CAN BE A BROKER AND A CERTIFIED FINANCIAL PLANNER. YOU ALSO HAVE FEE-BASED PLANNERS. PLANNERS THAT YOU GO TO THAT DON'T WORK ON COMMISSION AND SIMPLY CHARGE A FEE, MAYBE IT IS $500 OR $1,000 TO TELL YOU WHAT TO DO. A CERTIFIED FINANCIAL PLANNER CAN ALSO WORK ON COMMISSIONS. SO IF I WERE GOING TO PICK ANYBODY OUT OF A HAT FOR YOU AS TO WHO TO GET FINANCIAL ADVICE FROM, IT WOULD BE A FEE-BASED CERTIFIED FINANCIAL PLANNER. SO WITH THAT SAID, DEPENDING ON YOUR SITUATION, WHAT DO YOU WANT FROM A FINANCIAL ADVISOR, TELL ME.

WELL, I PRESUME IT IS JUST TO MAKE THE MONEY GROW AND BE THERE.

(Suze) HOW MUCH YOU GOT?

(Judy) WOW!

(Suze) SEE, NOBODY WANTS TO TELL ME HOW MUCH MONEY THEY HAVE. [laughter] I MEAN, WHAT'S THAT ABOUT? BUT, YOU SEE, THIS IS VERY INTERESTING, WHAT JUST HAPPENED HERE. WE DON'T WANT TO TALK ABOUT MONEY! MONEY, GOD FORBID WE SHOULD TALK ABOUT IT. WE TALK MORE ABOUT SEX, THANK YOU EX-PRESIDENT CLINTON, THAN WE DO ABOUT MONEY. WE DON'T WANT EACH OTHER TO KNOW HOW MUCH MONEY WE HAVE. THE CORPORATIONS DON'T WANT US TO KNOW THAT THIS PERSON IS GETTING PAID $20,000 TO DO LESS WORK THAN WHAT YOU ARE BECAUSE WE'RE NOT ALLOWED TO TALK ABOUT OUR SALARIES TO ONE ANOTHER. OUR CHILDREN DON'T KNOW HOW MUCH MONEY WE MAKE. WE DON'T KNOW HOW MUCH MONEY OUR CHILDREN MAKE. GOD FORBID WE SHOULD TALK TO OUR PARENTS TO ASK THEM IF THEY HAVE A WILL OR A TRUST BECAUSE WE'RE AFRAID THAT THEY WILL FEEL THAT WE'RE BEING GREEDY WITH THEM. AND SO WE DON'T TALK ABOUT IT. BUT IF WE ALL STARTED TO OPENLY TALK ABOUT MONEY, THE MONEY WE HAVE AND THE MONEY WE DON'T HAVE, FOR INSTANCE, HOW MANY OF YOU IN THIS ROOM, AND YOU BE HONEST WITH ME RIGHT NOW OR I AM GOING TO HUNT YOU DOWN LIKE THE DOGS THAT YOU ARE, REALLY I WILL, YOU KNOW I WILL COME OUT THERE-- HOW MANY OF YOU IN THIS ROOM HAVE CREDIT CARD DEBT THAT YOU CANNOT PAY OFF AT THE END OF THE MONTH? PLEASE RAISE YOUR HANDS AND BE PROUD OF IT. SHOW AMERICA WHAT'S GOIN' ON HERE. HOW MUCH CREDIT CARD DEBT YOU GOT?

(woman) 42,000.

(Suze) GOOD. YOU?

BUSINESS?

WELL, WHAT WAS IT? 120,000, DON'T YOU FEEL GOOD NOW? YES, HOW MUCH YOU GOT? 30,000, 3,000. WHO ELSE? HOW MUCH YOU GOT? 12,000--IT'S NOT SO BAD. AND PROBABLY THIS WAS THE FIRST TIME EVER THAT YOU PROBABLY TOLD ANYBODY HOW MUCH YOU HAVE. I'D LIKE YOU TO DO SOMETHING RIGHT NOW. TURN TO THE PERSON NEXT TO YOU AND TELL THEM HOW MUCH CREDIT CARD DEBT YOU HAVE. DO IT RIGHT NOW. OR HOW MUCH YOU HAD AT ONE POINT. DO IT!

[all talk]

HOW MUCH YOU GOT?

(woman) 7,000.

(Suze) HOW MUCH YOU GOT?

(man) PAID IT OFF.

(Suze) PAID OFF, THAT'S MY BOY. ANY?

SOME.

HUM.

SO HERE WE ARE, RIGHT? SO I'M UP HERE AND ALL OF A SUDDEN I ASK--NOW, I DIDN'T SEE THESE PEOPLE RAISE THEIR HANDS, BY THE WAY, WHEN I ASKED THE QUESTION TO BEGIN WITH HOW MUCH CREDIT CARD DEBT YOU GOT, 7,000 WOMAN OVER HERE, HOW MUCH YOU GOT, "SOME". . .THAT'S TRUE. BUT WAS THAT NOT FOR MOST OF YOU THE FIRST TIME THAT YOU EVER TOLD *ANYBODY* HOW MUCH CREDIT CARD DEBT YOU HAVE? BECAUSE WE DON'T TALK ABOUT . WE DON'T TALK ABOUT WHAT WE DON'T HAVE. WE DON'T TALK ABOUT WHAT WE HAVE. AND THEREFORE THAT RENDERS US *POWERLESS*. THAT'S THE SHAME OF MONEY AND THAT SHAME RENDERS US POWERLESS. AND WHEN WE ARE POWERLESS, WE MAKE INCORRECT DECISIONS WITH OUR MONEY. AND YOU HAVE TO THINK ABOUT THAT. WHEN YOU DON'T KNOW WHAT TO DO, IT IS BETTER TO DO NOTHING THAN TO DO SOMETHING YOU DO NOT UNDERSTAND. I WOULD RATHER SEE YOU EDUCATE YOURSELF A LITTLE, KEEP YOUR MONEY IN THE MONEY MARKET FUND, YOU ARE NOT GOING TO MISS OUT, KEEP YOUR MONEY IN A MONEY MARKET FUND RIGHT NOW, JUST KEEP IT SAFE AND SOUND OR THE STOCKS THAT YOU HAVE AND REALLY LOOK AT IT AND START TO LEARN SLOWLY BUT SURELY. DOES THAT MAKE SENSE? ALL RIGHT. DON'T BE ASHAMED OF WHAT YOU HAVE AND WHAT YOU DON'T HAVE. MONEY IS A GOOD THING TO TALK ABOUT. AND I UNDERSTAND NOT WANTING TO TELL THE ENTIRE UNITED STATES HOW MUCH MONEY YOU HAVE. NO PROBLEM, THAT I GET. SO DID THAT HELP YOU?

VERY MUCH.

YES, MY DEAR, WHAT CAN I DO FOR YOU? QUESTION MY NAME IS LINDA BENVENITO AND I HAVE A QUESTION ABOUT THE 529 EDUCATION PROPOSAL. I HAVE A 13-YEAR-OLD, I'M 54. I'M WONDERING WHETHER THAT'S A GOOD PLACE TO CONSIDER FOR COLLEGE SAVINGS. I JUST WANTED TO KNOW YOUR OPINION ON THAT. I KNOW THAT DIFFERENT STATES HAVE VARIOUS PROGRAMS AND I'M NOT SURE WHETHER I SHOULD CHOOSE A CERTAIN STATE OR HOW TO GO ABOUT THAT WHOLE PROCESS.

CURRENTLY AS OF TODAY THERE ARE 42 DIFFERENT STATES THAT HAPPEN TO HAVE 529 COLLEGE SAVINGS PLANS. FOR THOSE OF YOU WHO DON'T KNOW, 529 IS SIMPLY THE NAME OF THE LAW THAT DICTATES IT. THE COLLEGE SAVINGS PLAN IS A PLAN THAT ALLOWS YOU TO PUT 50, 100, 150,000 DOLLARS, IN FACT, IN SOME STATES IT IS A QUARTER MILLION DOLLARS INTO ONE OF THESE PLANS. YOU PUT IT INTO ONE OF THESE PLANS AND WHEN YOU GO TO TAKE THE MONEY OUT UNDER THE NEW TAX LAWS, THE MONEY IS TAKEN OUT TAX FREE TO PAY FOR THE EDUCATION EXPENSES OF A BENEFICIARY. THE BENEFICIARY DOESN'T JUST HAVE TO BE YOUR CHILD. IT CAN BE ANYBODY. OUT OF ALL THE PLANS OUT THERE OF HOW TO SAVE FOR A COLLEGE EDUCATION, I HAPPEN TO LOVE 529 SAVINGS PLANS FOR YOU, GIVEN THAT YOUR CHILD IS 13 YEARS OF AGE, BECAUSE IN JUST 4 OR 5 YEARS YOUR CHILD IS GOING TO BE GOING TO COLLEGE. SO YOU'LL BE ABLE TO TAKE THIS MONEY OUT TAX FREE TO PAY FOR THIS COLLEGE EDUCATION. OF THE 42 STATES THAT CURRENTLY HAVE THESE PLANS, YOU COULD GO TO ANY SINGLE STATE THAT YOU WANTED TO, INVEST IN THEIR PLAN. AND WHY WOULD YOU GO TO A DIFFERENT STATE? BECAUSE MAYBE THE INVESTMENT RETURNS OR HOW THAT STATE INVESTS THE MONEY IN THIS PLAN FIT YOUR NEEDS BETTER. SO, FOR INSTANCE, FOR YOU, YOU MIGHT WANT TO GO TO A STATE THAT INVESTS MORE CONSERVATIVELY BECAUSE YOU ONLY HAVE 4 YEARS UNTIL YOU NEED THIS MONEY. MAYBE IF YOUR CHILD WAS ONLY BORN RIGHT NOW, YOU WOULD WANT TO GO TO A STATE THAT WAS MORE AGGRESSIVE. WHICH STATE BEST FITS YOUR NEED? ALL OF YOU ARE TO GO ON THE INTERNET UNDER A WEB SITE CALLED SAVINGFORCOLLEGE DOT COM. IT IS A SITE HEADED BY JOE HURLEY WHO, IN MY OPINION, IS *THE* EXPERT IN THE UNITED STATES ON 529 COLLEGE SAVINGS PLANS. THIS IS WHAT I WANT YOU ALL TO KEEP IN MIND, HOWEVER. REMEMBER HOW I TOLD YOU, STARTED THE SHOW TODAY, THAT YOU HAD TO BE VERY CAREFUL BECAUSE THE TAX LAWS ARE GOING TO BE CHANGING AND THEY WILL BE REVERTING BACK TO HOW IT IS RIGHT HERE AND RIGHT NOW? IN THE YEAR 2111, THE TAX SAVINGS OF THESE COLLEGE 529 PLANS GOES AWAY. SO THE WAY THAT IT WORKS RIGHT NOW IS ■ IF YOU PUT MONEY INTO A 529 PLAN, YOU GET TO PUT IT IN. BUT WHEN YOU TAKE IT OUT, IT IS TAXED AT THE BENEFICIARY'S TAX RATE. SO THE CHILD THAT'S GOING TO BE GOING TO SCHOOL WILL HAVE TO PAY INCOME TAX ON THAT MONEY. IF YOU ARE LUCKY ENOUGH TO HAVE A CHILD GOING TO SCHOOL BETWEEN YEARS 2002 AND 2010 WHEN YOU GO TO TAKE THE MONEY OUT, IT'S TAX FREE. WHAT IF YOUR CHILD WAS ONLY TWO? TEN YEARS FROM NOW THEY'RE 12. THEY ARE NOT GOING TO COLLEGE AT THAT POINT IN TIME. SO FOR ALL OF YOU OUT THERE WHO HAVE YOUNGER CHILDREN, THERE MIGHT BE A BETTER WAY FOR YOU TO SAVE FOR A COLLEGE EDUCATION THAN A 529 PLAN. IN THAT CASE I WOULD LOOK INTO THE EDUCATIONAL IRA. I MIGHT EVEN LOOK INTO A ROTH IRA UNDER MY OWN NAME. SO DEPENDING ON YOUR NEEDS, HOW MUCH YOU REALLY HAVE, I WOULD STAY MORE CONSERVATIVE THAN NOT, BUT A 529 PLAN IS STILL A GREAT WAY TO GO.

YES, MA'AM.

HI, I'M BEVERLY GREGORY. I JUST SOLD TWO RENTAL PROPERTIES USING A 1031 TAX-DEFERRED EXCHANGE. I HAVE THREE OTHER RENTAL PROPERTIES. AND THE QUESTION IS SORT OF A TAX QUESTION. I HAVE THE CHOICE OF EITHER PAYING A HUGE AMOUNT-- WELL, I THINK $60,000 IS A HUGE AMOUNT OF MONEY IN TAXES.

(Suze) ARE YOU MAKING AN EXCUSE IN FRONT OF ME?

(Beverly) I AM NOT SURE.

(Suze) DID YOU JUST SEE WHAT SHE DID? LET ME JUST CLARIFY IT FOR YOU. $60,000 IS A HUGE AMOUNT OF MONEY. JUST KNOW IT. IN CAPITAL GAINS TAX, OR GOING INTO DEBT FOR ANOTHER PROPERTY.

(Suze) DO YOU WANT TO OWN ANOTHER PROPERTY?

I DON'T WANT TO PAY THE $60,000.

LET ME ASK YOU, GO BACK, DO YOU WANT TO OWN ANOTHER PIECE OF PROPERTY?

FORGET THE TAX.

NOT REALLY.

NOT REALLY, THAT IS THE ANSWER TO YOUR QUESTION. YOU ARE NEVER, YOU ARE NEVER TO DO ANYTHING SIMPLY TO AVOID PAYING TAX. DO YOU KNOW HOW MANY PEOPLE HAVE SERIOUSLY GOTTEN IN TROUBLE BECAUSE THEY HAD A STOCK, THEY BOUGHT IT AT 10, WENT TO 120, THEY DIDN'T WANT TO SELL IT BECAUSE THEY DIDN'T WANT TO HAVE TO PAY THE TAX ON IT? SO THEY HELD IT, AND NOW IT IS HERE AT 3. NOW, I'M NOT SAYING THAT THAT WILL HAPPEN WITH YOUR REAL ESTATE, BUT WITH REAL ESTATE, ALL KINDS OF THINGS CAN HAPPEN. YOU CAN NEED A NEW ROOF, YOUR PLUMBING CAN BREAK. YOUR TENANT THAT YOU GET IN THERE CAN ALL OF A SUDDEN BE A HORRIBLE TENANT AND NOT PAY YOU AND BEFORE YOU KNOW IT, YOU COULD GO WHY DIDN'T I PAY THAT $60,000 OF TAX? YOU NEED TO DO THAT WHICH MAKES YOU FEEL POWERFUL. IF YOU WANT TO OWN ANOTHER PIECE OF REAL ESTATE, OKAY, BUT FOR ME, I WOULD BE THRILLED IF I HAD TO OWE $60,000 IN TAX AND I MADE ADDITIONAL MONEY BESIDES THAT BECAUSE YOU ARE DOING REALLY WELL. WHEN YOU ORIGINALLY BOUGHT THESE PROPERTIES AND YOU INVESTED, YOU INVESTED IT BECAUSE YOU WANTED TO OWN THEM, IS THAT CORRECT?

YES.

(Suze) AND AT THAT TIME WHEN YOU DID THAT, THAT MADE YOU FEEL POWERFUL, IS THAT CORRECT?

CORRECT.

AND LOOK AT THE AMOUNT OF MONEY YOU MADE-- YOU MADE A KILLING! AND NOW ALL OF A SUDDEN YOU ARE CHANGING WHAT WAS SUCCESSFUL FOR YOU. WHAT WAS SUCCESSFUL FOR YOU WAS DOING THAT WHICH MADE YOU FEEL POWERFUL, THAT WHICH YOU WANTED TO DO. AND IT REAPED A FINANCIAL REWARD FOR YOU. NOW YOU DON'T WANT TO DO SOMETHING BECAUSE YOU DON'T WANT TO PAY THE TAX. YOU DON'T WANT TO OWN REAL ESTATE, BUT YOU DON'T WANT TO PAY THE TAX. DO YOU SEE HOW ALL OF A SUDDEN YOU ARE RENDERING YOURSELF POWERLESS BECAUSE YOU HAVE MONEY IN YOUR LIFE? DO YOU SEE WHAT'S HAPPENING HERE? PAY THE TAX, BE HAPPY. IN FACT, WHEN YOU WRITE THE CHECK, WHERE IT SAYS IRS, WHERE IT SAYS PAY TO THE ORDER, RIGHT ABOVE THAT "I AM HAPPY TO," WRITE THOSE WORDS. OKAY. BUT IT'S TRUE-- YOU KNOW EVERYBODY SAYS, OH, SUZE ORMAN, YOU PAY SO MUCH IN INCOME TAXES. DEAR GOD, PLEASE HEAR ME, MAY I PAY MORE IN INCOME TAXES AS TIME GOES ON. THAT MEANS I AM MAKING MORE! SOMETHING TO THINK ABOUT.

YES.

THE CONCERN WAS I HAVE TWO SONS IN COLLEGE, AND I GUESS I'M THINKING THAT BECAUSE I HAVE DONE WELL, IN REAL ESTATE, THAT IF I DO THIS AGAIN, IT WILL REAP A BENEFIT SO THAT IT WILL MAKE THE BURDEN OF THEIR EDUCATION A LITTLE BIT LESS FOR ME? ARE YOU POSITIVE, IF YOU BUY THIS NEW PIECE OF REAL ESTATE, THAT IT WILL REAP THE EXACT SAME BENEFIT THAT THESE OTHER PIECES OF REAL ESTATE REAPED YOU, ESPECIALLY WHEN THE STOCK MARKET WAS SKYROCKETING, EVERYBODY HAD ALL THIS MONEY, THE WEALTH FACTOR HAD KICKED IN, PEOPLE WERE BUYING REAL ESTATE THAT THEY COULDN'T AFFORD, YOU REAPED THE BENEFITS OF THAT BUT THAT BENEFIT CAME DIRECTLY FROM THE STOCK MARKET. ARE YOU POSITIVE IN YOUR GUT THAT THIS NEW PIECE OF REAL ESTATE THAT YOU ARE ABOUT TO BUY WILL REAP YOU THE EXACT SAME OR BETTER BENEFIT THAN THESE LAST ONES THAT YOU BOUGHT?

NO, IT WON'T.

THEY WON'T? THEN WHY DO YOU WANT TO DO IT?

BECAUSE YOU DON'T WANT TO PAY THE TAX. THE $60,000.

BEFORE I GO ON, DO YOU ALL UNDERSTAND HOW MOST OF YOU KNOW THE ANSWERS TO THE QUESTIONS THAT YOU ALREADY ASK OR THAT YOU HAVE? YOU JUST DON'T WANT THEM TO BE CONFIRMED. THAT'S ALL, YOU ALREADY KNOW WHAT YOU SHOULD BE DOING. REMEMBER, NEVER TALK YOURSELF INTO TRUSTING ANYONE. THE BEST FINANCIAL ADVISOR OUT THERE IS YOU. LOOK IN THE MIRROR. ALL RIGHT, THESE QUESTIONS HAVE ALL BEEN GREAT SO FAR. WE'RE GOING TO A BREAK, BUT WE'LL BE BACK IN JUST A FEW MINUTES.

♪ ♪

(man) SUPPORT FOR THIS PROGRAM HAS BEEN PROVIDED BY THE VANGUARD GROUP. VANGUARD IS COMMITTED TO DIRECTLY SERVING INVESTOR NEEDS WITH PERFORMANCE, VALUE, AND PERSONAL SERVICE. MILLIONS OF INVESTORS NATIONWIDE ENTRUST THEIR MUTUAL FUNDS, RETIREMENT, AND BROKERAGE ASSETS TO VANGUARD. THIS PROGRAM IS ALSO MADE POSSIBLE BY CONTRIBUTIONS TO YOUR PBS STATION FROM VIEWERS LIKE YOU. THANK YOU!

[loud applause]

THANK YOU. ALL RIGHT EVERYBODY, WE'RE BACK SO I'M READY FOR THE NEXT QUESTION. I'D LIKE TO KNOW ABOUT LONG TERM-CARE POLICIES. I KNOW YOU RECOMMEND THREE OR FOUR COMPANIES.

YES, SO THE QUESTION IS LONG-TERM CARE INSURANCE, IS IT NECESSARY, IS IT NOT? WHICH COMPANIES ARE GOOD? LET ME JUST PUT IT THIS WAY. ONE OUT OF THREE OF YOU WILL SPEND SOME TIME IN A NURSING HOME AFTER THE AGE OF 65. AVERAGE LENGTH OF STAY IS 2.9 YEARS. AVERAGE AGE OF ENTRY IS 84 YEARS OF AGE. BUT HERE IS THE MISTAKE ALL OF YOU MAKE. YOU THINK YOUR HEALTH INSURANCE POLICIES WILL COVER A LONG-TERM CARE STAY IN A NURSING HOME. AND I HAVE GOT NEWS FOR YOU, THERE IS NOT ONE HEALTH INSURANCE POLICY OUT THERE THAT WILL COVER A LONG-TERM CARE STAY. NEXT MISTAKE--YOU THINK MEDICARE WILL PAY FOR YOU. WRONG--IT WILL NOT. MEDICARE WILL NOT PAY FOR YOU IN 99.5% OF THE CIRCUMSTANCES. MEDICARE WILL PAY FOR YOU BUT ONLY IF YOU ARE IN A SKILLED NURSING HOME, WHICH MEANS THAT YOU ARE IN A SKILLED NURSING HOME BECAUSE YOU HAVE BEEN IN A HOSPITAL FOR AT LEAST THREE DAYS PRIOR TO THAT. AND IF MEDICARE DOES PAY FOR YOU, THEY WILL ONLY PAY FOR YOU FOR THE FIRST 20 DAYS AND 20 DAYS ONLY. WHO WILL PAY FOR YOU? YOU WILL OUT OF YOUR OWN POCKET. SO I'D LIKE TO ASK YOU ALL THIS QUESTION-- DO YOU HAVE WHAT IT TAKES TODAY TO CONTINUE TO LIVE AT HOME? LET'S SAY YOU ARE MARRIED, AND DO YOU HAVE WHAT IT TAKES TO CONTINUE TO LIVE AT HOME TODAY, WHERE THE COSTS MAY BE FOR YOUR MORTGAGE, YOUR RENT, WHATEVER, AND BE ABLE TO AFFORD TO KEEP YOUR SPOUSE OR LIFE PARTNER IN A NURSING HOME TODAY AT THE COST OF ABOUT $5,000

PER MONTH? MOST OF YOU DON'T HAVE THAT KIND OF MONEY. SO WHAT HAPPENS? YOU USE ALL THE MONEY THAT YOU HAVE TO KEEP YOUR SPOUSE IN A NURSING HOME. THEN YOUR SPOUSE DIES. WHEN YOUR SPOUSE DIES, CHANCES ARE YOU ARE LOSING A PENSION CHECK AND ONE SOCIAL SECURITY CHECK. SO HERE YOU ARE TO CONTINUE ON WITH YOUR LIFE AND YOU DON'T HAVE ANY MONEY. HOW DO YOU HELP THAT? BY GETTING A LONG-TERM CARE INSURANCE POLICY.

BUT CAN YOU AFFORD IT? BECAUSE THE KEY TO LONG-TERM CARE INSURANCE IS NOT JUST CAN YOU AFFORD IT TODAY, BUT CAN YOU AFFORD IT 5 YEARS FROM NOW, 10 YEARS FROM NOW, 20 YEARS FROM NOW? MOST PEOPLE GO IT IS NO BIG DEAL, I'LL PURCHASE IT RIGHT NOW, AND THEN 10 YEARS FROM NOW THEY ARE NO LONGER WORKING, MAYBE THEY ARE JUST ON SOCIAL SECURITY, AND, BOOM, THEY CAN'T AFFORD IT ANYMORE SO THEY DROP IT. HUGE, HUGE MISTAKE. YOU HAVE GOT TO KNOW THAT YOU CAN AFFORD THESE POLICIES IN YOUR RETIREMENT YEARS IN CASE OF A DEATH OF A SPOUSE, WHATEVER, THEN YOU SHOULD LOOK INTO BUYING IT.

IF THAT'S TRUE, THE PERFECT AGE TO PURCHASE IN MY OPINION IS 59. A LOT OF YOU ARE GOING TO BE OFFERED LONG-TERM CARE INSURANCE POLICIES AT YOUR PLACE OF EMPLOYMENT. AND YOU ARE GOING TO LOOK AT IT AND GOING TO SAY, GOD, AT 45 IT'S ONLY A FEW HUNDRED DOLLARS A YEAR. I'M ASKING YOU NOT TO PURCHASE IT BECAUSE IF YOU REALLY TOOK THAT FEW HUNDRED DOLLARS A YEAR AND YOU INVESTED IT FOR THE NEXT 14 YEARS, THE INTEREST ON THAT MONEY 14 YEARS FROM NOW IS ENOUGH TO GENERATE THE DIFFERENCE IN PREMIUM FOR YOU WHEN YOU GET TO BE 59. ALSO, HOW DO YOU KNOW AT 45 IF YOU ARE GOING TO BE ABLE TO AFFORD THIS WHEN YOU ARE 65, WHEN YOU ARE 70, WHEN YOU ARE 75? YOU STILL DON'T HAVE A REALISTIC VIEWPOINT OF YOUR MONEY. SO AT THE AGE OF 59, YOU KNOW KIND OF WHAT IS HAPPENING. HOW DO YOU SAVE FOR RETIREMENT? HAVE YOU NOT? WHAT'S GOING ON? YOU'RE GOOD THAT WAY. SO THEREFORE, 59 IN MY OPINION IS THE ABSOLUTE PERFECT TIME TO BUY.

AGAIN, WITH THAT SAID THERE WILL BE MANY, MANY OPTIONS YOU GET TO CHOOSE FROM WHEN YOU DO A LONG-TERM CARE INSURANCE POLICY. SO IT'S WHICH OPTIONS SHOULD YOU GET? I PERSONALLY RECOMMEND ZERO DAY DEDUCTIBLE, WHICH MEANS FROM DAY ONE THIS COMPANY WILL PAY FOR YOU IF YOU GO INTO A NURSING HOME. I DO NOT BELIEVE THAT YOU NEED MORE THAN 6 YEARS OF COVERAGE UNLESS ALZHEIMER'S RUNS IN YOUR FAMILY. IF SO, 6 YEARS IS WHERE YOU WANT TO GO, NORMALLY. LIFETIME BENEFITS IF ALZHEIMER'S HAPPENS TO RUN IN YOUR FAMILY. HOW MUCH INSURANCE SHOULD YOU BUY? YOU HAVE TO LOOK AT YOUR NEEDS BUT I WOULD LOOK AT ABOUT 100 TO $150 A DAY. I WOULD LOOK AT 5% COMPOUNDED INFLATION. AND MOST OF THE GOOD POLICIES WILL ALSO COVER YOU FOR ADULT ASSISTED LIVING, THESE DIFFERENT TYPES OF POLICIES AND DIFFERENT COMPANIES THAT YOU CAN USE TO HELP YOU WHEN YOU STAY AT HOME. THESE ARE THINGS THAT WE ALL NEED TO LEARN AND ASK BUT NOBODY EVER TALKS ABOUT IT. SO THAT'S WHY I'M BEING IN SUCH DETAIL WITH YOU. I LIKE LONG-TERM CARE INSURANCE. MAKE SURE IT MAKES SENSE IN YOUR PARTICULAR SITUATION.

YES, SIR. HI, SUZE, MY NAME IS GREG ROWE. I HAVE A QUESTION FOR YOU ABOUT STOCKS. MY QUESTION IS THAT I HAD A STOCK PURCHASED FOR ME WHEN I WAS MUCH YOUNGER, I'M 25 YEARS OLD NOW. NOW IS THE TIME IN LIFE FOR YOU, MY DEAR BOY, TIME OF LIFE. I HAVE TAKEN ADVANTAGE OF THE ROTH IRA SINCE I WAS 20 AND MY 401(K) SINCE I STARTED WORK. SO I AM TRYING TO TAKE CARE OF THOSE. BUT MY BIG QUESTION IS WHAT I SHOULD DO WITH THIS STOCK WHICH WAS PURCHASED, I BELIEVE, IN 1989, ORIGINALLY $4,000 IN A TECH COMPANY THAT DID VERY WELL. WHAT'S IT WORTH NOW? RIGHT NOW IT'S WORTH ABOUT $50,000. SO YOU WENT FROM 4 TO $50,000. WHAT WAS IT WORTH A YEAR AND A HALF AGO? ABOUT A QUARTER OF A MILLION DOLLARS. (Suze) AND YOU'RE JUST SICK TO YOUR STOMACH? WELL, YEAH. YOU CAN TELL ME THE TRUTH, I AM FOR YOU. MY MAJOR QUESTION, THOUGH, IS NOT THAT I LOST WHAT I DID WHEN IT WAS UP AT $250,000. MY QUESTION IS NOW, I MEAN, I STILL HAVE FAITH IN THE COMPANY. I HAVE A LOT OF SHARES. (Suze) WHAT COMPANY IS IT? IT'S EMC. THEY'RE STILL A LEADER IN THEIR INDUSTRY. . . (Suze) LET ME ASK YOU THIS, HOW MUCH OF THIS ONE STOCK THAT YOU OWN MAKE UP THE PERCENTAGE OF YOUR ENTIRE PORTFOLIO? THE ENTIRE PORTFOLIO THAT I HAVE, INCLUDING THE 401(K)S, ROTH IRAS AND EVERYTHING, PROBABLY 80%. ALL RIGHT, I DON'T CARE WHAT THE OUTLOOK IS FOR THAT COMPANY, YOU HAVE TOO MUCH INVESTED IN ONE PARTICULAR COMPAN RULE OF THUMB IS THIS-- NO MORE THAN 4% OF THE MONEY THAT YOU HAVE INVESTED IN THE STOCK MARKET IN MY OPINION SHOULD BE INVESTED IN ONE STOCK. YOU HAVE 80% OF EVERYTHING THAT YOU HAVE INVESTED IN ONE STOCK. AT ONE POINT, IT WAS EVERYTHING THAT YOU HAD. INTELLIGENCE WOULD SAY YOU DIVERSIFY, BUT YOU KNOW WHEN YOU'LL BE ABSOLUTELY MISERABLE, YOU'LL BE MISERABLE WHEN YOU DO DIVERSIFY AND THEN ALL OF A SUDDEN IN TWO OR THREE YEARS FROM NOW IT SKYROCKETS AND YOU SIT THERE AND MENTALLY FIGURE OUT HOW MUCH MONEY YOU WOULD HAVE HAD IF YOU HAD KEPT IT. THAT TYPE OF MENTAL THINKING ABOUT MONEY WILL BE YOUR DOWNFALL. REMEMBER, THE TWO INTERNAL OBSTACLES TO CREATING WEALTH--FEAR AND HOPE. YOU SAW IT UP AT 250, IT'S DOWN AT 50, THE GREATEST THING THAT COULD HAPPEN FOR YOU HERE IS TO LEARN YOUR OWN EMOTIONS ABOUT THIS AS TO WHY YOU DIDN'T SELL SOME OF IT WHEN IT WENT FROM 250. THAT'S ANOTHER STORY. THAT'S ANOTHER STORY! I KNOW, WAIT, I KNOW WHY. HE DIDN'T WANT TO PAY TAXES. RIGHT? DID THAT HAVE SOMETHING TO DO WITH IT? IT WASN'T AS MUCH ME, IT IS ANOTHER STORY. IT HAD TO DO WITH TAXES, THOUGH, YES. I WILL TELL WHAT THE STORY IS. HIS FATHER WHO GAVE THIS TO HIM, IS THIS CORRECT, REALLY LIKED THE STOCK, ISN'T THIS CORRECT? (Greg) YES, YES. (Suze) YES. DO YOU SEE? NOW, THIS WAS A FABULOUS LESSON. I HAVE NEVER SEEN THIS MAN BEFORE IN MY LIFE, HONEST TO GOD. HOW DID I KNOW THE REASON WHY THIS HAPPENED TO HIM? BECAUSE THE STORIES ARE ALL THE SAME. SO YOU FELT OBLIGATED TO YOUR DADDY BECAUSE DADDY GAVE THIS TO YOU AND, THEREFORE, YOU NEEDED TO LISTEN TO WHAT DADDY WAS SAYING. THIS WAS THE ADVICE THAT I WOULD TELL YOU. THE GREATEST LESSON YOU CAN LEARN FROM THIS, AND IT WAS WORTH EVERY SINGLE PENNY OF IT, HONEST TO GOD IT WAS, WAS FOR YOU TO LEARN THAT WHEN YOU FEEL SOMETHING OR YOU THINK IT, THAT YOU STAND UP FOR IT AND YOU SAY IT AND WHO CARES IF YOU ARE RIGHT, WHO CARES IF YOU ARE WRONG? THE MERE FACT THAT YOU HAVE THE POWER WITHIN YOU TO SAY WHAT YOU THINK IS TRUE EARNS YOU SELF-RESPECT. WHEN YOU HAVE SELF-RESPECT, YOU ARE MORE POWERFUL. AND WHEN YOU ARE MORE POWERFUL, OTHER PEOPLE CAN FEEL IT.

I HAVE ONE FOLLOW-UP WITH THAT. DO THE VAST NUMBER OF SHARES THAT I OWN IN THIS COMPANY NOW, DUE TO THAT AT THIS POINT, AND I DON'T IMMEDIATELY NEED ACCESS TO THAT MONEY FOR ANYWHERE BETWEEN NOW, 10 TO 15 YEARS DOWN THE ROAD, I DON'T FORESEE ANY OF THAT. I HAVE A DOWN PAYMENT ON MY HOUSE AND I HAVE THAT GOING AND SO I WON'T NEED MONEY FOR THAT. (Suze) ARE YOU MARRIED? ENGAGED. (Suze) THERE YOU GO. PRENUP? IS SHE HERE? SHE'S HERE. WHERE IS SHE? YOU GET UP HERE WITH HIM. COME HERE, SWEETHEART. HOW MUCH DO YOU KNOW ABOUT MONEY? I'M LEARNING. SO WHAT IS VERY ESSENTIAL FOR YOU IN THIS RELATIONSHIP IS THAT YOU ARE ABOUT TO MARRY A MAN WHO IS VERY KNOWLEDGEABLE, HAS ALREADY ACCUMULATED A VERY LARGE FORTUNE FOR HIMSELF AT THE AGE OF 25, AND THE QUESTION BECOMES HOW INVOLVED ARE YOU GOING TO BE IN THIS MONEY? LADIES OUT THERE, EVERYBODY LISTEN TO ME, IT IS KEY, IT IS KEY THAT YOU LEARN ABOUT YOUR MONEY AND YOU LEARN ABOUT THIS MONEY TODAY. YOU GET EQUALLY INVOLVED IN IT. LADIES, ISN'T IT TRUE ALL OF OUR HUSBANDS, THEY SAY TO US, SWEETHEARTS, DON'T WORRY YOUR PRETTY LITTLE HEAD ABOUT IT, BUT ACTUARIALLY SPEAKING, WOMEN GO ON TO LIVE 10, 15, 20 YEARS LONGER THAN THEIR MALE COUNTERPART AND WE'RE THE ONES THAT ARE LEFT WITH, WHEN THEY ARE GONE, ALL OF A SUDDEN WE GO, OH, I SHOULD HAVE BEEN WORRYING MY PRETTY LITTLE HEAD ABOUT THIS. THEY NEED HELP TO DO THIS TOGETHER. IF YOU REALLY WANT THIS MARRIAGE TO SUCCEED, YOU NEED TO JOIN IN AND BE HIS EQUAL PARTNER SO IT'S NOT ALL ON HIS SHOULDERS. BECAUSE THE GUYS ARE GOOD GUYS. AND HE'S GOING TO LOVE YOU SO MUCH THAT HE'S GOING TO SAY SWEETHEART, I'LL TAKE THIS FINANCIAL BURDEN AND I'LL CARRY IT ON MY SHOULDERS. AND WHO DO THE MEN HAVE TO ASK? THEY ASK HIS FATHER! THEY ASK JOE, THEIR NEXT DOOR NEIGHBOR. THEY ASK TIM DOWN THE STREET. AND ARE THEY GETTING THE RIGHT INFORMATION? LADIES, THEY WON'T EVEN ASK FOR DIRECTIONS. [LAUGHTER & APPLAUSE] THINK ABOUT IT. SO I DON'T KNOW WHAT'S GOING ON THERE BUT, AGAIN, ACTUARIALLY SPEAKING, MEN DIE BEFORE WE DO. I PERSONALLY THINK WE'RE KILLING 'EM OFF. I JUST DO, AND HE WILL--THIS GUY IS GOING TO LOVE YOU SO MUCH, AND HE IS SO RESPONSIBLE, THAT HE IS GOING TO TRY TO TAKE CARE OF YOU, SO I ASK YOU TO REALLY START TALKING AND GETTING FINANCIALLY INTIMATE WITH ONE ANOTHER, AS WELL AS EVERY SINGLE WOMAN IN THIS ROOM, AS WELL AS EVERY SINGLE MAN IN THIS ROOM. AND WATCHING THE SHOW TODAY, BECAUSE THIS IS THE CRUX OF A TRULY GREAT POSSIBILITY OF BECOMING A REALLY WEALTHY RELATIONSHIP. DISCUSS ALL THE POSSIBILITIES, JOIN TOGETHER YOUR FORCES, AND LOVE ONE ANOTHER, DON'T JUST LET HIM DO IT. STAND BY HIS SIDE. DON'T LET HIM COME FORWARD WITHOUT YOU EVER AGAIN. DO YOU HEAR ME?

ALL RIGHT. HERE IS THE BOTTOM LINE TO YOUR QUESTION-- YOU DON'T WANT TO DIVERSIFY. IT DOESN'T MATTER IF I SAY TO YOU SELL YOUR EMC, DIVERSIFY. YOUR GUT TELLS YOU TO DO WHAT, TELL ME? MY QUESTION IS BASICALLY. . . (Suze) NO, NO! DO YOU SEE THE PROBLEMS YOU'RE ALREADY IN FOR? HE IS GOING TO TELL YOU WHAT HE WANTS TO KNOW AND HE ISN'T GOING TO LISTEN. YOUR GUT TELLS YOU. . . (Greg) MY QUESTION IS IN 10 YEARS IT'LL GO UP. . . (Suze) I DON'T CARE WHAT YOU WANT TO KNOW. I WANT YOU TO ANSWER MY QUESTION. IN YOUR GUT DO YOU WANT TO KEEP EMC? I WANT TO KEEP IT BUT I ALSO WANT TO DIVERSIFY. I WANT TO KEEP PARTS. (Suze) ARE YOU A GEMINI? WHAT DOES THAT MEAN! YOUR GUT AND YOUR RESEARCH KNOWS EXACTLY WHAT YOU SHOULD DO. IF YOU WANT TO KEEP IT AND YOU WANT TO DIVERSIFY, SELL 50%, DIVERSIFY THE 50% AND KEEP IT. BUT YOU ALREADY KNOW WHAT YOU WANT TO DO AND IF YOU THINK I'M GOING OUT ON A FINANCIAL LIMB AND TELL YOU TO DO SOMETHING BECAUSE I KNOW HE IS THE TYPE THAT IF I'M WRONG, I'M GOING TO HEAR FROM HIM FOUR YEARS FROM NOW. INTELLIGENTLY SPEAKING, SHOULD YOU BE DIVERSIFIED ACROSS THE BOARD? YES. BUT AT THIS POINT IN TIME, IS EMC A GREAT COMPANY? ABSOLUTELY. ARE THEY GOING TO COME BACK? ABSOLUTELY. YOU ARE 25, IF YOU WANT TO WAIT FOR THAT TO HAPPEN AND YOU HAVE OTHER THINGS GOING FOR YOU, ARE YOU GOING TO BE HURT? NO. DO WHAT YOU FEEL AND THE GREATEST LESSON YOU SHOULD LEARN FROM THIS TRUTHFULLY, YOU DON'T NEED TO GO OUTSIDE OF YOURSELF. YOU HAVE WHAT IT TAKES TO DO RESEARCH. YOU KNOW WHERE YOU ARE GOING. CONSULT YOUR WIFE TO BE AND THAT'S THE ONLY PERSON THAT YOU NEED TO TALK TO ABOUT THIS.

YES, SIR. HI, SUZE, I'M HERE TO LEARN ABOUT TRUSTS. I HAVE BEEN IN A CONVERSATION WITH MY PARENTS HELPING THEM TO CONVERT FROM A WILL TO A TRUST, AND THERE ARE SEVERAL DIFFERENT KINDS I WAS READING IN YOUR BOOK AND I JUST DON'T KNOW WHAT IS THE BEST KIND OR IF YOU COULD GO INTO AN EXPLANATION OF DIFFERENT TRUSTS. MOST OF YOU THINK THAT A WILL IS USUALLY ENOUGH AND THAT IS ALL THAT YOU NEED TO PASS ASSETS FROM YOU DOWN TO YOUR BENEFICIARIES. I THINK ONE OF THE BIGGEST MISTAKES THAT MOST OF YOU WILL MAKE IN YOUR LIFE IS IF ALL YOU HAVE IS A WILL. BY THE WAY, EVEN IF YOU DON'T HAVE A WILL, YOU HAVE ONE. THE STATE THAT YOU LIVE IN HAS ALREADY DICTATED WHAT WILL HAPPEN TO YOUR PRIVATE AND SEPARATE PROPERTY IF, GOD FORBID, YOU HAPPEN TO DIE WITHOUT A WILL. THAT'S CALLED INTESTATE SUCCESSION. THEY ALREADY KNOW HOW IT'S GOING TO PASS. IF YOU HAVE A WILL, I AM GOING TO GIVE YOU A QUICK EXAMPLE, LET'S SAY YOU ARE IN THE STATE OF CALIFORNIA AND HERE YOU ARE, YOU HAVE A HOME WORTH $200,000, LET'S SAY IT IS MY MAMA, AND MAMA WANTS TO LEAVE ME HER HOUSE. SHE MAY HAVE A $190,000 MORTGAGE ON THAT HOUSE, BUT IN HER WILL SHE SAYS UPON HER DEATH SUZE IS TO GET THIS HOUSE. NOW WE HAVE A PROBLEM, MOMMY HAS DIED. I NOW HAVE THIS PIECE OF PAPER THAT SAYS I'M TO GET THIS HOUSE UPON HER DEATH. BUT THE DEED OF THAT HOUSE IS STILL IN ANN ORMAN, NOT ME. HOW AM I GOING TO DO IT? SHE IS NO LONGER ALIVE TO SIGN THAT DEED OVER TO ME. I AM GOING TO HAVE TO TAKE THIS WILL DOWN TO COURT. IT IS CALLED PROBATE COURT. IT WILL TAKE SIX MONTHS TO TWO YEARS FOR THE JUDGE TO VALIDATE THIS WILL, AUTHENTICATE IT, FIRST MAKE SURE MOMMY REALLY WANTED TO LEAVE ME HER HOME. AFTER THAT HAS HAPPENED IT GOES THROUGH THE PROBATED PROCESS, AND STATUTORY PROBATE FEES ON A $200,000 HOME IN THE STATE OF CALIFORNIA, REGARDLESS OF THE MORTGAGE ON IT--$10,300. WHAT IF I DON'T HAVE THE $10,300 TO PAY THE EXECUTOR AND THE LAWYER? I GOT NEWS FOR YOU, THAT HOUSE IS GOING TO BE SOLD TO PAY THOSE LEGAL FEES. HOW CAN MOMMY HAVE DONE THAT DIFFERENTLY? MOMMY COULD HAVE DURING HER LIFETIME SET UP WHAT IS CALLED A LIVING REVOCABLE TRUST. LIVING, SHE IS DOING IT WHILE SHE IS ALIVE. REVOCABLE, SHE CAN CHANGE IT ANY TIME SHE WANTS. TRUST IS THE NAME OF THE DOCUMENT. ALL SHE HAS TO DO IS TRANSFER THE DEED OF THAT HOUSE FROM ANN ORMAN INTO THE TITLE AND THE DEED OF THE TRUST. SO, FOR INSTANCE, IT WOULD THEN BE ANN ORMAN TRUSTEE FOR THE ANN ORMAN LIVING TRUST HELD FOR HER BENEFIT WHILE SHE IS ALIVE, HELD FOR MY BENEFIT AFTER SHE HAS DIED. IT'S ALREADY IN THE TRUST, THE NAME HAS ALREADY TRANSFERRED. SO UPON MOMMY'S DEATH, GUESS WHAT, TWO WEEKS LATER THAT TITLE IS NOW IN MY NAME. NO PROBATE FEES, NO TWO YEARS TO WAIT. NO AUTHENTICATING OF IT, IT IS HOW IT IS.

THERE ARE DIFFERENT KINDS OF TRUSTS. A LIVING REVOCABLE TRUST IS THE TYPE OF TRUST THAT WE'RE TALKING ABOUT THAT PASSES ASSETS FROM YOU TO YOUR BENEFICIARIES WITHOUT PROBATE. A TAX-PLANNING TRUST OR AN AB TRUST IS A TYPE OF TRUST THAT IF YOU ARE MARRIED CAN AVOID ESTATE TAXES CURRENTLY IN THE YEAR 2001 UP TO ESTATES OF 1.3 MILLION, NEXT YEAR IT WILL BE ESTATES OF 2 MILLION, AND SO ON. SO THERE ARE TAX-PLANNING TRUSTS. THERE IS AN IRREVOCABLE TRUST THAT CAN ALSO BE USED THAT CANNOT BE CHANGED FOR ESTATE TAX PLANNING PURPOSES. SO THERE ARE MANY, MANY DIFFERENT TYPES OF TRUSTS, BUT THE TYPE OF TRUST THAT EVERY SINGLE ONE OF YOU IN THIS ROOM NEEDS, IF YOU HAVE ASSETS THAT APPRECIATE, IF YOU HAVE ASSETS, NOT JUST A BANK ACCOUNT, BUT IF YOU HAVE A STOCK PORTFOLIO OUTSIDE OF A RETIREMENT PLAN, A PIECE OF REAL ESTATE, MAYBE SOME RENTAL PROPERTY, YOU NEED A LIVING REVOCABLE TRUST. AND THAT IS ESSENTIALLY HOW YOU SHOULD DO IT. SO DO I THINK THEY ARE ESSENTIAL? YES.

NOW, THE NEXT QUESTION YOU SHOULD BE ASKING ME, HOW DO YOU FIND A LAWYER? HOW MUCH SHOULD IT COST? WHAT SHOULD A LAWYER DO FOR YOU? WHEN YOU GO TO SEE A LAWYER, YOU SHOULD LOOK FOR A LAWYER THAT SPECIALIZES IN TRUST AND THEY DO ABSOLUTELY NOTHING ELSE BUT THAT. YOU DO NOT WANT A REAL ESTATE LAWYER THAT IS AS A FAVOR GOING TO DO YOU A TRUST. TRUST ME, IT IS NOT A FAVOR AT ALL. THEY SHOULD QUOTE YOU A PRICE. YOU DO NOT WANT TO SEE A TRUST LAWYER BASED ON AN INDIVIDUAL AMOUNT PER HOUR. THEY SHOULD SAY TO YOU IT WILL BE $500 OR $3,000. WHAT IS THE PRICE, WHAT IS THAT DETERMINED BY? THE NUMBER OF ASSETS THAT YOU HAVE. DO YOU HAVE FIVE BANK ACCOUNTS, FOUR PIECES OF REAL ESTATE, FIVE STOCK PORTFOLIOS. IF THAT'S SO, THEN THE LAWYER HAS GOT TO TRANSFER EACH AND EVERY ONE OF THOSE ASSETS INTO THE TITLE OF THE TRUST. THAT IS CALLED FUNDING THE TRUST. THAT TAKES A LOT OF WORK. AND THAT IS WHAT YOU ARE PAYING THE TRUST LAWYER TO DO, TO ACTUALLY TRANSFER YOUR ASSETS FOR YOU INTO THE NAME OF THE TRUST. SO THEY ARE SITTING WITH YOU FOR THREE OR FOUR HOURS, THEY ARE TO FUND THE TRUST BY TRANSFERRING EVERYTHING INTO THE TRUST, THEY ARE TO DO A BACKUP WILL, AND A DURABLE POWER OF ATTORNEY FOR HEALTHCARE, IF, GOD FORBID, YOU EVER END UP IN A HOSPITAL ON LIFE SUPPORT. THAT IS WHAT THEIR FEES SHOULD INCLUDE. MAKE SENSE? AREN'T YOU GLAD YOU ASKED? OH, LOOK, SHE STAYED UP THERE. I'M STILL HERE. WHERE DID HE GO? HE'S BACK THERE. YOU KNOW, THEY JUST DON'T LEARN. THEY JUST DON'T LEARN.

YES, LOVE. MY NAME IS SUZANNE THOMPSON. A FEW YEARS AGO I STARTED A ROTH IRA ON HIS DAD'S SUGGESTION. [LAUGHTER] THANK GOD YOUR DAD HAS APPROVED OF HER! YOU KNOW? THANK GOD. BUT I HAVE LUCKILY LEFT IT IN A MONEY MARKET JUST BECAUSE I HAVEN'T MADE THE TIME TO TAKE CARE OF IT. HOW SHOULD I DIVERSIFY AND WHEN SHOULD I DO THAT? SO RIGHT NOW WOULD BE A FABULOUS TIME TO START TAKING THIS MONEY AND EVERY SINGLE MONTH DOLLAR COST AVERAGING INTO THESE MARKETS. WHAT IS DOLLAR COST AVERAGING? I WAS JUST GOING TO ASK THAT. DOLLAR COST AVERAGING IS SIMPLY WHERE YOU TAKE THE AMOUNT OF MONEY THAT YOU WANT TO INVEST, LET'S SAY $12,000, AND YOU DIVIDE THAT BY 12, A YEAR'S PERIOD OF TIME, 12, AND THEN YOU WOULD TAKE THAT AMOUNT OF MONEY EVERY SINGLE MONTH, IN THIS CASE IT WOULD BE $1,000 AND PUT THAT $1,000 EVERY SINGLE MONTH INTO THE STOCK MARKET, ESSENTIALLY YOU ARE TAKING YOUR DOLLARS AND TAKING THOSE DOLLARS, INVESTING THEM IN THE MARKET, AND YOU ARE AVERAGING THE COST OF WHAT YOU ARE BUYING OVER TIME. IF THE MARKET GOES DOWN, YOU BUY MORE SHARES. IF THE MARKET GOES UP, YOU BUY LESS SHARES. BUT OVERALL, YOU'LL DO JUST FINE. SO GIVEN THAT YOU HAVE A ROTH IRA, YOU MUST NOT HAVE A LOT OF MONEY IN IT BECAUSE YOU JUST STARTED LAST YEAR, SO MAYBE YOU HAVE $2,000 IN IT. (Suzanne) I THINK IT'S UP TO 4, AND I HAVEN'T PUT IN THIS YEAR. (Suze) YOU'RE AT 4,000, MAYBE YOU WANT TO GO TO 6,000. IF I HAD $6,000 IN A ROTH IRA I WOULD BE DOLLAR COST AVERAGING INTO AN INDEX NO LOAD MUTUAL FUND. YOU ARE IN A RETIREMENT ACCOUNT. WE DON'T HAVE TO WORRY ABOUT END OF THE YEAR CAPITAL GAINS DISTRIBUTIONS WITH MUTUAL FUNDS. INDEX FUNDS, USUALLY DON'T HAVE END OF THE YEAR CAPITAL GAINS DISTRIBUTIONS. FOR THOSE OF YOU WHO DON'T KNOW, A MUTUAL FUND AT THE END OF EVERY YEAR DISTRIBUTES ITS CAPITAL GAINS TO YOU. THEY BUY, THEY SELL, IF THERE IS A CAPITAL GAIN, IT GOES TO YOU, AND IF YOU HAVE A MUTUAL FUND OUTSIDE OF A RETIREMENT ACCOUNT, GUESS WHAT, YOU ARE GOING TO HAVE TO PAY INCOME TAX ON THAT END OF THE YEAR CAPITAL GAIN DISTRIBUTION. THAT MIGHT NOT BE SO GREAT BECAUSE YOU MAY BE PAYING TAXES ON A MUTUAL FUND THAT'S DOWN 20% IN VALUE! THAT'S A REAL BUMMER AND THAT'S EXACTLY WHAT HAS BEEN HAPPENING THIS YEAR. IN A RETIREMENT ACCOUNT, YOU DON'T HAVE TO WORRY ABOUT THAT. I WOULD LOOK INTO A GOOD INDEX FUND. I WOULD LOOK INTO AN INDEX FUND THAT BUYS THE ENTIRE STOCK MARKET, NOT JUST THE STANDARD & POORS 500 INDEX, BUT THE ENTIRE WHILSHIRE 5000 INDEX. YOU WANT SMALL CAP STOCKS, LARGE CAP STOCKS, MEDIUM CAP STOCKS, SO YOU HAVE THE ENTIRE GAMUT OF EVERYTHING THAT'S OUT THERE. THAT'S WHAT I WOULD BE DOING.

YOU KNOW, IT IS SO FUNNY I WAS THINKING ABOUT WHEN I WAS NAMING THIS "THE ROAD TO WEALTH," WHEN WE LEARN HOW TO DRIVE, ISN'T IT TRUE, HERE WE ARE, WE'RE 16 YEARS OF AGE AND WHO SITS NEXT TO US BUT MAMA OR PAPA, OR WE GO OUT AND PAY SOME STUDENT DRIVING INSTRUCTOR TO TEACH US HOW TO DRIVE DOWN THE ROAD. WHAT DOES THE RED LIGHT, GREEN LIGHT MEAN? WHEN DO WE STOP? WHEN DO WE GO? HOW DO WE DO A U-TURN? WE HAVE TO NOT ONLY DO THAT BECAUSE WE HAVE TO PASS OUR EXAMS TO CONTINUE TO DRIVE EVERY FEW YEARS. BECAUSE WE NEED TO BE AN EDUCATED DRIVER BECAUSE WE DON'T WANT TO HURT ANYBODY ELSE AND WE DON'T WANT TO HURT OURSELF. THE PROBLEM IS, WHEN IT COMES TO OUR FINANCIAL CARS, MAMA AND DADDY CAN'T SIT NEXT TO US AND TEACH US BECAUSE YOU KNOW WHY? THEY DON'T KNOW. BECAUSE NOBODY TAUGHT THEM. WE DON'T HAVE A SCHOOL THAT WE CAN GO TO AND SAY HEY, I'M A STUDENT FINANCIAL DRIVER, WILL YOU TELL ME WHAT I NEED TO KNOW? WE'VE GOT ABSOLUTELY NOBODY TO TURN TO TO SAY SIT NEXT TO ME. SO NONE OF US, NOT ONE OF US IN THIS ROOM OR ANYWHERE WATCHING THIS SHOULD FEEL BAD THAT WE HAVEN'T MADE THE RIGHT DECISIONS WITH MONEY. OF COURSE WE HAVEN'T, BECAUSE NOBODY HAS TAUGHT US HOW. THAT'S WHAT THIS SHOW IS ALL ABOUT, GIVING YOU THE CORRECT ANSWERS TO YOUR QUESTIONS, AND HOPEFULLY GUIDING YOU ON "THE ROAD TO WEALTH." I WANT TO THANK ALL OF YOU. YOUR QUESTIONS WERE ALL REALLY QUITE AMAZING. BECAUSE IF YOU THINK ABOUT IT, MAYBE ONLY A FEW PEOPLE IN THIS GROUP GOT TO ASK QUESTIONS, BUT ISN'T IT TRUE THAT ALMOST EVERY SINGLE ONE OF THEM PERTAINED TO EVERY SINGLE PERSON IN HERE? WE'RE ALL TRAVELING DOWN THIS ROAD TO WEALTH TOGETHER. YOU CAN ALL HELP EACH OTHER BY ASKING EACH OTHER QUESTIONS, FINDING OUT THE CORRECT ANSWERS, AND REALLY LOOKING AT THE PLACES YOU NEED TO GO TO GET THE CORRECT FINANCIAL INFORMATION FOR YOU. IT'S OUT THERE. YOU JUST HAVE TO KNOW WHERE TO TURN. I THANK YOU SERIOUSLY FROM THE BOTTOM OF MY HEART FOR TURNING TO ME TODAY FOR SOME OF YOUR ANSWERS. I HOPE IN THE FUTURE I CAN CONTINUE TO PROVIDE THEM FOR YOU. THANK YOU FOR TRAVELING THIS "ROAD TO WEALTH" WITH ME. ♪ ♪ [LOUD APPLAUSE] WELCOME BACK, THANK YOU! THANK YOU AND WELCOME BACK. AGAIN, WE'RE GOING TO CONTINUE ON THIS "ROAD TO WEALTH" WITH THE QUESTIONS AND ANSWERS THAT, IN MY OPINION, YOU REALLY NEED TO KNOW. SO, YES, SIR. MY NAME IS MARTIN GREEN. I COME OVER FROM THE U.K. AND I AM WORKING HERE, DUE TO BE MARRIED NEXT SPRING, SO I'M PLANNING ON STAYING IN THE COUNTRY FOR THE FORESEEABLE FUTURE BUT THERE IS A POSSIBILITY SOMETIME I WILL BE RETURNING TO THE U.K. WHAT IS THE BEST THING FOR ME TO DO REGARDING MY RETIREMENT? AM I BETTER OFF WITH A ROTH IRA OR A REGULAR IRA? I KNOW YOU WANT TO KNOW WHAT THE BEST IS FOR YOUR RETIREMENT BUT DO YOU HAVE A PRENUPTIAL AGREEMENT? NO. HAVE YOU THOUGHT ABOUT ONE? >> NO. SO CAN I JUST TALK TO YOU A LITTLE? IT IS JUST US, NOBODY CAN HEAR ABOUT THIS! HE'S LOOKIN' AROUND--IT'S POSSIBLE, I DON'T KNOW! TWO THINGS. #1: THE LAWS IN THE UNITED STATES ALLOW ONE SPOUSE TO ANOTHER SPOUSE TO LEAVE AS MUCH MONEY AS POSSIBLE WITHOUT ANY ESTATE TAX WHATSOEVER. IF YOU ARE NOT A U.S. RESIDENT, YOU DO NOT QUALIFY FOR THAT EVEN IF YOU ARE MARRIED. SO IF YOU DO END UP STAYING HERE FOR QUITE A WHILE, YOU MIGHT WANT TO THINK ABOUT CHANGING RESIDENCY SO THAT WE CAN HAVE AN UNLIMITED MARITAL TRANSFER BETWEEN ESTATES. A LOT OF YOU KNOW THE ESTATE TAX LAWS HAVE RECENTLY CHANGED. THAT OVER THE NEXT YEAR, NEXT YEAR, YOU CAN LEAVE A MILLION DOLLARS TO SOMEBODY ESTATE TAX FREE, THEN 1 1/2 MILLION, THEN 3 1/2 MILLION, AND IN THE YEAR 2010, IT GOES AWAY. YOU CAN LEAVE ANY AMOUNT OF MONEY YOU WANT TO ANYBODY YOU WANT, ESTATE TAX FREE. IF YOU ARE LUCKY ENOUGH TO DIE IN THE YEAR 2010. BECAUSE IF YOU ARE STILL ALIVE IN THE YEAR 2011, GUESS WHAT EVERYBODY?-- IT SUNSETS BACK TO WHERE IT IS AND THE MOST YOU CAN LEAVE IS ONE MILLION DOLLARS. SO WHEN YOU HEAR THAT THE ESTATE TAX IS BEING REPEALED, IT'S NOT BEING REPEALED. IT IS BEING REPEALED FOR ONE YEAR AND ONE YEAR ONLY. AND IF YOU THINK THAT YOU CAN PICK THE TIME AND THE YEAR THAT YOU ARE GOING TO DIE NATURALLY, I DON'T THINK SO. THEN I DO HAVE A BRIDGE TO SELL YOU. SO WITH THAT SAID, I WANT YOU TO THINK ABOUT THAT AS TIME GOES ON. ALSO, IN TERMS OF PRENUPTIAL AGREEMENTS, YOU'RE ABOUT TO GET MARRIED. THE TIME TO PLAN FOR A DIVORCE IS WHEN YOU ARE SERIOUSLY IN LOVE. DO YOU KNOW, EVERYBODY, THAT ONE OUT OF TWO OF YOU WHO GET MARRIED END UP IN A DIVORCE AND DO YOU KNOW THAT THE NUMBER ONE REASON FOR DIVORCE HERE IN THE UNITED STATES, WHERE YOU HAPPEN TO BE, MY LOVE, HAPPENS TO BE ARGUMENTS OVER MONEY. BUT WE DON'T WANT TO RUIN IT. WE DON'T WANT TO THINK ABOUT THE WHAT IF'S OF LIFE, SO IT IS ESSENTIAL THAT YOU SIT DOWN WITH YOUR SPOUSE TO BE AND YOU REALLY DECIDE TODAY IF ANYTHING WERE TO HAPPEN 3 YEARS, 5 YEARS, 10 YEARS FROM NOW, HOW YOU WOULD SPLIT THAT UP. IT'S JUST A THOUGHT.

IF YOU QUALIFY FOR A ROTH IRA, IN MY OPINION A ROTH IRA IS THE ABSOLUTE BEST WAY, BAR NONE, TO SAVE FOR YOUR RETIREMENT. WHO QUALIFIES? SINGLE PERSON FILING SINGLE INDIVIDUAL TAX RETURNS, IF YOU MAKE UNDER $95,000 A YEAR IN ADJUSTED GROSS INCOME, YOU QUALIFY THIS YEAR FOR A FULL $2,000 CONTRIBUTION TO AN IRA, A ROTH IRA. NEXT YEAR, $3,000 AND THE YEARS THEREON. THAT CONTRIBUTION GOES AWAY TOTALLY ONCE YOU ARE MAKING AS A SINGLE $110,000 A YEAR ABOVE IN ADJUSTED GROSS INCOME. MARRIED COUPLES FILING JOINTLY, $150,000 TO 160. IF YOU QUALIFY FOR THAT, IF IT WERE ME, I WOULD BE TAKING THAT MONEY AND EVERY SINGLE YEAR PUTTING IT INTO A ROTH IRA. HOW DOES A ROTH IRA WORK FOR ALL OF YOU, JUST VERY QUICKLY, EVERY SINGLE YEAR YOU ARE ALLOWED TO PUT, LET'S SAY THIS YEAR, $2,000 INTO A ROTH. THAT $2,000 IS NOT TAX DEDUCTIBLE. IT IS WITH AFTER-TAX MONEY. BUT HERE IS WHAT YOU GET BY CONTRIBUTING WITH AFTER-TAX MONEY. LET'S SAY YOU PUT $2,000 IN THIS YEAR, $2,000 NEXT YEAR, 2,000 THE YEAR AFTER, LET'S SAY THAT'S ALL YOU DECIDE YOU WANT TO PUT IN, THAT'S $6,000. AND THAT $6,000 HAS GROWN TO $6,500. AND HERE YOU ARE, HOW OLD ARE YOU? >> 31. 31--SO 3 YEARS FROM NOW YOU ARE GOING TO BE 34. HE'S 34 YEARS OF AGE, HE WANTS $6,000 BACK, HE WANTS HIS MONEY BACK, HE'S 34, CAN HE GET IT? HE CAN TAKE OUT UP TO HIS ORIGINAL CONTRIBUTIONS ANY TIME HE WANTS WITHOUT ANY TAXES OR PENALTIES WHATSOEVER. SO IN HIS CASE HE'S 34, HE CAN TAKE OUT $6,000 INCOME TAX FREE, PENALTY FREE, IT IS THE $500 THAT THAT MONEY GREW TO, $6,000 TO $6,500 THAT HAS GOT TO STAY IN THERE UNTIL YOU ARE 59 1/2 AND FOR AT LEAST 5 YEARS. IF IT DOES, YOU CAN TAKE THAT OUT AT THAT TIME INCOME TAX FREE. ALSO, WHAT YOU NEED TO KNOW ABOUT A ROTH IRA, AT THE AGE OF 70 1/2, YOU DO NOT HAVE TO START TAKING MANDATORY WITHDRAWALS AS YOU DO WITH A TRADITIONAL IRA. ALSO, ALL OF A SUDDEN YOU HAVE ALL THIS MONEY IN YOUR ROTH IRA AND YOU DIE, AND YOU LEAVE IT TO YOUR BENEFICIARIES. GUESS WHAT, THEY GET TO INHERIT IT INCOME TAX FREE. IN A TRADITIONAL IRA, IF IT GROWS FROM 10,000 TO 100,000 AND YOU LEAVE THAT TO YOUR BENEFICIARIES, THEY ARE GOING TO PAY ORDINARY INCOME TAX ON THAT $90,000 DIFFERENCE. THERE ARE SO MANY FABULOUS REASONS WHY A ROTH IRA IS THE WAY TO GO OVER A TRADITIONAL IRA. I CAN'T EVEN TELL YOU. AND ESPECIALLY THESE NEXT 9 YEARS STARTING IN 2002 WHERE YOU CAN CONTRIBUTE $3,000 PER YEAR FOR 2002, 2003, 2004, $3,000 FOR THOSE YEARS, $4,000, 2005, 2006, 2007, THEN IT GOES UP TO $5,000 FOR THOSE LAST YEARS. AGAIN, FOR THOSE OF YOU OVER 50 OR 50 AND OVER, YOU CAN CONTRIBUTE $3,500 THE NEXT 3 YEARS AND THEN IT GOES TO $5,000, THEN $6,000 AND SO FORTH. SO IT'S SOMETHING YOU SHOULD LOOK INTO. I THINK ROTH'S ARE DEFINITELY THE WAY TO GO IF YOU QUALIFY.

YES, MY DEAR. HI, I'M ANN ELLIOT, I'M 47. I'VE BEEN DIVORCED FOR 4 YEARS AND DURING THAT I REALLY DID SOME THINGS THAT DID QUITE A BIT OF DAMAGE TO MY CREDIT RATING. SO BEFORE YOU CONTINUE WITH YOUR QUESTION, I HAVE, A QUESTION FOR YOU. WHY DO YOU THINK RIGHT AFTER YOUR DIVORCE YOU DID SUBSTANTIAL DAMAGE TO YOURSELF FINANCIALLY? WHY DO YOU THINK THAT HAPPENED? TWO REASONS? I WAS USED TO A SUBSTANTIALLY HIGHER INCOME THAN I PRESENTLY HAVE, AND IT WAS AN EMOTIONAL FIX. SO I SPENT A LOT OF MONEY I SHOULDN'T HAVE ON THINGS THAT I PROBABLY WOULDN'T HAVE. EVERYBODY LISTEN TO WHAT ANN JUST SAID, BECAUSE THAT IS SO IMPORTANT. WHAT WE ALL TEND TO DO IN OUR LIVES IS WE KINOF RUSH TO BE POOR. THE REASON MOST OF US HAVE CREDIT CARD DEBT TODAY AND, ANN, YOU ARE NOT ALONE WITH THIS, IS THAT OUR EMOTIONS WELL UP AND WE THINK WE ARE GOING TO FIX IT BY SPENDING MONEY. AND WE DON'T FIX IT. IT IS A REALLY TEMPORARY BAND-AID UNTIL THE BILLS COME IN AND YEARS LATER WE LOOK AT THIS AND GO I DID THIS TO MYSELF. IN THE SAME WAY THAT YOU DID IT TO YOURSELF, YOU HAVE WHAT IT TAKES TO UNDO IT. HOW MUCH CREDIT CARD DEBT DO YOU HAVE RIGHT NOW? $21,000 PLUS I TOOK OUT A $34,000 SECOND MORTGAGE, HOME EQUITY LOAN. ANN, SO YOU OWN A HOME? (Ann) CONDO. (Suze) CONDO. YOUR FIRST MORTGAGE IS AT WHAT INTEREST RATE? >> 7.5%. SECOND MORTGAGE IS AT WHAT? >> 18. 18, ALL RIGHT. SO NOW YOU ALL SAY, OH, THE REASON SHE HAS IT AT 18% IS BECAUSE SHE ALSO--WHAT THAT SAYS TO ME IS SHE HAS A HORRIBLE CREDIT REPORT. THE REASON THAT SHE HAS A HORRIBLE CREDIT REPORT IS NOT BECAUSE SHE IS NOT CAPABLE OF DOING THINGS RESPONSIBLY. IT IS BECAUSE WHEN SHE LEFT THIS RELATIONSHIP SHE DESPISED HERSELF SO, THAT SHE SET OUT TO RUIN HERSELF IN ANY WAY POSSIBLE, CORRECT? (Ann) YES. HOW MUCH WEIGHT DID YOU GAIN SINCE YOU HAVE BEEN DIVORCED? ACTUALLY IT WAS DURING THE MARRIAGE I GAINED ALL THE WEIGHT. I'VE ACTUALLY LOST 30, 40 POUNDS SINCE THEN. I HAVE CONTROL OVER THAT AND I WOULD LIKE TO GET CONTROL OR MORE KNOWLEDGE ABOUT HOW TO MANAGE MY OWN FINANCES. ALL RIGHT, SO ONE WAY THAT YOU START THAT IS BY TELLING EVERYBODY WHAT'S HAPPENING BECAUSE WHAT HAS RULED YOUR LIFE, ANN, FOR THE NUMBER OF YEARS SINCE THIS, HAS BEEN SHAME, HAS BEEN ANGER, HAS BEEN FEAR AND THOSE EMOTIONS RUSH UP. THEY ARE THE 3 INTERNAL OBSTACLES TO WEALTH. THEY WILL PREVENT YOUR PASSAGE ON THIS ROAD TO WEALTH AND HERE YOU ARE AND YOU ARE STUCK WITH THIS. BUT YOU'RE NOT STUCK. IT IS JUST A TEMPORARY BREAKDOWN BECAUSE THE MERE FACT THAT YOU ARE STANDING HERE AND ASKING THESE QUESTIONS IS WHAT REVERSES THIS ENTIRE PROCESS AND SETS US IN MOTION IN THE DIRECTION THAT YOU WANT TO GO. IN FACT, ALL THESE OTHER PEOPLE WANT YOU TO GO AS WELL. SO YOU HAVE THE SUPPORT OF EVERYBODY HERE. DO YOU HAVE ANY CONTINUED EQUITY OR ADDITIONAL EQUITY IN YOUR HOME? RIGHT NOW BECAUSE I LIVE IN D.C., I THINK I PROBABLY HAVE MAYBE ANOTHER $100,000 BECAUSE THE PRICES ARE SO HIGH IN THE AREA I LIVE. HOW LONG HAS IT BEEN SINCE YOU'VE CHECKED YOUR CREDIT RATINGS? ABOUT A MONTH, AND IT'S STILL PRETTY BAD. PRETTY BAD, BUT THIS IS WHAT I WOULD LIKE YOU TO DO. REGARDLESS OF IF IT'S AT 18%, 15%, OR WHATEVER, WHAT IS THE INTEREST RATE ON YOUR CREDIT CARDS? 22, 23%. 22%, WITH AS MUCH MONEY AS YOU HAVE ON CREDIT CARDS, WHAT I WOULD LIKE TO SEE YOU DO IS I WOULD LIKE TO SEE YOU REFINANCE THE ENTIRE AMOUNT OF MONEY, YOUR SECOND, YOUR CREDIT CARDS, AND YOUR FIRST, EVEN THOUGH I KNOW WE'RE GOING TO LOSE UP ON A BIG AMOUNT OF MONEY, AT 7 OR 8% INTEREST RATE, I WANT TO SEE YOU ALL REFINANCING IT AT PROBABLY A LOWER INTEREST RATE. WE ARE THEN CONVERTING A NONTAX-DEDUCTIBLE DEBT TO A TAX DEDUCTIBLE DEBT. BUT IF YOU ARE GOING TO DO THIS, HERE IS THE KEY-- YOU HAVE GOT TO KNOW THAT YOU HAVE CONTROL OVER YOUR MONEY AND NOT YOUR MONEY OVER YOU. AND I THINK YOU DO. BECAUSE OTHERWISE WHAT WILL HAPPEN IS YOU WILL HAVE ALL THIS MONEY IN A FIRST, OUT ON YOUR HOME, THEN YOU'LL HAVE ALL THESE CREDIT CARDS FREE, AND BEFORE YOU KNOW IT YOU WILL CHARGE THEM UP AGAIN AND YOU HAVE THE MONEY OUT HERE AND THE MONEY OUT THERE AND THEN WE DIDN'T DO YOU A FAVOR. IF AT ALL POSSIBLE, IF YOU CAN AFFORD IT, I'D LIKE TO SEE YOU DO IT IN A 15-YEAR MORTGAGE, NOT A 30-YEAR, BECAUSE HERE YOU ARE, YOU TOLD ME YOU WERE, WHAT, 47? IN A 30-YEAR MORTGAGE THAT TAKES YOU TO 77 YEARS OF AGE. THAT IS A LONG TIME TO HAVE THE BURDEN ON YOUR SHOULDERS OF HAVING TO PAY FOR A FUTURE RETIREMENT. IF YOU COULD POSSIBLY DO IT IN 15 YEARS, YOU WOULD BE 62. HOW FABULOUS AT THE AGE OF 62 WHEN YOU THEN QUALIFY FOR SOCIAL SECURITY, WHEN MAYBE YOU ARE STILL YOUNG ENOUGH TO ENJOY EVERYTHING, YOU OWN THIS HOME OUTRIGHT. THEN ALL OF A SUDDEN YOU HAVE THAT BURDEN OFF YOUR SHOULDERS AND THEN YOUR INCOME FOR RETIREMENT DOESN'T HAVE TO BE AS GREAT BECAUSE YOUR BIGGEST EXPENSE, YOUR HOME MORTGAGE, IS GONE. I KNOW A LOT OF YOU GO BUT, SUZE, A HOME MORTGAGE GIVES ME A TAX WRITE-OFF. OH, GIVE ME A BREAK! THE TAX WRITE-OFF IN A MORTGAGE, THE LARGE PART OF IT IS IN YOUR FIRST YEARS, THE BEGINNING YEARS. AS YOU GET INTO THIS MORTGAGE, THE TAX DEDUCTION GOES AWAY ALMOST TOTALLY. BUT YOU'RE STILL PAYING THE EXACT SAME AMOUNT OF MONEY EVERY SINGLE MONTH. IF IT IS A $40,000 BALANCE THAT YOU OWE ON YOUR MORTGAGE THAT WAS ONE DAY $200,000, YOU STILL HAVE TO PAY YOUR 1,500 2,000 3,000 PER MONTH. SO DO YOU SEE HOW IT IS IMPORTANT?

(Ann) CAN I ASK ONE SMALL QUESTION? YOU CAN ASK ANYTHING YOU WANT. WERE YOU SAYING TAKE EVERYTHING INCLUDING MY 7.5% AND PUT IT INTO ONE AND JUST GO FOR IT? TELL ME HOW MUCH YOU HAVE ON YOUR 7.5%. >> 116. TELL ME THE AMOUNT OF YOUR SECOND AGAIN. >> 34. AND HOW MUCH IN CREDIT CARD DEBT? >> 21. SO, SEE, THE PROBLEM IS IF WE REFINANCE $50,000, BECAUSE IT WILL BE A SECOND, IT'S GOING TO BE AT A REALLY HIGH INTEREST RATE OF ABOUT IT IS POSSIBLE, IF YOU TAKE THAT 50 OR WHATEVER IT IS PLUS THE ORIGINAL ONE AND COMBINE THEM ON A FIRST, YOU MIGHT FIND YOURSELF GETTING AN 8 OR 9% INTEREST RATE EVEN WITH A BAD CREDIT RATING. YOU MIGHT WANT TO LOOK INTO FHA LOANS, BECAUSE THEY HAPPEN TO FINANCE WHEN PEOPLE HAVE BANKRUPTCY OR BAD CREDIT REPORTS. EVEN IF IT WERE AN 11% ALL TOGETHER, THE DIFFERENCE BETWEEN 21 OR 22% AND THAT, IT MAKES IT WORTHWHILE. THERE YOU GO, THANK YOU.

YES SIR. HI, SUZE, I'M VAUGHN SANDERS. I GREW UP IN A FAMILY THAT WAS MORE REAL ESTATE ORIENTED THAN STOCK INVESTMENT ORIENTED. AND ALL OF MY KNOWLEDGE, IT SEEMS LIKE WHEN STOCKS ARE CLIMBING THEY ARE DOING GREAT. WHEN THEY ARE DOING BAD, THERE IS A BIG DIP. WHEN REAL ESTATE IS DOING WELL, THERE IS A BIG CLIMB AND THEN IT KIND OF JUST TAPERS OFF. ARE WE FORGETTING THE REAL ESTATE MARKET? I KNOW FOLKS WHO ARE INVESTING IN HOMES THAT ARE NOT QUITE BUILT. THEY PUT A CONTRACT ON IT LAST YEAR AND THE HOUSE IS ALREADY $70,000 HIGHER THAN IT WAS WHEN THE PUT A CONTRACT ON IT. I HAVE A GUT FEELING THAT WHAT WE SAW HAPPEN IN THE STOCK MARKET IN 1999, THE YEAR 2000, 1998--ALL THOSE YEARS WERE WHERE THE MARKETS WERE RUNNING AWAY AND PEOPLE WERE BUYING STOCKS THAT THEY DIDN'T EVEN KNOW ABOUT. IT WAS ALMOST LIKE THE REAL ESTATE MARKET, THEY WERE PUTTING OPTIONS ON THE STOCKS TO BUY, THAT THEY DIDN'T HAVE A CLUE WHAT THE COMPANY EVEN DID AND THEY WERE MAKING MONEY. THE REAL ESTATE MARKET HAS BEEN RUNNING AWAY FOR A LONG TIME. BUT DO ANY OF US REMEMBER BACK A FEW YEARS IN THE '80S WHEN YOU BOUGHT A PIECE OF REAL ESTATE AND THE REAL ESTATE MARKET HIT THE SKIDS AND YOU COULDN'T EVEN SELL THAT PIECE OF PROPERTY, FOR THE AMOUNT OF THE MORTGAGE THAT YOU OWED ON IT? SO PEOPLE WERE REALLY IN TROUBLE. IT HAPPENED ONCE. IT'S HAPPENED MANY TIMES IN THE REAL ESTATE MARKET, EXCEPT THAT OUR MEMORIES ARE SO SHORT, WE TEND TO FORGET WHAT IT CAN REALLY BE LIKE. SO WE THINK JUST LIKE WE THOUGHT WITH THE STOCK MARKET, THAT IT WAS ONLY GOING TO GO UP, WE THINK REAL ESTATE IS ONLY GOING TO GO UP. AND I GOT NEWS FOR YOU, IT IS NOT. IF YOU WERE TO LOOK WHAT'S HAPPENING ON THE HIGH END OF REAL ESTATE RIGHT NOW, YOU WOULD SEE PROPERTIES THAT WERE GOING FOR 2.8 MILLION ARE NOW GOING FOR 2.4, 2 MILLION, 1.8. THEY ARE STARTING TO COME DOWN. WHEN THE HIGH END STARTS TO COME DOWN EVENTUALLY THE MIDDLE END AND THE LOW END WILL FOLLOW AS WELL. SO DO I THINK REAL ESTATE IS A FABULOUS PLACE TO MAKE MONEY? YES, BUT REAL ESTATE IS A FAR MORE DIFFICULT INVESTMENT TO OWN THAN A PIECE OF STOCK. A PIECE OF STOCK, FINE, I OWN IT, I BUY IT, I SELL IT, I DON'T HAVE WATER BILLS, I DON'T HAVE MAINTENANCE, I DON'T HAVE TO KICK OUT A TENANT BECAUSE THEY'RE NOT PAYING ME THE RENT, I DON'T HAVE TO REPLACE THE ROOF. A PIECE OF REAL ESTATE, YOU HAVE TO KNOW THAT NOT ONLY WILL IT APPRECIATE IN VALUE, BUT IT'S NOT LOCATED IN A PLACE THAT YOU POSSIBLY ARE GOING TO HAVE AN EARTHQUAKE, A FLOOD, YOU'RE NOT SUBJECTED TO VANDALISM. ARE YOU A WOMAN WHO DOESN'T WANT TO BE RESPONSIBLE, FOR INSTANCE, FOR THE ACTUAL MAINTENANCE OF FIXING THE TOILET WHEN IT PLUGS AT 3:00 IN THE MORNING AND YOU GET A PHONE CALL. SO WITH REAL ESTATE COMES A WHOLE DIFFERENT SCENARIO AN JUST SIMPLY OWNING STOCK. SO IN REAL ESTATE OWNERSHIP, YES, YOU CAN MAKE MONEY, BUT A LOT MORE COMES WITH IT. DO I THINK WE'RE GOING TO EVENTUALLY SEE A SLOWDOWN IN REAL ESTATE? YOU BETCHA YOU I DO, I REALLY DO. THIS FACT THAT NONE OF US ARE SLOWING DOWN IN TERMS OF THE HOUSES WE'RE BUILDING, THE REAL ESTATE MARKET, THE HOUSING STARTS, IT JUST HASN'T HIT YET. SO IN TERMS OF REAL ESTATE RIGHT NOW, I WOULD BE JUST A LITTLE, LITTLE HESITANT IN GOING IN TO SIMPLY DO IT AS AN INVESTMENT UNLESS I WAS GETTING A SERIOUSLY GOOD BUY, UNLESS I KNEW THAT THAT AREA WAS REALLY ABOUT TO TAKE OFF, IN TERMS OF MAYBE THERE WAS A MAJOR CONSTRUCTION HAPPENING OR SOME BUSINESS COMING IN OR SOMETHING THAT WOULD SPUR THAT REAL ESTATE MARKET ON. IF IT WERE MY OWN INDIVIDUAL HOME, I HAVE TO TELL YOU, I'M NOT SO SURE I WOULD LOOK AT THAT AS AN INVESTMENT. A HOME IS WHERE YOU LIVE. A HOME INVESTS IN WHO YOU ARE. IF THAT'S WHAT YOU ARE LOOKING FOR AND THAT'S WHAT YOU ARE IN THE MOOD FOR AT THIS POINT, NOW IS A PERFECT TIME.

HI, SUZE, MY NAME IS BETH JENKINS SMITH. MY SITUATION IS I'M 35, I INVEST IN MY COMPANY'S 401(K) TO THE MAXIMUM THAT I CAN, MY MOTHER IS ABOUT 60 AND WILL BE RETIRING IN ABOUT 10 YEARS. SHE HAS NO SAVINGS, NO INTEREST IN STARTING ANY SAVINGS, AND ANTICIPATES BEING ON A VERY STRICT LIMITED INCOME. AND I KNOW AS BEING THE ONLY DAUGHTER IT'S GOING TO TURN TO ME TO SEE WHAT I CAN DO TO HELP HER OUT. HOW DO YOU FEEL ABOUT THAT? I AM PERFECTLY FINE WITH THAT. I WANT TO TAKE IT ON, I CAN TAKE IT ON, I'VE BEEN VERY FORTUNATE SO I WANT TO SHARE THAT. HOWEVER, I HAVE SOME QUESTIONS ABOUT WHAT I CAN DO TO BE PREPARED FOR THAT. ONE OF MY OPTIONS, AS I SEE IT, IS TO KEEP MY TOWN HOME AS A RENTAL PROPERTY, WHICH WILL BE PAID FOR IN ABOUT 15 YEARS. THAT WILL PROVIDE SOME INITIAL INCOME. OR POSSIBLY I COULD SELL IT NOW, TAKE ADVANTAGE OF THE MARKET AND CLEAR ABOUT 30 GRAND. DO YOU HAVE ANY COMMENTS ON THAT OR OTHER SUGGESTIONS? SO YOU HAVE AT LEAST 15 YEARS IN YOUR MIND UNTIL YOU ARE GOING TO NEED THIS MONEY? >> YES. ALL RIGHT, QUESTION--MAMA IS DOING ALL RIGHT RIGHT NOW. HERE SHE IS, SHE'S 60 YEARS OF AGE. IS THERE ANY POSSIBILITY THAT WHERE SHE IS LIVING WILL NOT BE GOOD ENOUGH FOR HER AND SHE'S GOING TO WANT TO MOVE IN WITH YOU OR TO THE TOWN HOUSE YOU HAPPEN TO HAVE? I CONSIDER THAT A POSSIBILITY. BECAUSE I WOULD LOOK AT THIS MORE OF DOES THE TOWN HOUSE SERVE THE NEED OF MAMA HAVING A PLACE FOR HER TO LIVE RENT FREE FOR THE REST OF HER LIFE AND, THEREFORE, NOT IN MY OWN HOME WITH ME, AND I WOULD LOOK AT IT MORE LIKE THAT BECAUSE NOT THAT WE DON'T WANT MAMA WITH US BUT WE WANT MAMA TO BE AS INDEPENDENT AS SHE CAN POSSIBLY BE FOR AS LONG AS SHE CAN. SOMETIMES WE THINK WE'RE DOING OUR PARENTS A FAVOR WHEN WE SAY MOVE IN WITH US, BUT WHAT HAPPENS IS WE THEN ROB THEM OF THEIR POWER AND THEN THEY FEEL THEY ARE A BURDEN ON US AND THEN THEY GET ILL QUICKER AND THEN WE LOSE THEM SOONER. IF WE CAN SET UP A SITUATION FOR THEM WHERE THEY CAN STILL FEEL AUTONOMOUS AND POWERFUL, NOT WORRY ABOUT MONEY AND STILL KNOW THAT WE'RE LOVING THEM, THAT IS ONE OF THE MOST POWERFUL THINGS THAT WE CAN DO FOR MOMMY AND DADDY, FOR MOMMY OR DADDY OR BOTH WITHOUT STRIPPING THEM OF THEIR INDIVIDUALITY. THAT WOULD BE MY NUMBER ONE CONSIDERATION. NUMBER 2, IN TERMS OF INVESTMENTS, DO I THINK THAT THE STOCK MARKET OVER THE NEXT 15 YEARS WILL PRESENT MORE OF A POSSIBILITY FOR APPRECIATION THAN REAL ESTATE? I DO--AS LONG AS YOU HAVE AT LEAST 15 YEARS FROM NOW, AND YOU ARE INVESTED IN THE ABSOLUTE CORRECT AREAS OF THE MARKET AND THE CORRECT STOCKS. SO MANY OF YOU OUT THERE THINK JUST BECAUSE A STOCK HAS GONE FROM 100 TO 60, IT'S A GOOD BUYING OPPORTUNITY. NO, NO. BECAUSE IT'S LIKE CISCO. CISCO WAS AT 80, THEN IT WENT TO 70, THEN WENT TO 60, AND THEN WENT TO 40, AND ALL OF YOU THOUGHT YOU SHOULD BUY IT BECAUSE IT WAS 50% OFF. AND NOW IT WENT TO 30 AND 20 AND DOWN TO 13 AND THEN UP. SO JUST BECAUSE SOMETHING IS CHEAP OR DOWN A CONSIDERABLE AMOUNT OF MONEY FROM WHERE IT WAS DOES NOT MEAN THAT IT IS A GOOD BUY. YOU BUY A STOCK OR A MUTUAL FUND BECAUSE ITS EARNINGS ARE COMING IN AND THERE IS GOOD GROWTH IN THAT MUTUAL FUND AREA OR IN THAT PARTICULAR STOCK. THEY ARE STILL A LEADER IN THAT INDUSTRY. THEY HAVE GOOD MANAGEMENT. THEY HAVE PRODUCTS THAT EVERYBODY ARE WANTING AND THEIR REVENUES ARE GOOD. HAVE YOU EVER NOTICED THAT RECENTLY MANY OF THESE COMPANIES ON THE STOCK EXCHANGE ARE REPORTING EARNINGS THAT ARE GOING UP, BUT REVENUES THAT ARE DOWN 20%? REMEMBER, EVERYBODY, COMPANIES CAN FIX EARNINGS AS TO HOW THEY REPORT. YOU CANNOT FIX REVENUES. SO THE FIRST THING THAT I WOULD LOOK AT IN BUYING A STOCK WOULD BE ARE THE REVENUES OF THAT COMPANY GOING UP? IS MONEY COMING INTO THIS COMPANY? ARE THEY HAVING SALES, IS THAT INCREASING OR IS THAT DECREASING? AND THAT IS SOMETHING THAT YOU HAVE TO PAY ATTENTION TO. SO IF YOU HAVE THE KNOWLEDGE, IF YOU HAVE THE TIME, IF YOU HAVE THE AREAS THAT YOU WANT TO INVEST IN, I PERSONALLY LIKE THE STOCK MARKET. IF YOU DON'T, THEN YOU MIGHT WANT TO THINK ABOUT THE REAL ESTATE, KEEPING IT FOR TWO REASONS, NUMBER ONE, FOR APPRECIATION AND ALSO FOR A PLACE THAT MAMA MIGHT HAVE TO LIVE WITHOUT IT COSTING HER ANYTHING.

THANK YOU. HI, SUZE, MY NAME IS CAROL SHARE. I'D LIKE YOUR OPINION ABOUT THE PURCHASE OF SERIES I BONDS AS A RETIREMENT STRATEGY OR AS A SAVINGS PLAN FOR YOUNG CHILDREN. SERIES I BONDS OUT THERE ARE SIMPLY INFLATION INDEX BONDS. THEY ARE SOLD THROUGH THE U.S. TREASURY. AND ESSENTIALLY, SOMEBODY'S DROPPING MONEY ON ME! I'LL TAKE IT! AND THE INTEREST THAT THEY PAY YOU IS INDEXED ACCORDING TO INFLATION. I HAPPEN TO LIKE THEM A LOT. SO FOR YOU, FOR YOUR YOUNG KIDS, YOU ARE LOOKING FOR SAFE MONEY, MONEY WHERE THERE IS ABSOLUTELY NO RISK WHATSOEVER, I DON'T HAVE A PROBLEM WITH IT. ONE HAS TO QUESTION FOR A YOUNG CHILD, IS THAT REALLY THE BEST PLACE TO BE PUTTING MONEY? I WOULD SAY IT IS NOT. YOU MIGHT WANT TO REALLY LOOK INTO GROWTH MUTUAL FUNDS OR INDIVIDUAL STOCKS THAT GROW FOR THE YOUNG KIDS. FOR YOUR OWN MONEY, MONEY THAT YOU WANT SAFE AND SOUND AND NOTHING CAN HAPPEN TO, I HAPPEN TO LIKE THEM A LOT.

YES, MA'AM. HELLO, SUZE, MY NAME IS RITA UHAUS. I HAVE AN IMMIGRANT FATHER WHO GAME FROM HUNGARY MANY, MANY YEARS AGO AND WORKED HIS WAY UP TO BE VERY

SUCCESSFUL AND WAS ABLE TO GIVE US ALL A VERY GOOD LIFE. I WANT TO BE ABLE TO DO THAT FOR MY 3 CHILDREN. I'M A SINGLE PARENT. I'VE WORKED 21 YEARS AS A NURSE. AND I DO OWN A HOME.

(Suze) DO YOU OWN IT OUTRIGHT?

(Rita) I DO, EXCEPT FOR WHAT I DID WAS BECAUSE I HAD A LITTLE CREDIT CARD DEBT, WHICH ACTUALLY WAS A LOT AND I WENT THROUGH A SEPARATION, DIVORCE, AND I WANTED TO BE ABLE TO PAY THAT OFF AND ALSO DO A LITTLE SOMETHING EXTRA WITH THE MONEY. I TOOK A TRIP TO BUDAPEST, AS A MATTER OF FACT, AND SAW MY RELATIVES WHICH WAS FANTASTIC FOR MY SONS, AND THEN I HAD-- ACTUALLY OUR HOSPITAL WHERE I WORKED AT WENT INTO DIFFERENT COMPANY. THEY DID AWAY WITH OUR 401(k). WE HAD TO DO OUR OWN THING, TRANSFER FUNDS OVER. I TOOK CARE OF THAT ASPECT. NOW I'M REALLY PIQUED BY ALL THE INTERESTED IN STOCKS, ALTHOUGH NOW, I KNOW NOW IS NOT THE BEST TIME, BUT I FEEL I AM GAINING A LOT OF KNOWLEDGE.

(Suze) HOW DO YOU KNOW NOW IS NOT THE BEST TIME? IN TERMS OF WHAT YOU SAID BEFORE, I COULD PROBABLY, I HAVE A LITTLE MONEY AND I COULD PROBABLY DO SOMETHING WITH IT, BUT IT IS MY KNOWLEDGE BASE THAT MAKES IT NOT THE RIGHT TIME IN TERMS OF WHAT I READ AND HOW I AM EDIFIED. I GET THAT INFORMATION BUT I DON'T REALLY HAVE PEOPLE TO TALK TO ABOUT IT TOO MUCH, YOU KNOW? SO ONE OF THE THINGS YOU MENTIONED IN YOUR BOOK WAS GOING INTO ONE OF THESE INVESTMENT GROUPS. AND I HADN'T ACTUALLY DONE THAT YET AND I JUST THOUGHT MAYBE A LITTLE MORE INFORMATION ON THAT AND HOW I WOULD GO ABOUT DOING THAT.

BEFORE I ANSWER THAT QUESTION FOR YOU, YOU CONCERN ME. AND LET ME TELL YOU WHY. YOU'RE JUST STARTING TO INVEST. IF ANYTHING HAPPENED TO YOU, WE DON'T HAVE MASSIVE AMOUNTS OF MONEY SO YOU WOULD BE IN TROUBLE FOR YOURSELF, BUT THE ONLY THING I HEAR YOU CARING ABOUT ARE YOUR CHILDREN. RIGHT? YOU CARE ABOUT THEM BECAUSE YOU FEEL THAT AFTER THE DIVORCE YOU TOOK AWAY THEIR FATHER AND YOU NEED TO PROVIDE FOR THEM IN A WAY THAT HAS SUBSTITUTED FOR THEIR FATHER; IS THAT CORRECT?

TO SOME DEGREE, HE'S THERE, HE'S PRESENT, BUT, YEAH. WHAT JUST HAPPENED THERE IS WHAT SHOULD HAPPEN WITH A GOOD FINANCIAL ADVISOR. YOU SAW IT HAPPEN HERE, YOU SAW IT HAPPEN WITH THIS GENTLEMAN? I SHOULD NOT HAVE TO BE TOLD HER SITUATION. I SHOULD BE SO FAMILIAR WITH FINANCES AND THE PSYCHOLOGY OF MONEY AND HOW PEOPLE WORK THAT I CAN LOOK AT HER AND READ HER AND LISTEN TO WHAT SHE SAYS AND KNOW EXACTLY WHAT IS GOING ON. BECAUSE SHE CARES MORE ABOUT HER CHILDREN AND THEIR WELFARE THAN HERSELF. THAT PRESENTS A PROBLEM IN TERMS OF HOW YOU TRULY INVEST. BECAUSE THE ONE LAW OF MONEY THAT IS SO PERTINENT TO US IS PEOPLE FIRST, THEN MONEY, THEN THINGS. AND WHEN I SAY PEOPLE FIRST, I MEAN<i> YOU.</i> WOMEN TAKE CARE OF EVERYBODY BEFORE THEY TAKE CARE OF THEMSELVES. THEY TAKE CARE OF THEIR HUSBANDS, THEIR CHILDREN, THEIR PARENTS, THEIR EMPLOYERS, THEIR EMPLOYEES, AND WHEN EVERYBODY ELSE IS TAKEN CARE OF, THEN THEY START TO THINK ABOUT THEMSELVES. AND WHAT WE DON'T UNDERSTAND IS WE ARE PASSING DOWN THE WRONG VALUES TO OUR CHILDREN. WE'RE PASSING DOWN THE VALUES OF WE DON'T CARE ABOUT OURSELVES; WE CARE ABOUT YOU. AND THEY'RE GOING, WHY DON'T YOU CARE ABOUT YOURSELF? SO I JUST ASK YOU TO LOOK AT THAT. BECAUSE THERE IS NOTHING WRONG WITH YOU DOING ALL OF THIS FOR<i> YOU,</i> FOR<i> YOU</i> TO BE OKAY, FOR YOU TO BE FINANCIALLY SECURE, FOR YOU TO HAVE ANYTHING AND EVERYTHING THAT YOU WANT, AND THEN AFTER THAT THE KIDS WILL BE TAKEN CARE OF BECAUSE YOU'LL HAVE SOMETHING TO PASS DOWN FOR THEM, BUT IT IS ESSENTIAL THAT YOU DO THIS FOR YOU FIRST AND NOT JUST FOR THEM. BECAUSE IF YOU CONTINUE TO DO IT JUST FOR THEM, AND SOMETHING GOES WRONG AND THEY SEE MOMMY IS UPSET, MOMMY LOSES HER JOB, MOMMY DOESN'T HAVE MONEY TO PAY SOMETHING, THEY'RE GOING TO THINK IT'S THEM, TOO. THEY'RE NOT GOING TO UNDERSTAND THAT MONEY IS WHAT'S UPSETTING YOU. EVERYTHING REVOLVES AROUND CHILDREN. THEY THINK YOUR HAPPINESS IS DEPENDENT ON HOW THEY ARE WITH YOU. IF THEY SEE YOU UPSET, THEY ARE NOT GOING TO GET IT'S BECAUSE OF MONEY. THEY ARE GOING TO THINK IT IS BECAUSE THEY ARE UPSETTING YOU AND THEY'RE GOING TO START TO FEEL LESS THAN THEMSELVES. THE GREATEST THING THAT WE CAN PASS DOWN TO ONE ANOTHER IS THE POWER WE FEEL ABOUT WHO WE ARE AND OUR OWN SELF-WORTH. AND THAT SELF-WORTH WILL TRANSLATE INTO NET WORTH. IT IS NOT ENOUGH TO SAY I'M DOING IT FOR THEM. I'M DOING IT FOR MYSELF. SO FOR YOU, WHAT QUESTION DO YOU WANT ME TO ANSWER FOR YOU? NOT FOR YOUR CHILDREN, BUT FOR YOU. THIS IS YOUR TIME.

HUM! FASCINATING, ISN'T IT?

(Rita) IT IS INTERESTING. BECAUSE MY IDEA WAS I PAID ENOUGH ATTENTION WHEN I GOT THE OWNERSHIP OF MY HOME, WHICH WAS ACTUALLY A GIFT FROM MY PARENTS, THEN WHAT I DID. . .

(Suze) AH! DID YOU HEAR WHAT SHE JUST SAID? DID YOU HEAR IT, FROM PARENTS TO HER, FROM HER TO HER CHILDREN, IT'S A GIFT. THE GREATEST GIFT IS<i> YOU.</i> THE QUESTION I WOULD LIKE TO ASK YOU IS WHAT WOULD YOU NEED TO DO TODAY TO MAKE YOUR LIFE WORTHWHILE?

I WOULD LOVE TO KNOW THAT I COULD RETIRE BECAUSE I'VE BEEN A NURSE FOR A LONG TIME AND THAT IS HARD WORK. THANK YOU!<i> THAT</i> IS WHAT SHE WANTS TO KNOW. THE ANSWER TO THAT QUESTION IS VERY SIMPLE. CONTRIBUTE THE MAXIMUM TO ANY SINGLE RETIREMENT PLAN THAT IS PRESENTED YOUR WAY. BESIDES THE 403(b) THAT YOU HAVE AT WORK, SHE SAID SHE WAS A NURSE, SO THEREFORE, SHE DOESN'T HAVE A 401(k) PLAN, SHE HAS WHAT'S KNOWN AS A 403(b) PLAN. THAT WORKS ESSENTIALLY IDENTICAL TO A 401(k). TAKE ADVANTAGE OF THESE NEXT 10 YEARS WHERE YOU CAN CONTRIBUTE THE MAXIMUM TO EACH ONE. AGAIN, THE RATES ARE GOING UP. YOU'LL BE ABLE TO PUT IN, YOU KNOW, $10,500 THIS YEAR BUT 11,000 NEXT YEAR, 12,000 13,000. TAKE ADVANTAGE OF THAT TO GET MORE MONEY IN THEM. BESIDES THAT, YOU MIGHT QUALIFY FOR A ROTH IRA AS WELL. IF YOU DO, DO A ROTH. MAKE SURE EVENTUALLY RIGHT AFTER THAT, YOUR HOUSE IS TOTALLY PAID OFF. IT WAS PAID OFF, YOU HAVE A LITTLE BIT OF DEBT ON IT TO HAVE PAY OFF YOUR CREDIT CARDS. YOUR GOAL IS THAT BY THE TIME YOU ARE 60 OR 62, TO HAVE EVERYTHING PAID OFF, TO HAVE AS MUCH MONEY IN RETIREMENT ACCOUNTS AS POSSIBLE, TO BE AS KNOWLEDGEABLE AS YOU CAN. DO YOU HAVE A WILL? DO YOU HAVE A TRUST?

NO, ACTUALLY HE STOLE MY QUESTION. I WAS GOING TO ASK ABOUT THE TRUST BUT THAT'S ONE THING I WANTED TO KNOW.

IT'S YOUR FAULT, WHOEVER THAT WAS, HOW DARE YOU! NO, NO, I KNOW THE IMPORTANCE OF THAT. IF YOU REALLY WANT TO DO SOMETHING FOR YOUR CHILDREN, YOU SERIOUSLY WANT TO DO SOMETHING FOR THEM, THIS WEEK YOU CALL UP AND YOU FIND AN ATTORNEY WHERE YOU CAN GET A TRUST, A WILL, AND YOU SET THAT ALL IN PLACE BECAUSE THAT IS TRULY CARING ABOUT THOSE YOU LOVE. THAT IS TRULY CARING ABOUT YOURSELF. IF YOU CAN DO THAT, YOU ARE TOTALLY ON "THE ROAD TO WEALTH." THANK YOU.

[loud applause] ♪ ♪ CAPTIONING BY ARMOUR CAPTIONING AND TPT