Why the Fed Rate Cut is GOOD for Retirees, Sort of...

[@Kin-28-8]

The Fed is undoubtedly responsible for the present catch-up efforts, as they were first too slow to control inflation. The pandemic, supply-chain issues, are all contributing reasons to the impending inflationary perfect storm. I'm still looking for companies to make additions to my $500K portfolio, to boost performance. Here for ideas...

[@Thompson-e7h]

Safest approach i feel to tackle it is to diversify investments. By spreading investments across different asset classes, like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown. its important to seek the guidance of an expert

[@Lewistonwilliams-f5i]

This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation

[@Agatha.wayne0]

I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get. I just scheduled a caII.

[@austinbar]

The avg. American is having a tough time, I know I am not alone. There are others in same position as me. By certain statistics: 22% of americans have no retirement savings. 64% are worried that they will not have money in latter years while 47% of adults who are not yet retired think they have to work part-time in retirement. How can I best grow the 100k I have saved seperately outside retirement access which of course had depleted over the years?

[@rogerwheelers4322]

Effective personal finance management is more important than the amount of money saved, regardless of whether income is earned through job or investment. Individuals can seek counsel from a certified financial advisor to optimize financial outcomes, who can provide specialized advice and methods to decrease expenses and maximize income.

[@joshbarney114]

I completely agree; I am in my mid 40s, approaching retirement, and have approximately over 2million dollars in external retirement funds. I am debt free and have very little money in retirement funds compared to the total value of my portfolio over the past three years. To be honest, the Fin-advisor can only be neglected, not rejected. Just do your due diligence to identify a fiduciary one.

[@FabioOdelega876]

This is exactly how i wish to get my finances coordinated ahead of retirement. Can you recommend the financial advisor you used to get ahead?

[@joshbarney114]

Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Marisa Michelle Litwinsky’’ for about two years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.

[@FabioOdelega876]

I appreciate this. After curiously searching her name online and reviewing her credentials, I'm quite impressed. I've contacted her as I could use all the help I can get. A call has been scheduled.

[@uwanttono4012]

The best thing I ever did before retiring was to pay off ALL of my debts!! That plus good health are a true blessing, Deo Gratia!

[@kwilliams2239]

It's shear folly to retire still owing (significant) money for anything. I don't know if I'd call it a blessing, really. It's the result of delayed gratification, a choice (if you believe in free will). Good health is certainly most important (can't all be perfect🙄) but being broke, and in bad health, in retirement has to be the absolute pits.

[@lindadorman2869]

I don't borrow, have a mortgage or car, or pay credit card interest so the interest rate cut won't be good for me at all. It just means I'll earn less on my savings. But hopefully it will lower the cost of goods and prices will come down. And it will help others who are struggling with debt or need to borrow. If the government really wanted to help retirees, they would change how they calculate COLA to more accurately reflect annual inflation vs. 3Q, and make Social Security non-taxable.

[@emc6511]

🎯 well said!

[@kwilliams2239]

You'll earn less on your savings, sure, but not on your investments. They TEND to go in opposite directions.

[@bryanwhitton1784]

It will probably not directly lower costs of goods and services. That would be deflation and that would be a bad thing. However, it may affect a company's stock price and sales performance. This could have the affect of lowering COGS and ultimately prices.

[@acornsucks2111]

Prices are not coming down because of a cut. Just the opposite.

[@bryanwhitton1784]

@@acornsucks2111 Not sure if this is true. During the previous 12 years the interest rate was very low and inflation was as well. In general I agree with you but a balance can apparently be attained.

[@gtrguyinaz]

The rate cut is good for most…. I don’t have any debt for 40 years…. It has been great to make 5% on cash..

[@ColoGamerpro]

You spoil us Schmidt! I've digested a plethora of personal finance oriented channels here on KZbin over the years and the only two that I can still stomach are you and Erin. You give the very best and spot on advice and ask thought provoking and unbiased questions that help listeners like myself become better. More importantly, thank you for recommending Stephanie Janis Stiefel my investment portfolio with her has been quite sustaining

[@MhadzVai]

Schmidt really is something special. Please think of supporting him (if you don't already, which maybe you do).

[@YaxelBurone]

I know this FA, Stephanie Janis Stiefel but only by her reputation at Goldman Sachs; even though she's now involved in managing portfolios and providing investmnt guidance to clients. I have been trying to get in contact since l watched her interview on WSJ last month

[@ColoGamerpro]

Well her name is 'Stephanie Janis Stiefel'. Just research the name. You'd find necessary details to work with a correspondence to set up an appointment.

[@SehunEscobar]

I went from no money to Invest with to busting my A** off on Uber eats for four months to raise about $20k to start trading with Stephanie Janis Stiefel. I am at $128k right now and LOVING that you have to bring this up here

[@JessieeAlmar]

Thanks to Schmidt. Following his recommendation, I started researching into Stephanie Janis Stiefel. Thankfully it was a little over a year ago now, I started an Investment with Stephanie’s Services and that allowed me to be on much MUCH more stable ground in the face of global financial upheaval. For what it's worth, it made a difference for me and my little family.

[@terry_willis]

The best part of this video is that it has no annoying background music.

[@brucewallace3860]

Lots of opinions out there - I like that you back up your ideas with solid, time-tested advice. Thank you.

[@schadlarry]

For 10 years the rates were close to zero was criminal. Sure we saved a few extra pennies while private equity bought everything under the sun at no risk and raised the prices of everything. Now we will be forced to enter the unregulated casino known as the stock market. At 5% I would have never run out of money.

[@davidpowell3347]

Good observation .

[@gamerguy5696]

The rate cut is only good for people with adjustable rates or new borrowing. It’s unlikely many will see revolving debt rates or credit card rates drop appreciably.

[@butopiatoo]

Exactly, They go up fast and are sticky coming down.

[@chumbawumba1959]

In the late 80's there was a guy named Charles Givens who was the favorite investing pundit of many. Before Internet and before KZbin, he spoke on radio and wrote several books. The ONE THING he always preached was **WHEN RATES ARE LOW, STOCKS WILL GROW ... WHEN RATES ARE HIGH, STOCKS WILL DIE** ... the premise was simple, when rates are very low, stocks will be the investment of choice, opting for risk to have growth. BUT ... when rates are high, investors will park money in Treasuries, CDs, and Bonds ... with little risk and predictable growth. I always remember that simple axiom.

[@justincase2830]

I don't see how a reduction in a retirees fixed income is any good at all.

[@kwilliams2239]

More than compensating increase at the growth end?

[@robertbucsh8840]

I don't pay interest, I collect it. So the rate cut hurts me.

[@dwight_klaus2981]

I'm not happy about the rate decrease. The FED is forcing me back into the market in search of yield. Retirees need low risk yield - well ahead of inflation.

[@Acousticmarine678]

If you aren't earning above the inflation rate, you're losing money. I think Buffet said once, rule number one to investing, don't lose money.

[@mrjuvy49]

We are with Buffett e since about 2010, we love the strength of the stock, BRK b. Great stock.

[@discoverglobeliving]

I remember when my parents were worried about rate cuts affecting their retirement investments. This video really hit home on how it’s not always a clear win for retirees. Interesting take on the impact of asset price inflation too!

[@1timby]

My experience over many decades is that once the price of an item goes up it seldom drops significantly despite the interest rate cut. The FED is a sham run by bureaucrats who have little care about anyone or anything other than them keeping their jobs. So, they are at the behest of their bosses and as we have seen care little about the economy. We saw them lower the rates to make a president look good and raise them to destroy the economy to supposedly quell inflation. Instead, we ended up with a cumulative loss of capital of over 20% and a loss of buying power. Sadly, many folks in retirement are looking for protection of capital. Lowering rates will cost them a lot in the long run and force them into riskier investments. With the government being run by imbeciles and those wishing to consolidate their power by destroying the nation this cut is mere Kabuki theater and has little to do with anything other than politics. On the surface and in some ways it might look good. However, in the long run, the FED does more harm than good.

[@nunyabidness-y2r]

I really like the new graphics you are using for the numbers. It seems to be clearer

[@MelanieEvans-f8u]

Thank you, Geoff! As usual, your information is timely and valuable! :)

[@user-yj3ob9kd3l]

Good points, but an interest rate cut will not be good for me at all. As you stated, interest on deposit accounts will go down. It's been nice the past few years. I won't need to borrow, so I don't care about interest on loans. I've never paid interest on a credit card, so that doesn't matter, either. Corporate savings isn't something that will benefit me unless I sell my stock or buy more, and I have no plans for that. Bottom line--not good for me AND I don't like the politics of it. A cut of 50 basis points, historically, has been reserved for a national crisis of sorts and it happens to be before an election that, curiously, has the potential to benefit one side.

[@skepticalmechanic]

Yea… not good for me also… this guy is a rich clueless dude…

[@user-yj3ob9kd3l]

@skepticalmechanic well, it was a good overview and he made some good points that will impact many, but just not me.

[@kwilliams2239]

@@skepticalmechanic You're not the only person on the planet. He didn't say that EVERYONE would benefit. Those with a balanced portfolio should be just fine, but Uncle Sam can try, and probably will, F things up.

[@bryanwhitton1784]

Yeah and the high rates came as a result of fighting high inflation. So you benefited with the high rates and then complained that your milk, coffee and eggs were too expensive. The FED's goal is a balance of rates vs. economic stability. You can't have high rates and a growing economy. As one posted noted, "When rates are low stock will grow, when rates are high stocks will die.". Pick your poison. High rates and a dead market or low rates and a growing market?

[@user-yj3ob9kd3l]

@bryanwhitton1784 This is true about interest rates. High rates are good for savers, but that's usually during high inflation when expenses are high. There's a give and take, but it's not necessarily a "pick your poison" and suffer either way situation. I can't control interest rates, but I do have some control over my expenses. Utility rates have gone up a lot, but that can cause us to be more conservative with use--LED bulbs save a lot, water the lawn less, turn up/down the thermostat, etc. Shop sales and use coupons at the grocery store. Save gas by combining stops and not making special trips. So, as prices increase, there are things we can do to offset while earning more with higher interest rates. We may have to give it more thought, but we can balance it out a bit.

[@NormaVill]

I really like your new board setup. Helps in understanding. Thank you for sharing your knowledge.

[@lcee6592]

Ditto!

[@chiaraperry472]

Thank you much for these great videos. You put out excellent content and it’s very much appreciated.

[@kevinweaver1179]

Great content -- There's good and bad in most all monetary policy

[@mchell]

Hmmm..Don’t think I heard one thing on your list that made me think the rate cuts will be good for retired people…

[@lastmanlost]

Very bad for me, have most in a Fed fund that was yielding 5 1/4%, now it is 4 3/4%. The Fed fund investments had only one worry, the rate would go down, now I have to go into riskier investments.

[@Kayla11113]

Rate cut does nothing but hurt my savings interest. I hope it doesn't drop more.

[@todddunn945]

I, like many retirees, don't have debt so rate cuts don't impact me in that area. Like others have said, the rate cut(s) will decrease my interest income. I guess the plus side of that is that my taxes will also go down, but not as much as my income will. Strangely, my stocks dropped right after the rate cuts were announced. However two and a half days is not a particularly good sample to determine where stock prices will go. I doubt very much that prices will go down. In the best case prices won't rise as fast IF the fed is right and inflation continues to drop toward 2%. Frankly, I expect the inflation rate to at best stabilize or more likely go up in response to rate cuts. Fortunately, as a retiree I am not impacted much by inflation since my costs for inflation sensitive things (food, etc.) are a small fraction of my overall financial picture.

[@bryanwhitton1784]

Thank you. A reasonable response. Costs aren't likely going to go down significantly from the rate cut. But it the cuts will keep the economy plugging along. The goal is inflation between 2 and 2.5% annually. This is a nice balance for the economy but have the high returns on deposit accounts. You can't have both unfortunately.

[@MARSHMALLOWwhimsy]

I am impressed with your update on tech stocks, I am looking for tax efficient way to rebalance my 7-figure dividend portfolio without triggering capital gain tax. what asset location strategies should i use?

[@PhoenixReborn-v6v]

The best strategy depends on your financial situation, account types, tax bracket, and investment goals. Consult an advisor or tax professional to tailor these strategies for maximum tax efficiency.

[@Tsunaniis-j5l]

I’m currently working towards financial freedom with a focus on dividends & growth investing. Since 2014, I’ve built a portfolio made up of 30% NVDA, 25% SCHD and over 40% in digital and alternative assets, thanks to my CFA. This strategy has helped me earn $56,000 a year in dividends. Back in 2014, I only earned $21 in dividends.

[@Damncars456]

Oh I've heard similar things about hiring an advisor. It's hard to choose one that's very good though. Could you make some useful recommendations?

[@MakeamericaGreatagain-h7j]

Wow!! her track record looks really good from what I found online.i just filled the form and scheduled for a call. Thanks to you.

[@larrywilliams5490]

Thank You,Geoff! Your videos are extremely helpful.

[@Abraham.Lincoln22]

I'm sorry to say but the title of this video is pretty ridiculous.

[@jonathanjacques7250]

No it is not good! Retired with no debt, We dont need credit.

[@bryanwhitton1784]

But the companies that manufacture what you buy do. If their cost to borrow drops your cost at the point of sale drops as well.

[@tammy9964]

Thank you for the information. Appreciate your time and effort for the education .

[@raymond-i2v]

Recently, I've been pondering retirement. I've also invested $800K on S&P 500 so i could secure my financial future. i need an approach to invest in Stocks like Nvidia stocks and of course AI stocks that will align with my risk tolerance and financial goals but it seem to be bearish right now.

[@Jeffery-f2e]

A lot of folks downplay the role of advisors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850k.

[@Fred-w7t]

I've been looking to get one, but have been kind of relaxed about it. Could you recommend your advis0r? I'll be happy to use some help.

[@Jeffery-f2e]

Her name is Jessica Lee Horst just research the name. You'd find necessary details to work with a correspondence to set up an appointment.

[@Kartguy1]

For those retirees that have an appetite for greater returns, a bond mutual fund will lock in higher interest rates with the possibility of capital gains over the next 1-2 years.

[@TFBITRCY]

Is summer vacation over? Finished with the casual attire? Regardless, your advice is excellent and thank you for the information.

[@terryB4713]

Thankyou Geoff

[@lilblackduc7312]

Thank you, Sir! 🇺🇸 👍☕

[@misterenergy959]

Good stuff!

[@205rider8]

Truflation has inflation at 1.4% !!!

[@BrianW211]

Geoff, for your videos that are "more current", you should put the date or something in the title, so future viewers aren't confused.

[@2023Red]

Geoff. My take is the Fed knows to keep the balls up in the air until January. Election. Swearing in. Recession looms from several indicators but we need a really big one to cut the spending. Inflation by itself is a good thing from several ways to outlook. No one complains about getting top dollar for selling their house. But we all complain about spending lots of bucks on a new truck.

[@butopiatoo]

rates paid on CDs and tbills have dropped .75 to 1% in the last 4 months. Things I had that are being called paying 5.25-5.7% can now only be replaced making 4.7 to 4% out to a year. RATES CHARGED don't drop as much or as fast as rates EARNED on fixed income. Sorry Jeff, not a helpful take. We all just have to roll with the punches. And when the new Part D premiums come out Oct 1, most are going up way more than the theoretical $525 "saved" over a year with a half point cut.

[@Zues64]

I’m not so sure Jeff in a non-recessionary scenario that 10 year rates don’t normalize back up to 5%.

[@lcee6592]

Seems no matter what, a person needs a sizable cushion built into their retirement account. Because no matter what the fed does, taxpayers lose in the end.

[@frostfox1208]

Could you comment on the federal debt and how much it is. 35 Trillion?

[@bryanwhitton1784]

Better yet break down the debt. How much is going towards paying the interest on the bonds everyone is talking about? How much is used to pay into the SS fund that everyone is complaining about. How much is foreign owned? Everyone needs to understand what the debt is.

[@frostfox1208]

I’m reading a book written 22 years ago “The coming Generational Storm “ it says the Debt was 45 Trillion 22 years ago.

[@bryanwhitton1784]

@@frostfox1208 The national debt at this time is about $35T but it is allocated as follows: About $27 trillion, or 79 percent, was debt held by the public - representing cash borrowed from domestic and foreign investors. The remaining $7.0 trillion (21 percent), was intragovernmental debt, which simply records transactions between one part of the federal government and another. The public part is the sale of bonds to the public and other agencies. Most of the bond sales is for social security. All it can legally invest in is federal bonds, thus the debt. They have been doing this for almost a century.

[@frostfox1208]

The book actually says a “fiscal gap” of 45 trillion

[@bryanwhitton1784]

@@frostfox1208 I gave response to your previous post and now it is gone. Did you see it?

[@jorgerivas1424]

Rate cut not good for retirees! We're debt free and rely on money-market funds to keep up with inflation. We rent a 3-bedroom house for $900 a month, support our kids and (unfortunately) our in-laws. The State of Texas confiscates most of our Social Security so we don't get any to speak of. The extra funds are going to go away and we'll have to start eating up principal. That's definitely not good!

[@tonyg9130]

I’m amazed at your ability to write backwards

[@johnweber6612]

Utter nonsense. The rate cut will lead to higher inflation for everyone, the money printing will go mostly to wall street and the one percent.

[@Sackattack_]

Yea, I was enjoying my money earning 4.5% in my savings account, and 5% in CD's. Would be nice to have like a 4% consistent rate, instead of it swinging from 0 to 8%, etc. I know that's probably unrealistic.

[@bryanwhitton1784]

@@Sackattack_ We had 12 years of consistently low rates and low inflation and everyone complained about the low returns. You can';t have high rates and low inflation it doesn't work that way.

[@Sackattack_]

@bryanwhitton1784 yep I rem those people complaining, but as a saver and a non borrower, I was in hog heaven with the higher rates. High rates pi$$ off people in debt, low rates pi$$ off people who have their crap together! 🤣 That's why I said it would be nice to have a consistent mid % rate but I know that would be too hard for our geniuses at the Fed to predict consistently.

[@rickm1255]

My man!

[@HolySchmidt]

My man…

[@dougricheson5683]

i like your shows and the information is very informative- however I don't like so much the new format with the reverse clear board writing.

[@dougb8207]

Thanks for the show Geoff. So my wife will be buying more stuff? yikes

[@HolySchmidt]

Ha!

[@alanduff2205]

Not good for debt free retirees who have bonds or CD’s. Locked in three year bonds paying over five percent six months ago. Won’t pull from stock funds for four years or so.

[@jefffanning2799]

Evergreen or Deciduous, Geoff Schmidt IS THE MAN! Excellent content Geoff, I learned much.

[@BadWolf762]

I lived through the Reagan/Volker period when interest rates were about 20%. At the time I thought it was terrible, but in reflection I realize they were ringing the excess liquidity out of the system, which set up the boom times starting in the late '80s. I was making 21% on the companies payroll savings plan back then. When we purchased our acreage in 1985 the interest rate was 11.25% and I thought that was great. Now I just see Powell and the fed spiking the punch bowl before the election.

[@todddunn945]

That was a great time. I bought some very nice 30 year treasuries.

[@bryanwhitton1784]

Inflation is down so the rates need to drop accordingly. This whole election relationship is BS. The inflation rates dropped to reasonable rates in the July/August time frame. The economy started slowing down at about the same time. So in September it was time to drop the rates. This isn't a decision that Powell made on his own. There are 12 managers across the country appointed from both the democrats and the republicans. The drop is voted on by the 12 and the vote was 11 - 1 to drop them. I really hate conspiracy theories.

[@keithmachado-pp6fv]

I have no debt and believe me I am not happy getting less on my CDs and savings account. With that said, the high federal funds rate was there due to high inflation which means if it was still needed we would be still experiencing high inflation. The fact they are cutting means inflation is under control.

[@bryanwhitton1784]

Exactly!

[@wes_d]

Studio video is dark and no backlight…

[@raymondmuzic4520]

I bet that you switched the wedding ring to your other hand to hide evidence of a mirror image flip of the video.

[@d.thomas1541]

Happy the rate went down, HELOC loan was 3.74% for years, went up to 8.975%! I was able to pay down the loan substantially with part time earnings, but interest payment stayed same as when debt was higher. So I agree with Geoff’s message. My stocks went UP, too. 🥰

[@s99614]

Higher inflation is bad for retirees, and that is what is going to be the result of this rate cut

[@michaelswami]

Could you explain?

[@mrjuvy49]

I doubt it.

[@bryanwhitton1784]

Well I'm not him but there is a slight chance it could happen. If the rate cuts are enough to light a big fire in the economy where everyone starts doing the expensive tasks such as remodels on their homes, buying new cars, electronics etc. then the production won't be enough causing shortages and we have inflation just as Geoff said. Having said that, I doubt that a .5% reduction is going to ignite the economy. It will boost some home sales and give car mfgs a little more profit. The car companies have been offering low interest rates and sacrificing margin for quite a while now. Lower rates won't change the interest rates but it will give back some margin.

[@mrjuvy49]

It's is like paying down debt, the hardest thing is to start, I surely can't hurt our economy and other cuts are coming I believe

[@michaelswami]

@@bryanwhitton1784 The reason I asked for an explanation is that I simply don’t see it. I think we’ve been in a recession in the US for at least six months, Europe, China and much of Asia is in one. Except for one grinding 14 year period, global slowdowns usually are not conducive of inflation.

[@davidpowell3347]

I think the excessive interest rate cut at this time will lead to resurgent inflation and thus will harm retired people and working people.

[@bryanwhitton1784]

It isn't big enough to do that. IMHO.

[@squidward66]

I'm no expert but my feeling is: election year messing around for short term votes, and they don't care what happens after that. Federal bureaucrats trying to save their own necks as usual.

[@rickagulia3767]

So you are concerned about the financial stability of the economy?? If you look at past a .5 cut indicates something is wrong with economy. Why such a big cut since they are telling the economy is strong ?? What about the comerical real estate market?? They have to be refinance and huge portion have very low occupancy. What about big investors like Warren Buffett they are in cash position?? Are they anticipating some big financial event coming ??

[@mrjuvy49]

Markets are cyclical, and I always tell people as an investor you may be smart or dumb depending what decade you are in. Stay the course to win.

[@SonnyPruitt-q1s]

You still believe the government data that inflation is 2.5%?🤣🤣🤣 Just because a home value increases that isn't always good,if my home is $200,000 and the value goes up to 2 million dollars if you are not selling it well that doesn't mean squat BUT that home is going to cost you more in property taxes every year which sucks and if you are on a fixed income and a tight budget it could mean the loss of your home.

[@mikeb5183]

Not good for retirees or anyone except people that don't work. The pace of the cuts is too fast. A quarter point every 6 months with some spending discipline would be better. Of course, in our political system this would never happen. Keep enjoying your wars.

[@alanduff2205]

You bombed on this one Jeff. You are flat wrong.

[@ratipati2007]

This is not good video at all. The character "Good" in the title is a value judgement based on the idea that having debt in retires is a given fact. That is not true at all for many of retires. Misguided video.

[@Cross-xm2fr]

So many bad takes here

[@raymondnoya5653]

We need to go back down to zero