Transcript: This is More knowledge, more Wealth with your host, Gabriel Shaheen. Gabriel is a certified financial planner and a registered investment advisor at Falcon Wealth Planning. This show does not intend to provide personalized investment advice through this broadcast and does not represent that the services or securities discussed are suitable for any.
Investors are advised not to rely on any information contained in the broadcast in the process of making a full informed investment decision, more knowledge, more wealth. Now, here’s your host, Gabriel Shaheen. Good day. This is Gabriel Shaneen, certified financial planner and your host, more Knowledge, more Wealth here on every weekend, talking about all important topics of personal.
My goal is to give you the knowledge you need to increase your wealth Now to the listener, you can always reach out to myself or any one of my colleagues here at Falcon North Planning. Our phone number is (855) 963-2526. That’s 8 5 5. 96 Falcon like the Bird, or visit our website@falconwealthplanning.com.
That’s falcon wp.com for short. Now folks, I’m president of Falcon Wealth Planning. We are a fee only non-commissioned. True fiduciary advisory firm. Now we are a registered investment advisory. We are independent folks. We got no affiliations with any of these big box broker dealers, but our clients do use the Fidelity Schwabs and so on of the world.
My point is, folks, we help with anything that involves a dollar sign, folks, and we got offices all across and we help people all across the. Our headquarters is here in Southern California. But folks, please take advantage of our free financial assessment we’re getting. That really helps relate this show to your specific situation.
That’s where you are today, how retirement looks like. Talking about taxes. Tis the season right? Investments, estate planning, insurance, folks who name it, anything that involves a dollar sign. We recommend that you give us a call. Get that unbiased advice, those who are not commission based, who don’t sell you anything that tr well, we sell brain, I guess, but we are offering one to two meetings, one to two hours of our time at no cost.
Folks, give us a call. We would love to help. Our phone number is eight five five nine six three. 25, 26. That’s 8 5 5 96. Falcon like the bird folks, there are a lot of things to talk about today, and a lot of the times I bring up to you what we discuss with our clients or just what clients are discussing with us.
And today, one of the biggest ones that I ca came up with and people are asking us at our firm is asking about what to do with mortgages. There are some people that need to buy a house despite housing, arguably still being a bit inflated based on where interest rates. and what they were selling at. Uh, but people are moving and they see themselves at a place long term.
Now what does that mean from a financial planning point of view? If you see yourself in a location for over five years, or definitely north of seven years, it makes sense to own a house versus renting. Now, if you’re planning to stay in that area over 10 plus years, you really don’t have to worry as much of an over-inflated market.
What does that mean? Well, if you need to buy a house and you bought it in 2008, from 2008 to 2018, you were not under. on that home. And so if you see yourself there for a long period of time, it makes sense to buy despite where you are. And despite, if you are considering renting because you make more, it makes more sense from number one, a tax point of view.
Number two, your payment stays flat, unlike rent that goes up. And number three, there is appreciation on the property, even if it were to drop, as I have suggested, I think real estate could potentially. 10 to 20 plus percent depending on the region, because I still feel they’re overvalued. But if you see yourself there for over 10 years, think about it from 2008 to 2018, real estate initially dropped 40%.
If you bought in 2008 earlier in the year where the bottom of the market was in 2011. . And so my comment to you of course is you’re wanting to buy makes sense. Congratulations. But the question is, what type of loan? To get a lot more questions, especially in a high interest rate environment. People are asking should they get an arm loan?
Now, what is. An arm mean an arm stands for a adjustable rate mortgage. So this is a loan that actually acts just like your 30 year mortgage. So if you’re currently paying 5%, there is no difference except after the five years are up, you’re. rate adjusts to whatever the rate is at that time. Now, I’m gonna give you numbers.
This was sent to us by one of the brokers here, and I’ll just say it’s a local bank. It’s US bank, not trying to give them publicity. This could be higher or lower than what it was at the time, but this was as of February 2nd. Oh, and by the way, happy uh, Valentine’s Day. to you guys. Hopefully you had a great time.
It kind of fell on a Tuesday this week, so you got this weekend. Maybe you did it the previous weekend. By the way, my recommendation from a financial planner don’t go out on February 14th. I know I should have said this last week. Do it on the weekend prior. Do it on the weekend after you. Do you really need a corporate sponsor to tell you when you love your spouse or your intimate person that you have?
Don’t. So just do it. You choose the date. If I was you, I would just say, you know what, sweetie? I’m not gonna do anything on February 14th. I love you to death, but I’m not gonna pay three to four times more. Let me negotiate with you. I was gonna give you this gift, but I’m gonna upgrade your gift. I’m gonna supersize your gift because of the money we save.
You got what I’m saying? Make your Valentine’s Day on the 18th of February. You know what I’m saying? Anyway, not to digress. Apologize guys. going back, so I’m gonna share with you rates. Now, currently at this time, February 2nd, 30 year mortgage was five and three eighths. So we’ll call it 5.375 at 15 year mortgage was 4.625.
That’s four and five eighths. Okay, that’s for a normal conforming. Now, here’s the thing, times in higher interest rate environments, banks have what’s called portfolio loans. This is for jumbo mortgages. The government does not get involved in those. Now, those are typically lower. In higher interest rate environments and conforming loans.
So a 30 year mortgage was a five and three eights. If you’ve got a jumbo mortgage, which we’ll just say is over a million dollars, it’s 5%. Man, that doesn’t seem right. It’s almost like the rich keep getting richer, but yes, it’s a lower rate. Now let’s discuss what arms look like. If you were to, to do a 10 year arm, you wouldn’t be paying on a a jumbo.
Or conforming the 5.375 or 5%. It would be 4.8 7, 5 4 and seven eights. Heck, if you did a seven year arm, it would be four and three quarters, which is 4.75. Now, historically speaking, outside of the past two years, I remember under 5% your happiest hack. When I bought my first house in 2004, I remember being so excited that I was supposed to, actually, I didn’t get 5%.
I had to refinance a little bit after that to get 5% or under 5%. My point with you is this, is that. Arms make sense and could make sense depending on number one, how long you see yourself there. Number two, what’s your financial situation look like? If it were to adjust, could you afford it? And number three, the interest rate or environment we are in as it’s continuing to rise.
We know the Feds have said they’re going to stop raising rates in Q2 or in Q3 of this year of 2023. So the feds just told us that, what does that mean? It’s gonna stay. And Joe further notice. Right? Okay, so let’s discuss when Feds lower rates. Well, they points of turmoil, recess. They lower rates. What else?
Times of potentially, uh, reduced inflation. We’ll call it deflation. What else? Turmoil. This could be, god forbid, a terrorist attack. This could be issues with the stock market. This could be issues with other types of markets that are out there, or wars that are going on international. This could be with tariffs, there could be multiple different reasons that our go.
Lowers the rates. Well, the beauty of doing an arm is you, no, it’s eventually, I don’t wanna say gonna expire or mature, but you do know eventually it’s gonna come to an end. Now why is that crucial? Well, because if you now have seven or 10 years, number one, you are saving money on the mortgage every single month.
If you’re saving a quarter percent, that can save you hundreds of dollars depending on which your mortgage, mortgage balance is. and you could refinance anytime. And there are multiple outfits out there that only charge maybe a thousand to $3,000 for a refinance, which, oh, by the way, they tie into either the rate or they just add it to your loan balance.
But if you’re getting a lower rate, just something as simple as this, if you have a $500,000 mortgage and you’re able to save a quarter percent, Quarter percent on 500,000. Now 1% on 500,000 is 5,000. A quarter percent of that is $1,250. Theoretically, you say $1,250 every year. You get what I’m saying? It is a compounding massive event.
It makes sense for you to do it. Some people worry about, well yeah, but you’re ret stretching it out over 30 years. It doesn’t matter. The law of math says you are gonna save money on that interest. If you really were worried about that, maintain your same payment. If you’re able to save $200 a month after the refinance, continue to make that payment of the extra $200 a month, you will always pay off the home sooner.
It’s the law of mathematics, so do not get so stressed about it and it could make sense for you to. a. arm mortgage. By the way, if you’re just joining us here, listen to Gabriel Sheen, certified financial planner and your host, more Knowledge, more Wealth here on every weekend. Talk about all important topics of personal finance and folks, if you need help with this, if what I’m saying sounds remotely similar to you, if you bought a home in the past six months and your interest rates are high, well, you know what?
They came down, there was a pointed time a few months back where you were getting a 7.25% on your mortgage. On a 30 year mortgage conforming mortgage. Well, I just told you right now, you can get a 5.375. That’s almost a 2% savings. A 2% savings on $500,000 mortgages. What? It’s $10,000 of annual savings if you’re not doing anything.
I’m sorry. You’re lazy. , okay. Maybe you’re arguing and upset at me that I called you lazy. Maybe you just don’t know any better. Well, guess what? That’s why we’re offering a free financial assessment. Take a look at your situation. It is never too soon, and depending on the mortgage you have, you could refinance at any time.
Maybe sometimes you have to wait six months. The point is, don’t do nothing. People who do nothing are lazy. And if you are not lazy and you’re just too busy, well that’s what you delegate it out. You might be too busy to cut your grass. What do you do? You hire a. , you get what I’m saying? You might be too busy to do your oil change.
What do you do? You, you do. You have somebody do your oil change. There’s multiple things. You might have not enough time to clean your pool, or you have somebody do that, right? You delegate out the things you either, number one, don’t want to do, or number two, don’t have the time to do, but to say that you just can’t and don’t have the time or not aware is.
Is nonsense. This is where you have to talk to a financial professional, and this is where we can help folks. We got offices all across and we help people all across the country. Yet again, I’m a Southern California person. That’s where our headquarters is. We would love to help folks. Give us a call. Our phone number is (855) 963-2526.
That’s 8 5 5 96 Falcon. like the bird. We can help relate this show to your specific situation cuz it’s just sad that people just, it’s like the rich keep getting richer, right? The rich people understand like, I have to spend money to make money. They pay the money for a professional and that professional saves them more than what they were paying.
Folks, when are you gonna wake up? Let’s allow the middle class to become the upper class, but it’s one step back from two steps forward. Why is that? Because it takes time to make a call. Please do that now. We would love to help. 8 5 5 9 6 3 25 26. That’s 8, 5, 5. 96 Falcon like the bird. Folks, we’re gonna go on a quick break and we’ll be right back after a few words.
This is Gabriel Shaheen, certified financial planner. Your host of More knowledge, more Wealth. That’s on every weekend. We’re going over all important topics of personal finance. We’re going over retirement planning, making sure you’re prepared for retirement, social security and strategies, real estate taxes, avoiding them now and in the future, investments, reducing fees, commissions, and so on.
Insurance. Planning folks, we are offering a free financial assessment that you could take advantage of. We have office all across Southern California, including the Inland Empire. Give us a call to take advantage. It’s a $500 offer. Our phone number is (855) 963-2526. That’s 8 5 5 96. Falcon like the bird, or visit our website, falcon wealth planning.com.
That’s falcon wp.com for a short, enjoy the show. We look forward to serving you.
Welcome back folks. This is Gabriel Shane, certified financial planner and your host of More Knowledge. More We on every weekend talking about all important topics of tur personal finance, and today we’re talking about just a simple interest rate. Something could, something so minuscule of a home mortgage and what your current rate is and maybe you wanting to move, but because you’re currently in a great three and a half percent rate and current rates are at five and a half percent, you might not want to.
here is where we’re discussing where it could make sense for an armed mortgage. Depending on your situation, depending on how long you see yourself living there, depending on how much you can afford, if in fact it did adjust and understanding the loans that you get that say, Hey, if it does adjust, maybe the first year, if you’re at five and a quarter, can’t go higher than six and a quarter, maybe the year after seven and a quarter.
Understanding what the ramifications on those for. , it’s gonna be crucial, but the sad part is I just don’t see people doing that. People are just like, Nope, I need to do a 30 year mortgage. That’s what I was told, or, nope, I want to pay it off faster. I want a 15 year. You have to see where we are at the times where we are.
Money is no longer as cheap as it used to be, which means you have to see where we are today and what the future looks like because the feds actually our fed. , right. I’m hesitant sometimes giving credit where credits due. But our government did say, and more specifically our fed chair, Jerome Powell, their goal was to raise rates.
They said in 2018 they were supposed to do it in 2020. Then Covid happened and they said, we’re gonna raise it in 2022. And boy did they, they raised rates with a fury. And now you’ve led that with compounding inflation and market turmoil. We’re kind of in a little mess where people aren’t feeling so great right now.
So what is my point with all this? The Fed. Finally gave itself room, and I talked about this in the first segment, where if there is turmoil, if we do go into a recession, if there is a housing crisis, if there is a financial crisis, if we go into a war in Russia or Ukraine or whatever now China with these spy balloons, what the hell is that about?
My point is if there is issues that are going around now, the government has room, they finally were interest rates were nothing before, absolutely nothing. They couldn’t go any lower. , they were at bottoms. If they did go lower, it would be negative. You know what that means? They’ll charge you for keeping money in your bank.
Your a hundred thousand at the end of the year is only gonna be worth 99,000. That’s what it’s like in Japan. That’s what happened in Germany and Sweden for a point of time. So what am I trying to tell you is now the government pro finally raise rates enough were, if something were to happen. They don’t have to just print money like crazy what they’re through, what they were doing before through qu quantitative easing and things like that.
They can now lower rates, which loosens up the bank’s regulation to allow them to lend more money. This is where you have bank to bank borrowing. This is where you have the loosening and the tightening of the banking, uh, powers. Where right now it’s more difficult to borrow money than before. So they finally gave room for people to be able to borrow money.
They gave room for people to be able to lower rates when things happen, and the government just said in q2, Q3 of this year, they’re gonna stop, which means I probably would. Bank on the next seven years, as historically there’s a recession every four or five years. Where if you were to lock in an arm for seven to 10 years, I don’t think that’s a big deal, especially if you’re able to lower your rate quarter percent or even half a percent.
I think it’s a no-brainer. Folks, that would be my recommendation to you, depending on your situation. So hopefully that’s an answer there. That’s good for you. But I’m gonna congratulate the government. I hate them raising rates, but damn it, they actually said and did what they were gonna. They’ve been saying the whole time and they executed it like Holy smokes.
Now, I’m not saying this is a Biden thing, I’m just saying the previous administrations who had Jerome Powell in there anyway, so whether you’re a Biden, whether you’re Trump, my point is is the administration, or excuse me, the Fed chair, Jerome Powell actually did it. And so this is a compounding effect with rising rates, and I’ve been talking about this for a while, is large cap growth companies and even mid-caps and small cap tech companies are getting punched in the face.
Why? Because interest rates are so high, they can’t just borrow money. Remember, the banks are mal tightening, they are tightening their lending, and now it’s not as cheap to just start a company. 0.75% rate where you could borrow that and a private equity firm will give it to you with your eyes closed.
It’s harder now to do that. You actually see this now in Shark Tank. You’ll be seeing this watch in the next one to two years because they’re backed up six to nine months. They record and they air six to nine months earlier you’re gonna hear they’re not able to get as much funding. As before, because people don’t have as much money to give.
And when I say people, that’s you. That’s me. That’s the mutual funds, that’s the investment companies, that’s the private equity companies, the hedge fund companies, and as I just said, the banks, which is why tech companies get smashed in a rising interest rate environment. By the way, folks, if you’re just joining me, this is Gabriel Shaneen, certified financial planner and your host More Knowledge, more Wealth here on every weekend, talking about all important topics of personal finance, and I wanted to.
Truly what happens in a rising interest rate environment. And it’s, listen, I’ve talked about this before. If this segment sounds familiar cuz it does sound familiar, but what I got for you today, I’m gonna shake this paper is proof I’m gonna list you. I can list you three dozen different companies that’s had layoffs.
Why? Cuz they need to, because they can’t afford to just continue to lose billions upon billions upon billions upon billions of dollars anymore. It’s just not long term. It’s not feasible folks. And because of that, you are seeing massive layoffs in the tech world and folks, if, and, and a lot of you made a lot of money on tech, but now you’re sitting on it and now seeing those gains that you had in 20 19, 20 and 21 that got demolished in 2022.
Mild recovery in 20, uh, 23. , but in Marisa weeks, you are seeing NASDAQ and tech fall a bit more. If you wanna help with this folks, we can identify your portfolio, see what you have, if it makes sense, if they’re profitable, and see what you should do to divest. Because in a rising interest rate environment, tech gets hurt.
Folks, give us a call. We can help you. It doesn’t matter where you are. We’re offering one to two meetings, one to two hours of our time at no cost. Our phone number is eight five five nine six three twenty. 26. That’s 8 5 5 96 Falcon like the Bird, or visit our website@falconwealthplanning.com. That’s falcon wp.com for sure.
Folks, when you take a look at what’s happening in the tech, let me go over this. I’m gonna talk about this year, not even talking about last year. Last year. Heck, hp. Hewlett Packard, laid off 6,000 people. Cisco, 4,000 people, Amazon, 10,000 people. Meta, which is Facebook, 11,000 people Twitter with the whole.
Yeah, Elon Musk coming in, uh, almost 4,000 people. Uh, Groupon, uh, laid off, uh, a good amount of its staff, about 500 people, and then, uh, Microsoft, a thousand people. I mean, it’s almost like Elon was a visionary in this thing. He was saying, Hey, there’s gonna be problems, and he wanted to get rid of the staff and it, I’m telling you this, it was just the beginning.
If you take a look at this year, you have still this year in 2023, and oh, by the way, we’re only in the middle of February, a little past the middle of February, you. Twilio, 17% of its, uh, force laid off. Roomba 7%. Disney, 3%. Zoom 15%, Dell 5%. HubSpot, 7%. PayPal, 7% ibm one and a half percent, which oh by the way, might not sound like a lot, but we’re talking.
Thousands of people. Folks. Gemini, 10% Yankee Candle, 13%. Three M one, roughly 1%. Spotify, 6%. Google, 6%. Microsoft, four to 5%. Now, yet again, that might not sound like a lot cuz it just happened in January. That’s over 10,000 people. Amazon, one to 2%. Oh, by the way, almost 20,000 people. Carta, 10% of its, uh, staff la uh, Coinbase, 20%.
DirecTV five by 6%. Salesforce 10%, which was 8,000 plus people. Vimeo, 11%. Goldman Sachs 8%. Compass, uh, uh, stitch Fix, 20%. Yahoo, 20%. Uh, uh, GrubHub, uh, 10% eBay 500 group on again and another 500 people. Sap two and a half percent, which is 3000 people. Spotify, 6%, and Google. Um, as I mentioned before, uh, stat 6% represented, uh, 12,000 people.
Folks. Uh, a lot of layoffs are happening now. You would think that the unemployment rate would go sky high, which would then be able to justify recession. Now, we’re gonna really see that in the next few months. But my point is this, folks, as we’ve said, this isn’t rocket science now, for us, it’s not because we’re scientists of finance.
We see the things that you’re not seeing. We see the items of the effects it has. When you take a look at. Common sense logic and what’s happened historically. Taking into account all three of those is what. experience, and this is why it’s crucial to speak with someone who’s not selling a product that’s not pitching you the performance of a fund or product that’s focusing on you and understanding in your situation what’s the best for you and the amount of risk that you need to take and make it sure you’re properly diversified.
For somebody to say that they’ll make you money without risk is a lie, and it’s basic fraud for someone to say you can lose or invest in something where you cannot lose. Principle is guaranteed and you’re gonna make a bunch of money is complete fraud, folks, I’m sorry to say, but those are pitches and you ask ’em, show me somebody who’s been in the product for 20 years, they’re gonna say, no, it doesn’t exist.
These have riders to it. They have restrictions to it. They have caps on how much you can make. It is sadly, is something that this industry is heavily being regulated and trying to stop. These people are insurance salespeople and it’s a return of principle product. Remember, the definition of insurance is to make you whole.
You’re getting protection to bring you back. You get sick and you go to the hospital. , they don’t give you a toaster. No. They make you feel better. If you somebody rear ends your Prius, they don’t replace it with a Lamborghini, right? If your house 2000 square foot house burns down, they don’t replace it with a 20,000 square foot house.
If I have life insurance, I can’t get a 50 million life insurance policy. You know why? Cuz my wife won’t be upset if I’m dead. You get what I’m saying? It has to bring you whole to your current lifestyle folks. Insurance is designed to get you. Don’t fall into the trap for people selling you annuities and don’t fall into the trap of people selling you any whole life policies.
More importantly, this index universal life policy, these universal lives, all it is, folks, it’s a joke and it’s just you’re not gonna be happy. Ask them. Find somebody who’s been in the product for 20 years. You’re not gonna find it. And if you do find it, their returns are not what was promised on day one.
Folks, if you need help, give us a call. We would love to help you. We’re non-commissioned fee only planners. Folks, me and my colleagues would love to help you out. Our phone number is (855) 963-2526. That’s 8 5 5 96. Falcon like the. Folks, this was a fast, fast show. I wanna thank you for tuning in with us this weekend.
Feel free to join us anytime. Join our podcast or on our Spotify. Lovely help you out folks. Folks, enjoy your weekend. Have a great week and God bless.
