12.05.24 Update: Series I Savings Bonds / A Warning About Fidelity

Since the earnings rate on I Bonds changes every six months - Clark has updated advice for savers. Also - Clark’s “three favorite children” in the financial world, Vanguard, Schwab and Fidelity, aren’t perfect, and he calls them out where needed. At the moment, there’s an issue with Fidelity that investors need to know about. Series I Savings Bonds: Segment 1 Ask Clark: Segment 2 Fidelity Investments: Segment 3 Ask Clark: Segment 4 Mentioned on the show: Clark's Christmas Kids 2024 6 Things To Know About Series I Savings Bonds Why Clark Says It’s Time To Dump I Bonds 17 of the Best High-Yield Online Savings Accounts in November 2024 Best Prepaid Cards: Top Debit Card Alternatives Fidelity And Ex-Advisor Agree to End Lawsuit Over High-Fee Investments How To Open a Roth IRA Fidelity Investments Review: Pros & Cons The Best Places To Buy Hearing Aids (Clark.com) Clark.com resources Episode transcripts Community. Clark.com Clark.com daily money newsletter Consumer Action Center Free Helpline: 636-492-5275 Learn more about your ad choices: megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

• 0:00Speaker 00

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• 0:27Speaker 01

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• 0:42Speaker 02

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• 0:44Speaker 03

  Thanks for joining us here on the Clark Howard Show. You know, our mission is to serve you with advice and information that empowers you so you make better financial decisions in your life. And if you have a moment today, I hope you'll take that moment to look at clark'schristmaskids.com. It's where we take care of the Christmas wishes of children and foster care. And whatever you're in a position to donate, please help out these children. Let them know after they've been let down by the adults in their lives that an absolute

• 1:28Speaker 03

  stranger cares about them, loves them. Again, it's clark'schristmaskids.com. So I can't even begin to tell you about how many people are contacting us with questions posed for the podcast and the YouTube show. And people contacting us at the Team Clark Consumer Action Center totally befuddled about I-bonds. And I've got some new important advice on the I-bonds you may have bought when the rates were really high a few years ago. And then I've got to do a follow-up about fidelity because we've had some questions

• 2:09Speaker 03

  recently from listeners and viewers about how I could make fidelity one of my three favorite children when...

• 2:19Speaker 03

  Fidelity as a child is showing some misbehavior. I'll tell you what I mean later in this podcast. So, Series I savings bonds were hot, hot, hot during the hot inflationary cycle we had from the supply chain disruptions in the COVID cycle with, gosh, the rate people were earning on Series I, I for inflation, back during the peak of the inflationary cycle was just under 10%. People were buying the I-bonds at such a fast rate that the computer system of the

• 3:01Speaker 03

  US Department of the Treasury crashed, I think on more than one occasion, because people were clamoring to keep up with inflation that for many people, except people who were alive back in the 70s, was unprecedented in your lifetime. And so, these Series I savings bonds were a safe place to go, and the rate on Series I savings bonds resets every six months. So, the rate has just gone down, down, down, down, as inflation has trended steadily down and is now generally back in the twos.

• 3:45Speaker 03

  So, the Series I rate, again, resetting every six months, for people who bought them when the rates were so very high on the I-bonds, now are earning 1.91% on those. 1.91%. So, think about it. Just two, two and a half years ago, people were earning almost 10%, and now that is 1.9%, where you can put money in a simple savings account with online banks that are paying the best rates, around five or so percent. So the Series I Savings Bond that was such a great thing has become a dud.

• 4:29Speaker 03

  But let me tell you, this is where you gotta hang with me because Series I Savings Bonds come with two interest rates. One, a base rate just for breathing, and that on new Series I Bonds is 1.2%. So you get 1.2% for as long as you own the I Bonds plus the rate of inflation. So you're always running ahead of inflation with a newly purchased I Bond. Where those older ones, when those were sold, you got no bonus. You only got the inflation rate because the demand was virtually unlimited.

• 5:13Speaker 03

  So there was no reason for the Treasury to give you bonus money. So if you have those old Series I Bonds, you need to dump them. You're going to forfeit 90 days of interest, but that interest now is pitiful, 1.9%. So you dump out of those, forfeiting the last 90 days of interest, and then you're a free agent. If you love owning I Bonds, you can actually exchange your old ones for new ones. If you go to savingsbonds.gov, it will take you to the link that will explain how you

• 5:50Speaker 03

  do the exchange, and then you take ones earning zero bonus to ones that will earn 1.2% plus the rate of inflation, again, resetting every six months. So if inflation rises again, for whatever reason, you are getting that higher inflation money, plus you're getting the 1.2%. It is worth the forfeit of 90 days of interest to exit either into new ones or follow the money. And the money right now says you're better off. In these online banks, you can see a list of some of the best rates out there in the country at Clark.com.

• 6:34Speaker 03

  There are many lists out there if you don't like ours, but you can find these rates, again, around five is the magic number you're looking for right now. For your money to be earning a lot more than you're earning on something that I encourage you to buy a few years ago, and now I'm telling you, you want to dump them. I mean, it's like, why the inconsistent message? Because the market conditions changed.

• 7:05Speaker 04

  Chase some money. All right, Dennis in California says, I know Clark usually does not like piece of garbage debit cards, in quotes.

• 7:12Speaker 03

  Piece of trash is what I say.

• 7:14Speaker 04

  What are his thoughts on the new PayPal debit card that provides a 5% rebate on selected purchase categories?

• 7:20Speaker 03

  Okay, as long as you understand the risk with a debit card and you're chill with that, you can do it. So with a PayPal linked debit card, the only money at risk is the money you have available in your account. Debit cards tied into a checking account that you pay your mortgage from, or car payment, or rent, big expenses, and your payroll goes into it and stuff like that, that's playing with dynamite, because you have so much money at risk. If the debit card is paying these, on these select categories, and you're disciplined, and you only use the card for those categories, and you're comfortable,

• 8:01Speaker 03

  again, with the fact that if somebody gets your number and uses it, your money disappears, then you have to fight with PayPal to get your own money back. The advantage of credit cards is, there's only a charge there. No money of yours has left the building. Your money is still there. So that's why I call them a piece of trash, because the debit card is so anti-consumer. In this case, if you go in eyes wide open, and you protect yourself by not having too much money at risk in the account. I think it's great.

• 8:41Speaker 04

  Norman in Georgia says, what Garmin device does Clark wear to detect a fall? There are many on the market.

• 8:47Speaker 03

  So my Garmin device does not, all right, so those of you on the YouTube show will see there's something really wrong.

• 8:54Speaker 04

  We get a lot of questions about the number of

• 8:57Speaker 03

  I wear

• 8:58Speaker 04

  two watches.

• 8:59Speaker 03

  Two watches.

• 9:00Speaker 04

  And an Oura ring.

• 9:01Speaker 03

  Not really a watch, although it does tell time, I think. Yeah, so this is my Garmin fitness tracker and I've been in the Garmin orbit for 15 years and I'm obsessed with fitness and even though I'm far from an athlete, I'm obsessed with fitness and Garmin, in my opinion, is the best at it.

• 9:22Speaker 04

  And what's that model?

• 9:23Speaker 03

  I have no idea.

• 9:25Speaker 04

  The cheapest one you could get?

• 9:27Speaker 03

  It was on sale and it just does the thing.

• 9:30Speaker 04

  That doesn't detect falls.

• 9:31Speaker 03

  And today it's very unhappy with my step count.

• 9:35Speaker 04

  Okay.

• 9:36Speaker 03

  And it only has my goal today, 16,380 steps.

• 9:40Speaker 04

  Wow, slacker. You're really slacker.

• 9:42Speaker 03

  I try to be 18,000 a day. The other I wear is the latest Samsung watch. It's the seven, I think is the number they're on. This one does fall detection and when we were moving recently and packing boxes and carrying boxes, it kept thinking I was falling and it kept asking if I wanted it to call nine, it was going to call 911, tell them where I was and I had to cancel it out and hope that sirens weren't suddenly heard in the distance. So there are a number of devices that do it now, but if Garmin's into that, I plead ignorance. I didn't even know that they were

• 10:24Speaker 04

  But your Samsung, the Samsung seven

• 10:27Speaker 03

  does it for me.

• 10:27Speaker 04

  Does it?

• 10:27Speaker 03

  And it, it's very sensitive to thinking that I've had a fall.

• 10:33Speaker 04

  And the Apple Watches do that as well.

• 10:35Speaker 03

  Apple Watches were, I guess, the pioneers in doing that.

• 10:38Speaker 04

  All right, Big Howie in Iowa wrote in and said, hi, baby Clark. I only have time to regularly read one financial publication. What do you recommend? The Wall Street Journal? Thanks from the heartland.

• 10:49Speaker 03

  Okay, so gosh, this is brutal.

• 10:52Speaker 04

  Yeah, you can only pick one.

• 10:53Speaker 03

  Brutal.

• 10:55Speaker 04

  I know what you would say. I think I know what you would say. Maybe I'm wrong. Maybe I'm wrong. I think that you would say the Financial Times.

• 11:01Speaker 03

  Yeah, that is absolutely right. Yeah, the Financial Times is my most important read. Comes out six days a week, doesn't waste much of its efforts. Like, Wall Street Journal's become kind of a lifestyle publication as well as finance. And so, a lot of those lifestyle stories are fun. But I really am not interested in what the greatest new look is in men's suits. I mean, I obviously don't care about fashion at all. But the Financial Times is what the Wall Street Journal used to be. It's just so in the weeds about finance.

• 11:41Speaker 03

  Do a trial. If you find that it's so Dullesville for you and puts you to sleep, I would say if you're interested in finance, you said financial publication, I would say the Wall Street Journal's sister publication would be the better choice. If you're interested in finance principally, that would be Barron's Magazine. That does both daily updates and then a weekly magazine, not getting the physical one, just the online, the digital. And I'd put the Wall Street Journal in third place. It's not as good a newspaper as it used to be.

• 12:19Speaker 04

  Oh, and the inside, the reason the big Howie called you Baby Clark is because we talked about it before on the podcast, that your family all calls you Baby Clark because you're the youngest.

• 12:28Speaker 03

  Yeah, I can live to 110 and my family will still be calling me Baby Clark.

• 12:34Speaker 04

  Baby Clark, Clark, Clark, a Clark. You know the Baby Shark song?

• 12:37Speaker 03

  I don't.

• 12:38Speaker 04

  I hear it in my head whenever you say, "Baby Clark." Okay.

• 12:41Speaker 03

  I was an unexpected child and I am much younger than my siblings, so thus the Baby Clark moniker? Would you call that a moniker?

• 12:51Speaker 04

  Yes, it's a moniker, nickname, moniker.

• 12:53Speaker 03

  Okay. Coming up ahead, I want to talk about one of my three favorite children, Fidelity Investments, that has been getting some bad publicity lately and generated some questions from listeners and viewers about whether Fidelity should be kicked out of my favorite kids list. And we'll talk about that straight ahead.

• 13:18Speaker 00

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• 15:03Speaker 03

  So I have three kids. And I love my three children. They all have, uh, let's call them quirks. Each of them have things that are like, huh, we're human beings, right? And we all are going to have things that we wish that someone we love did better or whatever. So I'm going to go from that to talking about my figurative three favorite children in the investment world, which are Vanguard, Schwab, and Fidelity. With each of my three favorite children, from time to time, I've talked about things they've done that I think are classless and wrong.

• 15:46Speaker 03

  So it's all part of being unbought and unbossed. You know, I'm going to say what I feel regardless, just like being the man from Costco. If Costco does something I don't think is right, I'm going to call them out on it. Uh, it's just what you gotta do. You gotta, you know, the good and the bad go together. So let's take first Vanguard, one of my three favorites. Vanguard really has done so much for the American people over its existence. It's unreal. Popularizing investing beyond the nation's rich, where Vanguard made investing accessible to all of us.

• 16:31Speaker 03

  So Vanguard, I've been really sore at for a number of years because they have become expert at customer no service. And the complaints about Vanguard not having their customer service act together, not having technology that's up to date to service customers and for customers to do self-service with app and online. I mean, it's just, it's, it's not a secret. This is Vanguard's Achilles heel. And then Schwab, I was all over Schwab about what they were doing when interest rates and inflation were really high, that they were cheating their customers by putting their

• 17:14Speaker 03

  idle cash in an ultra-low savings rate automatically. And you manually would have to go in and earn 15 times the interest by manually moving your money into a Schwab money market fund that was earning 15 times what the default was. Today, I think it's 10 times. And that was just wrong, just wrong. So even your favorite children have flaws. Now let's move to fidelity. So we've had a number of complaints from people about fidelity doing things, wearing

• 17:57Speaker 03

  two hats, being a fiduciary and then not being a fiduciary and potentially misleading customers into crummy products because there was more money in it for fidelity. Well, Barron's Magazine that I talked about a little while ago is a publication that is one of my must reads every single day. I've been reading for a good while about the stuff going on with fidelity with pushing their employees to put people in garbage that paid high commissions. Barron's has a story just in the last week about a longtime fidelity employee who was

• 18:42Speaker 03

  with fidelity, I think 24 years, who fidelity fired because the person became a whistleblower calling fidelity out for purposely putting people in inferior investments because they generated higher income for fidelity and that the employees were pressured, forced, if you will, to put people in junk instead of better stuff. So how do I resolve in my mind that fidelity is a favorite child? This is one that is tougher than the other two because this one really, really has bothered

• 19:23Speaker 03

  me for a while when we started hearing about it from listeners and viewers talking about stuff they were being put in. And then this case ended up settling with a NDA, non-disclosure agreement. So we don't know exactly how it all played out because nobody's talking, but fidelity played so dirty with this employee, this person who had a perfect work history for 24 years, suddenly they said they were garbage and posted bad stuff about them on Broker Check. I assume that has been removed now. And by the way, Fidelity, as I've said with any company that I pick on,

• 20:07Speaker 03

  it's free to have somebody come on the podcast with me and rebut when I'm saying, Fidelity should not be playing both sides of the street. They shouldn't be behaving like they're dirty dealing at full commission stockbrokers. At the same time, they're also wearing a hat as a good guy. And Fidelity does a lot of fantastic things. I mean, think about the innovations of the Fidelity Zero Funds that I love, that a young person can come in and put $1 in, by young, I mean a teenager, open an account with a dollar, invest commission free and fee free. Anybody of any age can do the Fidelity Zero Funds, which are a variety of index funds that are great to put their money in.

• 20:50Speaker 03

  Fidelity has a wide variety of great products for money management, the equivalent of checking accounts, all these things. But this is something you've got to know. You need to know that if you invest through Fidelity and you're dealing with a Fidelity salesperson who is recommending something, you need in writing from them that they are operating at that moment as a fiduciary. In writing, if they are operating as a fiduciary at that moment, they can't put you in the garbage. They can't cheat you, putting you in high cost trash. They have to treat you right if they are a fiduciary.

• 21:32Speaker 03

  If they say, oh, well, in this, I'm not in a fiduciary capacity, you're done listening, you're done talking to them, and you don't buy the stuff. And again, if Fidelity wants somebody to come on the air and say why this isn't garbage, why this isn't a terrible practice on Fidelity's part, I'm happy to have you come on and give your say.

• 21:55Speaker 04

  Okay, this came in from Zach in Pennsylvania. I'm 18 and a full-time college student. I don't know much about investing and unfortunately, my parents don't know much either. But I've been listening to your podcast recently and would like to get your advice, please. I have about $2,000 that I would like to invest long-term with the intention of adding to it over time, and though it may only be minimum in the short term, what are my best options?

• 22:20Speaker 03

  Okay, first of all, Zach, $2,000 at 18 that you're willing to commit for long-term shows incredible discipline on your part and maturity. This is fantastic. And so you say you're a full-time college student and I don't know if you are working part-time, but if you are working part-time and you have earnings in '24 that exceed the $2,000, what I would want you to do is open a Roth IRA. Roth IRA allows that money to grow tax-free through the years and ultimately, later in life, you spend it tax-free.

• 23:02Speaker 03

  When you're under current rules that will change 40 years from now, but right now, you would be able to spend the money tax-free once you turn 59 and a half. But again, 40 years from now, who knows what those rules would be. But having the ability to grow money tax-free and spend it tax-free is such a wonderful thing that that would be priority number one. And you could do that with any of my three favorite children that I just talked about. If you're Roth-eligible, I would want you to go into the Target Retirement Fund 2070, 2070. I think everybody's got a 2070 now.

• 23:44Speaker 03

  And what that is designed for is specifically for retirement accounts where the mix of money changes over the decades to match the risk level you should be doing where right now it'd be nearly 100% in widely diversified stock-type choices. Which brings me to the second alternative. If this is not money from work... You would do an investment account. And let's talk about the Fidelity company I was just picking on. With Fidelity, as a teen, it would be awesome for you to open an investment account and put the money in the Fidelity Zero, I don't remember, they call it Broad Market Zero Fund or Total Stock Market Zero Fund.

• 24:28Speaker 03

  I would just throw the 2,000 right in that and you could add to it over time. What a Total Stock Market Index Fund does is it owns little pieces of most every publicly traded company in the United States. So you're basically hitching a ride on the future growth of the American economy and American capitalism.

• 24:51Speaker 04

  All right. And Chris in Georgia says, I love this show. I'm a longtime listener. Thank you for all of your help over the years. My wife and I are 44 years old and we took your advice on the 15-year mortgage. We refinanced when rates were low and now have a 2.75% interest rate and only 10 years to go before the home is paid off.

• 25:08Speaker 03

  Isn't that fantastic?

• 25:10Speaker 04

  Thank you, Clark. I wanted to ask you about a letter I recently received from my HOA management company. They're claiming that I must sign an affidavit of occupancy and if I don't sign, they will notify the board of directors of the HOA. I'm nervous signing anything sounding as serious as an affidavit. Could doing so have any financial implications, positive or negative, if at some point I decide to sell the home? Or can the HOA prevent me from having access to the amenities, tennis courts and pool, as they change the access code yearly to prevent those who haven't paid dues from accessing? Is this truly a requirement?

• 25:43Speaker 03

  Yeah, so this is a thing now, Chris, and it started in the South and the West, Southwest really, where people are being in mandatory homeowners associations, not in condo associations, but in homeowners associations are having to do these affidavits of occupancy. What they're trying to do is a lot of associations have rules that limit the number of rentals permitted in the community. So you have to, and this is a legal document, you were swearing to something that you could get in trouble later with the law. I don't know if it's committing a civil act or a crime.

• 26:26Speaker 03

  Not smart enough, not a lawyer, but this is so they have track of who's in a place. Are there tenants? Is this owner occupied? So the only danger is if you are lying. If you are an owner occupant of your property, it is a legal demand that is considered to be reasonable and proper. As best I know, in any state that this has ever come up, and you fill it out, you attest to or whatever it says, and you're good to go for at least the next year or five years, or however long it is between when they want these affidavits done.

• 27:07Speaker 04

  Caroline in Florida says, what and where in your opinion is the best place to get a hearing aid for the value? Who would you recommend if it was for your mom?

• 27:16Speaker 03

  So Caroline, I've got a change in my answer on this. And that is, I am so excited for people who have iPhones. And what Apple has done with the AirPod 2 Pros, Pro 2s, whichever way you say it, that are FDA certified as hearing aids for minor to moderate hearing loss. I don't know where your mom is on the spectrum of hearing loss. If it's significant hearing loss, it would be a great idea to have her hearing checked by an audiologist.

• 27:57Speaker 03

  And Costco now, they have the largest share of hearing aids sold in the United States, far and away. And for traditional hearing aids, their prices are generally one-fourth of what the traditional industry price has been. So the test here at Costco is free.

• 28:22Speaker 03

  If the hearing loss is found to be mild or moderate, you could start if your mom's an iPhone user. You could have her start with the AirPod 2s. And the improvement in quality of life is so significant. I think the, the reason I'm so excited about the Apple thing is they're following Bose. Bose did this years ago, but never established mind share with people that Apple can't because of its installed base in the United States. And so many people of all ages wear those funny looking things coming out of their ears that nobody even looks twice at it.

• 29:02Speaker 03

  And it is an actual real hearing aid that can make life so much better, particularly in a situation where there's a lot of ambient noise around where you are. But I wouldn't, unless you know it's very mild, I wouldn't start with those till you've had a hearing test. And again, I'm a strong believer in Costco being the best place in America to have your hearing checked out. We have a guide at Clark.com on the best places to buy hearing aids in addition to Costco. Because maybe you don't like Costco, maybe you've had a bad experience there.

• 29:47Speaker 03

  We have other places we've reviewed as well that you can check out to see if this is something you should be doing and where you want to go down that path. So thank you so much for joining us today. We're all about you. We're all about you, learning ways to save more and spend less and avoid getting ripped off. I love what we do with our daily newsletters. We have the Clark Newsletter, the Clark Deals Newsletter, and these newsletters, free, make it really easy to subscribe. You find that you don't enjoy them like I think you will, we make it just as easy for you to dump those subscriptions.

• 30:31Speaker 03

  Go to Clark.com/newsletter or newsletters. And tomorrow, my favorite podcast of the week, Clark Stinks. See you then.

• 30:47Speaker 01

  Your sausage McMuffin with egg didn't change. Your receipt did. The sausage McMuffin with egg extra value meal includes a hash brown and a small coffee for just $5. Only at McDonald's for a limited time.

• 30:59Speaker 02

  Price and participation may vary. Promotion pricing may be lower than meal pricing.