Episode 198 – The Effect of Banks Crashing

This week on On the Money with Secure Money, Brian Quaranta explains what happens when a bank crashes and how to save your money.

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Announcer 00:00

Investment advisory services are offered through Foundation Investment Advisors, LLC, an SEC registered investment advisor. Brian Quaranta and his guests provide general information not individually targeted, personalized advice, they’re not liable for the usage of information discussed. Exposure to ideas and financial vehicles should not be considered investment advice or recommendation to buy or sell any of these financial vehicles. This information should also not be considered tax or legal advice. Past performance is not a guarantee of future results, investments will fluctuate and when were deemed to be worth more or less than when originally invested. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products, they did not refer in any way to securities or investment advisory products, fixed insurance and annuity product guarantees are subject to the claims-paying ability of the issuing company.

Brian Quaranta 00:39

Well, look, you know, it’s the new world we live in. And you know, nothing’s changed since 2007 2008. We’ll continue to see stuff like this. So, when we come back, we’re going to cut through all the noise as Steve said, and we are going to address all the fears that people have right now and hopefully give you a little sense of calmness when we come right back with On the Money with Secure Money.

Announcer 01:00

And now, On the Money.

Brian Quaranta 01:03

Any good retirement plan starts with the foundation,

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Asset protection, tax reduction, holistic planning,

Brian Quaranta 01:11

These are the things that start to move you towards having a retirement plan.

Announcer 01:14

Retirement doesn’t have to be complicated.

Brian Quaranta 01:18

You think that’s the difficult part? That’s just getting started.

Announcer 01:21

And now On the Money with Secure Money.

Steve 01:28

And welcome everybody this is on the money with secure money. I’m consumer advocate Steve, Brian Quaranta’s here. Brian is President, CEO of Secure Money Advisors. He is an author, he wrote the book called right track your retirement a simple planning strategy to help you reduce risk, build income and provide peace of mind. And, you know, again, you can go to righttrackyourretirement.com and get your own copy right now. And Brian even pays for the shipping. Hey, Brian, by the way, how are you?

Brian Quaranta 01:54

Steve, how are you? We do pay for the shipping and handling, we always pay for the shipping and handling. It’s a free, although I hate I hate calling it a free book. Because you know, people think like, well, there’s no value there. But this book, I’m telling you, I mean, it is 120 pages of absolute hard-hitting value on how to plan for your time. And I wrote it in response to all the volatility that we have all the uncertainty that we have, because people need a way to approach retirement, that gives them a little bit more peace of mind and security. And that’s what right track your retirement does. And if you’re not on the right track, if you’re not doing the right things. When would you want to know? Well, you can find out by going to righttrackyourretirement.com and getting a copy of my book right now. Just go there, fill out the online form. And we’ll send you a copy. first thing on Monday morning.

Steve 02:44

Sounds good to me, Brian. And so let’s dig into this. We’re going to talk about the Silicon Valley Bank. SVB. Right. And it has been it took the it took the US by storm. I mean, everybody was going crazy with all of this. And so what really happened, Brian, what’s going on there with this bank? And why this one?

Brian Quaranta 03:03

Well, there’s the news of Silicon Valley banking failure, you know, obviously sent many depositors into a tailspin, as you know, folks, you know, when you hear of a bank failure, I mean, people begin to panic, they start withdrawing money and efforts to protect their portfolios. And this created a run in conjunction with a lack of a diversification on the bank. And it had to sell a lot of its assets at further losses create even more issues internally. So, you got to look at the way banks operate too. So, you know, a bank, we operate off of this fractional reserve system, a lot of people don’t realize this. And what I’m about to share with you may absolutely change the way you look at our, you know, the economy. And it should, because money is essentially being created out of thin air. But the fractional reserve system, there’s a great book out there called the Creature from Jekyll Island. I think I got that, right. But everybody should read this. And this was how our monetary system got started. There was a secret meeting amongst some of the top leaders on Jekyll Island outside of New York, and they had come up with what we call the fractional reserve system. So, if I bring the bank, a deposit of any amount, we’ll just say $100,000, for example, they can then lend that $100,000 out nine times. So that means essentially, they’ve created $900,000 out of thin air that doesn’t even exist. Now. What does the bank do with money? When they receive that money, some of it goes into a portfolio of long term, you know, government treasuries, and some of it goes to a loan portfolio right. So, like when you go to the bank and you buy a bank CD, and the banks giving you a 3% return or a 4% return on that money. The question is where is your money at that point in time is it in a little safe with your name on it, waiting your arrival to come back and you know, in money or to, you know that money is lent back out, that money is lent back out in the form of mortgages, business loans, auto loans, all kinds of different loans that the bank makes. Now, the reason the bank is giving you a 4% rate of return on your CD, is because they’re lending that money out and maybe five, six, or 7%, and the difference of the banks lending at six, and they’re only giving you four, that’s a 2% spread. And that’s how they make their money. Well, in Silicon Valley, we had a lot of banks that were lending to the tech industry data, highly concentrated tech position, obviously being in Silicon Valley. And because of what’s happening with interest rates, right now, that’s not conducive to the tech market. Because technology companies rely on cheap capital, to grow their money, because they have an idea or a software, whatever it might be, that they know is going to be a good idea. But they have no customers yet. So, they have to grow towards getting customers. And when they do that, they eventually start making money. But when the mean term, they’re just making money off of the arbitrage between cheap money and maybe what they’re making so but what this leads us to is, you know, is poor in loan portfolio for the bank, on top of that, we had interest rates going up, and their long-term treasury bonds. When interest rates go up, bond prices go down. So they were taking a hit on Treasury bonds when people were coming in and taking money, and this caused a panic. And look, you know, banks fail every single year. This one happened to get a lot of news around it. But, you know, banks have been failing since the days of George Bailey. Anybody remember? A Wonderful Life? Right?

Steve 06:39

Right. Well, again, what you described, let’s see what will tell you here’s a clip from the movie.

It’s a Wonderful Life


I was just talking to old man Potter, and he’s guaranteed cash payments to the bank. The bank is gonna reopen next week. But George, I got my money here. Do they guarantee this place? I’ll pick mine now. No, but you’re, you’re thinking this place all wrong is if I got the money back in a safe, the money’s not here.

Steve 07:01

See? That’s exactly what happened here. Right. That’s exactly what happened.

Brian Quaranta 07:05

What happened? It’s exactly what happened. That’s right. Yeah, that’s exactly what happened. Now, remember, the FDIC protects us up to $250,000? You know, per bank. But keep in mind, the FDIC is the Federal Deposit Insurance Company. Okay. They are there to back the banks. Now, if there was catastrophic failure, I mean, you know, doesn’t necessarily mean you look at the fine print of the FDIC, I mean, it could take them, you know, it could take them a long time to pay you back, read the document. They don’t pay you back like the next day. So, there was catastrophic failure. You know, it could take time to pay back. Let’s hope that never ever, ever happens. So, look, every single week, Steve, on our show, we leave at least 10 spots open for the listeners, and I want to offer you for the next 10 callers who call in right now. come into our office get a right track complimentary review from us. I’m telling you’re gonna love this review. It goes over five key areas income taxes, investments, health care legacy planning, it’s so thorough that it’s going to help you determine what the probability of success of your plan is actually working. Look, if your plan wasn’t going to work in retirement, if you had a chance of your plan failing, wouldn’t you want to know when it would fail or what the potential probability of it failing would be? If you call right now, you can, you can get a complimentary right track review. It’s absolutely complimentary. It’s free, folks. I don’t think a way to say it, we’re literally going to take the risk off of you and put it on us. My promise to you is if you come in and take advantage of this, nobody from our team will ever sell you anything. Nobody will ever pressure to do anything. Leave your checkbook at home because all we’re going to do is give you a couple reports that show you what risk you’re taking, what success you’re going to have, what your plan, what your income is going to look like and see if we can save you on some taxes. So, call the number that Steve is going to give you and schedule today.

Steve 08:49

Sounds great. Brian 800-656-8616. That’s the number to call folks. 800-656-8616 It’s a comprehensive financial review as Brian said no cost no obligation and you’ll end up with a roadmap to get you on your road to retirement 800-656-8616 800-656-8616

Brian Quaranta 09:09

When we come back, we’re going to continue to talk about this banking stuff and money and we’re going to talk about some ways you can protect yourself and retirement you’re not going to want to miss what I have to share next what listeners we come right back with On the Money with Secure Money.

Announcer 09:30

And now On the Money with Secure Money.

Steve 09:37

We are back on the money with secure money Brian Quaranta here I’m consumer advocate Steve. Brian of course is President CEO of Secure Money Advisors got a great team at Secure Money Advisors securemoneyadvisors.com Of course is the website. However, I would say stop first at righttrackyourretirement.com righttrackyourretirement.com that’s where you can learn about Brian’s book you get to see a little video of Brian and see him and all of those things. And you can get your free book as well. That’s really what it’s all about. Right, Brian?

Brian Quaranta 10:07

That’s right. And, Steve, tell you folks, when you get the book, read chapter four, read chapter four, because I talked about how to protect yourself from big market swings. And I’m telling you, we’re not out of the woods yet. I mean, this economy is still in a lot of trouble, I think we’ve got a long way to go. I don’t think that we’re going to see any type of big recovery here this year, I think this market is still very uncertain of where it wants to go. And look, I mean, if you’ve got all the time in the world, because you’re 35-40 years old, maybe 50. And you don’t want to retire till 70, stick your head in the sand, don’t worry about it. But if you’re approaching retirement, or you’re already retired, this is not the time to stick your head in the sand and hope and pray that everything’s gonna work out. This is not the time in your life to take advice that might sound like this. Don’t worry about it, hang in there. You’re in it for the long haul. Everything’s gonna be okay. Steve, have you ever talked to somebody that said that their advisor told them to just hang in there that they’re in it for a long haul? Well, you hear the stories? Yeah. Now, here’s been my criticism of my industry. The other cookie cutter phrase my industry likes to use is this. Well, we don’t have a crystal ball. So, we have no idea what the market’s goal, I’ve heard that a bunch of times. Now think about this. And out of the other side of their mouth, they’re saying, don’t worry about it, hang in there, everything’s gonna be fine. If I don’t have a crystal ball, and we don’t know what the market is going to do, how can I give advice to just hang in there, don’t worry about everything’s gonna be fine. But again, people don’t realize what all the big buck firm have done is they’ve created cookie cutter phrases to do one thing, and they do it really well. And that’s, they manage your emotions, they’re not giving you real advice. They’re managing your emotions. And it’s a flip of a coin of whether or not the market is going to be doing well, when you’re retiring or not doing well, when you’re retiring. I’m gonna tell you, if it’s not doing well, when you’re retired, or when you’re getting ready to retire, you better make sure you have a good plan in place. Because if you’re not thinking like a pensioner, and you’re thinking like a gambler, that’s where you might get yourself into trouble. But let’s get back to this banking stuff here. Because I know we got a lot more to cover.

Steve 12:19

I mean, you talked about managing your emotions. And that really is what it’s all about. But if you go to the media, I mean, depending on who you’re listening to. I mean, they will I mean, it’s a disaster from the word go. But we’ve got some we’ve got an interesting clip from- He’s chief strategist at Piper Sandler. And his name is Michael Kantrowitz. And he was on CNBC. This is his take.

Michael Kantrowitz


The lagged effects of all of these policy tightenings, from central banks, from commercial banks and from inflation create the conditions for problems to happen. And so, I think, you know, this is one of several problems that we’re going to be seeing down the road. Most of these are due to higher interest rates, historically, problems arise, the big problems arise when job losses occur, which unfortunately, is a typical byproduct of the lagged impact of higher rates. So, you know, our message to investors has been for quite some time now to be quite defensive and conservative, and that we still believe we’re in a bear market, and investors shouldn’t get too complacent on this idea that the economy is anywhere near recovering on a global basis.

Steve 13:22

Well, again, I think the key here whether we he says a couple things, I’m sure you agree, and but he says don’t let complacency take over. That’s so important, Brian.

Brian Quaranta 13:31

Well, not only that, but as you already said about employer, please been laid off. Yes, of course, we see the unemployment rate. Right, it was we see the unemployment rate go up. That becomes where that now is where the bigger problem is start. So, what do I mean by that? What does he mean by that? Well, what happens when you have people that are unemployed, and they don’t no longer have any income coming in, or they’ve got a lot less come coming in? Because they’re, you know, on unemployment? Well, they may not be able to pay their car loan, they may not be able to pay their mortgage. So here we go. We got foreclosures, right. We have people starting to foreclose on homes. Interest rates are going up. Some people have adjustable-rate mortgages. So, they’re gonna get, you know, an increase in how much they gotta pay for their mortgages. But as you see the employment rate go up. That’s where the bigger problem starts. And that’s what he’s saying is that we’re not even there yet. We are not out of the weeds. This is not the time to get complacent. This isn’t the time to say well, you know, let me jump back. You know, let me jump back in with all of my money right now sit in the sidelines, having money that’s protected. Look, I’ve been preaching from the top of the mountain for almost 25 years that the number one thing that any investor I don’t care what level of investor you are from, very beginner, all the way up to very expert So everybody needs security. And the big investors call it dry powder. That means they keep money on the sidelines, they keep money in cash that’s not affected by the markets. Because when markets go down and winter comes, there is opportunity. The question is are you going to be able to take advantage of that opportunity. But if you’re not a professional investor, most people are not looking to take advantage of the wintertime or the downtimes. During the markets, they’re looking to just get through retirement, they want to put food on the table, they want to spend time with their grandkids, they still want to go traveling. Well, if you want to do that, you can’t do it by sitting at the blackjack table, sitting at the roulette table. And that’s all you’re doing when you’re sitting in the markets is you’re literally gambling with your money, you’re gambling, now, it’s a little bit different than gambling solely just because of the probability of winning. So, with gambling, you have a higher probability of losing, whereas investing, you have a higher probability of winning, but you still lose. That’s the problem. And you may write the wrong time. So, you know, I write about all this stuff in my book, Steve, because people need to know how to protect themselves in retirement, they need to approach retirement differently, the things that the things that you did getting yourself to retirement are not the same things that you’re going to do to get yourself through retirement. As a matter of fact, a good retirement plan is made up of five key areas, it’s made up of your income strategy, your tax strategy, your investment strategy, what are you buying? What are you selling? What are you making sure is protected? How much money do you have at the banks? How much money do you have in liquidity? And number four is your long-term care strategy? Look, if you’re 65 or older, today, there’s a 50% chance that you could wind up in a nursing home now if you’re a married couple, you can look at each other right now and figure out who that’s going to be. But the bottom line is, that’s a high percentage folks, and most people don’t have a plan to handle it. I share with you a way to approach it in my book, right track your retirement. So again, if you want to get yourself on the right track, do you want to figure out how to get yourself a team that truly understands how to build a plan around safety security, folks, take advantage of this offer. It’s a great offer next 10 callers called right now, we’re giving you a complimentary Right Track Retirement Review. And if you go to righttrackyourretirement.com, grab a copy of my book, all you got to do is call the number Steve’s gonna give you and schedule with us today.

Steve 17:26

800-656-8616 That’s the number to call. You heard Brian Quaranta right now gets the comprehensive financial review getting you on your road to retirement 800-656-8616 800-656-8616.

Brian Quaranta 17:41

Every week we discuss concepts and strategy that you can use to create the retirement of your dreams and we come back the adviser puts the consumer advocate on the spot with a retirement quiz and we come right back with On the Money with Secure Money.

Announcer 18:00

Are you fighting for financial knowledge? Don’t let bad advice be a punch in the gut to your retirement. Take advantage of a complimentary no cost, no obligation consultation with a local trusted financial coach. Call Brian Quaranta and his team that Secure Money Advisors 800-656-8616, 800-656-8616. And now On the Money with Secure Money.

Steve 18:38

We’re back On the Money with Secure Money. I’m consumer advocate Steve. Brian Quaranta is here having a great conversation today. Brian, of course President CEO of Secure Money Advisors, and the author of a Right Track Your Retirement and I would encourage you to visit righttrackyourretirement.com To get your copy of the book and learn a little bit more about Brian and Secure Money Advisors. What do you think?

Brian Quaranta 18:58

You know, I think that’s a great idea. I think it’s great. I you know, you were asking me a break. How long have these types of accounts been around? Did you know? By the way, this is on page 44 of my book. So again, righttrackyourretirement.com get a copy of this book, but on page 44 of my book. Okay. Babe Ruth, everybody remembers Babe Ruth, right? So, in 1922, when he was awarded a $52,000 contract worth the equivalent of about $800,000 today, by the way. So, $52,000 in 1922 was worth about $800,000 today, he was just 27 years old. Now, by the way, I’m reading this almost verbatim from my book right now. He had no idea what to do with this money other than spend it, but he did know how to recognize good advice. This advice came from his business partner Christy Walsh, who worried about Babe’s future. At Walsh’s urging Babe went to see an insurance agent who convinced him to purchase a deferred annuity. With his World Series winnings and a portion of his annual salary he invested in several annuity contracts. He had no way of knowing what would happen next, how the roaring 20s would go out with a pitiful mew, how the market would crash and how his career would end early when he started having health problems. His market investments, if he hadn’t had any would he had been worthless during the Great Depression? He put money into this annuity, and the annuity paid Babe Ruth, an income of 17,500 hours a year from his annuities, which by the way, translates to $290,000 in today’s dollars. Wow. So, what a great target 1922? They were already using these right? Yeah, how are you using? And you want to know why Wall Street hates them? Wall Street hates them, because it takes money away from Wall Street. Why in the world? Would you why? Why do we risk our money, we risk our money for one reason. And that’s to try to get a rate of return. That’s it. But the rate of return is not as important as the monthly income that can be generated. Now think about this. We insure everything in our life. We insure our cars, we insure our homes, we insure our health, but we don’t insure our income. Are we all crazy? Are we all crazy, folks? I don’t care if you have $10 million right now, you should be taking $2 million in insuring your income for the rest of your life gamble with the other 8 million I don’t care if you have 500,000 you should be putting something that guarantees the income. Right? Wall Street’s done such a great job marketing to us. Look Jim Cramer’s on TV. Three weeks before Silicon Valley Bank went bankrupt. You know, Jim Cramer was on TV recommending that stock? Was he really? Yes. recommending it? Wow. Yeah, you know, there’s some old footage of him and Jon Stewart going out it because Jim Cramer can sit there on TV, because he’s not a licensed investment professional, and he can give advice out on stocks to buy, and he doesn’t have any repercussions. He’s got no recourse and then nobody can take any recourse against them. Because, you know, it’s there, all the disclaimers that are on there. But my point is, folks, do your own research. Get yourself a plan that provides a peace of mind think about I’m a fiduciary, by law, I’m held to the highest standard, I have to do what’s in the client’s best interest. Why in the world? Would I be recommending that my clients choose some of their money to be into an annuity. Now I can’t do it with everybody, because not everybody qualifies to do this, right. And you may not qualify to do something like this. But for those that do, it can be a really great tool. But as a fiduciary where I’m held to the highest standard, and I can do any investment out there that I want. Why would I choose that as part of my planning process, because it’s in the client’s best interest in most cases. So folks, take advantage of the right track retirement review that I offer every single week on this show, go to righttrackyourretirement.com get a copy of my book, you can schedule your appointment there, we go over five key areas. When you come in, we show you how to do this income strategy, we show you how to build a planet simple, easy to understand, that’s going to give you a real peace of mind real clarity. And when you have peace of mind clarity, retirement is a calm, peaceful thing that you get to do. You’re not worried about what’s going on the market or what the what the news cycle is saying. Because you’re protected. Right? Are any of you worried right now, if you get in a car accident that your insurance company is not going to cover that accident? No, no. Are you worried if your house? Yeah, if you’re if your house burns down are you pretty confident, they’re going to pay to replace your home? Yes. Right. So, look, the insurance companies do something better than no other companies can do out there. They know how to pull risk and manage risk. And that’s what these annuities have been about. You can trace these back even further than 1922. But Babe Ruth was probably one of the greatest stories that I read and then wrote about on the use of the annuities. So, Steve, I don’t know how much time we got left for questions. I know I got off on a little rant here, folks. Apologize. But I see too many people. I see too many people’s lives ruined, because somebody convinced him was a great idea to risk 100% of money, and I’m just damn tired of it.

Steve 23:55

Well said Brian 800-656-8616. That’s the number to call, folks. If you want to get your edge or hedge. Let me say it that way. Let’s get them on. Let’s get to a question here. Arthur’s up first, Arthur says I’m planning to retire at 62. I have 250,000 in savings and I have paid off a rent- I have a paid off rental house with $1,400 a month rent income. My house that I live in is paid off too. I’m not sure what to do with my savings. How might a financial advisor help me? What do you recommend?

Brian Quaranta 24:29

Well, you know, Arthur, that’s a great question. And I don’t know if a financial adviser may be able to help you. It depends on what that $250,000 is for if it’s just in savings, and you’re not planning on buying any more properties. You have no big purchases coming up. You know, and if you’re somebody that’s paid off mortgages, you’re probably like myself and a lot of my clients where you’re very conservative, you may just want to look for a guaranteed rate of return like, you know, a six-month CD at four and a quarter percent or a fixed annuity, you know, at five and a half or 6%. You know, but again, there’s a lot more questions I would have to ask Arthur than, you know, then then, you know this, but, but I think, you know, sitting in a savings account at damn near zero is probably not the best strategy. So if, you know, if he’s got no big expenditures are not going to buy any more real estate property. Some of the things that I talked about might be an option for him.

Steve 25:29

All right, 800-656-8616, Arthur, and again, on that note, we need to wrap it up. Right.

Brian Quaranta 25:34

All right, Steve. Well, folks, again, thank you so much. And again, don’t forget, go to righttrackyourretirement.com schedule your time with us. We go through five key areas with you during the right track meeting. I promise you this. When you come to our office, nobody will try to sell anything, nobody will press you to do anything. You will learn a lot. The meeting will be very informative that I promise you so schedule with us today, righttrackyourretirement.com and we’ll also send you a copy of my book call 800-656-8616 and you can schedule there at that phone number. Also, my team is standing by to take your call.

Steve 26:04

Brian has always had a blast. This is a really fun show. Great show today, Steve,

Brian Quaranta 26:07

Folks again, we’ll see you next week right here same time we’re on the money with secure money.

Announcer 26:17

Investment Advisory services are offered through Foundation Investment Advisors, LLC. an SEC registered investment advisor. Brian Quaranta and his guests provide general information not individually targeted, personalized advice and are not liable for the usage of information discuss exposure to ideas and financial vehicles should not be considered investment advice or recommendation to buy or sell any of these financial vehicles. This information should also not be considered tax or legal advice. As performance is not a guarantee of future results. investments will fluctuate and when redeemed maybe worth more or less than when originally invested. Any comments regarding safe and secure investments and guaranteed income stream for Owens and fixed insurance products and cannot refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims-paying ability of the issuing company.

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