Your Questions Answered!

We’ve made it through another turbulent week on Wall Street, and another week dealing with the spread of coronavirus.

This week, it felt like things got a little more “real” at the Scheidt house.

The governor of our home state of Georgia issued a “shelter in place” order. This will cause most businesses in our area to shut down, and leads to more challenges for our local economy. This situation is playing out in thousands of towns and communities around our country.

While we’ve been “sheltering in place” already at our house, the fact that it is now legally mandated feels a bit surreal.

One of the neighbors up the street tested positive for coronavirus.

From what I hear, she is doing alright and is expected to make a full recovery.

But again, it’s sobering to realize that this risk is spreading and hitting very close to home. And I’m sure this won’t be the last person we know who winds up getting the virus.

Still, even with so much sickness and uncertainty in this season, it’s important to keep a spirit of gratefulness.

I’m grateful that my immediate family is healthy… I’m grateful for the many healthcare workers who are willing to put their lives on the line to help those who get sick… I’m grateful for the resources our country has to make sure families get fed, sheltered, and get the care that they need.

And I’m grateful for YOU [%= :subscriberName(E, Reader) %].

Because you’re part of our family here at The Daily Edge.

You’re walking this uncertain road with us. You’re doing the best you can in this challenging situation. And if you’re like many of your Daily Edge brothers and sisters, you’ve been sending in questions, comments and feedback.

I’ve so enjoyed hearing from our readers over the past few weeks, and I hope you’ll continue to send me your notes! Just drop me an email (EdgeFeedback@StPaulResearch.com) any time and I’ll be reading every note!

Speaking of notes, I wanted to take some time today for a conversation with some of you who have sent in questions or feedback. Please keep in mind that I can’t give any individual financial advice. But many of the questions are great for me to respond to in a way that helps everyone learn!

Is My Bank Safe?

Our first question comes from Debra N. who asks:

Is my bank safe? For example, Credit Union Banks. I believe my bank is family owned.

Great question Debra. Especially with the risk that we have in so many other areas of the market.

The good news is that your bank deposits are safe! — up to $250,000.

That’s because the Federal Deposit Insurance Corporation (or FDIC) insures all bank deposits up to $250,000. So even if something tragic happens and your bank fails, the Federal government will reimburse you for losses up to $250,000.

If your savings are held by a credit union, there is a similar insurance program that protects you. It’s called the National Credit Union Administration (or NCUA). And just like the FDIC, it protects your deposits up to $250,000.

That’s the good news. But there are a few other issues to keep in mind.

First of all, think about timing. If a bank or credit union fails and it taks several weeks (or months) for the Federal government to sort it out, you may not have access to your cash for a time. So if we do get to a point where the financial system is in danger of crashing (we’re not there yet), I wouldn’t count on having access to your funds right away.

More importantly, we spent some time this week talking about the crisis of negative interest rates. And if you’re holding too much cash in your bank, you’re earning a paltry rate of return at best. This is why I recommend finding alternative ways of saving your cash and earning income from your investments. You don’t want too much of your wealth sitting idle.

You can get started on our Income Crisis series from this week here.

What About Staple Technology Companies?

Here’s a great one on some specific stocks from L. Lum…

Zach: Thank you for sharing the anxiety of your kids during their stay at home.  They’re at the age they want to be active and do activities that are enjoyable.  Hopefully they can also learn and be challenged with new productive skills. 

I’m aware the environment with the virus is unprecedented in history. I’d like your opinion on two stocks — Apple Inc. (AAPL) and AT&T (T) that are part of my portfolio. Would you consider selling.  Or buying?

L  Lum
Oakland, CA  (one of all San Francisco Bay Area cities under Shelter-in-place.

Thanks for a great question L…

While I can’t tell you specifically what you should do with your own shares, I do like both of these stocks.

Apple has been working to make a transition to where the company earns more revenue from services like subscriptions to its Apple Music store and other online products. This couldn’t have come at a better time. After all, families like yours and mine are streaming more movies, listening to more music, and finding new online ways to keep our minds busy.

That means more service revenue for AAPL. And keep in mind, the company has plenty of cash, putting AAPL in a great position to ride out this storm.

AT&T is in a similar position of strength. The company will benefit from more cell phone usage, internet bandwidth usage, and subscriptions to its HBO streaming products.

So while both of these stocks have naturally traded lower with the overall market weakness, I see this as more of a buying opportunity. Today, you can lock in dividend income from these two companies for years to come — and you’re purchasing that income at a discount price!

Are We Really Safe to Hold?

There’s a lot of uncertainty in the market today. I feel it too! So I’m not at all surprised to see questions about whether we should really stay in the market or not.

Arlynne H. sent in this candid question:

Zach, do you really think we are going to be safe by staying in the market with all the ups and downs?  If you want to advise that we sell now, I will take your advise and sell now. Please give me an  opinion.

Arlynne, I think a lot of this has to do with what you’re invested in.

When you talk about “staying in the market” I can’t tell if you’re invested in a broad mutual fund that tracks the market, or if you’ve picked great companies and bought individual shares of stock.

If you’ve been following the investment opportunities that we cover here at The Daily Edge, I truly do think that you’re already set up in a great position to weather the storm.

That’s because we regularly recommend buying shares of stable companies that generate plenty of profit and distribute that profit to investors through dividends. Companies like these typically hold up better than the broad market during times of stress. And the dividends they pay you can help offset a pullback in the stock price.

In fact, if you’re using a Dividend Reinvestment Program (or DRIP), the dividends can actually help you buy more shares at an extreme discount!

The only caveat I would offer here is that some sectors are getting hit harder than others. So if you have big positions in energy companies, airlines, or leisure companies (like hotel or cruise ship stocks), I would consider moving money out of these areas.

There are just so many better places you can put that money to work with less risk.

A Quick Grammar Correction

Sir: Instead of saying: “These are the questions my team and I pour over on a day-to-day basis, helping us to find the best income opportunities for you to invest in day in and day out …”

you need to say in Queen’s English:

“These are the questions my team and I pore over on a day-to-day basis, helping us to find the best income opportunities for you to invest in day in and day out …….”

I liked the article. Very useful suggestions at this hour when it looks so dark and every one is pessimistic. Hopefully, this too shall pass.

Yikes! I’ve been a writer for the better part of two decades. And yep, you’re right. The correct word to use is “pore”

On a similar note, a friend of mine caught a similar mistake I made this week.

I mentioned I picked up enough groceries to “tie me over for the next week.”

She correctly pointed out that the proper phrase is “tide me over for the next week.”

We’ve got a team here at St. Paul Research that helps to catch most of the mistakes like this that I make. But occasionally one slips through. Thanks for catching it!

(And hopefully the point of the message wasn’t lost because of the grammar mistake.)

What’s Really Important…

Here’s a great bit of feedback we got from Steve M.

Zach: thanks so much for reminding us all about what’s REALLY important; I certainly intend to answer your call for the “two things” you’ve asked us all to do. I live in a small town (under 13,000) and I am acutely aware of the challenges our local community faces. We need to rally to help the small businesses who may wind up being severely challenged by these times; they are the real backbone of our economy and our society. Keep up your good work. It’s important and appreciated.

Great stuff Steve!

And just to remind you guys, the two things I asked in my message last week was to:

  1. Take time to make memories with loved ones… and,
  2. Support your local community businesses when you’re able to get out and about.

It’s a challenging time for all of us. But this is America. We bond together and help each other out. And we always emerge from challenges as a stronger nation!

Back to the Basics

There are some of you who are just getting started investing. And that’s tremendously exciting! I”m s glad you’re joining us — especially since you’ve got such a great opportunity to start investing at discount prices!

Here’s a quick question from Claire A.

Hi Zach, I would like to know if I would need a broker to facilitate the purchase of dividend stocks in the 5G rollout companies or how do I go about purchasing. This is my first time to do trading so I am totally confused about how to go about this business…

Hi Claire, welcome aboard!

Yes, the best way to purchase stocks — whether they be 5G rollout companies, blue chip dividend stocks, or other great opportunities — is to open a brokerage account.

You can do that with any of the well known brokerage companies. Fidelity, Ameritrade, or Interactive Brokers (just to name a few).

I don’t recommend any one specific brokerage. They all have different strengths. Some have cheaper prices, others have platforms that are easier to use, others can offer extra services like linking your brokerage to a checking account.

Try out a few of them. Go online and see what their platform looks like and what kind of ratings they get for customer service or order execution. And then pick the one that works best for you.

The key here is not to get bogged down in the details. Any brokerage will help you invest in the companies that will give you the most income and really help you grow your wealth.

Well, that’s about all the time we have for today. But I hope we can make this question and answer format a regular occurrence!

I love hearing from you and getting the chance to have some two-way communication.

So please continue sending your questions to EdgeFeedback@StPaulResearch.com.

And have a great weekend!

Here’s to growing and protecting your wealth!

Zach Scheidt

Zach Scheidt
Editor, The Daily Edge
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Zach Scheidt

Zach Scheidt is the editor of Lifetime Income Report, Income on Demand, Buyout Millionaires Club, and Family Wealth Circle — investment advisories dedicated to finding Wall Street’s best yields. He brings to the table impeccable investment management experience and a solid record of identifying oversized payout opportunities.

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