Introduction to CDs and their benefits

Madison: Hello, everyone, and welcome to the 9th episode of Not Just Numbers, Honest Conversations with a Financial Advisor and Lawyer. I am Madison Demora, and I’m here with Mike Garry. Mike is a financial advisor and certified financial planner and the founder and CEO of Yardley Wealth Management and an estate planning lawyer. His law firm is Yardley Estate Planning. Hi, Mike.

Mike: Hi, Maddie. How are you?

Madison: I’m awesome. Thank you for asking. So, Mike, we got our first question from a listener. Would you like to tackle that first thing today?

Mike: Sure. Do you want to tell us who it’s from and let me know the question?

Madison: Sure. So I was with my friend Grace the other day, and we got into the conversation of what is a CD?

Mike: Well Maddie I have to say, Grace asked a really timely question, and I’m glad she needs a place for some savings. Great job, Grace.

Madison: Yeah. What is timely about it?

Mike: Well, since the Fed started raising rates a year and a half ago, cash and bonds and other fixed income securities like that are interesting to people for the first time in about 15 years. For a long time, from like, 2008 until 2021, cash, CDs, bonds paid just over 0%. It’s hard to get excited about zero or 1% returns. Now, there are options, lots of them.

Madison: Are you going to tell me the options?

Mike: I will get to the options, but first I’m going to lay out the ground rules. First thing, when you’re talking about cash savings or fixed income securities, where you’re buying the individual securities, you have to buy only things that come with insurance or backed by government or both, there are lots of options. Lots of options in the marketplace that are similar but aren’t insured or backed by the government, and they will pay a little bit more interest. But, but, but it is not worth the extra risk to get that extra percent or two. We talked about that in an earlier episode. Right. Like, guy was searching, you know, got the non insured CD from the crypto place and then just went out of business. He lost all of it to get an extra percent or two. Just don’t do it. Stick to insured accounts or things backed by a government.

Madison: Okay. Are you going to tell me the options now, or just let me guess?

Laddering strategy for CDs

Mike: Of course, a CD is a product you can buy from a bank or a credit union or a broker that pays a fixed rate of interest for a specific period of time. For example, say you have $25,000 that you know you’re going to need for next year, but ultimately, you want to use that money. You know you’re not going to need it for the next year, but ultimately, you want to use that money to buy a car. You don’t want to risk it in the stock market, but also don’t want to keep it in your Wells Fargo account, earning 0.1%. You can buy a one year CD for $25,000 right now. It’ll probably pay like, 4% or 5%, and it will mature on a specific date in a year. So, like, if you went and did it today, being recorded on August 8, your CD would mature next year, on August 8 or August 9, and you’d get your money back, plus the interest. Now, during that time, you can’t access that money without paying a penalty, so you really want to make sure it’s very likely you won’t need it. And then this is for money beyond your emergency savings, but not really your long term investments or retirement savings. And there’s a lot of things people need to save for like that, like cars, or down payments for homes or condos, weddings, vacations, etc. There was a time when, say, like, my grandparents would take time to shop around to see who was offering the best CD rates and open accounts at those places for that time. It’s not something I would do, but some people do it pretty effectively. If you have a use like this, where you have a specific timeframe and you want all your money back, for sure. The other options besides CDs are government bonds, governmental agency bonds, or even high yield insured savings accounts. The latter is a bit of an outlier because we have an inverted yield curve.

Madison: So would you say that CDs are a short term savings?

Mike: Well, they can be, although I think people buy, like, five year CDs, so that will probably go into, like, intermediate. But ordinarily, yeah, I’d say short term. So I’m not really a CD guy. I don’t. I don’t use them. But people who do use them effectively seem to buy a couple different ones that mature at different times. And that way, well, it’s like, not sure whether they’re going to need the money for something. So when it matures, they’ll go in and they’ll buy a CD dated a little bit longer than the last one they have out there. So maybe you have three different CDs and one matures in six months, one matures in a year and one matures in 18 months. And so then every six months you have money coming due and you think, okay, well, I still don’t need this. I have my emergency money, but I might need it because we’re still not sure if I’m going to buy a house, still not sure if we’re going to get married. So that money matures and then when that matures, you’ll have, at that point you’ll have a six and a twelve month CD. So, okay, I’ll buy another 18 month one. And so I think that’s what most people tend to do when they have a thoughtful plan. Sometimes people just like, I’ll have extra money, I’ll buy a CD just because they don’t think about it. And that’s their habit. But that’s a good question. And so generally short term, but sometimes people will have some money in CDs for a long time without it ever being like locked up for that long time. Does that make sense?

Madison: Yeah. So what would happen if you bought a CD and kind of just, I don’t want to say forgot about it, but does it keep maturing?

Mike: So, yeah, if the CD matures and you don’t say anything and let the bank know that you want your money back or do something, a lot of times it will automatically go for the same amount of time that you had it before. So if you say you have a one year CD and you have like the ten or 15 days before it matures to tell the bank you want to do something, if you don’t do that, it will automatically renew. Again, that’s my take from what I, what I hear people say. Like I said, I’ve never really been a CD guy.

Navigating an inverted yield curve

Madison: Okay, so going back, what is an inverted yield curve?

Mike: Okay, so the yield curve, think of it like a graphical representation of interest rates in the market. So its like typical curve with an x and a y axis and it will show the length of time and the interest rates. And ordinarily the further you go out in time, the higher the rates are on comparably risky things. And so a treasury bill that matures tomorrow in the marketplace would be the least risky thing that there is. And so that would have the lowest rate and then a three month one would be a higher rate, a six month would be higher than that, and so on, with a 30 year bond yielding the most. But right now, one year rates are higher than two year rates, 99% or 99 plus percent of the time. If you looked at rates for one and two year bonds, the two year would be higher. Right now, there are money funds that have higher rates than the one year bond. And as I said, those are higher than the rates for two year bonds. So instead rates getting higher, the further you go out, shorter term rates are highest and rates get to be less if you go out for a couple of years. So historically, when you were going to put money away, the choice was easy. You would buy something that matched up with the time when you either will need the money or think you might need the money. Now you have to guess whether money funds or shorter term funds will continue paying more or buy the longer dated bonds and figure that rates will go lower. So by having an inverted yield curve, the market as a whole is saying it thinks that rates will go lower in the future. Now, historically, that’s been the case for two specific reasons. One is people think that a recession is going to happen, and that may be the case, although they’ve been saying that for a couple of years now and it hasn’t happened. So it’s probably less likely than it was. And then the other one is in a case like this, where the Fed is increasing short term rates and the market hasnt adjusted longer term rates. And so we dont know what will happen, because guessing interest rates is as hard as guessing the direction of the stock market in the short term. Over 20 years, its a good bet that youll have positive good returns from bonds and that the stock market will be up. But I dont know how it will do tomorrow. The same with interest rates. No one really knows what theyll be in the future. Your best guess as to what interest rates will be in the future is current rates. Theres really not much of a clue. Does that all make sense?

Madison: Yes. I think you hit the nail on the head. I really hope this helped answer Grace’s question. And she can make smart decisions for herself. Smart financial decisions.

Mike: Always hoping Grace makes smart financial decisions.

Interview with Sally Gadea from Panna Gelateria

Madison: We are joined here today with Sally Gadea. Sally is the chef and owner of Panna Gelateria and bakery here in Yardley. Sally, would you like to explain to our listeners Panna and how it came about?

Sally: Sure. Yeah. Back in 2021, my husband was, at the time, a corporate pastry chef in DC, and he left that position, and I said to him, don’t move sideways into another pastry chef job. I figured you either have to move up or move on and do something totally different, kind of move diagonally. And I think that we had both come to a point in our career where we were kind of tired of either doing the same thing, moving sideways. And it just felt, like inevitable that we would own our own business. And so we started looking in January 2021. I can tell you, on my daughter’s birthday, we went and stood in front of one of the stores in Yardley that was empty. And we took a picture because we were like, maybe this will be the spot. And it wasn’t. And we looked at another spot seriously. And that didn’t end up happening. And we just kept looking around to see what was available and talking to people locally, and we ended up at the spot that we’re at now.

Madison: That’s awesome.

Mike: Where is that spot? What’s your address?

Sally: Oh, 25 South Main street in the Yardley town center.

Madison: So what made you want to do gelato and baking?

Sally: I’ve been a pastry chef now, or we’ll just say I’ve been in the industry for 18 years, and Jemil has, like, ten years on me. He’s ten years older, so he’s been in it probably 25 / 28 years, something like that. And we probably were both, I think we started out cooking at home. Jemil, coming from a single parent background, and my mom baked a lot when I was growing up. But Jemil was, before becoming this corporate pastry chef, he was a pastry chef in Las Vegas at the Bellagio. So he was there for 14 years, and that’s where he really got into the Italian side of baking. And throughout all of his years, he’d been perfecting all of his recipes for gelato, and he always stayed in fine dining Italian, and he’s just kind of a science nerd like that. He’s really into bread making and fermentation. He just relives the science of things. So I think that’s where he really perfected the texture of the gelato, just looking into the science of it. He’ll watch YouTube videos and read books that are in Italian. Even though he doesn’t speak Italian and he doesn’t really know it. He knows enough and understands enough from the context that, um, that he’s learned from it. Um, and for myself, I’ve been in pastry for as long as I said. And, um, I don’t necessarily do just Italian pastries. I kind of just bring to upon whatever I think is good. My own recipes, so here we are.

Mike: We used to watch Alton Brown shows. The science of cooking and baking different things. It was always pretty neat. My wife was a science major in college. And she couldn’t get any of the three kids interested in science, but she could get them interested in cooking and baking. And I watched that. Like, see, it matters. Like pressure, temperature.

Madison: Panna is in Yardley. Are you from Yardley?

Sally: I’m from Washington Crossing. So just down the road. And then my parents moved to Yardley about 15 years ago. Um, after I had graduated. And so now here we are. You know, in Washington Crossing, there’s not a lot of businesses and not much has changed. I think the most that’s come in there is, uh, Dunkin Donuts. And I like it that way. I’m kind of proud of them for just staying small, but it’s nice to see Yardley. For me, when I was growing up, Yardley was just, uh, like businesses, like banks, you’d come for like Kramer’s. And then I think Wawa went in and then the Vault. And I think the Vault company really kind of brought it to life as a place to visit. And then there’s the Yardley Inn. But there were some new businesses that kind of revitalized it into more of a tourist town.

Mike: I always thought of it as a place for like hair salons, banks and realtors and too many financial advisors. But if you walk around, there are a lot of businesses here and it’s good. I love the vibe of downtown.

Sally: Yeah, I think it’s just right. I think it’s not too much. It’s enough to come to visit. There’s some good, interesting restaurants to come and see. Peaceful place to be.

Madison: It is. I really like how it’s like more small businesses, like you said, like, there’s not really like a Dunkin Donuts really around here. Like we have like the coffee shops.

Sally: I think that’s very intentional. I guess the city council. But there’s what, there’s Wawa and Starbucks are as I guess corporate as it gets.

Madison: How’s business going?

Sally: It’s been good. Yeah. We were, I think, when we first started, I had no idea what to expect. I mean, when you start a business. Well, we did a business plan, and it was, like, the hardest thing I’ve ever done. There were definitely tears. There were definitely many long hours of that. And, like, looking back at our estimations are insane because we do so much more than that. And I kind of went into opening with, like, a number in mind. “This would be great if we did these sales.” And we were really lucky that, especially last year, I think we did that number every day during the weekday, and then we do double that on the weekends. And so it was, like, right away hitting that. This summer I think now the summer is starting right now, so we’re still learning those ebbs and flows, but it’s hard to get a really good gauge because we’re coming out of the pandemic. And then I think we hit a really sweet spot. When we opened last year, mid July, because people hadn’t quite planned any vacations. They were like, you know, think of winter 2021. You couldn’t quite plan something for sure. Although I did get plenty of people coming in saying, I just got back from Italy last year, but I think this year, in June and July, people were away. But now you can feel that everybody’s, like, back thinking about school. But it’s good. I mean, the ebbs and flows, you just have to accept and not panic over it. Like, I think we have a solid business and we’ll just do well depending on people around.

Madison: When I was on your website, I noticed you guys do, catering, too. That’s awesome.

Mike: That’s great. So early in that you have such a solid business.

Sally: Yeah, we’re really lucky. I mean, I won’t say was a shot in the dark. I mean, we kind of came in feeling pretty confident about what we do, and I think if I said it was a shot in the dark, that would sound irresponsible. Right. So I think it’s okay to say we felt pretty confident that we would do well. We thought that the people here hit the demographic that we needed, to want to come in and visit. And we knew other bakeries had done well. And then we offered something a little bit different. Like, there is coffee, there are frozen treats, there are baked goods in the area, but we do all in one place. We have an inside space. There’s some seating. So I think we bring something a little bit new. And we have all these years of experience behind us. We also spent time looking at the location and thoughtfully considering. We knew that that was next to the where the farmers market. There’s lots of activity at Buttonwood park. You know, they do the concerts at night, and that was on Main street before, but they’ve moved it, thankfully for us, um, to the park. And then there’s the playground, and there’s businesses that people coming in on an everyday basis, like the Ship and Print, the liquor store, and then there’s restaurants around. And where we are, we have lots of parking for our customers. So we spent days. There would be days, I say we, I made Jemil go and sit out, and he would sit out front for hours watching the traffic, like, gauging what kind of cars were in the parking lot, you know, like, kind of considering what demographic of income might be coming in and out of the parking lot and what were the busy times. And are there a lot of people in a lot of traffic, as we thought? So it wasn’t just like, “We like to bake, and we’re just going to try this out.” We are actually a thoughtful business. Kind of packaged up as pastry chefs.

Mike: Right. How’s it different for you being self employed with your husband compared to, like, the previous corporate career?

Sally: Everything is different. I mean, those are kind of two separate questions, but then, like, that overlap. So, obviously, being in a corporate setting, I was in a corporate business. It was small. I mean, they had 13 locations, but they had corporate management and a lot of professional components to it and same for Jemil. And so I think that was good. That gave me a lot of, like, professional experience. But, you know, you don’t have to worry about all of the stuff on the back end. You just go in and bake, and that’s it, pretty much. And a little bit of management of staff, but, you know, you’re pretty much set and you’re getting your paycheck. And then here, it’s like, you know, there’s the pressure on to make sure you’re using everything, to make sure you’re not wasting anything, to make sure you’re making enticing menus, all of that. And then the added component of being with my husband means that all of that’s intensified. I think we’ve improved, but I think we really are learning to work together. And I’ll never lie to say that it’s easy. It’s really, really hard. And sometimes we need a little space from each other. Because it’s hard to get that. I mean, we have a three year old, so our life is, like, kind of in a drier end. It’s, like, kind of crazy and loud and spinning all the time. And then we have the intensity of the business, which is sort of another child, and we’re there together all the time, almost. So it’s just, I don’t know, we’re works in progress, but we’re trying.

Mike: When figuring out how to split the different duties in the business, was it kind of natural, different strengths? Or do you have to, like, sort other things out?

Sally: Yeah, I mean, I think the most obvious one is that Jemil does the gelato. I could learn, but we’ve kind of left it where it is that he does all of the gelato. Because I do, he might listen to this I think it’s unfair, but I do a lot of the front end of managing, scheduling the staff, a lot of stuff with managing the money and deposits and things like that, and then, you know, planning the baked goods and, like, just everything. It’s just kind of a lot. And Jemil does a ton of stuff, too, but I’ve just decided to leave the gelato to him. There might be a day where, I mean, I really should learn and be trained in it, but it’s just that I haven’t had the time or bandwidth for it, so that’s definitely all him. When he has time, he’ll jump in and do some projects with baking, but I handel most of the baking with his help, and so, yeah, I think we naturally found our places and have ended up dividing it. And then there’s little stuff, like, right now, I just made a certain cake batter, and I left a note about, like, how to bake it off, you know, or sometimes I’ll put something in the oven. And so he has me back on that and vice versa. So we’re learning to work together.

Mike: That’s good. Like you said, it’s not easy.

Sally: It’s not. It’s really hard to work with your spouse. There’s that wall of politeness is not there that you would have maybe a coworker.

Madison: What do you like best about what you’re doing?

Sally: I really love the baking aspects, and, I mean, I feel really comfortable being in the kitchen, and I actively enjoy that every single day. Like, it truly lights up my brain. And makes me happy. So when I’m doing that, I feel really good. And I also really have enjoyed getting to know everybody in Yardley. Like, a huge part of our business are locals and regulars. They come in sometimes every day, sometimes multiple times a week, or just, you know, throughout. And it makes it so much more meaningful. I think if we were in a city where it was just like tourists or just people blowing through, it would just maybe feel a little bit more like a slog. And now, knowing everybody, knowing their names, it makes me feel good. And it’s very rewarding to see people coming back. Like, you really like us. You didn’t just come that one time to try it. You liked it.

Madison: Aw, that’s awesome. With all the success that you’ve achieved, what’s the biggest challenge you’re facing or have faced?

Sally: That’s a really good question. And put well together. We are, are doing really well. And I think the hardest part is meeting that with our size. And we always knew from the very beginning that the size of our space was going to be a challenge. But we make it work. You know, you just, in a way, it’s kind of good that it’s smaller because it keeps us organized. It keeps things tight, keeps things fresh. We don’t have a lot of space to store things. But there are a lot of challenges to it. We really need, in our ideal world, if we could just have one thing, it would be more space to put freezers for the gelato, because we do our gelato cart. We have the gelato for the front. And then we also do, during certain seasons, we do wholesale trays of gelato for the Bristol Riverside Theater. So we have to play a little game of balancing where to put everything. So far, like, everything survived and it’s okay. But if we could even just have one more freezer, that would be great, because we also do a lot of storage of frozen, unbaked baked goods. When I make cookies or scones, that I’m making the dough, and then freezing it, and then I bake it fresh. So it just sometimes during the holidays and certain times can set us back because we can’t make enough volume to, like, store. And make it everything a little smoother. So always kind of, like, catching up.

Madison: Are you guys busy around the holidays?

Sally: Yeah, we did a lot of business around Thanksgiving. That was our busiest day. And then I mean, yeah, Christmas keeps things going. Mother’s Day was a really busy day, too. But the most orders, Thanksgiving, it was crazy.

Mike: The gelato cart. I think I saw that on Instagram. Where is that?

Sally: Right now it’s in a trailer. So, yeah, we keep it in a trailer around the store up at our house. And we can take it anywhere. People ask about it for weddings, but I just tell people you can book it on our website and I don’t need to know what it’s for. We had an event recently for weddings, and people walk by and they’re like, “Is this only for weddings?” No. We did a end of school year event for a school. We do community events, too. We’re doing something at the smoke house in mid August, and we have a couple little events at different businesses. We did the VFW’s car show last night, and we’ll do community day. So we’re just down to show up wherever it can be used.

Madison: That’s awesome. So do you go there with the cart? I guess someone has to serve it, right?

Sally: Yeah. Depends on where it is. Jemil, sort of the main guy for the cart, he’s a little worried that it’s too heavy for me to push in and out, but I think I can handle it. But if it’s close enough, then we’ll put a person on staff. Like we did Charlann’s corn festival on Saturday, so we had someone because it’s really close, and then we can leave them and Jemil can come back to the store. But if it’s far away, it doesn’t make sense, Jemil just goes with it.

Madison: Okay, if you could go back to your 18 year old self with one piece of advice, what would it be?

Sally: I don’t know. I can’t really pin point one thing. Or maybe I’m just not willing to. But I think at the end of the day, it already happened. I can’t really think like that. As soon as I start to tell myself, ask myself those questions, I just think it’s too late now. And also, it’s just part of my path. That if anything had been different, who knows where I’d be now? Although, if anything have been different, who knows where I’d be now?

Madison: Exactly. Yeah. If you could be remembered for one thing, what would it be?

Sally: I mean, I just want to be a kind person. And then I think that does go a long way in creating a legacy. I think, like, even just taking the time to talk to people, if I’m putting in context of Panna, taking the time to talk to people who are regulars and getting to know people. Again, that’s like, even though I just do pastry, and that’s not being a doctor, it’s not being in the military and defending the country or anything really important. All the things that we do are just the, like, means by which we connect with people and help them through their lives. And I think that it can be important whatever you do, whether it’s wealth management or baking or tattoos, across the street, Yardley Tattoo. But whatever it is, that’s just the means that you help other people, understand and make meaning of their own lives.

Mike: So I say I think it’s really important. Like, connections and social connections are really, really important. I was listening to a podcast this morning about, you know, it’s like, it’s more of like a food and related thing, but in talking about in terms of, like, health and wellness, like, throughout your life, social connections are one of the biggest determinants.

Sally: Oh, yeah, I’ve heard that too.

Mike: And so I think it’s great. Like, people will come in, you know, you get the pastry or the gelato or coffee, and you see the same people or new people, and you develop those connections. I love that about our little town.

Sally: Yeah, I think it matters. And I think even though that sounds like kind of regretting and saying that, but it still stand by it, that it’s just like, I don’t know. You never know how that’s going to trickle down to other people from that person’s day. They’re coming and they’re having a rough day, and just give them a minute to chat and then, like, how that can change the course of their day and thereby other people’s day. So I think it is pretty powerful. Kind of like sharing good energy with people.

Madison: It’s farther than just gelato and bakery, you know? It can be a more personal thing.

Sally: Sometimes it’s for me. Sometimes people coming in, if I’m having a rough day and I go up front and I talk with a regular or someone, you know, that can shake me out. Which definitely saves Jemil probably a lot of our pain later. You know?

Mike: We don’t know how many people Jemil’s calling, like, “Somebody’s got to come in here.”

Madison: We know your time is incredibly valuable, and we greatly appreciate you spending time with us. For those watching and listening and want to learn more. Where’s the best place for them to learn more about Panna?

Sally: Definitely Instagram. That’s what I do. So that’s @PannaYardley. I was really hard headed about getting a website, I think, really, because I just want to get the right person to do it and to be on our own terms. And in the end, I think that was, like, it came out the way I wanted it to. We ended up working with a local photographer, and she just did a beautiful job with it and did exactly as I would wanted to have it.

Mike: Who was that great photographer?

Sally: Evelyn Cirignotta. She does a lot of pictures for us. She did our, when we had our gelato cart, she did some photography for that and set up on our website. I’ve just decided anything I’m not good at that requires, like, a decent amount of skill, especially technologically. Whether it’s our accountant, our bookkeeper, our website designer, Evelyn, whoever it is, it’s better to just outsource that. And not waste your time on energy. My time and energy is better spent baking and dealing with the store, with things I know how to do. But, yeah, she did a great job. She has a look that’s just beautiful, and I feel like it’s just a way that we can convey what do there really well.

Mike: All the graphics of your place always look great.

Madison: I love how your vision came to life.

Sally: Yeah. I think it just came together that this ended up being, in a lot of ways, a local project. We love using produce from our local farm called Charlann, up the road on Stoney Hill. And we actually just genuinely like, I think they think that we’re weird. Because, now we know them, but, like, since last summer, we would just be tagging them and talking about how great their produce is. We use their cantaloupe, we use their watermelon. We use all their produce in our stuff that we can. And I think that they were just like, “What is this new bakery that just, like, keeps tagging us?” So it wasn’t like we had a deal or anything. It never is anything I ever vouch for, like, Evelyn, it’s just stuff that I’ve come to know, um, that we think has great quality and that represents us well. And, yeah. Working with local people in any way, whether it’s just reposting with them or them reposting us. It just seems like Yardley, the way I put it, has this tapestry of local businesses. We’ll say Bucks. We’ll just reach out and say, like Yardley, Bucks county has this tapestry of local businesses that recognize that, like, we all have to work together, or if we work together, we can be so much more powerful and strong and engaging to people. We can reach more people if we all share what each other is doing. And because there’s so much quality, whether it’s at Yardley Tattoo, their stuff is beautiful, their work is beautiful, or at Krysset or, you know, I don’t know. Charlann. And, you know, whatever people do, it’s like, there’s a lot of quality here and that people can enjoy. And so I’m happy and proud to lift those people up, and I’m appreciative that likewise, you know, other businesses around us do the same. I mean, that’s how our Instagram has done pretty well, and our business is just people sharing it. That’s a really special place.

Madison: Yes, absolutely.

Mike: Very fortunate.

Sally: I mean, every morning when I’m driving, I drive down Afton to come here. So I pass by Afton lake as I turn into, like, right about where whit Pilates is and to go into Panna, and I pass by there. And I truly feel grateful to be here every day.

Mike: What a great way to end the podcast. Thank you so much, and thanks a lot for bringing the pastries.

Madison: For more information on YWM, you can visit our website at yardleywealth.net you can also follow us on socials at Yardley Wealth Management. This podcast has been produced by Madison Demora and Mike Garry with technical and artistic help from Poe productions.