← HerMoney with Jean Chatzky
HerMoney with Jean Chatzky
“I have $11,000 to invest in retirement. Is an ESG fund a good idea?”
00:14:38
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- [00:00]
A
I want to tell you about another podcast I've been relying on to help guide my charitable giving decisions. Giving Done Right is all about how to make an impact with your giving and tackles the question every donor is asking, how can I make the biggest difference Right now? With shifts in federal policy and funding in flux, nonprofits and civic institutions are struggling and your giving? It matters more than ever. On Giving Done Right, you'll hear from philanthropic experts and major donors who reveal how to maximize impact on issues from protecting democracy to supporting immigrants in crisis. Whether you give hundreds or millions, this show delivers knowledge that turns good intentions into real results. Stay tuned to the end of this episode for an exclusive listen of Giving Done Right and find more episodes wherever you get your podcasts. Hey everyone. Welcome to Her Money. I'm Jean Chatky. Today we are bringing you another Mailbag episode. I know you love them, but this time with a very special guest, author and Yahoo. Finance senior columnist Carrie Hannon. If you caught our earlier conversation with Kerri about her brand new book, Retirement Bites, you know she has a great ability to cut through the noise and give us straight talk on what retirement really looks and feels like. So we thought this would be the perfect time to bring her back to tackle your specific retirement questions. Carrie, are you ready?
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B
I am ready. Thanks Jean.
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A
Our first question comes from Beth. She's got a question about life insurance. I have a fully paid life insurance policy with a difference in cash value and death benefit of about $5,000. I'm going to make my own funeral arrangements. I own my home with no mortgage and I have no outstanding expenses. I don't have a spouse, siblings or children. Does it make sense to cash in the life insurance policy, prepay the funeral expenses and put any remaining money into a CD or other fund? What are the reasons to keep or cash in the life insurance policy? I think there's so many people who've got paid up policies these days that they're wondering like why am I holding onto this thing if my need for life insurance has evaporated?
- [02:31]
B
I'll give my answer and then I want to hear your answer on it too. I would cash it out. I think use it to pay your funeral expenses. If that's going to make you feel better, clean that up. Invest it in a way that you have management. You can choose where it's invested at this stage in your life. Why not? And you may get some appreciation doing it that way. But again, it's such an individual decision. But that's because the other way is just sort of like a forced savings. And I think you can maybe take control of it there. And Jean, what do you think?
- [03:02]
A
Yeah, I'm wondering, Beth, why you had it in the first place. Honestly, I mean, in my mind, although life insurance can be used as an investment, it's really a product for people who have other people depending on their income, people who would be up a creek without a paddle if you died and they didn't have the support that you were providing to them. And maybe you had this because you were supporting older parents, or maybe you had it for some other reason, maybe it came from an employer and you rolled it over. But clearly with no real debts, a home that you own outright, no people that you are supporting, you don't need an insurance policy that basically provides income once you're no longer here. So I would think, like Carrie said, I would really think about what do you want to do with this money? What are your other goals? What are the things that you want to do in, in your life right now that you could do with some free cash? Clearly you want to take care of your own funeral. That's great. Definitely do it. Leave some instructions while you're at it for what kind of a service you want, what kind of, whether it's a party or whether it's a celebration of life or whether it's some other form of remembrance. But then this is, this money is kind of an opportunity, I think, to really check something off your list that maybe you haven't been doing. Our next question comes from Lucy. She writes, I'm a 75 year old widow and I have an IRA brokerage account with Vanguard, a little under $140,000 in a conservative fund. I also have a high interest rate savings account, two CDs with the clean Energy Credit Union, Social Security and, and an ITREASURY account and a basic checking account. My monthly balance is about $215,000, give or take. I own my home, but I also do have a $400 a month equity loan payment until the end of time. I am very frugal. I'd like to invest one of the CDs, about $11,000 in an ESG fund. In other words, a socially conscious investment fund. Any ideas? This is what I love about our listeners, Carrie. They tell us everything. They lay out their entire financial life for us. So what do you think? I mean, clearly Lucy's in incredibly good shape.
- [05:43]
B
Oh my gosh. I was just like, woo hoo. Congratulations. This is good news. We love hearing that. I think that ESG funds are fantastic. The important thing here is and Vanguard's got some great ones you can go right there at your brokerage account. Not a big deal. You have a couple of things that you can to be proactive about this and make. Look for one that's going to focus on what mission is important to you, what kind of doc, if it's an equity fund, what kind of stocks are in that fund, what companies do they invest in? Do they speak to you? Is there one particular that really would stand out for you there? And Vanguard makes it super easy to do your homework on these. Secondly, you want to look at the fees. I mean what traditionally these ESGs came with higher fees than other investments. Other funds did that's come down. But you want to look for 0.05 to 0.09. I think Vanguard is around 0.09. But look for what that that fee is. They all disclose that right up front. And I think the final decision is do you want one that's an indexed fund, so it's passive, or one that's actively managed by somebody? That's a big decision to make. Again, there's pros and cons of them. The index fund tends to have lower fees, so it's kind of your choice. But Jean, there's probably some things I'm missing there. What else should she think about?
- [07:00]
A
I was just going to invite her and anybody else who's listening, by the way to join us for Investing Fix, which is the bi weekly investing club that I run with Karen Feinerman from cnbc. And so, Lucy, if that's something that you're interested in. Investing Fix is held every other week on Monday nights, but the first month is always free for anybody who's wondering. You can find more information@investing fix.com and we spell Fix with two X's just to make it complicated. I don't know why I ever thought of that. Before we take our last question, we're going to take a quick break. If you're still overpaying for wireless, it's time to say yes to saying no. No contracts, no monthly bills, no overages, no hidden fees, no bs. My producer Hailey actually gave Mint Mobile a try this fall and she was surprised by how easy it was. She said the coverage was great, the speed held up and she loved not getting any surprise fees. So if you've been thinking about trimming your budget or ditching your overpriced provider, Mint might be the easiest switch you never knew you needed. Ready to say yes to saying no? Make the switch@mintmobile.com hermoney that's mintmobile.com hermoney upfront payment of $45 required, equivalent to $15 a month limited time. New customer offer for first three months only. Speeds may slow above 35 gigabytes on the unlimited plan. Taxes and fees extra. See Mint Mobile for details. So you all know I don't rave about things unless I really mean it. And I have to say I finally tried the Fits Everyone collection from Skims. My daughter has been telling me about it for such a long time, but now I totally get the hype. I've always had issues with underwear. It's too tight, it's too bulky, it leaves lines under everything. I can't stand the lines. This is a game changer. The fabric is soft. I can't believe how comfortable it is. This is the kind of feel good upgrade that is small but seriously meaningful. We all deserve a few small upgrades in our lives. So if you haven't tried Skims yet, take this as your sign. The Fits Everybody collection lives up to the name. It really does fit and flatter everybody. Shop Skims Fits everybody collection@skims.com and after you place your order, be sure to let them know we sent you select podcast in the survey and be sure to select our show in the dropdown menu that follows. We are back with Carrie Hannon, author of the new book Retirement Bites. Carrie, you ready for one more?
- [09:55]
B
Yes, I am. Let's do it.
- [09:57]
A
Okay, we've got an anonymous listener who is asking about who to trust with her financial planning. She writes, I'm 57 and I'm thinking that retirement might be accessible to me now, but I'm wary about running out of money later in life. If I retire too early, I'd like the help of a financial expert to check my math, offer advice to grow what I have, and ultimately tell me if I'm ready for retirement now or if I need to keep working. I'm very fortunate to have free financial advisors available through multiple outlets, access to morningstar through my Workplace 401 plan, a financial institution holding my CDs, a brick and mortar bank where I've had a checking account for decades, and an online bank with a high yield savings account. All of these institutions have reached out with offers of free wealth planning advice. My question is, should I enlist the help of all of them and compare the answers? Is that considered ethical or maybe even bad form as a customer does having all of these institutions know my quote unquote money business? That's a great Book title, money, business leave me vulnerable in any way. And are there other issues I, I should be thinking about when sharing my financial information with an advisor? Jean and Carrie, I've been reading your work for several years and you are the people that I trust most with this kind of thing. Well, that is really nice. So Carrie, what do you think?
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B
Oh my goodness, this is huge. Having a financial advisor, in my opinion is super important. And I think it's wonderful that you have all these opportunities for people who want to help you. And keep in mind, most people have an agenda of some sort if they're reaching out from your financial services company potentially to encourage you to maybe many things. If it's free, excellent. You want to make sure it's free. But to me, I like having one unbiased, objective person that's not probably associated with any of the places where I have my money at this point to give me sort of that overview, a holistic lookup. They can see where all the accounts are, help me figure out ways to bring these all maybe under one umbrella in some way, kind of organize it and strategize it. But I think that unbiased advice is really critical. And giving your financial advice to anybody involves a deep level of trust and that's what you can build with a one on one relationship with someone. And yes, you should interview a couple of people to find that right match for you and it might be one of those people. But my sense is you may want to go to someone who's independent. But that's just my take on it.
- [12:39]
A
Yeah, I agree. I would probably go ahead and talk to the, the advisor through your workplace 401k. I think that those folks have, have a good amount of experience and could at least get you started with some basic advice. But I agree with Carrie. I would compare that information and that advice to what you might get from a fee only financial advisor who is somebody that you, you choose independently. And again, at edhermoney.com, we have a button called Find an advisor. It'll help you through a service called Wealth Ramp, which is a free service, Find a fee only advisor who is a good fit for you. But I do think at this age in particular and looking ahead to retirement, this is when you need that pre retirement checkup. This, this is when you need to make sure before you make any big decisions that you are in fact in as good of a position as you suspect you are. So I think the timing is excellent. Carrie, I have one more question and this one actually comes from me. It's one that I didn't have a chance to ask during our interview. Earlier on your book, you suggest that people before they retire go through the process of envisioning an ideal week in retirement. What's that process like and why is that so important?
- [14:09]
B
Oh, it's a dreamy kind of experience, right? I'm not saying. But if you can't visualize something, you can't get there. So if you can somehow put some concrete imagery around what this ideal week might look like for you, it helps you make decisions today that would help you get to that ideal week. So, you know, this is a period where let it all hang out. You can just have some fun with this exercise. Like what would you do when you get up? What kinds of activities do you want to be doing? Is it exercises? It doing stuff with friends and family, but you can drill down and get pretty specific. Is it traveling? Is it, you know, where are some places you want to go? So that's kind of big picture stuff, but super important to have that vision. And I often even gina simple as things like when I'm trying. So it's not just planning for retirement, but I do this for retirement. You can put things up on your refrigerator of the things you want to make sure you can do every week that you might want to work with. I put pictures up of things I love, like the Virginia countryside, a beach in St. Barts, my horse, whatever it is, because that's what I'm saving money for. I can spend time doing those things. But when you allow yourself to put an image in a concrete, even writing it down, physically writing it down helps you make it a reality.
- [15:27]
A
They say if you dream it, you can do it. And I guess if you see it, you can do it as well. Carrie Hannon. The book is called Retirement Bites. Where can we find more about you and your work?
- [15:39]
B
Oh, thank you. My website is kerryhannon.com, so it's K E R R Y h a n n o n.com y. Also, if you search on Yahoo. Finance, you'll find me, but my website is best.
- [15:52]
A
Amazing. Always a pleasure to talk to you. Thanks for doing this with us.
- [15:55]
B
Thanks.
- [15:56]
C
Gene Limukemu and Doug Limu and I always tell you to customize your car insurance and save hundreds with Liberty Mutual. But now we want you to feel it. Cue the emu music. Limu.
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A
Save yourself money today. Increase your wealth. Customize and save.
- [16:16]
B
We save.
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C
That may have been too much feeling. Only pay for what you need at Liberty Mutual. Dot com. Liberty. Liberty. Liberty. Liberty Savings Fairy. Underwritten by Liberty Mutual Insurance Company Affiliates. Excludes Massachusetts.