Liz Scharf, an AFCPE-accredited financial counselor with Capstone Community Action, joins Vermont Edition to talk about planning for retirement during a turbulent time in the market and strategies for your savings no matter your financial situation.
What’s causing this turmoil?
Liz Scharf: “It’s pretty much par for the course … to see these big ups and downs in the stock market. I think it’s something that we knew was going to be coming, because we’ve had a very good number of years of getting very high returns on our accounts. And I think we forget, when things are looking really great, we forget the chance of it not always being like that. And then we have corrections.”
What can people do if they're worried about their investments?
Liz Scharf: "The general consensus is to ride it out, sort of ‘stay the course,’ and look at your risk tolerance and age. So looking at [the stock market] on a day-to-day basis, that’s a lot of gambling going on, and a lot of guesswork. The advice never should be, sell your accounts today because something bad happened. Because that’s how the stock market continues to drop, when people panic."
Why the "magic age" of 65 isn’t so magical any more.
Scharf says we think of that age as a retirement milestone, but she adds “we’re not dying at 65. We may live until we’re 90, and so that can be another 25 to 30 years of investment. So you want to make sure that your money that’s in retirement continues to grow.”
Making regular contributions from your paycheck to your retirement is essential.
Scharf says this is the best way to invest: it takes advantage of an employer’s match to what you put in, but it can also take advantage of low times in the market: when the stock market is down, your plan is buying low.
“Every two weeks, when we’re taking money out of our paycheck, we’re buying our fund at the price that it is. So when the stock market’s down, we’re buying more shares, and when it’s up, we’re buying fewer shares. So over time, we’re building up a portfolio with a number of shares."
Don't have a workplace retirement program? In 2019 your employer may be able to sign up for the Green Mountain Secure Retirement Plan.
Scharf can recommend some apps to help you “see your spending” every week or month, as well by categories like groceries or utilities.
- Mint: Scharf says she personally uses this free app because “it allows you to tie in your accounts for your investments as well as your credit cards and bank accounts, and you get to see it all in one big picture."
- You Need A Budget, or YNAB: Scharf notes this app charges a fee to use and allows you to “assign a job to every dollar of your paycheck.” She says people have "found they have really saved money with it. A lot of my clients really love it.”
- Wally: an app that allows you to take snapshots of your receipts and automatically download that information into a budget.
Listen to the full interview above to Liz Scharf answering questions from Vermonters, and about strategies for savings and short- and long-term investments.
Broadcast live on Monday, Dec. 10, 2018 at noon; rebroadcast at 7 p.m.