Return to Transcripts main page

CNN Live Today

Top Five Tips: Investing for Retirement

Aired June 02, 2003 - 10:14   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


LEON HARRIS, CNN ANCHOR: With all of the numbers looking positive right now, let's talk about money. Are you still dreaming of having a golden nest egg at retirement time? Well, it may be possible if you take the right steps at the right time.
So, check out these positive numbers. Since January 1, the Dow is up about 6 percent, and the S&P has climbed about 9.5 percent. The Nasdaq is up an astonishing 19.5 percent.

Now, the question is: How can you benefit from all of this? Well, get out your paper, your pads, Gerri Willis of "SmartMoney" magazine is here this morning with the top five tips on investing for retirement.

Good Monday morning to you, Gerri.

GERRI WILLIS, "SMARTMONEY" MAGAZINE: Hey, Leon. Good to see you.

HARRIS: All right. So, you think now is a good time for people to think about getting back into the market, huh?

WILLIS: Well, I think a lot of people have gotten out. They're on the sidelines. They're in money market fund where they're earning almost nothing for their money, and they've missed what's going on in the markets, this big increase that you just showed with the graphics there.

I think job No. 1 is finding out just how much money you're going to need for retirement. Go to a Web site called financialengines.com. That site can help you figure out exactly how much money you're going to need to retire.

HARRIS: OK, but then after you do that, you have to figure out exactly where to put the money. How do you figure out exactly the best asset allocation?

WILLIS: Well, you're going to have to go back to the Web for more information, more research. Go to morningstar.com or even money.com, and use one of the calculators that will help you figure out how much money to put in stocks, bonds, international, small-cap, large-cap. Remember, these numbers will be different depending on how far away you are from retirement. But you need a little professional help to figure out the right allocation, and most people probably have too little in stocks right now.

HARRIS: You think so. Interesting. You know what? The easiest way to do that if you don't want folks to go out and, you know, change -- wholesale everything they do is to stick with the index funds. We've talked quite a bit about that in the past, right?

WILLIS: That's right. People are used to thinking about the S&P 500 index fund. It was really popular during the late '90s. But guess what? There's an even better one out that is a broader index. Vanguard has a total market index. It doesn't just concentrate on large-cap stocks. Also medium-cap, small-cap. It buys the entire range of stocks. This will let you perform as well as the market.

HARRIS: Yes, but sometimes these funds come with loads, don't they? And you have to pay pretty much, you know, a fee to actually get into these and then manage your funds in them. How do you weigh which one is the best way to go with that?

WILLIS: Well, if you're buying actively-managed funds, you're going to want to look for no-load funds, and you can find those pretty easily on morningstar.com. They can help you navigate through all of the choices. But remember, you're going to want to pick funds, small- cap, large-cap, bond funds -- don't forget bond funds -- and international, just to make your entire portfolio make sense.

HARRIS: All right, finally this morning, you say go beyond the 401(k). What do you mean? Are you talking here about taking bigger risks?

WILLIS: No, not at all. What I'm suggesting is that a lot of people are going to find that their 401(k) just doesn't do it. It's not enough at the end of the day. And if you've sustained big losses over the last two or three years in the bear market, you might want to think about also opening a Roth IRA. This is yet another way to shelter a little income from taxes and just save money for retirement.

HARRIS: All right. Good deal. Thanks, Gerri, as always. Gerri Willis with the top five tips. All right, folks, hope you took some good notes. See you, Gerri.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.







Aired June 2, 2003 - 10:14   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: With all of the numbers looking positive right now, let's talk about money. Are you still dreaming of having a golden nest egg at retirement time? Well, it may be possible if you take the right steps at the right time.
So, check out these positive numbers. Since January 1, the Dow is up about 6 percent, and the S&P has climbed about 9.5 percent. The Nasdaq is up an astonishing 19.5 percent.

Now, the question is: How can you benefit from all of this? Well, get out your paper, your pads, Gerri Willis of "SmartMoney" magazine is here this morning with the top five tips on investing for retirement.

Good Monday morning to you, Gerri.

GERRI WILLIS, "SMARTMONEY" MAGAZINE: Hey, Leon. Good to see you.

HARRIS: All right. So, you think now is a good time for people to think about getting back into the market, huh?

WILLIS: Well, I think a lot of people have gotten out. They're on the sidelines. They're in money market fund where they're earning almost nothing for their money, and they've missed what's going on in the markets, this big increase that you just showed with the graphics there.

I think job No. 1 is finding out just how much money you're going to need for retirement. Go to a Web site called financialengines.com. That site can help you figure out exactly how much money you're going to need to retire.

HARRIS: OK, but then after you do that, you have to figure out exactly where to put the money. How do you figure out exactly the best asset allocation?

WILLIS: Well, you're going to have to go back to the Web for more information, more research. Go to morningstar.com or even money.com, and use one of the calculators that will help you figure out how much money to put in stocks, bonds, international, small-cap, large-cap. Remember, these numbers will be different depending on how far away you are from retirement. But you need a little professional help to figure out the right allocation, and most people probably have too little in stocks right now.

HARRIS: You think so. Interesting. You know what? The easiest way to do that if you don't want folks to go out and, you know, change -- wholesale everything they do is to stick with the index funds. We've talked quite a bit about that in the past, right?

WILLIS: That's right. People are used to thinking about the S&P 500 index fund. It was really popular during the late '90s. But guess what? There's an even better one out that is a broader index. Vanguard has a total market index. It doesn't just concentrate on large-cap stocks. Also medium-cap, small-cap. It buys the entire range of stocks. This will let you perform as well as the market.

HARRIS: Yes, but sometimes these funds come with loads, don't they? And you have to pay pretty much, you know, a fee to actually get into these and then manage your funds in them. How do you weigh which one is the best way to go with that?

WILLIS: Well, if you're buying actively-managed funds, you're going to want to look for no-load funds, and you can find those pretty easily on morningstar.com. They can help you navigate through all of the choices. But remember, you're going to want to pick funds, small- cap, large-cap, bond funds -- don't forget bond funds -- and international, just to make your entire portfolio make sense.

HARRIS: All right, finally this morning, you say go beyond the 401(k). What do you mean? Are you talking here about taking bigger risks?

WILLIS: No, not at all. What I'm suggesting is that a lot of people are going to find that their 401(k) just doesn't do it. It's not enough at the end of the day. And if you've sustained big losses over the last two or three years in the bear market, you might want to think about also opening a Roth IRA. This is yet another way to shelter a little income from taxes and just save money for retirement.

HARRIS: All right. Good deal. Thanks, Gerri, as always. Gerri Willis with the top five tips. All right, folks, hope you took some good notes. See you, Gerri.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.