Transcripts

"Money File"-Valuable Advice for New Grads

SUSIE GHARIB: In the "Money File" tonight, wise words for recent grads. Here's Harriet Johnson Brackey, personal finance columnist at the "South Florida Sun-Sentinel."

HARRIET JOHNSON BRACKEY, PERSONAL FINANCE REPORTER, SO. FLORIDA SUN- SENTINEL: Summer is a great time to think about setting up a retirement account. College grads are getting their first jobs and teens, hopefully, are working for the season. If they start to save now, that will set a pattern for life. My point is, getting going is crucial. The studies show, again and again, that once you get into a retirement account, you tend to stay with it. People rarely change them. They pick a certain allocation to stocks and to bonds and almost never make big changes to that. They also tend to keep their contributions coming at a steady pace. Even in times when markets are tough, they keep shoveling the money in. That set it and forget it mentality is paying off to investors who already have retirement accounts. For example, the three million participants in defined contribution accounts, think 401ks at Vanguard, largely have held steady in the 15 difficult months that ended in March. The mutual fund firm said most of these retirement investors didn't pull out of stocks, didn't dip into their nest eggs and benefited by having diverse portfolios. The markets have been so volatile, but it's the median account in this group is down less than half as much as the market as a whole. So to those who say it's dumb to keep on investing for retirement in times like these, I say I don't think so. I'm Harriet Johnson Brackey.