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Future You Called – She’d Like A Word About Your Money
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We’re swimming in money advice these days – TikTok influencers, chatbots and the occasional bona fide expert (ahem, HerMoney CEO Jean Chatzky). But when it comes to the real stuff — like talking about money and building a secure future — many of us are still figuring it out.
On the latest HerMoney Podcast, Carl Richards, CFP, author, speaker, and creator of the beloved New York Times Sketch Guy column, joins the conversation. His new book, "Your Money: Reimagining Wealth Through 101 Simple Sketches," aims to spark more meaningful money conversations.
One of the most important? The one with your future self. As Richards explains, many of us are guilty of "future blindness," or our tendency to ignore the person we’ll be 10, 20, or 30 years from now.
His solution is to check in now and then."Start caring a bit about that person and build that into your plan," says Richards. "We don’t know what’s going to happen, but one thing that we can be hopeful about is that we may not be very good at anticipating future problems, but we’re actually pretty good at solving them when we’re in them."
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Ask Jean
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Today’s question comes from Kathy. She writes: Can you please explain the difference between annuities and certificates of deposit (CDs)? Would one of these be a good addition to my retirement plan?
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| A: |
While CDs and annuities share some similarities, they’re very different financial products. CDs are best for short- to medium-term savings, while annuities are typically long-term retirement investments. Here’s the scoop on each.
A CD is a "timed deposit account," basically, a savings vehicle where your money is locked in for a fixed period. CDs offer a fixed interest rate, usually higher than a standard savings account and a set withdrawal date, ranging from months to years. Generally, the longer your money stays put, the more interest you earn. It’s up to you whether the rate difference between, say, a three-month and a six-month CD is worth leaving your money untouched a bit longer.
Annuities are a category of insurance products and investments. There are some (immediate fixed annuities and deferred fixed annuities) that you purchase in order to generate a specific amount of income in retirement, either right away or down the road. There are others in which you save money to grow and make a decision on how you get your money out (withdrawals or an income stream) down the road.
Where I think you’re confused is that there is an annuity called a MYGA, which stands for Multi-Year Guaranteed Annuity, that is often used as a CD substitute (or vice versa). You save money in a MYGA for a period of years, then start taking income down the road, or roll it (like you’d roll a CD) into another annuity. If you’re looking for a good MYGA primer, check out this one from our friends at Gainbridge.
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Submit your questions to Jean here.
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This Week In Your Wallet
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The latest economic warning sign is showing up in car loans. The share of subprime borrowers who are at least 60 days behind has doubled since 2021, hitting 6.42% – worse than during the last three recessions, according to CNN. Repossessions are also at their highest level since the Great Recession. "It’s a disturbing trend to economists," CNN notes. "Car loans are typically the last payments that Americans are willing to miss. They’re too important to their lives: Cars are essential tools to get to work, drive families and access food."
The Fed is expected to cut interest rates again this week – and experts say it’s a good time to rethink your money moves. "If the Fed lowers its key rate as expected, interest costs on many kinds of short-term debt would fall. That includes credit cards, car loans, and anything tied to bank prime rates, which are often set at a certain percentage above the Fed funds rate," reports Investopedia. "On the other hand, returns on CDs and high-yield savings accounts (HYSAs) would also decrease." Translation? Rates are likely heading south, so if you’ve been meaning to lock one in, now’s your moment. Here are our roundups of CDs and HYSAs worth a look.
So, you’ve got a killer business idea. Go you! Now comes the fun (and financial) part — making it a reality. This week on HerMoney.com, we’re breaking down the must-have money checklist for launching your own biz. Step one is getting honest about your budget so you know how much you can put toward your venture. Next, build not one but two safety nets – your personal emergency fund and a business one. "Making a profit in a business can take time. When starting your business, it can take you anywhere from months to possibly a year to see a positive cash flow," says Tae Lee, founder and CEO of Never Go Broke, Inc.
💡 Pro-tip: Sometimes, the secret sauce to getting your business off the ground isn’t just hustle (though that’s SO important). It’s a small business loan. The right funding can turn your big idea into a thriving reality.
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Things That Save You Time
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More For You To ♥
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🚦 A recent study found that 57% of drivers have looked for a new auto insurance policy this year — the highest rate ever recorded. If you haven’t yet, experts say it pays to compare, with many companies offering new customer discounts of up to 20%.
🩵 Bluey, Bingo, Bandit, and Chilli – the lovable dog family from Australia—have become a global sensation with "Bluey." Nicki Sheard, CEO of BBC Studios’ Brands and Licensing, is one of the masterminds behind the show’s success. Hear her story on the latest episode of How She Does It.
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