Haley Sacks has built a career translating Wall Street into plain English. You may know her as Mrs. Dow Jones, and she helps millions of followers make sense of investing, retirement, and how to grow your wealth when the cards seem stacked against you.
She's distilling that market wisdom into her new book, Future Rich Person: The New Rules for Building Wealth, and our Wake-Up Call at Work newsletter caught up with Sacks to talk about the biggest questions investors are facing right now, why she’s weary of IPOs, her checklist for retirement, and estate planning 101.
Do you have any tips for everyday investors concerned about the current market volatility?
Haley Sacks: Volatility is basically the tax we pay for getting to grow our wealth in the market, but it’s totally normal to feel anxious about your money when there are all these headlines about conflict and economic instability. Our survival instinct is to act: to either pull our money out of the market or try and guess which industry may blow up next. But all of the data shows that the most successful everyday investors don’t ever try to outsmart the chaos; they rely on boring and effective rules to grow their wealth. Fundamentals like building your emergency fund, paying down your high interest rate debt, and practicing dollar-cost averaging, which is when you invest a fixed amount into the market at regular intervals — regardless of whether it’s up or down.
We've seen some big IPOs lately. How do you think the average investor should be approaching these?
I’m very anti-IPO. I know it’s easy to get swept up in the hype, but for the average person buying in, it's so risky, and you should understand that the game is really rigged against the little guy — because most of them pop and drop. So people buy in at the peak with all this opening day excitement, and then shortly after, the insiders are going to sell their shares to lock in those profits, which causes the price to come down. There’s also a lack of data around these companies. They aren't established public companies, which have all this financial information available, so you’re relying on future promises versus proven profitability.
So I’d say if you’re really interested in an IPO, don’t buy on the first day. Wait three to six months, which is when the insider lock-up period — when insiders are privately allowed to sell their shares — expires. A less risky option is to look into IPO exchange-traded funds rather than putting all your eggs in one basket. A good rule to follow is that a healthy portfolio should be 95 percent boring index funds and 5 percent money for risky debt.
Do you have any tips for women preparing for retirement?
Women are at a disadvantage, because we earn less on average, are more likely to take career breaks for caregiving, and we live longer. As a result, we retire with 30 to 40 percent less than men. The first thing I’d say is don’t wait — even if you feel like you’re starting off too late, don’t talk yourself out of taking control. If you’re 50 and over, make sure you’re taking advantage of the catch-up rules, which allow you to contribute extra money into your 401(k), 403(b), or IRAs. Even if you can’t hit the maximum, just an extra $50 to $100 a month will make a huge difference over a 10- to 15-year horizon.
Play the Social Security delay game. You can claim Social Security as early as 62, but your monthly check is going to shrink. Every year you delay claiming past your retirement age up until age 70, your guaranteed monthly benefit will increase by 8 percent per year. So waiting until 70 could result in a check 30 percent larger for the rest of your life.
I also think we should start to redefine what retirement looks like, because the idea of working until 65 is becoming outdated. If you feel behind, you may want to consider a soft retirement, or working part-time to transition into a lower stress position that lets you cover your daily expenses.
What’s on your retirement checklist for things people should make sure are squared away before they call it quits?
The first thing is to take a look at your lifestyle. People assume their expenses are going to go down when they stop working, but having free time can cost you money. Then, I’d lock down your healthcare strategy. If you retire before 65, you can’t get Medicare yet, so how are you going to cover that gap? And if you retire at 65 or older, mark your calendar — the enrollment period opens three months before your 65th birthday and closes three months after.
I also think you should de-risk your portfolio. When you’re 30, a crash in the market doesn’t really matter that much because you have years to recover, but if you’re 60 and there’s a crash right before you want to retire, that could derail your plans. I would make sure that you have one to three years worth of cash in short-term bonds available. And optimize your big three income streams: Social Security, pensions, and annuities — if you have them. Work with a professional to figure out your drawdown order and which accounts to empty first, so that you can keep your lifetime tax bracket as low as possible.
Many Baby Boomers don’t have a plan for how they’re going to pass on their wealth. Do you have any advice when it comes to estate planning?
I think the biggest misconception around estate planning is that it’s only for wealthy people. But if you don’t have an estate plan, then your state government will create one for you, and your family’s going to have to pay the court system to figure it out. I think what everyone needs — regardless of your net worth — is a will, a power of attorney, and a POD (payable on death) and TOD (transfer on death) to your bank and brokerage accounts, because it will allow the money to transfer directly to your heirs upon your death without having to go into probate.
People forget about their digital legacy. Make sure you have physical copies of all your special documents in one place, an inventory of your assets, digital passwords, and funeral wishes. People don’t usually do all this work, but it’s really a gift to your family. Fifty-six percent of Americans have no estate planning documents in place, and 42 percent say they would have no idea what to do if a family member passed away. So it’s really important to have these conversations with your loved ones. I promise they’ll be grateful.
This interview has been edited for length and clarity.
