HerMoney Podcast Episode 288: Investing For Short-Term And Long-Term Goals 

Jean Chatzky: (01:25)
We have goals that just can’t wait until we hit 65 or 70. We might want to buy a house or a car or a motorcycle. We might want plastic surgery, an MBA, an around the world trip, or to help put a niece or nephew through school. The point is once we get our retirement chugging along and our emergency fund in place, cause we all know how crucial that is too, it’s time to think about all those other goals and how we can get more out of our money so that we can accomplish, if not all of it, then as much of it as possible. According to Fidelity’s 2021 Women in Investing study, which just came out, there has been a 50% increase in women investing outside of retirement over just the last three years. That is an incredible leap, an additional 49% of women say they’re more interested in investing since the start of the pandemic.

Jean Chatzky: (02:29)
And 42% said, they now have more money to invest. All of this is incredible, but, and maybe you suspected that there was a but coming, many women also said they’re still not comfortable with their money. Just 14% of women feel they know a lot about saving and investing and only 33% feel confident in their ability to make investment decisions. Just a third of women consider themselves to be quote, unquote, investors. But here’s the thing, and I’ve said this before, if you have a retirement account of any kind, you are an investor, your 401k makes you an investor. Your IRA makes you an investor. You do not have to be hand picking stocks in order to call yourself an investor. And the other thing that we know is that when women do invest, we do better than men, according to a new Fidelity analysis of 5 million customers over the last decade, women outperform men by an average of 40 basis points. So why is it that in 2021, so many of us continue to find investing intimidating? Well, to help us answer that question today is Lorna Kapusta. She is head of Women Investors and Consumer Engagement at Fidelity, and she’s in charge of Fidelity’s efforts to support women at every stage in their financial journey. She has helped thousands of women take control of their financial futures, and today she is going to help us. Lorna welcome, thanks for being here!

Lorna Kapusta: (04:17)
Jean. So nice to see you as well. I know you and I have been talking about having this conversation on your podcast for quite some time.

Jean Chatzky: (04:25)
I’ve been waiting, I’ve been waiting and I’m excited that we’re finally able to do it. I have known you for years and I know what you do at Fidelity, but could you just share a little bit about your role?

Lorna Kapusta: (04:37)
Sure. So we span the gamut in what we focus on, but it really starts with making sure that Fidelity offers the right set of solutions that has the best customer experience for all customers. And where my team focuses on making sure we have that understanding for women and why it’s important is women do approach money, on average, a bit differently than men. And so we’ve got to make sure that we’re doing everything that we can to best serve them. In addition, Jean, kind of like this, we focus on how do we inspire and provide the right educational resources so that women can make their money work as hard as they do. Conversations like this, we run a Women Talk Money program, and have a newsletter, as well as workshops across the country, all are really important to help women do as much as they can so their money’s working for them.

Jean Chatzky: (05:24)
So what questions are you hearing most from women lately? Where do we feel like we need the most help? What’s the best way to get that?

Lorna Kapusta: (05:35)
So, as I just mentioned, we have a Women Talk Money program that we run very regularly. Thousands of questions come in, as well as I regularly listen to client calls. And I’ll tell you, they span the gamut depending on life stage. So there often are the typical questions of how much do I need in emergency savings? How much do I need to retire? And how do I take steps to invest? I’ll tell you over the last year and a half though, the questions have definitely changed a little bit, much more focused on the financial aspects of caregiving people rethinking about their priorities and seeing if they have enough to retire early, as well as those, you know, with the caregiving of potentially assessing taking a break, many folks are calling in about that. And what does that mean when they take a break on their money, on their benefits, and then on what they can do in the long-term?

Jean Chatzky: (06:26)
What about investing questions? When we launched the show, I talked about the statistic that more women are investing outside of retirement, which Kathryn and I gave a little cheer. But what do you think is behind it? Is that stimulus money at work? Is it money that we’re not spending because we’re still working remotely? Is it just that the markets have been going great guns and that is inspiring.

Lorna Kapusta: (06:52)
So Jean, I think it’s all of those things for many years, women have been on a fantastic education and economic trajectory. And because of that, we’re seeing women have more money than they did before. And then the pandemic hit, we saw actually women investing prior to the pandemic, but then the pandemic hit. And as much as women, especially working women who are caregivers who took on more responsibility, they seem to find more time in their day. With that, or prioritizing money with that, what they were able to do was figure out how to shore up their financial foundation. And they also started reaching out to get help with their money. And one thing we’ve heard is that given people were home and zoom is available to have one-to-one financial discussions with a finance professional, it just really created that time to kind of get online, get on that zoom, make that phone call so they could do so.

Jean Chatzky: (07:43)
Have you seen any shift in the attitude that women have toward risk in investing? And I’m asking this question. I went for a walk this morning – now that we’re living in Philly, I have a new walking partner. Her name is Gwen, and we went out for a walk this morning and we were talking about her asset allocation. This is what I do on my walks. She’s a lawyer, so I get some free legal advice, but we also talk about money. And we were talking about whether we’re a little too conservative, whether we’re a little too aggressive. Have you seen any sort of a shift in the amount of risk that women are willing to take in our investing?

Lorna Kapusta: (08:22)
So I will say I don’t have any data that says that women are taking on more risk. What I can tell you is that when women invest, they’re smart, they’re thoughtful and they’re risk aware. So what we’re seeing more of, you shared 67% of women are investing outside of retirement. What we are simply seeing is women getting more educated, getting the information that they need to take those steps. And a lot of what we focus on is really just trying to help put that information in their hands and provide that help so that they can do it. So it’s not necessarily about more risk. It’s really just about more women getting the information and help that they need and asking the questions so that they can take the steps that they want to, to make their money work for whatever they’re looking to achieve.

Jean Chatzky: (09:13)
Right. And I think those steps are largely individual, right? My new friend, Gwen, recently lost her husband. And that is changing and coloring all of the financial decisions that she’s making. I recently moved, that’s changing and coloring all of the financial decisions that I’m making. Do you think that the events of the past [00:06:00] year and a half have been a catalyst for women overall, to get more engaged with our finances? I mean, how do you think that the pandemic has caused us to take a new look?

Lorna Kapusta: (09:52)
Oh,

Jean Chatzky: (09:52)
Really important. Yeah.

Lorna Kapusta: (09:55)
I mean, Jean, a hundred percent, when the pandemic started, we heard from women really early on about wanting to take more action with their money. And I think at that point it was, how do I just make sure I’m showing up my financial foundation. If you go back a year and a half, as you recall, folks didn’t know if they were going to have their job a few months away, it was a really kind of interesting and slightly scary time. But fast forward through the pandemic, I think there was just a re-evaluation of priorities of what’s important. As you know, there was the big life event of the pandemic, which had us all reevaluate, but then there’s all the regular life events that people go through, um, that there’s financial implications. And I think through that, what we saw was women doing more than ever to step forward and say, “I’m going to make sure I’m taking care of things and I’m going to get the help that I need.” And I’ll tell you, I think part of this is the financial industry – and, you know, I could talk about Fidelity – I know it has really made great strides to do more, to make investing, but make this type of planning help accessible for everybody. Listen, we’ve got a ways to go, but historically it’s been so complex, it’s full of jargon and we’ve just realized real people need this help and you need to be able to use plain speak and help on what’s important. So I think we’re trying to make a lot of changes to be able to support that.

Jean Chatzky: (11:12)
Do you think that that jargon that you’re talking about is responsible for the confidence gap? I mean, you know, it’s 2021 and yes, we’re seeing all of these moves in the right direction, but we’re still seeing this frustrating confidence gap.

Lorna Kapusta: (11:29)
Yeah, I would say the industry, the complexity that the industry created over time, and the jargon that even still exists today, although we’re trying to change it. I know again, Fidelity has a really big focus on this part of it. I think there’s also just women growing up and maybe being told not to talk about money or that it’s not polite, or maybe given the same type of upbringing that their brothers were. And so I think there’s probably just a number of factors that have contributed to it. But you talk about the confidence gap. And it still exists. We talked about how more women are investing than ever, but we still are seeing only 41% of women feel comfortable with their knowledge of investing. And only a third feel confident to make decisions about their investments. And so we’ve got to do more and to provide that help and just normalize the money conversation.

Jean Chatzky: (12:22)
And normalize the money conversation, I think, and normalize the fact that there are no perfect answers, right. You and I have talked about this before, but I come back to this time and time again, because I think it’s a factor in the equation that we just don’t discuss. Right. I made dinner last. I made eggplant parm. I did not use a recipe. Why did I not use a recipe? Because I’ve made this eggplant parm many, many times, right? I stopped. I took a step back to look at whether I was supposed to put the ricotta cheese on the eggplant or whether I was supposed to put the ricotta on top of the sauce. Like I did. I did sort of cheat and look at, look at some instructions to see in what order the layers were supposed to go. But it was good enough and it was going to be good enough, no matter how I layered that eggplant part, right. It was going to all come together in a big soup and it was going to be delicious. Investing is a little bit like that. Like there’s no perfect way to make an eggplant parm. I mean, you know, the chefs on the Food Network might disagree with me, but there’s no perfect way to invest, but there are a lot of good enough ways to invest. And sometimes I think women who tend to be recipe followers like me when I’m making something new for the first time. We get very frustrated with the fact that there is no perfect investing recipe and that’s a confidence shaker.

Lorna Kapusta: (13:51)
I think that it’s definitely true. But I think that the reality is that women associate, when there’s no perfect recipe, this fear of losing it all. 70% of women think investing is related to stock picking, still. And so the opportunity, Jean, is to help. I keep on going back to just putting information in the hands of all women so that they understand there are actually good recipe options that can make you comfortable, that you’re not going to completely burn the eggplant parm down. And I’d love to actually talk through those because I think that gives you a path to do things that aren’t perfect, but actually are good enough and will put you in a good enough place. And I always compare this: a good enough place for investing is potential to grow your money, versus a place where women have a tendency to always lean towards, which is being just a good saver and keeping it in a bank account, which you’re earning very little. So we’ve got to actually realize that our fear of investing prevents us from achieving the most potential. And when it’s just sitting in something like a savings account, unfortunately it’s earning very, very little.

Jean Chatzky: (14:57)
You said two important things there. 70% of women still associate investing with stock picking. And you said there are steps. So can you explain why investing does not have to mean picking stocks, and then what those steps are to get us in a position where we can make our money work?

Lorna Kapusta: (15:21)
Of course. And I tell you, I know early on for me, when I started out, I thought that investing was stock picking. Because what I had heard is, you know a company, and then you buy stock in that company because no one had shared what truly the options are, and what’s most important when it comes to investing. So Jean, investing can be about stock picking if you want to do it and if you like it and you have a lot of time. But what investing really is about is actually taking your money and putting it towards achieving different goals. And those goals can be buying a house. It can be buying a second house. It also can be, I just want to make my money grow and I don’t need it for 10 years. So the way I think about it is if you have money outside of retirement and outside of your emergency savings that you don’t need access to for five or more years, and you could say 5, 15, 25 years, there are three paths you can take to make that money achieve its greatest potential. One is you can do it yourself. There are online resources where you can go, you can learn about different investment options. You can put together a portfolio of stocks, bonds, ETFs. And by the way, you know, that’s a basket. It’s important that it’s diversified. And a tool can help you find the right mix based on your timeframe. But that just takes time upfront. You have to be interested and you have to also be willing to stick with it over time, but you can, you can do that. The second is where you may not have as much time to invest, but you do have time, like five years, 10 years, to do something online. And I think this is one of the best kept secrets. It’s called a digital advisor or a robo advisor, again, kind of a jargon name. So you don’t really know what it is, but you can go online. You can answer seven questions, typically things you’re already thinking about. When do I need the money? So is it five years? Is it 10 years? What do I need the money for? What’s my risk tolerance. So how comfortable am I to stomach those ups and downs? And then this digital advisor will make a recommendation and can invest it for you. And it actually over time makes changes needed to, to keep it in the right mix. So you get that money back, you know, available to you. Let’s say it’s 10 years when you need it. And last is speaking to a financial profile. That is always a great option where they will work with you to develop an overall financial plan. They’ll go through all of your goals and then they’ll help you to invest that money. And what I think is most important is that women often think that they don’t have enough money to reach out, to and work with a financial professional. So I always say, there is help available for everybody. Fidelity is there. We have thousands of people across the country, and I always say, don’t hesitate. It’s one of the things women hesitate to do, and a phone call is free. So you can always call 1-800-FIDELITY. And we’re here to help. But those three options are available to everybody. And it’s really about just taking the step to do so.

Jean Chatzky: (18:30)
Can I just clear up a question. Do you have to have an account in order to make that phone call? Or can you just call even if you haven’t opened an account yet?

Lorna Kapusta: (18:38)
Oh, you can call if you have not opened an account yet. And the whole idea is to talk about your situation and what you’re interested in doing. And oftentimes women are a bit, um, “intimidated” is what they tell us, or they’re not sure what to ask. And really what you want to be prepared with is what your goals are, what you’re trying to achieve, and a little bit of where you may need help. And then we’re here to talk through it. And I’ll tell you, it meets you where you are and it’s judgment free. And then we’ll help you figure out what the best options are for you. And it may end up being, not working with a one-to-one person. It may be the other options, but we’re there to talk through and help you with that.

Jean Chatzky: (19:18)
That’s amazing. I think I’ve said many times on this show that if you have, you know, a workplace account, you can pick up the phone. But just to know that you can pick up the phone if you don’t have an account at all, and you can still have this free conversation. That’s a really good thing. I want to take a moment to remind everyone that HerMoney is proudly sponsored by Fidelity Investments. Because sometimes money conversations can be tough to navigate as Lorna and I have been saying, but when it comes to investing more of your money, Fidelity’s got your back starting this Wednesday, October 13th, you can catch their special women talk money investing event. You can catch it live or on demand. It’ll have lots of action-oriented resources to help your money make more money. And if you want to learn more about this program or just investing in general, you can visit fidelity.com/HerMoney today. I’m talking with Lorna Kapusta, head of Women Investors at Fidelity. Okay, so you alluded to this a couple of minutes ago, but I want to dig in a little deeper. Short-term goals, long-term goals. When we talk about where to put my money. In other words, how much I should be keeping in savings, in cash, where it’s earning frustratingly little versus, the market. I know it’s going to be different for everyone, but I’d really like to break down the timeframes in terms of those short-term long-term. You know, what if I need the money in 5 years? What if I need it in 10 years? What if I need it in 15 years?

Lorna Kapusta: (20:51)
So Jean, the answer is that 5 years, 10 years, 15 years, you take that same path that we just talked about. Those three options. Do it yourself. Potential digital advisor or meet with a financial professional. And then based on if you need the money in five years, that’s the idea of figuring out that path versus if you don’t need it for 15 or 20 years.

Jean Chatzky: (21:15)
So if I’m a ‘do-it-myself-er’ and I need the money in five years, or I need it in less than five years, should I be keeping that money in cash?

Lorna Kapusta: (21:24)
So when we think about less than five years and you need that money to be accessible, what we do say is don’t look towards those traditional investing options that I just went through. What you want to be looking towards are options that will make that cash accessible, but your higher earning, the highest interest rate as possible. And so why it’s really important, Jean, is in that five plus years, you don’t want to time the market, you want to be investing and you want to have time to let that money earn money and you don’t want to have to pull it out. And so that’s why we really focus on at least five years and looking at more time than that.

Jean Chatzky: (22:03)
But under five years, if it’s college tuition money, if it’s the down payment for a house, that’s where we don’t want to be taking market risk. I mean, that’s what I feel. I feel like if it’s under five years, you can look at other safe investments. You can look at treasuries, you can look at CDs. You can look at a savings account, a high yield savings account, if you can find a high yield savings account. And interest rates are expected to go up starting in 2022, so maybe we’ll get a little bit of additional money in our savings, but what we don’t want to do with, you know, Susie’s college tuition is put it in the market, let the market take a tumble and then we need it in six months. And we’re feeling at a big loss. We do and you will learn it. You alluded, we don’t want to take a big loss. Switching gears here just a minute, we talked a little bit about risk. We know that women continue to be a little more risk averse when it comes to our investments. But I do think we should talk about the opportunity cost of not investing. Can you break that down?

Lorna Kapusta: (23:05)
Yeah, Jean. And this is my favorite topic to talk about because even I, who focuses on this day-in and day-out, has this aha moment. So we just talked about the fact that you want to be investing money outside of that five years. And it’s really important because that’s where women still have a tendency to keep it in savings. So let me just give you a picture of what it means, what the opportunity cost is for $20,000. If you have $20,000 and you put it in a savings account and let’s take 10 years, over a 10 years horizon, Let’s assume you’re earning about 0.06%, which is pretty typical right now. In fact, that might be a little generous, which is kind of crazy. You will earn over that time $120. So remember that $120, $20,000, 10 years. You take that same $20,000, and you invest it in a conservative portfolio. And a conservative portfolio is a mix of stocks, bonds, and some short term vehicles. You have the potential to earn on that $20,000, $12,795. Now that is based on historical returns. It’s actually about 5% annually. So it’s not, it’s not super aggressive, but let’s compare $120 versus $12,795 over 10 years. That is opportunity.

Jean Chatzky: (24:26)
Gotcha. That’s very, very clear. There was an interesting question on the Fidelity study. If you had $25,000 to invest, would you know what to do? You got a very different answer from women and for men.

Lorna Kapusta: (24:41)
We did. Less than half of women said that they know what steps to take. And men, 71% of men said they know what steps to take. You know what? I think that that’s okay. Because there is help for the men who didn’t know what steps to take as well as of course those women. And, you know, our whole point is you don’t have to have all of the answers. You just need to be willing to get started. And then we can help you.

Jean Chatzky: (25:07)
Yeah. That is almost a mirror image of the statistic that surfaced that 67% of women don’t see themselves as investors. I mean, you and I have been in rooms together and I’ve said, raise your hand if you’re an investor and we see about a third of the hands go up. And then I say, all right, raise your hand or if you have a 401k and every hand goes up or an IRA, and every hand goes up because we don’t associate having a retirement account with being an investor. But of course that makes you an investor. I mean, what are the other misconceptions that you see every day?

Lorna Kapusta: (25:50)
Jean you actually, when you started off this discussion highlighted one that I’m not even sure you realized you were talking about. But the other one is the misconception that men are better investors. So we’ve done tons of research and when you ask men and women who is the better investor, they both say they believe men are. But as you started off, you just talked about the recent analysis we did on 5 million customers. We looked at men and women, and what we saw as women on average were earning more over that 10 year horizon. And so, that to me is the first misconception. The second one, and we were just talking about, is that being a good saver is enough. And I think oftentimes women have felt that that’s the case. And yes, saving is essential and making sure you’ve got that emergency fund. But we’ve really got to make sure that we write that misconception off that saving is enough.

Lorna Kapusta: (26:42)
It’s not good enough. And that we’ve really got to do our best to think about investing. So it gives us the greatest opportunity to maximize potential. And the last thing, and I mentioned this earlier, is that women often feel like they don’t have enough money to invest or qualify for help from a financial professional. And I have to tell you that is just not the case. There’s help for everybody. And we’ll figure out with you what help and you’ll have enough. And so we just need to make sure that we’re having the conversation and having it early, because starting early and being consistent are really important to the recipe of making our money have the greatest potential to grow.

Jean Chatzky: (27:25)
What I liked most about this snapshot of women investors compared to men investors, was that you took a 10 year timeframe, right? It wasn’t a year. It wasn’t five years. But for anybody who’s thinking that that’s not long enough. I do want to just say. God, it must have been 30 years now. I was a young reporter at Forbes. I think I might’ve been at Smart Money at the time, but a professor named Terrence Odean, who was at the University of California Davis, did a similar study where he looked at women versus men investors. And by the way, he found the same result. Women do better. So this is not a flash in the pan. This is decades and decades worth of studies upon studies. This is true. This is just true. And we need to accept that. It’s true. All right. As we wrap here, tell me about some of the secrets to success that you’re seeing among women who are confident, who are confident about their saving and investing abilities. I mean, what are they doing to inspire this confidence?

Lorna Kapusta: (28:34)
So Jean, I am going to hit on what you just said and why it’s not a flash in the pan of what the secrets to success are. First, when it comes to saving and investing, women take a holistic approach and they have kind of a financial or money roadmap and knowing what’s important to them and then aligning their money to do it. The second is that they’re investing consistently. So not trying to time the market, but more have set up this investing out of every paycheck. And last is critically important, which is around practicing patience. So they’ve set up their plan. They’re investing consistently, listen, the market’s going to go up and the market does come down. And when the market comes down, they are patient. They don’t make rash, emotional moves of pulling money in and out, buying and selling. What they do is they hold based on the plan. And so I think those three things are just really critical to why we’re seeing women do well and outperform men. And I like to say Jean, we don’t do enough of saying invest like a woman.

Jean Chatzky: (29:41)
There you go. Get invested, stay invested. Lorna. Where can we go for more info on the study and on the Women Talk Money event.

Lorna Kapusta: (29:51)
So we have a new resource center: Fidelity.com/WomenInvest. And that will give you information and help at your fingertips as well as access to this special Women Talk Money event, which is on Wednesday the 13th of this week. But it’ll also be available on demand after that.

Jean Chatzky: (30:12)
Thank you so much for the conversation. Thanks for being here!

Lorna Kapusta: (30:15)
Loved this. So good to see you and thank you!

Jean Chatzky: (30:18)
And we’ll be right back with Kathryn and your Mailbag.

Kathryn Tuggles: (30:32)
Hey Jean. You doing well?

Jean Chatzky: (30:35)
I am. I’m doing really well. I enjoyed that conversation. I enjoy hearing about the progress that we are making and you know, I come back to that statistic over and over again about why we don’t feel confident to me. I really think a little bit of fake it till you make. It goes a very, very long way here. I mean, that was true for me. You know, I started doing this before. I felt like I knew everything. I still don’t feel like I know everything and I continue to invest. And it’s just one of those things where we have to be comfortable being slightly uncomfortable because there’s no perfect answer.

Kathryn Tuggles: (31:15)
Right. I totally agree. And I honestly think that the fake it till you make it thing yes. A hundred percent. And there’s something about just doing it and just getting started. That gives you so much confidence to take it to the next level. I think for me, my wake up call about what investing could really do for your future, and the true power of investing came when I left my first job and I saw just how much, what I felt like was not very much, you know, my 3% contribution to my 401k. And then I got the company match on top of that. And I couldn’t believe what was in my account when I left my job, what had just been left to grow. And this happened during 2008. So I wasn’t expecting it to really be worth much at all, but to see how it just a few years of dedication can change your financial future is so powerful.

Jean Chatzky: (32:15)
Yeah. Yeah. I completely agree. And I think that same sort of dedication when applied to other financial goals is possible. As long as you automate it, as long as you get on a path to automate it. I mean, when I was putting money away for college, for my kids, I just got on this automatic contribution thing. Right. And I’ve been doing the same for my nieces since they were born. And now they’re 17 and they’re about to start applying to colleges. You know, it’s a little bit of money every month of their life and it’s going to make a difference. You know, it’s not going to pay for the whole thing, but it is absolutely going to make a difference in the amount of financial aid they need to take out. And so if we step-by-step our way there, we can meet any goal. Right?

Kathryn Tuggles: (33:09)
And to your point about the contributions to your niece’s college fund and it not paying for the whole thing, my 401k is not going to pay for the whole thing of my retirement. Like I think so many of us get so hung up on gotta to pay for the whole thing. I don’t have enough. And the truth is we’re going to be pulling from multiple sources of income to fund an education. We’re going to be pulling from multiple sources of income to fund retirement. And you just have to make the effort to contribute where you can and when you can.

Jean Chatzky: (33:41)
A hundred percent. I know we’ve got some Mailbag questions you want to dig in.

Kathryn Tuggles: (33:45)
Love to. Our first question comes to us from Jen. She writes, “Hi Jean and Kathryn, thank you for doing the show. I heard you on the Choose Five podcasts, and I have been binge listening to HerMoney since. My husband and I want to move out of our home. We love the location, but it’s an old house. So we feel like we’re always doing repairs. We’ve been saving for a down payment on a new house over the last year and have about $30,000 saved. We’d need to save around a hundred thousand to have a 20% down payment. If we don’t sell our home first, we’d like to not rush into buying a house. For example, if we sold our home first and had nowhere to live right up to closing, that’s what happened with our current home. Should we reduce our contributions to our 401k as to save more quickly for the down payment or put our current home on the market and rent an apartment while we look after it sells? We currently have $300,000 in our 401ks, $40,000 in Roth, IRAs, $16,000 and HSAs and $40,000 in emergency savings. We are 30 and 29 years old. Also, we’re only able to contribute to Roth IRAs. If we max out our 401ks to lower our modified, adjusted gross incomes. Thanks for the help.”

Jean Chatzky: (35:00)
So, first of all, when I got to the point where you said that you are 30 and 29 years old, my chin dropped to the floor. You have done so well. The fact that you are already homeowners, the fact that you’ve stashed so much in your retirement accounts, your health savings accounts, I love that you’re prioritizing that health savings account and that you’re using it as a savings vehicle rather than just a vehicle to pay for year in, year out healthcare expenses, because it has the potential to be so powerful down the road. You’re doing incredible. So I answer your question, I just want you to know that. The next thing I’d like to say is that I know that the 20% down payment on a home has sort of become the holy grail. We like to talk about getting to a 20% down payment because then you can avoid PMI.

Jean Chatzky: (35:57)
You can avoid private mortgage insurance, and it’s nice to be able to avoid any expenditure that is not mandatory, but what gets missed a lot of the time is that people really are not putting down 20% on average, first time home buyers – and I looked this up for you – first time home buyers put down an average of 7%. That’s from the National Association of Realtors. Repeat buyers put down 16%. So a little bit more. And yeah, there’s some truth to the line of thinking that, especially in a market like now a larger down payment will put a little more heft behind your offer because it, it just says to the seller that you’re on solid financial ground, but it is not mandatory. You don’t have to do it. You can do it with a 10% down payment. You can do it with a 6% down payment and locking up your liquidity in your home.

Jean Chatzky: (36:59)
Doesn’t give you as much money for repairs or for other financial needs because once the money is in your house, it is harder to get it out of your house. So I hear you saying that you’d like to save a hundred thousand if you didn’t sell your home first, but I want you to try to step off of that at least momentarily. I don’t like the idea of reducing your contributions to your 401k’s necessarily. And as far as putting your current home on the market and renting an apartment while you look? I mean, Kathryn, I don’t know what you think about that. But to me, that is just a big Oi. Because having just moved once, I cannot imagine setting myself up to move twice. And I can only expect that if you are in an area of the country where the housing market is churning right along as it is in so many places, your house will sell and you could find yourself renting for a considerable amount of time. So I’d actually encourage you to just look at a lower down payment, and to see what that looks like to you. And if it translates into a mortgage payment that you can afford, and good luck, it sounds like you guys have your heads on so straight. I think you’re going to make a terrific decision.

Kathryn Tuggles: (38:31)
Yeah. What an amazing job they’ve done saving. And I would try to avoid moving into an apartment. Having to move twice is just, you know, you don’t want the feeling of a new home to feel harried and to feel like an inconvenience. Ideally, it should feel like a beautiful new beginning.

Jean Chatzky: (38:51)
I’m so with you on that. I mean, I’m still unpacking boxes from my move. Please don’t stress yourself out twice if you don’t have to. And the other thing to think about is moving is expensive, right? The cost of a move is often several thousand dollars, if not more. That’s money that you could be adding to your down payment.

Kathryn Tuggles: (39:09)
Yeah. That’s a great point. Those extra thick boxes are not cheap. Our next question comes to us from Alexis. She writes “Hi Jean. I hope that you’re doing well. I have been a long time listener of this podcast, and I’m so thankful for your expert advice and candid spirit. Here’s my situation. I’ve been working with the same company since I graduated college. And I love it here. After five years in one department, I recently accepted a new position at the same company, working for a new team. When I applied for the job, the application asked for my exact salary and benefits expectations. It was a little uncomfortable putting down a number, especially since the hiring manager would have access to my current salary and benefits. But I did my market research and asked for $65,000 about a $10,000 increase from my previous salary and slightly above the mid-market range for this role.

Kathryn Tuggles: (40:03)
I was over the moon when they offered me the position and not only matched my salary expectations, but exceeded it. They offered me $72,000. And the larger end of your bonus, a sizeable increase from what I was making before I accepted the position without negotiating. I was happy with the offer and it was over what I asked for. So I didn’t think I had a lot of ground to ask for more money. However, I recently had a conversation with some of my colleagues and mentors and they told me I should have negotiated for more. This surprised me and has me rethinking my actions. I know there’s nothing I can do now, but I can’t help but wonder, was I wrong for not negotiating? What would you have done in the same situation? Thanks for all that you do.”

Jean Chatzky: (40:50)
Well, thank you so much, Alexis for writing. Thank you for your candor in asking this question. I think it is a really good one. And sometimes I think that in this quest to encourage other women to negotiate, we get a little judgy. And I think that your colleagues and your mentors have gotten a little judgy with you. I would not have negotiated any more than you did. I think that you did negotiate. You negotiated by asking for a raise of, and I just ran this number 18%. You negotiated by asking for slightly more than the mid-market range for this role. You did not shoot low you shot high. And they came back to you and they said, actually, we’re going to pay you more. I have a theory on why this happened. I think that probably other people in this position were making more than you asked for. And they were probably trying to level set for this particular job, but I don’t think you did anything wrong. In fact, I think that you did it all right. And I would not have asked for more in this situation. What about you, Kathryn? Would you have asked for more?

Kathryn Tuggles: (42:05)
I would not have asked for more, but I completely agree with you Jean that this was probably a pay parity situation. Alexis, going back to your earlier point, about how much you love working at this company. I think the feeling is mutual. I think that they love you. And I think that they were probably very serious about the fact that they were not going to pay you less and they were going to pay someone else to do the same job. And maybe that person was a man. Maybe that person was a woman, but the point is they wanted you to be paid equally and fairly. And I think that’s amazing. And I think as a manager, if one of my employees asked me for 65,000, I then gave them 72,000 and then they came back and asked me for more, that might rub me the wrong way. So, you know, I think you did the right thing. And I think the fact that you love this job and love this company is just an amazing thing, but you know, next time you can negotiate for sure and ask for more to start with right next time, maybe ask for 80 and see what happens.

Jean Chatzky: (43:05)
Exactly. And the one thing I don’t want you to take away from this Alexis, or any of our listeners to take away, is that talking about salary is a bad thing. It is such a good thing. I am so impressed with the fact that you talked about this with your colleagues and your mentors. I’m sorry that it made you feel bad. But when we talk about pay parity for women, across the board, talking about it and sharing this sort of information is exactly what it’s going to take to get there. So kudos to you on that. I’m so glad that you did it.

Kathryn Tuggles: (43:39)
Yeah, and congrats on the new job! So happy for you. Thanks Jean.

Jean Chatzky: (43:43)
Thank you so much, Kathryn. In Today’s Thrive: the Phrases to Avoid Saying in a Job Interview and What to Say Instead. The majority of us, 55% are planning to find a new job this year, according to a survey from Bankrate. If you’re one of the millions looking for a change, it’s time for a little prep work, maybe it’s been awhile. Since you walked into a job interview, maybe they seem a little more intimidating than they did a few years back. Thankfully, no matter what kind of interview your’e prepping for the old rule of thumb to put your best foot forward has not changed. Even in this brave new digital world. This week at HerMoney, we’ve got a run down on the phrases to avoid using during your interview and what to say instead so that you can sell yourself as the absolute best person for the job.

Jean Chatzky: (44:37)
Here’s a look at a couple of my favorites. First, don’t say I’m flexible when negotiating your salary. If you say you’re flexible, the truth is you’re much more likely to get low-balled. If you’re flexible, it implies you’re willing to take whatever figure is offered and that you have no other prospects. Instead say my experience and skills put me on the higher end of the salary range for this position, let me explain. And then elaborate about those experiences and your skills. Another thing not to say “my weaknesses are actually my strengths.” In nearly every interview, you will be asked about your greatest weaknesses. So make sure you’re ready for this question with a solid answer. Please, please stop saying that you are a perfectionist or that you work too hard. Those are the classic-so-fake-you-can-spot-them-a-mile-away kind of weaknesses that nearly everyone has tried over the years.

Jean Chatzky: (45:42)
You’ve got to give a real answer, a real weakness, so that your interviewer knows that you are capable of an honest self-evaluation. So instead say, “In the past I have struggled with,” and then paint a picture of who you really are. For example, you could say, I love new challenges and I get completely immersed in the projects I work on, but I’m a big picture person who sometimes struggles with details. Then elaborate a little bit on that. Or you could say sometimes I get too in my own head and I forget that other people outside this marketing department don’t speak the same lingo, so I need to slow down. Whatever you choose. Be honest with your answer and look to say something that adds depth to your character while also still portraying positivity. In other words, they just want to know that you’re willing to improve and learn from your mistakes.

Jean Chatzky: (46:41)
Last one, don’t say, “My old boss was awful and that company was the worst place to work.” Even if it’s true, even if your boss was a nightmare, it is never appropriate to trash talk. Your current or former employer, ever. Instead say, “There are aspects I enjoyed about my former position, but I’m looking to make a change,” and then be honest about what you enjoyed and try to avoid going into specifics about what you didn’t. Thank you so much for joining me today on HerMoney. Thanks to Lorna Kapusta for a great conversation. If you like what you hear, I hope you’ll subscribe to our show at Apple Podcasts. Leave us a review because we do like hearing what you think. We’d like to thank our sponsor Fidelity. We produce this podcast out of CDM Sound Studios. Our music is provided by Video Helper and our show comes to you through MegaPhone. Thanks for joining us. And we’ll talk soon.