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Investment guru has retirement tips for boomers

By HELEN HUNTLEY
Published October 29, 2006

Any way you look at it, the task of preparing Americans for retirement is daunting.

A third of U.S. workers admit they aren’t saving a dime for retirement. Some of them won’t sign up for company savings plans even when it means missing out on free money from their employers.

Those on the cusp of retirement — 55 or older — are more likely to be saving, but half have accumulated less than $50,000 in savings, according to the Employee Benefit Research Institute. That won’t last long in a nation in which company pensions are falling by the wayside and government benefits such as Social Security and Medicare are under stress.

Donald Cassidy thinks he can make a dent in the problem, even if it’s just a small one, by helping people learn how to invest.

Cassidy, 61, recently retired after 30 years in the securities business, the last 16 of them as a research analyst for Lipper Inc. He’s written five books on investing. His best seller, at 35,000 copies: It’s When You Sell that Counts. And he’s been talking to investor groups for years.

Now he’s busy turning his passion into a so-far-unpaid second career. Step 1: Setting up the not-for-profit Retirement Investing Institute, which he runs out of an upstairs bedroom of his Lakewood, Colo., home, surrounded by a library of more than 800 books on investing and psychology.

His vision is a series of “take your investments to college” programs in cities around the country in collaboration with universities and without the taint of sales pitches. Cassidy said programs he helped organize at the University of Denver could serve as a model.

He also would like to offer on-the-job investment education to help workers manage their 401(k) retirement savings accounts or deal with the financial challenges of downsizing and pension plan terminations.

“The provision of in-person help via in-room interaction at events does, I think, provide a personal touch that some people very much want, and that they can’t get via books or Internet alone,” he said. “Investing is a very personal and scary thing until you become comfortable with it.”

Here’s a clue to how serious he is: This month he flew 3,000 miles (round trip) to speak to 40 people in St. Petersburg and about 75 in Winter Park. The groups, local chapters of the American Association of Individual Investors, paid his expenses, but no honorarium.

But small turnouts don’t concern Cassidy. He likens himself to a country preacher.

“We’re not going to save every soul on the planet,” he said. “But if you help one, that’s a good thing.”

His remarks in St. Petersburg offered a lesson in balancing risk and reward. “When you’re in or close to retirement, your principal is all you’ve got and you don’t want to blow it,” he said. He warned against the dangers of reaching for high yield, but encouraged the group to look beyond CDs and government bonds, considering such investments as convertibles, preferreds and royalty trusts.

“I hope we can become clearly identified as a source of pure help with no sales or product agenda,” he said.
Cassidy said he’s received a few thousand dollars in contributions and is working on grant proposals.

Although he could just relax and enjoy retirement, Cassidy said he’d rather not: “I’m just a workaholic and a very bad golfer,” he said. “I enjoy teaching and helping. I am financially able to do it and it was a choice of reaching out  vs. just sitting around and reading and trading the family accounts.”

Does it make sense to cash out a $50,000 CD earning 3.75 percent interest to reinvest in a higher-yielding CD?
It might. The calculation is pretty simple. First determine how much extra interest you would earn each month by investing at the new rate. Then find out how much your early withdrawal penalty would be. The final step: Calculate how many months it would take for the extra interest to equal the amount of the penalty. If it would happen before the CD matures, then cashing it in is a good idea; if not, you might as well wait.

Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, write hhuntley@sptimes.com or Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731. Read more questions and answers at blogs.tampabay.com/money.

[Last modified October 29, 2006, 07:54:43]