Where Should You Retire?
<strong>Ryan Ermey</strong>: Whether you're looking for sunshine and surf or snow and solitude, you probably have a pretty good idea of where you want to retire, but will it be wallet-friendly? Sandy breaks down our cover story on our favorite money-smart retirement destinations in our main segment.
<strong>Ryan Ermey</strong>: On today's show, we'll chat about the differences in headline stock market indexes, and a new edition of deal or no deal, cover stimulus checks and interest on tax refunds. That's all ahead on this episode of Your Money's Worth. Stick around.
- Episode Length: 00:36:09
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<strong>Ryan Ermey</strong>: Welcome to Your Money's Worth. I'm Kiplinger's associate editor Ryan Ermey, joined as always by senior editor Sandy Block. And Sandy, how excited are you that we just had the best second quarter in the stock market since 1998?
<strong>Sandy Block</strong>: Speechless, Ryan. That's the only thing I can say.
<strong>Ryan Ermey</strong>: It's been interesting on social media today, watching a lot of people take, let's call them victory laps about the stock market's performance in the second quarter, especially . . . It's like we've all forgotten our math class here, that a 50% decline in a given investment requires a hundred percent gain to get back to even. So despite a record breaking quarter, the S&P 500 is still down 3.1% in 2020. I saw someone tweet, "Congratulations to your 401(k)." Most people's 401(k)s are probably still down.
<strong>Ryan Ermey</strong>: Anyway, I thought it was an opportunity to discuss something that I wrote about in the August issue of Kiplinger's, which is what people talk about when they talk about the market. You might see in a headline, "Stocks have best quarter since 1998," or what have you. And what do people mean by stocks? What do people mean by the market? For most people, you're getting three answers to that, if you're tuning into the radio and if you're sitting in the back of an Uber while they listen to NPR, that's I always seem to be-
<strong>Sandy Block</strong>: On the hour. That's right.
<strong>Ryan Ermey</strong>: If you're checking into your brokerage account, if you're looking at Yahoo! Finance, you're generally getting a three-pronged answer in the form of the performance of the Dow Jones Industrial Average, the NASDAQ Composite Index, which is just colloquially called the NASDAQ and the S&P 500. So understanding the differences between these different indexes is important in understanding which slice of the stock market that you're looking at. And if you're investing in ETFs or index funds, which people increasingly are, it's important to know what you're actually invested in. So over the long-term all three of them do work as market barometers, and they tend to move in similar directions.
<strong>Ryan Ermey</strong>: Over the past 15 years, the Dow has been 97% correlated to the S&P 500, meaning they move in the same direction 97% of the time. And the NASDAQ has been 95% correlated to the S&P. Although lately there's been a pretty big divergence in performance. So we mentioned the year to date return of the S&P 500, that's down 3.1%. The
