For 29 years, Rich Guerrini has worked at PNC Investments, a broker-dealer subsidiary of PNC Bank, which has a market cap of more than $50 billion. For the past 11 years, he served as the president and CEO of PNC Investments, and before that he was the executive vice president and managing director of alternative investments at the firm, as well as a financial adviser. With all his varied investment experience, we decided to ask him what people need to know about retirement planning, his current take on CDs, and the most common mistakes he’s seen investors make. Here’s what he told us.
CDs are a ‘solid alternative’ right now thanks to rates in the 4% to 5% range.
“We haven’t had attractive CD rates for the past 10-to-15 years when rates hovered around zero. For the first time in that same timeline, investors can find CD rates that are in the 4% or 5% range, and they’re a solid alternative because they offer safety of income, they’re guaranteed and they reduce exposure to market fluctuations,” says Guerrini. (See some of the best CD rates you may get here.)
That said, Guerrini notes that while investors should consider CDs for a guaranteed portion of their investment strategy, CDs shouldn’t be the only piece of an investment strategy. Indeed, CDs can be good for shorter-term goals, but for longer time horizons, you may want to consider potentially higher returning investment vehicles like mutual funds. (Looking for a new financial adviser to help with your investment strategy? This tool can match you to an adviser who may meet your needs.)
Many people miscalculate the cost of retirement — a plan with real numbers is key.
It’s also important for people to understand that they must have a real estimate of their budget in retirement. “Many people think their spending and budget will drastically reduce during their golden years and that’s just not the case. The reality is that when inflation and other factors are calculated into a plan, their budget doesn’t reduce drastically. Sitting down with a financial professional can help investors decide how healthcare will be handled or even when to claim Social Security,” says Guerrini.
Furthermore, going into retirement, investors need to have a plan in place. “Many people don’t take time horizon into consideration when planning for retirement. If they enter retirement at the age of 65, they may have 20 years left from a life expectancy standpoint. This means they’ll have to find a way to navigate their finances for 20 years,” says Guerrini.
Don’t try to time the market: ‘It’s virtually impossible to do.’
“It’s virtually impossible to do, and we know from looking at current market conditions, it would have been very easy to be sitting on the sidelines due to the volatility we experienced in 2023. If an investor was sitting on the sidelines, they would have missed a decent run up in the past few months. A lot of main street investors don’t have a plan or strategy in place, so they like to buy when the markets are up and sell when they’re down,” says Guerrini.
Don’t put all your eggs in one basket.
“Another common mistake investors make is chasing home runs because they think they might hit one picking an individual security. In order to limit downside and participate in the upside in a more controlled manner, investors should have a diversified portfolio of investment instruments that participate in equities, stocks and fixed income bonds,” says Guerrini.