← The Clark Howard Podcast
The Clark Howard Podcast
02.17.26 Ask An Advisor With Wes Moss
00:36:24
Should You Use Your “Sacred” Retirement Fund To Save Your Business? & 2026 Jobs Outlook
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- [00:00]
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- [01:37]
Clark Howard
Welcome to Ask an Advisor where we here at Team Clark go deeper on all things investing and saving your money for your future. Chris Adias Wes Moss hello Wes, good to see you Today. A couple really interesting things. First I know you're going to talk to specifically about small business owners and many are feeling a cash crunch right now.
- [01:57]
Wes Moss
What do you do if you have a cash crunch? What are the accounts? What's the right way to solve a temporary valley, let's say in your cash flow and there's a lot of different ways to approach it so we'll talk that through and some of the rules.
- [02:10]
Clark Howard
And then on Friday Clark spoke about jobs, unemployment, his predictions for the rest of the year. But you have some really interesting numbers and a perspective on the latest jobs report. That is a different take than what Clark had.
- [02:25]
Wes Moss
Well, it is we just got jobs numbers and we just kind of played catch up because we really, we've had two, we had a government shutdown and then a partial shutdown and that delayed job numbers and then it delayed it again. And we just recently now have pretty much a full job picture. So we can really do an assessment now. And it's not a glowing report, but it's better than I thought it was.
- [02:48]
Clark Howard
Going to be and different depending on your education level. I saw a couple of years, snuck a peek at a couple of your charts and I'm really interested in what you're going to say about that too.
- [02:56]
Wes Moss
Well, let's start with this. There's so much churn in this economy and there's a variety of reasons. I think that when you go through technological change like we're seeing at such a rapid rate, if you think about the announcements, I follow this and you get a new announcement and it's not, it's not just every week, but in sometimes we'll see new announcements with new AI developments in a day or even two in a given day, one company will release a new way to code quicker, then the next company or competitor will do the same thing in this in later that afternoon. And it may not directly impact every single industry. In fact, there's some industries it doesn't does it doesn't have an impact on, but it's a rumbling and it's a little bit of an economic earthquake. And that filters through to almost almost every industry, at least at some level, some more than others. And I've seen with some small business owners over the past couple of months, people kind of raising their hand and say, gosh, things are impacting my business. And even if it's not AI related, small business owners frequently have to manage cash flow. What if you've got a good quarter going or a good six months going, but your client is late to pay and you want money in 30 days, but they say, well, I'm not going to get it to you until 60 days or 90 days. So that happens all the time, even in a good economy. So this was a situation. We'll call him Connor, small business owner in his 40s, let's say running a marketing agency and has a pretty good Runway for client base and revenue outlook for this year. But someone has been late paying their checks, so he's not getting paid. He has a couple clients that have been delaying their checks to him and paying their bills. So now he's looking around saying, well, I know the money's supposed to be coming in, but it may be, I may have a whole month where I've got to go back to my personal money. And this is the conundrum that any small business owner, I'm sure, has had to at least think about or execute on. Got to go to his own pocket to fund the business. While he's waiting for that lack of cash flow, he thinks it'll get resolved, but it's not going to get resolved in the next week or two. And he has bills to pay. So what does he do? So he looks around and he says, well, I could pull money out of my brokerage account. What should I do that Wes? Or I've got this Roth money, which is a sacred place, It's a sacred chest with jewels on it and you don't want to touch it. But in the end, we got to pay the bills. So the question is, can he tap the Roth account? What should Connor do? The simple, clean way to do this, and the easy answer is you go to the brokerage account. There's no penalties, restrictions, but there are taxes and the market's been strong over the last five years. And his stocks are up, they're all up. And if he were to sell some of those stocks, he's going to pay capital gains. Now the good thing about that is that we know what the rate is and it's lower than the income tax rate in most instances. For him it'd be about 15% only on his gain. So that's one easy way to do it. But he said, well, what about my Roth? Well, let's just do round numbers here. He contributed 15,000 to the Roth, let's call it five plus years ago. The Roth is worth over 50, so. So he's eyeing that. And I said, well, if you need 10,000, maybe brokerage, if you need 10,000, maybe you just take. And we talk about this all the time, but we don't talk about the logistics of this. Remember your Roth contributions, because they're after tax, those are free and clear, you can pull out your contributions, you don't pay taxes on them and you don't pay penalties on them. So in his case, I said, look, if you have 10, if you need 10 to 12,000 to float you through this period of time, just use your contributions. Because if you, even if you can't pay it back into the Roth, which is the next twist on this, which is the 60 day rollover window, then you're still not going to be taxed or penalized. If you're taking the contributions or anything less than that, that is something I want to just want to remind everyone about is that they are accessible. I know it's this sacred chest. Do not touch. But if you need the money to float yourself, particularly small business owners, it is accessible. Contributions can come out tax free, penalty free. Now he said, well, I think I might need more than that. What about the whole account? What about the whole 50? Whoa. What about the whole 50? Well, we know the contributions are fine, but the rest of that, because he's in his 40s, would be taxed and penalized. But here's the key. This is a period of time he needs to cover. It might be a month. The good news is there's a 60 day re rollover window so that if he takes the full 50 out, he has a full 60 days to put that money back in and it's as if it never happened. How does this actually work? You end up getting a 1099R, which is a retirement distribution form. And then you end up with a Form 3, 5498 that shows that essentially that you have a net zero withdrawal because you put all the money back. The nuances around it are, is the 61 days and the whole thing gets blown up. That's gotta be 60 days or less. That's very important. And you can only do this one time per year. You can't float yourself two different times during the same year even if you put the money back. So those are the rules around using Roth money. And he thinks it really will be more like 30 or 40 days. So that's what he's going to do. Take out Roth money, put it back in within 60 days. It's a way to cover a cash crunch shortfall. Float yourself. It's your own money. We just want you to be able to access it in the most efficient way.
- [08:49]
Clark Howard
Okay, this question came in for you from Jefferson. He says, I'm in my early 40s with a portfolio of over $2 million. What are your thoughts on small small caps? Do you feel they're set up for a great run since they've underperformed for so long? I currently have 18% of my portfolio in small cap value.
- [09:09]
Wes Moss
What are your thoughts, Jackson? Over the last five years, here's how it's gone. Ultra mega cap growth has been the right place to be, the best place to be, followed by large cap value, followed by small cap growth growth, followed by at the basement. The bottom of the barrel has been small cap value. It's still done well over the last five years, but it's. If you look at large cap growth, the numbers are double or triple. We still made money, but it hasn't been nearly as much. There is this property. It's almost like gravity in the investment world, which is reversion to the mean over long periods of time. Small caps have actually done better than large. We've had a run where large has done better than small. So the gravity here or the reversion to the mean is very likely that small caps and then categories like small cap value should play some catch up if we get reversion of the mean. Interestingly, in 2026 so far we've seen a real reversion away from large cap into small cap. And you've seen the small cap indices do really well relative to large. And that's not just been 2026, but it's really been towards the end of 2025 that started to happen. So we have seen this rotation already happening. Are we farther enough in to say this is a new permanent reversion of the mean that'll last for for years? Maybe a little too early to say that yet, but at your age, in your in your 40s, having 18% in small cap and some of that in small cap value, it doesn't seem like too much to me what you're doing. You're diverse. It's diversification. Remember, The S&P 500 isn't overly diversified because it's so heavy. 40% of the companies are basically in the top 10 names. So it's not that diversified. In order to be diversified, you're going to have to add in ETFs or funds or individual positions that are in these other categories. So that's really what you're doing. I think it's a good thing. And I don't think 18%, as long as you have a higher risk tolerance is totally fine.
- [11:10]
Clark Howard
Okay. And this one came in from Eric in North Carolina. I was recently cleaning out some old files and found my credit union statements from the late 1990s. So many surprises. I was startled to find my Social Security number on every statement which I immediately shredded. But I was even more surprised to see the interest rates. I had a six and three quarter percent mortgage through my credit union, which was not unreasonable back in the day. But the shocker was that my savings account was giving me 6%. I'm still with the same credit union, which now provides me with a paltry quarter of a percent rate on that same same savings account. What happened with the return of Higher interest rates over the past five years. Why haven't our banks increased the rate of return for these accounts accordingly?
- [11:56]
Wes Moss
Eric, it's unacceptable that that kind of interest rate in the world today. Think about this six and three quarters in the 90s, that was your mortgage rate. That's exact. That's where rates are right now. So why isn't your savings rate paying you that? It has to do with the federal funds rate. The federal funds rate is three and a half to three and three quarters, almost four. And a money market fund right now should be paying 3.5 to 4%. So you're getting hosed by your credit union Social Security statements. It's good that you shredded them. If you really look at the numbers just there were 274 million Social Security numbers that were ousted last year. So I think that there's probably three Social Security numbers for every person in the United States floating around somewhere on the dark web. So it's every one times three. But do everything you can to protect against that. Freeze credit. Make sure you're using multifactor authentication and all your investment and banking accounts. That's kind of table stakes for the world we live in today.
- [12:50]
Clark Howard
Sure. Our health insurance cards used to have them right on them. Medicare cards had them on them forever. I mean they finally gotten that number off of pretty much everything.
- [12:59]
Wes Moss
We need diligence around that in order to. Oh yeah, we just have to know that, that we are have all been exposed many times. Freeze your credit but onto the rate. It is your job now to make sure that if you have a larger chunk of money and it's going to sit in cash and it's part of your dry powder, it should be at least getting 3.5% or higher. In interest rate environment we're in today, banks and credit unions, particularly the large banks, they are famous for not paying you and that's how they make their money. Net interest margin is the biggest thing that that's their biggest revenue source. They want to, they're lending money out at 6 or 7% and if they're paying you 3 and a half percent, they're making a fair amount of money on the difference. If they're paying you 0.25 of a percent, they're making a fortune. So it is incumbent on you, Eric, to make sure that money gets into a money market or high yield savings account. They're not going to do it for you because that's how they make a living. Brokerage firms do this and they it's the inertia of staying still. An object at rest tends to stay at rest. And right now you're at rest. The money market's just sitting there. A lot of functional bank accounts though, checking accounts where there's lots of money coming in and out and writing checks. A lot of times those don't pay much. That's why you want your functional cash. Have enough in there to make sure you can easily pay bills. But if once you have that amount, whether it's 5,000 at all times or 10 or depending on your situation, the rest of the cash, let's say you have another hundred thousand dollars in safety money that should be in a high yield savings account or it should be in a money market and nobody's going to tap you on the shoulder and say, hey, you're losing out here because they like that interest rate spread. So it's on you, Eric. It's on everyone listening to make sure that anything that's substantial above your real just checking checking account number value to be at least working for you. But it's on you to do so.
- [15:04]
Clark Howard
Okay, and then Shelly in Washington sent this one in. Is long term care insurance worth it? Washington state has a mandatory LTC fund. Now. It's a very small benefit. My husband's 60, I'm 52. Should we purchase additional long term care Insurance? He has $1.2 million in retirement assets now, not counting our house. He plans to retire in a few years. I'll retire in 10 to 13 years and expect to have 2.5 to $3 million in retirement accounts by then.
- [15:33]
Wes Moss
Shelley in Washington, they do have a program for long term care. I think it's called something like Washington Cares. And most people in the state of Washington do. Do you kind of have to. Not everybody does, but you kind of have to pay into it. And it's a little over a half a percent. Almost like fica. It comes out of your paycheck, but that doesn't cover a whole lot. I think the maximum over time is something like 35 or 40 grand. So it's not enough for long, long, long term.
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Clark Howard
Oh no.
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Wes Moss
Long term care. But long term care is tough, Shelley. There's kind of these three categories. If you don't have a whole lot of money, then you have less assets to protect and you'll end up at some point maybe even using Medicaid. If you're wealthy and you have 3 million plus, you can self insure your long term care. It's kind of that muddy middle where you have decent assets, but it's too expensive to even buy long term care insurance and there really is no great option. There used to be good options 20 years ago and they were kind of too good to be true. And long term care policies were pretty affordable but they were underpriced and those companies, almost many of them went out of business and they had great financial hardship because they weren't charging enough for the long term care benefits they promised people. And that was a problem. So what happened? The rates are up triple, quadruple, quintuple from where they were when it was quote affordable. But it was also unrealistic. So from the numbers you're telling me you're only 50, you've got another 10 to 15, 10 to 12, 13 years of working, husband's already got a million two, you got two, you're going to have 2.5. I want you to be in the self insured camp. So I don't think you need to go buy a long term care product or one of the hybrid products that gets kind of the least bad option. I want you to think of you having multiple income streams in retirement. Those income streams effectively are your new paycheck for the rest of your life. Social Security rest of your life, pensions the rest of your life. Your investment assets should generate cash flow and income for the rest of your life and that should be enough to pay for long term care if and when you need it. Remember, our other spending goes down. So if you're in long term care, all the other spending kind of goes away. You're not no longer discretionarily spending and traveling so you can refocus your cash flow you've built towards your long term care. That's the camp. Shelly, I'd like to see you in.
- [18:06]
Clark Howard
All right, we're going to take a quick break and we'll get to more of your questions after Wes talks about the latest job reports.
- [18:14]
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- [19:15]
Clark Howard
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- [19:33]
Wes Moss
When you need it.
- [19:34]
Clark Howard
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- [20:07]
Don McDonald
You know what's funny about free financial advice? It's usually the most expensive kind. I'm Don McDonald from the Talking Real Money podcast. For over three decades, my co host Tom and I have been the antidote to the financial nonsense sense that fills the airwaves. We don't sell products. We don't have sponsors paying us to recommend their funds. We just tell you what has actually worked. Backed by decades of academic research, not some guru's gut feeling. Our listeners tell us we're like car talk for your money. Minus the car problems with maybe even more bad jokes. You're already listening to a podcast right now, so finding us couldn't be easier. Just search for Talking Real Money or visit talkingrealmoney.com give us a few minutes. The worst that happens, you're mildly entertained. The best? You stop making your broker richer and start building actual wealth. Just search for Talking Real Money Talking Real Money is an educational podcast. Hosts are affiliated with a registered investment advisor.
- [21:05]
Wes Moss
For disclosures, visit talkingrealmoney.com welcome back to Ask an Advisor. I'm Wes Moss along with Krista Dibias, and we are here to answer your questions. We're going to head into We're Talking Jobs.
- [21:18]
Clark Howard
Yeah. You can submit those questions@clark.com ask and just let us know if you would like Wes or Clark to answer your question.
- [21:26]
Wes Moss
State of the U.S. job market and what it means for investors. We've been in kind of this cloud and fog for the better part of almost six months. If you go back to October, we had a long government shutdown and shut down the bls. We didn't get any jobs numbers. You look at labor data, it almost looks like there's something wrong with the chart because there's literally a gap. The line goes, it stops, disappears, then it comes back. So we've been in a weird state for trying to figure out how the labor economy is doing all at the same time. There's so much changing in the labor economy because of AI. So it's been a really uncertain time. We just received kind of a catch up from that, plus the partial government shutdown. And now I think we're somewhat caught up when it comes to a real picture of the labor market. And when I first saw the numbers, my initial reaction was, ooh, that's not that good. Because there was a giant revision to 2025 numbers. It was almost a 900,000 person revision, lower meaning the BLS reported these jobs. And then they came back and said, oh no, no, it was actually we're almost a million over. And if you look at those numbers, 2025, on average, we only added about 15,000 jobs a month. That's a low number. We want to see 150,000 jobs, not 15. We're missing a zero. Now. It's better than losing jobs. But I would call that a no. No hire slash, no fire economy. It's really just a flat line. Then if you really understand what they were saying is that those numbers and that revision really was. It's very old data. It's from earlier in 2025 and actually goes into some 2024 data. And when it comes to the economy, especially as fast paced as we are today, it's ancient history. So it's not irrelevant, but it's pretty much irrelevant data. What matters is the what's happening right now. And even that's a little bit backward looking. It's even that's a little old. But we just got the January report and again it takes many weeks for the BLS to compile and report. And that is much better news. The if you look at what happened, this maybe we can call it at least the beginnings of a Turnaround. We added 130,000 jobs in January. Unemployment rate down to 4.3%. Historically, that's still super low. The U6 rate, which is the underemployed rate, meaning that you want to work full Time, but maybe you only have a part time job that went down a fair amount as well from 8.4 down to 8%. Wages, which also accompany the job report, they're up 3.7% year over year. So people are making more money beyond the inflation rate. So that's good. And then I always look at the. Remember we did a show on epop, I think we did here, the employment to population ratio of prime age workers. It's the employment of prime age workers to the population and that's at a really healthy level. That's 80, almost 81% of prime age workers, that's 25 plus 25, 50 to 54 that want to be working are working. So that's a really, really good number. I would say that in totality that it's a pretty good jobs report. I think that's good news. I Look at the US EPOP ratio and I went back to 2021, it was around 76 and a half. Today it's at 80.7. That's a 5.6% jump in prime age folks being employed, that's a big move. And that's the number that I think that says the most about the economy. The next piece of the equation is looking at the unemployment rate per. And I always find this fascinating, per education level. And if we look at where we are today as education rises and every time I hear about college isn't worth it and college is too expensive, I think about the way the job numbers really shake out because we hear that number of 4.4% unemployment, but it's made up if you break it down by education level. As education levels go up, unemployment levels go down. They go way down. In fact, if you have a college degree or more, the unemployment rate is only 2.9%. So if you have less than high school, it's 5.2 high school only, it's 4.5, some college, 3.5% unemployment and then college or college plus 2.9%. We have seen though even the educated group and the BLS measures all these independently. That has crept up just a little bit. So we're not out of the woods. And I think we're going to continue to see some churn as job roles change because of artificial intelligence. You hear of 3,000 layoffs or 7,000 layoffs. That's like chum in the water for the, for media. Because there was a story about Pizza Hut closing stores. It was 200 stores closing. And I looked up how many Pizza Hut stores there were. There were there's almost 20,000 of them. So they're not going to say 1% of pizza stores are closing. They're going to say 200 are closing. That's where we are. We get the establishment or payroll survey, then we get the household survey. And from that number we get this 4.3% unemployment rate, the 8% underemployment rate. But the bigger economic backdrop to me says that if this sticks or this holds and we have rising labor force participation, we have wage growth, still low overall rate, strong employment to prime age employment, numbers that all supports consumer spending and that supports an economy that's really not even close to recessionary territory. And then that means that the Federal Reserve is less worried about lowering rates. I think the report tells me, and this is what impacts investors. We're in a stable interest rate environment. I don't think we see rates go much lower from here. The Fed just doesn't need to lower rates all that much, but they also don't need to raise them. So we're in kind of a stable environment, which I think is. That's a good thing for bond investors. It's also a good thing for equity investors because it means that if the Fed isn't lowering rates, it means we're in a pretty darn good or strong economy. So the corporate profits get to continue to grow, the consumer continues to spend, and that's good for equity markets. So I think the bottom line, pretty good job numbers that we're gonna have to monitor, which is in turn really good news for your 401k.
- [28:11]
Clark Howard
Okay. Would you like some questions?
- [28:13]
Wes Moss
I would love it. Just fire away.
- [28:16]
Clark Howard
This one came in from Chris in Florida. My wife's a public school teacher and I work at a public state college. We've both been working in our jobs for 25 years and we'll both turn 50 this year. We both contribute the max to Roth IRAs through TIAA CREF. We also have been contributing to the Junkie 457 403B funds offered by our employers with no match. We have too much in savings and feel we need another investment vehicle. Would our next best option be to Open a traditional IRA? Or would you also recommend our moving our 457 and 403B accounts to the traditional IRA if the fees are high?
- [28:55]
Wes Moss
Chris in Florida, as I'm writing 403B and I did unhappy face, upside down smiley face because it's. You're the one that's saying it. I mean, but yeah, some of these four 3B accounts can be crap. Yes, they are teachers, they're annuity based, they're super expensive and people just don't like them. I see that all the time. And then the four. Now the 457, Chris, in the state of Florida for you guys, and you're in, you're a college teacher, your wife, it sounds like, is a public school teacher. The 457 should be a little bit better option. Usually the state plans are less expensive and if you can lean towards that, you're probably better off long term. But while you're working, if you're under the age of 59 and a half, it's really hard to move these. A lot of cases, you just can't move them. The IRA is probably not a good move because a traditional ira, because you already have probably a relatively high income, both being employed and you're contributing to the, and you have the 403, you're probably not getting any sort of deduction for the ira. So you end up making after tax non deductible IRA contributions. And that gets messy. So I don't think that's the path you want to take here. The eventual path is that once you're 59 and a half, you may be able to do an in service rollover to an IRA and then you get to control your own destiny for the 403. I don't know your exact plan, but it's possible. And I would ask your, the HR group or the benefit group if you're able to do that now at your age. And then you could have an IRA and you almost unburden the high fees. If you're, again, if you're allowed to do this for your particular 403B. But you're not wrong to want to get this into a more efficient, less burdensome retirement plan. Chris, you, you've got a retirement plan. It's kind of like running in the beach in wet sand with a weight on your back. And this is not good for your long term appreciation. So try to get it into a lower fee environment if they'll allow you to do it.
- [31:01]
Clark Howard
Okay. And Deb in Texas says you had a listener by the name of Rich that retired in his late 40s and by all accounts sounds like he's doing great. My question is, he mentioned he expected over $80,000 from Social Security. So when Social Security is paid out, it's locked at the last 35 years of earned wages. If he hasn't had 35 years, the additional years are counted as zero and benefits are Averaged from there. I can't imagine he had 35 years of high income since he retired so young. And Social Security would pay out over $80,000. Am I missing something?
- [31:35]
Wes Moss
Deb? She's auditing our list of questions. I love that. Deb, on the surface, you're totally. I think your instinct is totally right. But there's a couple of things here I bet you and I don't remember this exact question, but Rich, when he said 80k in Social Security, it's probably for he and his wife, probably two social securities, which would mean they'd both be around 40k a year. That's totally possible. But to your point, Deb, wait a minute. If he only worked 30 years, then you got five goose eggs. Social Security averages your 35 top years. So even if you have. You max it out for 30 years, if you do the just the simple math, if you have five goose eggs, 30 divided by 35, I want to say, is 85. So in your mind you're thinking, wait a minute, shouldn't that be a 15% reduction in Social Security? Deb, your instincts are right. But guess the one missing variable here is the fantastical math done by the Social Security administration. It is not a perfect straight line calculation here. And I've looked at this because I've had a lot of people over the years ask me, like, what if I don't work for a year and I only have 34 years or 33 years. Is that goose egg the zero income year? Does it crush my Social Security? And the answer is it doesn't nearly as much as you might think. If you have, if you max out, and this is all hypothetical, but if you max out for. Let's say Rich was 49, late 40s, and he's working since age 19, 29, 39, 49. So he's got 30 years and he happened to be a really high earner in all those years and maxed out still. And even in those younger years, remember, Social Security goes back and adjusts for inflation, so he probably gets a little bit of a lift there. But if you max out over 35 years and you wait till your full retirement age and you get 4,200 bucks a month, then $4,200 a month. 4,200 times 12 is 50 grand times 2. So, yeah, you can easily get to 80. But even if you miss three years, it doesn't drop by 15%. I'm sorry, even if you miss five years. I've looked at this in the calculation that somewhere in the 5 to 7% range is what I see. People drop even if they have some goose egg years. So he could easily be getting 3,800 bucks a month. And you multiply that by 12 and then that by him and a spouse and you're over 80. So it's totally possible, Deb. But you're right to ask. Thank you.
- [34:07]
Clark Howard
All right. And this is from Mitch in Ohio. I've had investment retirement accounts with all of Clark's favorite children plus others, but I've never seen any that showed the full gain and loss of owning an investment. In other words, not just the difference between the purchase cost compared to that day's trading valuation, but also including all the income the investment has produced since I bought it. For example, if an Investment is worth $1 less than when I bought it but is paid thousands of dollars in dividends when I owned it, then I obviously gained by owning it. But the brokerage shows only an incomplete sales based gain loss, especially for retirement accounts for which there are no capital gains taxes or tax loss. Harvesting this incomplete sales based valuation really complicates decision making.
- [34:54]
Wes Moss
Totally right, bitch.
- [34:55]
Clark Howard
Where can I find a more complete analysis of a genuine gain or loss from owning an investment? And as a related question, maybe one that's impossible to answer, why don't any of the brokerages offer this type of analysis for retirement accounts?
- [35:09]
Wes Moss
Mitch? Totally, totally right. And it is the number one misdirected question I get when it comes to performance. Shouldn't we sell this XYZ thing or shouldn't I sell this fund or this ETF because it looks like it's made no money? Why? Probably because you're not counting any of the income and the big brokerage firms just don't have a good way to do that. I don't know why. I think it has to do with tax, the reporting. You can go in on most big platforms and you can see all your reinvested dividends. So you may have 100 reinvested dividends or let's say every quarter you get a dividend times 10 years. That's 40 reinvested dividends. And it'll keep track of how that reinvested lot did. But it doesn't give you your overall rate of return, it doesn't give you total return. And I don't know why I would think you could find this somewhere. But the industry uses secondary platforms in order to see total return. And they'll use big software plat companies like Black diamond as an example. Orion is an example and that's A, that's a software that is overlaid to investment accounts because it's tracking total return, which is growth, which seems to be the only thing that most of the big brokerages monitor. And income. If I have a bond or a bond ETF and I put 100 grand in it in 10 year, it pays me 6% per year. So I got 60 grand worth of interest. But at the end of that 10 years, the bond itself is still $100,000. Almost every brokerage firm I know shows a zero percent return. So Mitch is, you're totally right, but you're missing $60,000 in income or a 60% return over that period of time. So you're right. It's misleading. It's like, well, this isn't really doing. This isn't good. But when in fact it's actually very good. I don't know the right answer, except I don't know how to solve it. I know why. Charts that I use, you can find the price return and total return. I know Bloomberg does that, but those are pretty high price. Those are super high priced subscription services. And then the portfolio management software is not inexpensive either. And that's usually for companies. So the reality, and I've gone onto, let's say Google Finance or free platforms and they don't do the total return very well. You're just going to have to be really mindful of that. It actually makes it even worse with mutual funds because mutual funds do pay out distributions and then they raise your basis and it makes it look like your rate of return is even less. So it's very misleading. Mitch, my best answer right now, and for everybody watching listening, is to do not forget your income when it comes to calculating your total return. It matters.
- [38:03]
Clark Howard
All right, well, that does it for us for this week's version of Ask an Advisor. We'll be back one week from today. Clark will be back tomorrow with a new show and hope the rest of your day is great.