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- [00:02]
Clark Howard
To realize the future America needs. We understand what's needed from us to face each threat head on. We've earned our place in the fight for our nation's future. We are Marines. We were made for this. I'm so glad you're with us here on the Clark Howard Show. You know, our mission is to serve you with advice and information that empowers you so you make better financial decisions in your life. Life coming up, straight ahead. We are in the strangest time when you are trying to build financial security for your future. Expenses of investing are the lowest they've ever been on one hand. At the same time, we face enormously high expenses and other choices we could make with investing. I want to tell you what to watch out for. And then coming up later, AI is talked about all the time and a lot of it is scary, a lot of it's possibly true and then some of it is scarelines. But one area where AI is going to play a bigger role is in health care, including what role AI may have and you trying to self diagnose. I'll talk about that later. So with investing, it's amazing how much cheaper it is. When I first became an investor, well, way long ago in the 1970s, the cost of investing was crazy high. Pretty much not even. You can't even come up with numbers to compare how expensive it was for you to buy a mutual fund, to buy stocks, to do anything in the investing world back before the Internet and back before the competition that exists today for investing. I was reading recently that Vanguard now has an average cost of its mutual funds of 6, 100 of 1%, which is so cheap, that's what they charge you over the course of a year to manage the money that you have in that fund that's so cheap that it's basically free. And speaking of free, Fidelity Investments has their 0 funds that actually are free. Fidelity uses them as almost like an advertising vehicle, a promotional vehicle to bring in new clients or bring in more money from clients, giving them a small group of funds that you can invest in commission free and fee free so you get 100% of the return of whatever you're investing in. And stock trading now routinely essentially free. And it used to cost hundreds of dollars in commissions just for you to buy a stock and now that same transaction free. And then at the same time we've got that going on. We've got all these games and gimmicks going on from non fiduciaries trying to sell you junk that has ultra high fees and all the pitches trying to get you to do private placements and private equity where you pay massive commissions up front. And then if the investment makes money, you give up an addition 20% on average what your return would be. So you're paying humongous fees. And then you got the insurance people trying to con you into thinking that insurance is an investment and telling you how great it's going to be for you to pay their huge fees that are not disclosed with commissions up front. That can be the entire amount that you put in the first couple of years in an insurance product and then massive ongoing expenses. And don't even get me started with the cuss word and we're a family show, you may need to cover your kids ears. Annuities. Annuities are why the insurance industry fought so hard and spent so much money on lobbyists and gave so much money to politicians that the insurance industry would not have to behave as fiduciaries, meaning that they would have to do what was best for you as a customer, as an investor. And as a result, the insurance industry has won. The American people have lost and people continue to be sold piece of junk annuities with gigantic upfront commissions and ongoing expenses and then what are known as surrender charges that can leave you 10 years later with less money than you started with, even if the investment markets have gone up over those years. But I do even have some hope there. On the piece of trash annuity market, there are a small number of fiduciary financial planners that are selling commission free annuities. And over the years, if an annuity is in fact appropriate in your life, and a fiduciary would only recommend it if it was an appropriate tool for where you are in your life, that annuity will be much better because it won't have fee after fee after fee and it won't be a junk one that's being sold by some salesperson so he can get the free trip to Hawaii from the insurance company. And there he is sunning himself on the beach in Hawaii or on a junket to Europe and having so much fun sending the pictures back home to family. And you paid for that and your future security paid for that. So the point I want to make is how important it is that if you do pay for advice, that you make certain that you're dealing with somebody who has signed a fiduciary contract with you, that he or she is legally duty bound to do what is right for you and not what lines their pockets. Second, that investing is there for you at even zero cost today. And a lot of people intimidated by the terminology or what's going on or whatever, feel like they've got to go to that friendly person who says, oh, I'm going to take care of you. Take care of you for sure. And remember the snake in the grass investment arms of banks that very rarely are truly fiduciaries. And if you're going to ever use a financial arm of a bank, know their costs are higher and often they are not working for you. They're working for whatever gets them the most commission. Now it's possible you could be with an investment arm of a bank and they play it clean and straight, but you got to make sure they've signed a fiduciary agreement with you.
- [07:57]
Krista
Krista okay, Scott in Colorado sent this question in for you think I'm going
- [08:01]
Clark Howard
to be person of the year for the life insurance industry, the annuity industry or the banks?
- [08:08]
Krista
It's a tough call. I'm not sure.
- [08:11]
Clark Howard
0 for 3 on that, right?
- [08:13]
Krista
I think so. It's like the opposite of your favorite children.
- [08:17]
Clark Howard
They are.
- [08:18]
Krista
Okay, well, Scott in Colorado wants to know this. He says, I recently cashed in some EE savings bonds that were near maturity. I know earnings from these bonds are tax free if they are used for a qualified education expense. My question is can I use the proceeds from the savings bonds to fund my granddaughter's 529 plan and not have to pay taxes on the earnings?
- [08:40]
Clark Howard
The answer is yes, as long as you jump through like eight hoops. There's an income limitation hoop. The designation originally of ownership of the EE bonds has to be done within a tight time limit and there's a lot more than that. But the answer is yes if you meet all the requirements. There's also an IRS filing you have to do with your return if you do convert EES to a 529 account. It's one of those things that yes, it's possible. Yes, it's a great thing to do. But you got to make sure you meet all the requirements. The best guide to this is one that was written originally and has been Continually updated by savingforcollege.com if you go to saving for college, you'll be able to search their briefing on converting EE's or Series I savings bonds into a tax free essentially exchange into a 529 plan for the benefit of your granddaughter. And I hope you meet all the requirements.
- [09:54]
Krista
Jared in North Carolina says is the no medical evaluation life insurance from banks and insurance companies legitimate.
- [10:01]
Clark Howard
What a great Question. Okay, this is weird. This morning I was eating a bagel and a nice woman came up to me and was talking about how her grandmom was filling out an application for one of these. And she asked me was it any good? And she told me what it was. I said, no, I'm sorry, that one's junk. Don't let her send it in. When you refer to the no medical exam life insurance market, there's the old dirty way and the new clean way. So let's deal with the dirty way first. They advertise very heavily on nostalgic TV shows. What they're pitching is that, hey, you know, you're worried about what's going to happen when you die. You know, burial costs, things like that. And no one will be turned down. Just apply right now for this life insurance. So those policies pay no benefit, usually for a minimum two years. So you paid in the premiums. You think you're going to be providing peace of mind to your children and poof, you got nothing in that waiting period, which is usually a couple of years. Now that is the old dirty way. The new clean way is ensures that do instant medical underwriting of you using industry databases instead of putting you through a normal medical exam where nurse comes and sees you and takes blood sample and other stuff, urine sample, all those things. And the instant issue market in that case is legit. We have a brief guide on clark.com how the the legitimate instant issue market works. Now remember I said your question was no medical exam. So there is no medical exam with the legit market, but there is a medical background check on you on because so much data, in spite of hipaa, so much data is out there. They're able to in the overwhelming percent of cases calculate risk and you get real insurance issued almost immediately.
- [12:28]
Krista
Matthew in Tennessee says, previously I've linked my Venmo account to a throwaway checking account to limit the blast radius of a hack under your recommendation.
- [12:38]
Clark Howard
Okay, I love that sentence.
- [12:41]
Krista
That was beautifully the blast radius. But recently when making a payment, I saw an option for using Amex Send and split on Both Venmo and PayPal. I tried it. It was quick and easy. And it posted the charge to my Amex credit card. No credit card rewards, but no fees either for someone who pays his credit card in full every month. What's the catch? Is this more secure? Do we need to get any consumer protection since it's going through the credit card account? Can I unlink Venmo from my checking account entirely now?
- [13:13]
Clark Howard
Yeah, you know Somebody else had asked me about send and split. Have you ever looked at it?
- [13:18]
Krista
I haven't used it, but I do think it's, I mean it's an interesting way to do it.
- [13:22]
Clark Howard
And then if you completely legit and
- [13:24]
Krista
then if someone wants to pay you, you can receive the payment as a credit on your American Express bill.
- [13:29]
Clark Howard
So American Express has done this as like a broadening of their banking kind of umbrella. And people don't want to use a credit card, typically with Venmo or Cash App because of the fees involved. American Express is absorbing it, taking on credit risk, but you're getting no membership, miles, points or cash back or anything like that. So what you're doing is from what I know is completely a great alternative to my whole thing about having the cordoned off separate bank account with usually with an online bank where you don't pay any fees on that, where your money's not at risk. And the issue with it, I saw online before is that American Express limits how large your transactions can be and how many you can do over a month to limit the risk to American Express. But for routine kind of Venmo transactions where you're just sending, you know, $20 here, $50 there, a hundred dollars there, absolutely, the American Express send and split is a great alternative and probably superior to the advice I've given over the years to people who have an American Express card eligible for spend and split. You just got to pay your bill. Coming up ahead. AI AI AI AI. Now is becoming part of medical care. How do you fit in as a patient, as a consumer?
- [15:12]
Schwab Announcer
Investing with Schwab is like spending a Saturday at a great farmer's market. You can fill your reusable tote with a bit of everything. Maybe you go for some free range self directed investing or perhaps you pick a few farm fresh trades while you peruse. You can even get help from a dedicated advisor. That's full service wealth management. Mix, match and change your mind whenever you want. Because at Schwab you can invest your way. No matter your goals or appetite for investing, Schwab has everything you need all in one place. Visit schwab.com to learn more. This episode is brought to you by Coastpay. Coastpay is giving listeners up to $2,000 credit for your business when you get started. Today, spending on gas, materials and more can earn you up to $2,000 credit if you manage a crew, construction, H vac, landscapers, whatever. You already know when your guys pay for gas and materials and it causes all types of issues Cards get borrowed. Trucks fuel up when they're parked in the yard and your accountant is chasing you for receipts at the end of the month. Coastpay fixes all of that. Coastpay is the modern fuel card and expense management tool built for fleets. This isn't software built by someone who's never run a crew. Fuel maintenance materials are now all on one card with real control and instant visibility. Set real time spending limits for every driver or vehicle. Fuel only fuel and materials certain days or certain hours. You decide and coast enforces it. You see every transaction the moment it happens. No more end of month surprises. If someone tries to fill up at an odd time or buy something outside their limit, you'll know instantly. Fraud protection actually works on Coast. No shared pins, no missing receipts, no guessing employees check in by text. Coast verifies the purchase and you stay in control and your accounting team will thank you. Automatic receipt capture and cleaner data means month end goes from a tedious multi hour project to a quick review. Unlike old fuel cards, coast works everywhere. Visa is accepted every gas station, every brand, every time. Your drivers aren't detouring just to find one station that takes your card. There's no contracts, no commitments, just a smarter, simpler way to keep your operations tight and and your crews moving. Right now, CoastPay is offering our listeners up to $2,000 credit. When you get started at coastpay.com wealth, go to coastpay.com wealth to see how you can earn up to $2,000. Credit terms apply. That's cospay.com wealth. The Coast Visa commercial credit card is issued by Celtic Bank. All card accounts are subject to credit approval.
- [17:42]
Don McDonald
You know what's funny about free financial advice? It's usually the most expensive. Kind of 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 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.
- [18:33]
Clark Howard
Just search for Talking Real Money.
- [18:36]
Don McDonald
Talking Real Money is an educational podcast. Hosts are affiliated with a registered investment advisor. For disclosures, visit talkingrealmoney.com Investing with Schwab
- [18:44]
Schwab Announcer
is like spending a Saturday at a great farmer's market. You can fill your reusable tote with a bit of everything. Maybe you go for some free range self directed investing or perhaps you pick a few farm fresh trades while you peruse. You can even get help from a dedicated advisor. That's full service wealth management. Mix, match and change your mind whenever you want. Because at Schwab you can invest your way no matter your goals or appetite for investing. Schwab has everything you need all in one place. Visit schwab.com to learn more.
- [19:13]
Verizon Announcer
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- [19:44]
Clark Howard
We're in early innings on the role of AI with healthcare and there was a lot of Fuss recently because ChatGPT, which is I think the most popular consumer version of an AI assistant that consumers are using now, has a health outlet chat GPT Health where you can ask medical questions. And I read a story from a tech person who took their Apple Watch health data, ran it through the chat GPT Health and it let them down. Well, unfortunately a lot of rabbit holes that turned out not to be. Well not to be accurate based on the reporters findings, but we're in early early innings and people in medicine are using AI assistance AI tools a lot in medical research, trying to figure out something that might take months of research from graduate assistants letting AI test different theories in just minutes. And so these AI tools have the potential over time and in the right hands of significantly enhancing medical research. I'll give you another example. This is different than Dr. Google where Dr. Google any of us at any time are two clicks from cancer. It's just a fact. Try it. List any Kind of aches and pains. And Dr. Google will quickly have you figuring you've got weeks to live or something. But the technology that is going to be in our hands as consumers is not a replacement for you going to a doctor. But how about finding the right doctor, potentially family member has an ongoing chronic disease and needed to go to a medical research facility instead of traditional medicine. And so she started using Claude, which is another AI assistant, and was able to find three different medical centers in the United States where advanced research was being done on her chronic illness. Not only did it say where the most advanced research was going, it talked about what areas of that chronic illness the various researchers were working on and who at the three medical centers was the lead researcher on that. And then went through quite a process to get an appointment with one of those researchers because there are times that you'll have a chronic illness that you just don't seem to be getting anywhere with traditional clinical care, not the fault of the hardworking doctors in clinical care. It's just they're busy and the latest cutting edge research they may not know about. And that's the kind of thing that's just one small example of where AI can be a benefit in being a patient advocate. Advocating for yourself or advocating for a friend or a loved one is if you're running into a wall with medical care, knowing where better care may be available. I talked before about people who use the Kardia mobile, which is not an AI tool, but it's one that is able to Track with a 6 lead consumer device daily what's going on with your heart. I have a brother who has an AFIB problem and he uses the cardia every single morning. The medical center he goes to is a cooperative facility with cardia and they get a report on him every morning. And if his daily EKG is showing a bad pattern, it goes straight to his cardiologist and then the cardiologist knows otherwise. You know, heart patients so often die because between visits something will be wrong and nobody knows. And we're going to have more and more of this kind of thing where consumers are able to get access to real information that can save their lives or improve their health. And it is going to be a process, a hit or Ms. Like Dr. Google, but absolutely big changes here. I should have said Kardia is spelled K A R D I a cardio mobile. And for people who have ongoing concerns about their heart, don't buy the cheap cardia. Buy the one that does the full six lead that was medical advice From a medical idiot.
- [24:58]
Krista
Well, you know, Clark's telling you to spend the money. Spend the money. That's what I would say, too.
- [25:03]
Clark Howard
Yeah, but I mean, let's face it. My understanding of medicine is nothing.
- [25:08]
Krista
I wouldn't say that.
- [25:10]
Clark Howard
It is. It is nothing. So if you are a medical professional, you're a doctor, you're a scientist or researcher, and you're like, clark, when did you go to medical school? I didn't.
- [25:23]
Krista
All right, let's go to some questions. Nancy in Wisconsin sent this one, and like you, I'm a huge fan of Aldi. Recently I began noticing something and I want to get your opinion. In their weekly ad, some items have a red circle with the words price drops. Other items just have a price. I assumed that everything in their ad was a special price just for that week. But when I see price drops, I figured they were lowering the price long term for. For more than a week. I learned the hard way, this is not true to me. If they had their regular items on sale, then mark them as sale price. And their special items there for short term can be in the ad marked get them while they last, or something to that effect. I feel like Aldi's doing bait and switch with their pricing or purposefully trying to be confusing. What do you think?
- [26:13]
Clark Howard
I think they're confusing, but not on purpose. And your advice is, is well taken. So all defines is what they call the items that now you see them, now you don't. And then why they don't just don't say sale. When something is on sale and they call it a price drop. I don't get it either. But what I do know is people are getting the Aldi thing. Do you know they're opening a new location in the United States roughly every other day now.
- [26:46]
Krista
Wow, that's insane.
- [26:48]
Clark Howard
So came to the United States 50 years ago, to the Midwest, and Aldi really struggled in the United States for a good while. They really didn't understand American consumers. And they worked at it, worked at it, worked at it, and now they're booming and they're in, I think like 35 states now or something like that. They're growing like a weed. And I know there are people going in Aldi and just can't stand it. They don't get it. They don't like it. You have to bag your own groceries. The stores can be disheveled, but. And everything is store brand almost 100%. But the prices are dirt cheap. And that's why I wanted to name our last dog Aldi. But got outvoted by our social media audience in the contest. Aldi lost to Kirkland Signature and Kirk's an adorable dog. Kirk is an adorable dog or doglette. Yeah, all nine pounds of Kirk because Kirk almost died at birth and and barely survived. And Kirk's siblings are all about £40 and Kirk is generously a nine pound dog. Maybe.
- [28:06]
Krista
Marianne in Florida says we've been saving money for our three grandchildren ever since they were born. They're now 10, 17 and 20 years old. Rather than money up front for college, we want to see that they are serious about getting a good education and graduating. Our daughter believes the kids should have no student loans and is of the opinion we should give them all the money up front for college. Growing up, my husband and I paid for our own education and it meant so much to us at graduation because we achieved it on our own. Any thoughts on dispensing savings to grandkids once they graduate, we would provide them the money to pay off their student loans.
- [28:44]
Clark Howard
So Marianne, there's an old expression, he who has the gold makes the rules. And if you're being kind and generous enough that you're going to absorb the cost of college for these grandkids when they complete, I think your daughter should say thank you. And you know, I'm a big believer in the 529 plans. You could set up three 529 plans, put money in them you get for the 10 year old, it would really matter because you get some growth over the years. 17 and 20 year old, really, not appreciably. But the student loans, if any of your grandkids go to really expensive colleges, the new cap on borrowing under the federal student loan program is very tight and it won't pay for four years of college in any way unless somebody goes to, they don't go to sleep away school, they go to community college or a local college that is a state school, then yeah, you could stay under the federal borrowing cap. So I would say since you're the ones being so generous that all three kids can borrow up to the federal limit and beyond that you would go ahead and pay. And when they graduate successfully, that successful graduation you would wipe out the 50,000 I think is the limit now for each of the three children. Imagine where your son and mine go. 50,000 is gone in oh my goodness, like a semester and a half. And it's a state school.
- [30:32]
Krista
Not our state though.
- [30:33]
Clark Howard
Right.
- [30:34]
Krista
Craig in Colorado says Clark has commented about high fees for HSA accounts. What I don't know is how much constitutes a high fee? I haven't paid fees with my employer, but after I retire soon, my HSA administrator will start charging $2.75 per month. Is this considered a high fee? And if yes, is it possible to move the entire account to a lower fee administrator without triggering taxes?
- [31:00]
Clark Howard
Okay, we got a lot to say here. First of all, what you earn on your savings in the employer provided HSA is one of the hidden fees. It's probably near zero that you earn on your savings. If you do any investment options through them, they tend to have extremely high fees. And then you talk about the salt of the wounds. If you're no longer with the employer, you're then going to pay about $35 a year in junk fees just to have the HSA. So, yes, you can transfer funds in your HSA from the crummy employer provided HSA to the excellent plans at Fidelity Investments. Now, there may be somebody else who offers really outstanding HSA plans other than Fidelity, but they're the only one I've seen in my research that offers an incredibly outstanding HSA account. So while you're there, still with that employer, you can move money out of it to Fidelity, and when you're no longer with that employer, you can move the remainder all to Fidelity. And at the time when you may change employers, there could be another better HSA choice out there. But what employers are looking for with an HSA plan, they're looking for something that's the easy button that costs the employer as little money as possible. And they're not really paying attention to how most of these employer provided HSA plans have all kinds of hidden fees and obvious fees when you invest with them that are really bad ugly. And your HSA can end up with a smaller balance over time, particularly if you invest through employer HSA than through your own independent one with Fidelity, just because of the fees. And I wanted to mention when I said the thing about Krista and me having a child at the same state university, it's not the same child we each have. Our sons are each at Auburn University War Eagle, both sophomores completing their sophomore year right now. Just wanted to clear that up. Krista didn't want people to think there was something about us that I didn't even think about it the way I said it.
- [33:37]
Krista
Okay.
- [33:38]
Clark Howard
I thought later, wow, people are going to think, wow, Clark and Krist have a kid together. No, we don't.
- [33:45]
Krista
Nope.
- [33:50]
Clark Howard
Anyway, have an absolutely wonderful day today. And on Wednesday, we're going to be back serving you with more empowerment for your wallet so you can save more, spend less, and never, never, not ever get ripped off.