05.06.25 Ask An Advisor With Wes Moss

Summary

The Clark Howard Podcast – Episode Summary: May 6, 2025
Title: Ask An Advisor With Wes Moss
Host: Clark Howard
Guest: Wes Moss, Fiduciary Financial Advisor
Release Date: May 6, 2025

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Introduction

In this episode of The Clark Howard Podcast, host Clark Howard welcomes fiduciary financial advisor Wes Moss to the segment “Ask An Advisor.” The discussion delves into critical personal finance topics, primarily focusing on the viability of buying a home in the current market and essential questions to ask when engaging with a financial planner. Listeners are also invited to submit their finance-related queries, fostering an interactive and informative dialogue.

Is Buying a Home Still a Good Investment?

[00:33] Wes Moss:
Wes Moss opens the conversation by addressing a frequent listener question about the current state of the housing market. He emphasizes that while housing remains a strong long-term investment, the decision to buy a home now must be weighed against market volatility and personal financial stability.

Key Points Discussed:

1. Long-Term Stability:
   Moss underscores that housing typically serves as a “forced savings plan,” offering stability and protection against inflation over a decade or more. He notes, “housing is a way to protect against inflation” and highlights the significant financial relief homeowners experience when their mortgage is paid off, particularly in retirement.

2. Market Volatility and Trends:
   He illustrates that while housing prices generally appreciate by 3-4% annually on average nationwide, short-term fluctuations can be substantial. Referencing the period from 2006 to 2016, Moss explains how housing prices plummeted post-financial crisis and took years to recover, cautioning against the assumption that buying a home will always yield immediate profits.

3. Leverage and Investment Growth:
   Using a hypothetical scenario, Moss demonstrates the power of leverage in real estate investment. For instance, purchasing a $500,000 house with a 10% down payment ($50,000) can result in significant appreciation and returns. He states, “you get a lot of leverage” and explains how this can lead to an impressive compounded rate of return over time.

4. Current Market Conditions (2025):
   With housing prices having surged by 50% since 2020 and mortgage rates being historically high, Moss acknowledges the challenges for prospective buyers, especially younger individuals. However, he maintains that for those with a long-term horizon, buying a home remains a sound investment strategy.

Notable Quote:
[07:30] Wes Moss:
“There’s nothing like being in retirement with your shelter paid for. It opens up spending freedom dramatically.”

Five Essential Questions to Ask a Financial Planner

Transitioning from the housing market discussion, Wes Moss introduces the framework of the “Five Ps” — five critical topics to address when working with a financial planner. This segment provides listeners with a structured approach to evaluating and collaborating with financial advisors.

The Five Ps:

1. Planning:
   Moss emphasizes the importance of defining clear financial and life goals. He advises, “If you were to ask your advisor right now, what are your three top life or financial goals,” encouraging introspection and deliberate goal-setting.

2. Portfolio:
   Aligning investment strategies with personal goals and risk tolerance is crucial. Moss discusses balancing aggressive and conservative portfolios to meet individual financial objectives.

3. Protection:
   Protecting assets through insurance is vital. Moss highlights the necessity of umbrella insurance and life insurance, especially for business owners to ensure business continuity in adverse events.

4. Passing It On:
   Estate planning and legacy considerations are essential. Moss advises on trust planning and tax-efficient methods to transfer wealth to future generations, ensuring that financial legacies are preserved as intended.

5. Paying Yourself and Paying Taxes:
   Efficient tax planning and structuring withdrawals are critical for maximizing retirement income. Moss discusses strategies for minimizing tax liabilities and optimizing withdrawals from various accounts.

Notable Quote:
[19:14] Wes Moss:
“These five Ps are constants in life. Planning, portfolio, protection, passing it on, and paying yourself and your taxes.”

Listener Questions and Expert Answers

The episode features insightful answers to several listener-submitted questions, providing tailored financial advice and practical strategies.

1. Frank from Florida: The 4% Rule and Time Horizons

Question:
Frank in Florida asks about adjusting the 4% withdrawal rule for shorter investment horizons, such as 20 or 25 years, and whether a sliding scale applies.

Wes Moss’s Response:
Moss acknowledges the importance of reconsidering withdrawal rates based on time horizons. He explains that for a 20-year horizon, the safe withdrawal rate can increase to approximately 5.5%, though still not as high as some might expect due to inflation considerations. He advises balancing between maximizing withdrawals and ensuring long-term portfolio sustainability.

Notable Quote:
[09:10] Wes Moss:
“How do you max out what we pull out of the investments without running out? It goes up to about five and a half percent.”

2. John in Arizona: ETFs vs. Individual Stocks in Brokerage Accounts

Question:
John questions whether holding ETFs in a brokerage account is preferable to owning individual stocks for long-term investment and rebalancing purposes.

Wes Moss’s Response:
Moss highlights the benefits of ETFs, particularly their diversification and lower volatility compared to individual stocks. He notes that while individual stocks may offer opportunities for significant gains, managing a large portfolio for effective loss harvesting is challenging. Thus, ETFs are often more practical for most investors.

Notable Quote:
[12:20] Wes Moss:
“ETFs give you immediate diversification right out of the gate.”

3. Henry in California: Safe Investments for Down Payment Savings

Question:
Henry seeks advice on whether to keep his $150,000 earmarked for a home down payment in a U.S. Treasury bond fund making 4%, or consider alternatives like CDs offering 4.25%.

Wes Moss’s Response:
Moss recommends maintaining funds in money market mutual funds due to their liquidity and safety, aligning with Henry’s goal of accessibility for a home purchase. While CDs may offer slightly higher returns, the lack of liquidity poses a risk if funds are needed unexpectedly.

Notable Quote:
[14:32] Wes Moss:
“Keep your safe money safe.”

4. Cody in Florida: Selling vs. Renting Out a Home Before Traveling Overseas

Question:
Cody, a retired law enforcement officer, contemplates selling his mortgage-free home valued at $350,000 to fund international travel, expressing concerns about capital gains and the hassles of managing rental property abroad.

Wes Moss’s Response:
Moss advises selling the home, particularly due to the low capital gains taxes applicable if the property has been a primary residence for two out of the past five years. He also points out the logistical challenges of maintaining rental property overseas, suggesting that the proceeds could significantly bolster Cody’s retirement income.

Notable Quote:
[35:15] Wes Moss:
“I wouldn’t want to have rental property in another country. Too much trouble.”

5. Aaron in Ohio: Choosing Between Different S&P 500 Funds

Question:
Aaron is conflicted about whether to stick with Vanguard’s VVIAX or switch to Schwab or Fidelity’s S&P 500 index funds for better integration with donor-advised funds and lower expense ratios.

Wes Moss’s Response:
Moss emphasizes that all major institutions offer comparable S&P 500 funds with minimal differences in performance. He recommends choosing based on convenience, user interface, and existing relationships with financial institutions. Cost differences are marginal and typically not a decisive factor.

Notable Quote:
[38:50] Wes Moss:
“They’re all almost right in that same range. I would default back to where is it most convenient for you.”

Closing Thoughts

In wrapping up, Wes Moss reiterates the importance of comprehensive financial planning through the Five Ps framework. He underscores that proactive and ongoing conversations with financial advisors can provide peace of mind and ensure that personal financial goals are met effectively.

Notable Quote:
[29:14] Wes Moss:
“If you can understand those core Ps and are always thinking about them with your advisor, you can get a lot of peace of mind.”

Conclusion

This episode of The Clark Howard Podcast, featuring Wes Moss, offers valuable insights into real estate investment, strategic financial planning, and practical advice tailored to individual financial circumstances. From assessing the merits of homeownership in fluctuating markets to navigating retirement withdrawals and optimizing investment accounts, the episode equips listeners with the knowledge to make informed financial decisions. By addressing common listener questions, Moss provides actionable strategies that cater to diverse financial needs, reinforcing Clark Howard’s mission to empower individuals in achieving financial freedom.

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Remember: For personalized financial advice, consider reaching out to a fiduciary financial advisor like Wes Moss. Submit your questions at www.clark.com/askclark and take control of your financial future today.

Transcript

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[Krista Dibiaz]

Welcome to Ask An Advisor where we go deeper on all things investing. I'm Krista Dibiaz here with fiduciary financial advisor Wes Moss.

[Wes Moss]

Hi Krista, thanks for having me as usual.

[Krista Dibiaz]

And today we're going to get to some of your questions which you can submit to [e-mail] ask and before that, I know your first topic is something that Clark gets a lot of questions about. Is it still a good idea to buy a home right now? Is it still a good investment?

[Wes Moss]

Yeah, I think it's a harder question to answer right now because of the housing market. But let's dive into that and then.

[Krista Dibiaz]

Later you're going to tell us the five things that we should ask any kind of financial planner. We're thinking of hiring, right.

[Wes Moss]

Or sit down and have a meeting or a series of meetings. What are the main topics to cover? I really like this. So let's talk about housing.

[Krista Dibiaz]

Yeah.

[Wes Moss]

And you really don't think about at least most of the time you don't think about housing in terms of a chart or you think stocks, you think chart and you think values over changing quickly. And housing values don't do that. They move I would say with a lot less volatility. But there are some huge price changes over time. If you were to look at a chart of housing and I think the short answer that I wanted to cover today is that there are three truths. As long as you have lots of time. When I say time, I mean a long horizon of 10 years or more. Housing is a forced savings plan. Housing is a way to protect against inflation. And one of my favorite things about housing is that when housing is paid off, it's one of the core principles or habits, financial habits of happy retirees. There's nothing like being in retirement. I have these conversations all the time. When somebody is no longer has a mortgage, their spending freedom opens up dramatically. And there's nothing like having your shelter paid for with no money owed to the bank, only property taxes left and insurance to deal with over time. And that's a great place to be. But let's think about housing for a minute. So first of all, housing over time has been a great investment. Depending on which period of time you look at, you'll see a long term trend of beating inflation now, not dramatically. And in this again depends on the city you're looking at. But if we looked at the whole country, on average, housing prices do go up 3 to 4% per year on average over time. But it's not like that in any given year. If you go back and look at the period of time from 2006 all the way through 2016, housing prices went down pretty dramatically after the financial crisis and then took a long time to recover. So if you bought a home in, let's call it late 06, early 07, it may have taken you a decade just to break even on the house price. So there's this thought of, well, as long as I buy a house and I'm in it for a little while, I'm going to make money. That's not necessarily true on the value. So I think it's important to understand that. Next, let's fast forward to the opposite situation. You look at the Key Shiller Home price index. Again, way to track the average price of homes in the United States. And by the way, we just got a report recently that the median home price in America is a little over $400,000. So that's just the median home price in America. So if you look at what happened from the year 2020 to really essentially where we are today, housing prices looking at the Key Shiller Home price index, up 50%. So if you're one of these folks who fortunately bought in 2019 or in 2020, you've seen massive appreciation for housing prices. One, you can argue, of course, housing's been a wonderful investment, but you can also say, wait a minute, housing is super expensive now up 50% and interest rates are historically pretty high. Now those who bought a house in the 80s and the early 90s will say, I remember my mortgage rate was 12%, 15%, 18% and what, six and a half or 7%. That's not bad. But relative to the last 20 years, mortgage rates are high too. So you couple that high prices, relatively high mortgage rates, housing, to buy a new house is a really nerve wracking proposition for somebody in their 20s or 30s or even 40s that still hasn't done it. So the question is, is it still a good idea to, to make the commitment and buy a house that I would say as long as you're not flipping a house or trying to flip it in a year or two. Because you also have to take into account real estate commissions for the most part, which, that takes a big chunk out of your potential gain, then housing still is a really good long term bet again for savings, inflation, protection and then a paid off house. There's nothing like that to be a happy retiree. A couple other ways to think about this. Let's think about the financials. Let's take a $500,000 house. Let's now put, put, let's call it 10% down, right? You're putting down $50,000, you're getting a $500,000 asset. So really what's so different about housing as an asset class? Not to mention property is very different than the stock market. So real estate property is very separate than stocks, very different than bonds. So it's another category, it's another reason I like it. But you're getting essentially leverage. Think about how long it takes to get $500,000 into a 401k plan. Yeah, I remember when the 401k limits were 10 grand a year. Today they're 23,5 per year. If you're 50 plus, they're 31,000 a year. So it's not insignificant. But think about how long it takes to contribute at 23,5 a pop to a 401k to get to 500,000. It would take decades to do that here, all in one fell swoop. Boom, you've got a $500,000 investment. So again, if it goes down in price like we saw after the great financial crisis and the, and the actual housing crisis, really one of the worst periods of time for housing in America, that works against you. But most of the time, and over time, being able to have that much money at work right out of the gate, you get a lot of leverage. So if you think about, I did some math here, $500,000 house, you put $50,000 down. Let's say it only grows at 3% a year for a decade. Now your 500 is worth almost 700. And you've essentially made, let's call it $180,000 after real estate taxes on only having put down $50,000. Now, you've paid some principal over that period of time, but your initial investment, 50 grand, that's a 350% rate of return or a 17, almost 18% compounded rate of return on the cash you put in. And I think that's with only a 3% rate of return because we were able to use leverage. You take the banks giving you, lending you money, you get the giant asset right out of the gate. And even if it appreciates a little bit year after year, you've really had this wonderfully compounding investment. And that's why if you look at wealth statistics in America, we are such a wealthy nation now because we have so much home equity and so much of America has refinanced home prices or their home mortgage rates lower and locked in low rates. And that's why people in America still today, in 2025, don't really want to move. They've got low mortgage rates. So put that all together. There's almost nothing like being able to have that much of an investment right out of the gate with only putting, let's call it 10% down. Now some people may put more into, there's, there's ways to put down less. You're getting lots of money to work. It's an inflation protection and it is to some extent a for savings plan, putting money in, paying your, your interest and your principal month to month. And so I think I would be over the course of the next couple of years, I could see us having very little to no home appreciation because we just saw a 50% jump. But then if you expand that horizon and look out over a decade, I think housing is, it's still, even though I know it's harder today than it's been in a long time if you're 30, 35 and you're on the fence about buying or renting, I think buying is such a better option with a long time horizon, even here in 2025.

[Krista Dibiaz]

All right, well, we'll go to some questions that came in for you, Wes. Frank in Florida says, I understand the 4% rule applies to a 30 year window. What about 25 years or 20 years? What percentages work for those? Is there a sliding scale?

[Wes Moss]

I don't know why we don't talk about this more, and this is the cool thing about questions, is that you're thinking about something that makes total sense. That just doesn't come up a lot. We always talk about 30 year, 35, 40 year time horizons. Okay.

[Krista Dibiaz]

We all want to live forever. Sure.

[Wes Moss]

Right. So we're all assuming we're going to live to 105. But it makes total sense to start rethinking your horizon if you're. And how old is Frank? 80.

[Krista Dibiaz]

He didn't say.

[Wes Moss]

But okay, let's say you're 85. Do you really have a 35 year time horizon anymore? No. Now your money might. And that's the argument to the 4% rule because you're, you're not only investing for you at that point, you may be investing for your kids. And your grandchildren. So you can make an argument that Even though you're 90, you still have a 30 year horizon because this is kind of the family money. But realistically, if you only have a 20 year time horizon, wouldn't it stand to reason that that whole 4% rule per year goes up? And the answer is, of course it does. And that's the cool part about this question. Now it doesn't go up. I've done the math on this and it doesn't go up as dramatically as you might think, but it's still the percentage per year you can take out obviously would go up. Based on historical rates of return, I'm looking at still a balanced portfolio, half stock, half bond. The short answer is because of inflation and because we still want a 95% confidence that we don't run out. Again, all based on history. If you take your time horizon test again, how do you max out what we pull out of the investments without running out? It goes up to about five and a half percent. So it's not quite as much as you may, we may have thought mathematically, you just do the math. 100 divided by 5 is 20. But we have to remember we're accounting for inflation. The way these tests work historically is that you're starting with your initial 5% and then it goes up per inflation. So you think, wait, why? How can it only be five and a half percent? It's because of inflation. Remember, you're giving yourself a raise for that 20 year period as well. So math wise, Krista and Frank on this question, really good way to think about it. As you get older, you certainly can increase your percentage rate of return as your time horizon shrinks. I did one more thing. I'm a big believer in really understanding withdrawal rates. I think we all want to understand how we can max out what we can pull out from our portfolios without running out. If you keep it static. Now, that may not be normal life, but it also may be the real world where you don't spend as much and your spending actually comes down. If you're looking at a static rate of return and you don't account for inflation and you're looking at a 20 year horizon, you can actually up it to more like seven, seven, seven and a half. But again, 20 years is still a long time. Not accounting for inflation may not be real world, but in some cases it might be. So that's the math behind it. And that's why I love these questions.

[Krista Dibiaz]

Okay, this one came in from John in Arizona. Is it okay. To hold ETFs in a brokerage account because of rebalancing buys and sells versus just holding individual stocks for long term.

[Wes Moss]

John, the reality here is that we're looking at two different vehicles to invest in equities in the capital markets and stocks and companies. Individual companies versus ETFs. They're both good. And I think that in some respect, if you think about, when you think about rebalancing, rebalancing is when you are harvesting losses. Well, first of all, ETFs I like in general better because you have more diversification right out of the gate. 100, 200, 500 stocks in one basket. That gives you immediate diversification right out of the gate. So you don't need to own as many ETFs to get the diversification you would need to own individual companies. So that's the big advantage. But the price dispersion because you have that diversification in the ETF is usually a lot less. So if you own 20, 20, 30, 50 stocks, you're going to have some huge winners and then you're going to have some losers. Very, very likely. It makes harvesting those losses if you have individual companies a little easier. So you can make an argument that it is good to have individual companies, but it's really hard to do. Even if you have a million dollars to get 2% positions in each, you still would need 50 companies. So that's a lot. Short answer. I like both, but for harvesting purposes, it is even hypothetically a little better to own individual companies. But again, I own both.

[Krista Dibiaz]

Okay, this is from Henry in California. Fortunately, I have saved close to $150,000 for a down payment on a new home, hoping to buy it at the end of this year. Currently, these funds are invested in a US treasury bond fund at one of the investment firms that Clark refers to as one of his favorite children, Schwab. I'll just say it is currently making 4%. Is there a better fund or index I could put it in? That would be very safe. The stock market's a little too volatile right now for me to chance this money from my dream home. I'm 62 and have about 40k in a Roth and 140k in a regular IRA. Per Clark's great advice, I now max out my contribution to the Roth every year as I got a late start. I've seen some three month CDs that are returning 4.25%.

[Wes Moss]

When it comes to keeping money safe, I think that you still want to just use money Markets or money market mutual funds because they're liquid daily. Sure, you can find maybe CD rates that are a quarter of a percent higher, but you've got to stay the term in order to get the full amount of interest. So they're a little, they're technically a little less liquid if you want to get your interest. Whereas a money market fund is, it is daily. So every single day you leave money in a money market mutual fund, you're getting your pro rata share of that yield. So I don't know if it's necessary or even it maybe outweighs the simplicity and the liquidity of using a money market mutual fund. And again, if you're using one of the favorite suns, these are the giant investment multitrillion dollar companies, I feel a really high degree of confidence in those funds. We're always tempted to get a little extra yield if rates are at, and this is where the rates come from. The Federal Reserve sets policy, they set short term rates which then in turn essentially set short term treasuries, which essentially sets the yields of a money market. So if rates, if the Fed's around 4 and short term treasuries are at 4, well then your money market should pay around 4, maybe a tiny bit less. So anytime you're way above that or even materially above 5, and I would say materially above that, that means you're taking on some other extraordinary risk and you could really pay for that with downside. So just know where the fed funds rate is and a good old fashioned average low cost money market fund, I wouldn't reach beyond that to get an extra quarter or certainly once you get to an extra percent, then you're taking on some real risk. So keep your safe money safe.

[Krista Dibiaz]

Sounds great. So coming up, this will be really cool for those of you who do use a financial planner or interested. You're going to tell us the five things that we should make sure we ask them about or talk to them about.

[Wes Moss]

Five P's coming up.

[Krista Dibiaz]

All right.

[Don McDonald]

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[Wes Moss]

Here, there's no one way of doing things, no unwritten rules, and no shortage of adventure.

[Krista Dibiaz]

Because out here, the only requirement is having fun.

[Wes Moss]

Bank of America invites kids 6 to 18 to golf with Us for a limited time. Sign them up for a free one year membership, giving them access to discounted tee times at thousands of courses. Learn [e-mail] golf with us what would you like the power to do? Bank of America restrictions apply. See BFA.com golf with us for complete details. Copyright 2025 bank of America Corporation. Welcome back to Ask an Advisor. Wes Moss here with Krista dibias on the Clark Howard Show. Krista.

[Krista Dibiaz]

That's right.

[Wes Moss]

How you doing?

[Krista Dibiaz]

I'm doing great.

[Wes Moss]

Ready to get back into it?

[Krista Dibiaz]

Ready.

[Wes Moss]

So off the top of your head when you're going to go meet with a financial advisor, do you know exactly the five things you should talk about?

[Krista Dibiaz]

I don't.

[Wes Moss]

The.

[Krista Dibiaz]

I usually let my advisor guide me.

[Wes Moss]

Okay, here's what I would say. This is not a perfectly comprehensive list and this isn't everything you would talk to with your financial advisor. But I would say these are the five major topics and major categories that you, you need to. And it's not necessarily all in one meeting either, but over the course of time, call it a year or two years or maybe more, these are the topics that you really want to solve for. So I call them the five Ps A, so I can remember them. B, maybe so you can remember them or you can look at it also as the three Ps and death in taxes. So let's just go. Here are the first five. The first one is about planning. Second is about the portfolio. And again, what you would be strategizing and solving with your financial advisor. So one, planning goals. Two, portfolio. How does the portfolio and the investments reach those goals? Three, protection. So what? It's not just about investing and growth. It's about protecting the assets you have. That may be insurance. Think umbrella insurance. Simple, easy, low cost, hugely protective in case there's some sort of litigation or lawsuit relating to your property. Four, this relates back to death, but really it's about passing it on. So passing your assets on to the next generation. And this is an evolving conversation that will change over time and maybe come into focus as you age a little bit. And your family is kind of kids have, you have grandkids. And now you start to understand what the family legacy is all about. So again, passing it on is the fourth P. And the fifth is about paying yourself and paying taxes. So we've got the three Ps, death and taxes, the really five Ps and they're all super important topics. Some of them you need to understand right away. Some of them are ongoing and then some of them are maybe materialize out into the future a little bit. So think about, let's talk about each one a little bit. Planning. I think this is tough for anybody. If you were to ask your answer this question right now. What are your three top life slash financial goals or the your life goals for your money? It takes a little time to figure that out right out of the gate. If you're a question on this. It may take a little bit of time and it should take some time. It should take a little bit of thought because I think the default I will hear is, I just don't want to run out of money, because running out of money is a top three fear financially for almost anybody in the world. So that's fine if that's one of the goals, and it may be the number one goal, but I don't think that's enough. You need to think through and this is again, talk with your advisor about what really are your goals, what is the money for? So first we solve for how much you think you're going to need in the future. That's a retirement plan or retirement timeline. That can be done through software conversation. And then you put in your variables for inflation and how much you think you can save and estimated rates of return for different assets. And that gets you a cash flow picture of what your money situation should look like. 5, 10, 15, 20, 25 years out. Now, beyond that, I think that it's good to push ourselves a little bit to really try to relate back to what in my life is important to me. How do I live richly with the money that I have? And that may include bigger life goals that you want to accomplish in retirement. And maybe it's as simple as travel. Maybe it's as simple as travel, traveling with your extended family, which can be pretty expensive. What are the main core pursuits or hobbies you're going to have during your retirement, and what does it cost to fund those? Fortunately, a lot of those are relatively inexpensive. When are you going to pay off your mortgage? When are you going to take Social Security? That's all just planning has nothing to do with investing anything. So it's so critical to get that right and spend some time on it. And that may evolve and change over the years. But that's number one, you've got to get this planning done. Those are some of the things to think about. Number two, protection. The protection is a little more straightforward. If you think about umbrella insurance as an example, if your net worth is $2 million, you should probably have at least $2 billion in umbrella insurance on your home and your property. If it's a $5 billion net worth, same thing, you should have at least $5 million. You can argue for even more when it comes to umbrella coverage. The same goes for life insurance when you're younger and there's still a lot of planning left or a lot of payments left before your children become independent. What happens if you pass away, your spouse passed away and then there's no more income. And that's obviously what we buy. Life insurance. Nobody likes to talk about it or buy it or even bring it up as a topic, but we've got to have it. Maybe you're a business owner and you have business partners. Well, what happens if you pass away? Are your business partners going to be able to buy you out and pay your percentage of the business? They may not have the liquidity to do that. So it may be life insurance for business purposes or business ownership. So those are a little more straightforward, but they take some conversation, some time to get that done. And again, those needs change over time. The third area here would be, I guess I skipped right to protection. That's number three. Number two is the portfolio. Of course. Where are you going to feel comfortable in the portfolio to meet all those goals we did in the first pig is it. Do you need an aggressive portfolio to try to reach these goals? Maybe it's a super conservative portfolio with not a lot of risk and volatility that'll still get you to those goals. And that makes sense to you. It really is about now matching a philosophy or an investment strategy that meets your needs, your risk tolerance. Tolerance so that you can accomplish all those financial goals. You put in that step one, which is the plan. So we have planning, we have the portfolio to get us there and accomplish those goals. And then we have the protection. The third p to make sure money is there if something doesn't go well or goes goes astray. Number four and five. These are the two constants in life. Constants we wish were not necessarily the case, but they just are. And number four is passing it on. What are you. So if you do this plan and over 30 years you've been able to pay for retirement, but there's still $500,000 left over. Who. Where does that money go to? Maybe it's $5 million. That's maybe a different conversation. Well, that's a. That's a ton of money. Are my grandchildren going to be old enough to receive that money all at once or that ruin them? So then there's some trust planning that might go on that then outlines your wishes while you're living and you're coherent and you're really thinking about this to say maybe the grandkids don't get any money until they're age 30. And that would go into your trust planning. That would go into your will. This is where you need an estate planning attorney to help you through figuring out the best way to pass it on. The other part here is how do you pass things on that are in the most tax efficient way, which we'll get to now? Number five, taxes. Well, I would say the fifth P is paying yourself and paying your taxes. Now this P is to some extent part of all of financial planning. And this is an ongoing conversation. But how are you structuring things? So you're paying the least amount of taxes that you can pay and paying taxes only in the most efficient way, which also goes back to how are you paying yourself? So what accounts are money coming out while you're in retirement? It really matters. Utilizing a brokerage account versus an IRA versus a Roth account. Well, there's a lot behind how you withdraw money in the distribution phase of retirement that can mitigate your taxes in the most efficient way. As we think about all of these, really, they all will change over time. Maybe your umbrella policy doesn't change for 10 years. Maybe your life insurance doesn't need to change once you buy it, but it could. Maybe it's for business and your business has grown, you've got to have more insurance. Maybe your net worth has grown. So your umbrella policy does have to go up. Maybe your goals have changed in the first pay and now there's new goals and it's changed your spending outlook and that would then change what the portfolio would look like to match those goals. So we're always thinking about all those five things. But when you're sitting down with an advisor and you're trying to get the peace of mind that everything is well planned, it is a lot of work upfront. And then I think it's ongoing conversation as your life changes, your goals change. But if we can understand that those core, if you get those five cores, those five Ps, and you're always kind of thinking about them and you're speaking and talking with an advisor about them, I think you can get a lot of peace of mind and even a little bit of planning goes a very, very long way.

[Krista Dibiaz]

That's great. And I love the, you know, when you talk about the, your core pursuits thing, which has been such a part, an integrated part of all of your research and what you've done, I think that's really important that somebody, you know, cares about, like, how are you actually going to enjoy, like you could have all the money in the world and if you're not enjoying, if you're sad and you don't have any, you know, sort of like things that give you joy in life that could be really inexpensive. It's a big part of it. I think that gets missed a lot.

[Wes Moss]

And I think it's when I was a younger financial advisor, I still had the thought. I mean, I've been an advisor for since my early 20s. I was an intern still in college at a big financial planning company. And I remember thinking in those really early years, well, if you've got all this money, if somebody has $10 million, life's just gotta be great. And then I learned that it's not necessarily great if those folks, all they did was work all their life and they stopped working and they're 70 because that's what they loved. And then there's nothing and they don't have a whole new purpose which can really actually be built with your core pursuits in life. And I think that's what spurred me to study and research that. But I'm writing about that now. There's more to come on that.

[Krista Dibiaz]

KRISTEN okay. All right. Well, here are some questions that came in. Jim in Idaho says, I have a 457B through the city of Los Angeles and it's now held by Voya. I'm considering moving it to one of Clark's children, Fidelity.

[Wes Moss]

Are there any more on Clark's children?

[Krista Dibiaz]

There's more later. Are there any benefits or protections that would be lost by moving out of a 457 into an IRA?

[Wes Moss]

So, first of all, the 457 accounts.

[Krista Dibiaz]

Through the city of Los Angeles, okay.

[Wes Moss]

So that's likely a government plan. So there is an extraordinary amount of protection. If you have not only a retirement account, but but also a government retirement account, There is a lot of protection there. And again, I'm not there's a whole profession for this, estate planning and asset protection attorneys, because the laws will go from state to state. And so I wouldn't say I'm an expert on asset protection, but I would say that kind of the ultimate protection you have, whether it's in a brokerage account versus a retirement account, retirement accounts have much more creditor protection and protection. If something were to happen, you and you end up in bankruptcy, the bankruptcy rules are that the bankruptcy court should not be able to go after retirement accounts up until it's over $1.7 million. So there's a big, big hurdle before that even should come into the conversation in an ira. So if you're thinking there's a lot to consider going From Retirement Plan 457 or 403 or 401 into an IR IRA, and this is a really important one, think about the protection. If you're worried about somebody suing you or you have creditors, then I would err towards the safest and most the highest creditor protection. And it's tough to beat a government sponsored retirement plan. A good old fashioned IRA has protection too. But you've got to consider if you're going from a, let's say a plan like Voya to a Fidelity, you've got to consider the cost, the investment options, and maybe there are more options at a Fidelity, and you would just make sure that you understand the differences. But for the most part, and I've seen over the last 25 years, anytime I've seen somebody get into trouble with creditors, let's say their IRAs have been safe in that process. Again, I'm not an asset protection attorney, but I've seen that come into play and it's been very, very helpful for folks. Okay.

[Krista Dibiaz]

Cody in Florida says, I'm 63 years old and retired with a $4,200 pension a month from law enforcement. I have approximately $600,000 in an investment account which I really haven't tapped into as of yet because my pension check covers my expenses. I built my house approximately three years ago and have no mortgage or debt on the house. I was told that it was valued at approximately $350,000. I plan on traveling for the next two or three years overseas and I'm considering selling the house instead of renting it. But I'm concerned about capital gains. I may even move overseas permanently at some point. My question is, what would be the best course of action? As I would like to start taking money from my investment account to maximize my travel over the next five to ten years.

[Wes Moss]

Okay, so Cody is thinking about, did he say the pension amount, how much month?

[Krista Dibiaz]

4,200.

[Wes Moss]

Oh, 4,200. Okay. All right, so there's a couple different questions here. Cody is in law enforcement, so thank you for your service in law enforcement, Cody, number one. Number two, you have a great pension. 4,200 bucks a month. That goes a long way. Perhaps the easier answer here on housing is that, remember, if you've lived in the home and it's been your primary residence for two out of the past five years, each individual. So this is double if you're married, husband and wife. But if it's just you, it's still $250,000 exemption on gains on capital gains. So I can't imagine you bought this place for 100. Now it's worth 350. It's probably that you bought it for 250, it's worth 350. So that 100 should be excluded and taken care of with the 250 exemption. So I don't think there would be a tax issue here. I don't think he put what his debt was.

[Krista Dibiaz]

No, he said he has no debt on the.

[Wes Moss]

Oh, no debt. So another 350. So if you end up with you have 600 plus 350, it's $950,000. If I do the good old fashioned 4% rule on that. Cody, now we're talking about how to withdraw from this, then you're looking at another 38,000 from investment withdrawals, plus $4,200 a month in pension, which is 50,400. We're talking about almost 90 grand. So I don't know if I would if I'm going to be overseas. Heck, if I was going to be in another state, even if I had a home in Georgia and I was going to move to Texas, I wouldn't want to have rental property in Georgia. It's just too much trouble to do that out of state, let alone out of the country. So I wouldn't. If you're going to be traveling for a year, two, three years, maybe permanently, there's just no way I'd want to have a rental property in the United States. Too much trouble. The time change and the having to deal with property across halfway across the world, owning and maintaining a home, living in it day to day is hard enough. Having rental property on in another country, I just don't think that's realistic. So I would be selling it. I would look at taking that, adding it to my overall retirement account balance, using the 4% rule, have 90 some grand a year in income. I think you'd do a lot for that. Now if you need more in those early years, because Cody's young, you could even step up your withdrawal rate a little bit, four and a half to five. Where you're taking this, let's call it a gradual approach. Then when your costs and your travel kind of comes back down to earth a little bit, you go back to the 4% rule.

[Krista Dibiaz]

This is from Aaron in Ohio. I know Almost all Vanguard's ETFs have a corresponding mutual fund share class and thus the same tax structure. This is a little confusing to me. I guess I'm trying to understand how much better VVIAX is compared to a different S&P 500 index fund. Thinking about switching to Schwab so it'll be easier to Give to my Schwab donor Advised fund or even switching my brokerage account and donor advised fund to Fidelity because I may want to use their cash management account. Out of Clark's favorite children, which is your favorite. I know they all have pros and cons, but wouldn't it be convenient to pick a favorite? Thanks for all the great advice.

[Wes Moss]

It would be convenient. It's really hard to pick a favorite of the three because really, in the end, we just want our money to be safe. And they're all, to me, they're all multitrillion dollar companies. They're easy to utilize. I think you end up defaulting back to who you've used the longest and the brand that you like. Which again, I think once you've got a safe institution, it's more about the convenience of the web interface. It is the convenience of being able to make trades when you need to. Being able to get somebody on the phone. That's a big part of it. What I've used the longest is Schwab. So I would say Schwab is some. I would say somewhat my favorite. But Fidelity is just as good. And I do actually use Fidelity for some things too. So I really love those too. So maybe can I pick two out of three? Those are my two favorite kits. And in full disclosure, I use Vanguard funds in my Schwab account or Fidelity account. So they're all good. But if you nailed me down, I'd have to say Schwab and fidelity are my two favorites. When it comes to these different S&P 500 funds, remember, almost every big institution has them. Schwab has an S&P 500 fund. They've got mutual funds that do it. And they have ETFs that do it. And Vanguard has mutual funds, multiple share classes, and ETFs that do it. Fidelity, same thing. So it's kind of like Aaron's in Ohio. Like, I love pink crisp apples. I think they're actually called crisp apples Pink. It's the cousin to the pink lady apple. They're the best apple, period.

[Krista Dibiaz]

I don't know.

[Wes Moss]

And I'm a Big Apple connoisseur. So if you told me I gotta go get a pink crisp apple at Kroger or Publix or in your part of the country is probably like Meijer, because I spent a lot of time in the Midwest. So Meijer's like this. Like, if I'm going to get a pink crisp apple, I don't care what store I walk into. The Pink Crisp are pretty Much all the same, really depends on the kind of year, what country they're coming from, what state, the conditions that year. But that's going too far with apples. So you're getting the same thing. You're just getting it from a different store. S&P 500 fund here, there. And really you just have to look at costs and almost all the costs are the same. I think Vanguard VO is an ETF is the S&P 500 is like 0.03. The Schwab version I think is 0.02. And Fidelity, you can find an S&P 500 fund for 0.015. Whoa, let's do the math on that. A million dollars at that two tenths, two hundredths of a percent is 200 bucks a year. So on a million dollar investment, a 0.02 expense ratio is 200 bucks a year. Yeah, I'm not going to say that's free, but it's almost nothing. Vanguard might be 300 bucks a year and Fidelity might be 150 a year. They're all almost right in that same range. And an S&P 500 fund tracking the index is going to really in the end give you almost identically the same result. Then I would default back to where is it most convenient for you? If you've got your donor advised fund etchwab, it might be easier just to have everything at Schwab and they have a great donor advised fund. I use it. Fidelity is kind of the grandfather of the donor advised fund. So if you're using the Fidelity Donor advice fund, maybe you have your investments at Fidelity. So again, make it convenient for you. Operate within the brand that you trust because in the end it's pretty much all the same pink crisp apple.

[Krista Dibiaz]

Okay, well, that does it for us today, Wes. Until next week, remember you can ask a [e-mail] ask and if you have any kind of consumer question, remember that our Consumer Action center team Clark, they're available to you five days a week. You can find out how to reach [e-mail] CAC for Consumer Action Center. Hope that the rest of your day is great.