06.30.26 Ask An Advisor With Wes Moss

Summary

The Clark Howard Podcast

Episode Summary: Ask An Advisor With Wes Moss

Release Date: June 30, 2026
Host: Krista Dibiaz (Team Clark)
Guest: Wes Moss (Fiduciary Advisor)

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Episode Overview

This episode of The Clark Howard Podcast features “Ask An Advisor,” where host Krista Dibiaz and fiduciary advisor Wes Moss address listener-submitted questions about personal finance, retirement planning, investing strategies, and career transitions—including how to become a financial advisor. The conversation highlights practical advice centered around simplifying investment approaches, handling retirement withdrawals, understanding target date funds, weighing 401(k) options, and pursuing meaningful second careers. The tone is approachable, friendly, and packed with actionable steps for financial freedom.

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Key Discussion Points & Insights

1. The “Bucket” Approach to Investing

[02:11 – 07:27] Wes Moss explains his philosophy

• What Is the Bucket Strategy?
  Wes details the “bucket” methodology for retirement planning—breaking down investment complexities into four visual categories:

  1. Cash/Money Market: Safety, liquidity, inflow for eventual retirement withdrawals.
  2. Income Bucket: Bonds or similar assets for steady interest and some risk mitigation.
  3. Growth Bucket: Stocks (including both growth and dividend payers) to fight inflation through appreciation.
  4. Alternative Income: Assets like real estate or energy pipelines that may not fit neatly as stocks or bonds but can generate cash flow and potential appreciation.

  “If you think about the complexity of the world we live in, simplifying this down into just four very distinct investment categories, in just good old-fashioned buckets, I think it really, really helps.” — Wes Moss [06:46]

• Pros and Cons:

  • Pro: Visual, removes complexity, fits both accumulation (working years) and distribution (retirement) phases.
  • Con: Multiple interpretations exist; strict percentage allocation can be overwhelming; can create unnecessary rigidity if overthought.

• Accumulation vs. Distribution Phase:

  • Accumulation ("closed" buckets): Focus on building up each bucket during working years.
  • Distribution ("open" buckets): During retirement, dividends and interest flow from investments into the cash bucket for withdrawals.

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2. Determining Smart Retirement Withdrawals

[07:27 – 09:53] Listener: Mark in Florida

• Guardrails vs. Static Rules:

  • Wes advocates for dynamic withdrawal strategies. If your investments outperform your plan, consider withdrawing more; if underperforming, exercise caution and stick closer to the 4% rule.
  • Use conservative projections early, and adjust based on performance compared to your goals.

  “If you’re ahead of your own plan, then to some extent a lot of that is that excess capital you could take more of that would maybe go beyond the 4% rule.” — Wes Moss [08:38]

• Measuring a “Good Year”:

  • Look for retirement savings that are ahead of projections—either by outperforming conservative assumptions or having market years above average.

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3. 401(k) vs. Roth IRA & Evaluating Employer Plans

[09:53 – 12:42] Listener: Brent in Nevada

• Should You Contribute to Employer 401(k) Without a Match?

  • Wes’s clear advice: Do both the 401(k) and a Roth IRA if possible.
  • 9% returns on a 401(k) are respectable (make sure returns are not being confused with contribution inflows).
  • Evaluate whether your investment mix is too conservative; adjust for more stocks if seeking growth.

  “Do not stop the 401k. No, no, no and yes, yes, yes to starting and also doing the Roth.” — Wes Moss [12:37]

• On Rate of Return Calculations:

  • Confirm your calculation defines returns accurately—should not include fresh contributions, but focus on investment growth.

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4. Target Date Funds & Expense Ratios

[12:42 – 14:06] Listener: Jack in Missouri

• Are Investors Double-Charged on Expense Ratios?

  • Exclusive expense ratios: The published expense of the target date fund already includes all the underlying funds’ expenses, so no “double-dipping.”
  • Applies to both mutual funds and ETFs.

  “The mutual fund is going to publish the all-in expense. There's not another double-dipping that's happening.” — Wes Moss [13:17]

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5. Second Careers, Core Pursuits & Becoming a Financial Advisor

[16:02 – 23:00] Second acts and industry demand

• Rethinking Career & Life Balance:

  • Many listeners want to shift careers for better quality of life, flexibility or personal fulfillment after high-stress primary careers.
  • Key consideration: “Are you financially ready to downshift?” Understand tradeoffs between income and lifestyle.

• High-Demand Fields:

  • Education, medical professions, software, and financial advice—all have current or projected shortages.
  • Financial advice specifically: Retirement of existing advisors and a surge in retirees needing advice creates vast demand.

  “There is a huge shortage of financial advisors...there’s three quick things to do.” — Wes Moss [19:47]

• How to Become a Financial Advisor (Three Steps):

  1. Education: Bachelor’s degree (any field, though finance helps); pursue CFP® (Certified Financial Planner) designation.
  2. Experience: Work at a financial firm to gain practical experience and acquire certifications/licenses.
  3. Build Client Base: Usually within a firm at first, then potentially as an independent practice.

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6. Breaking Up with Your Financial Advisor

[23:00 – 25:12] Listener: Amy in Indiana

• DIY Transition Steps:

  • Open new brokerage accounts (Vanguard or other) with identical titling as existing accounts.
  • The new firm’s transfer process handles the move (including handling the “breakup”).
  • When assets move "in-kind," there are no tax consequences.

  “Vanguard will do it for you. Vanguard will break up with Advisor.” — Wes Moss [24:40] “As long as those match up, you can move the assets as they are. It’s called in kind.” — Wes Moss [24:45]

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7. Does Compounding Work Better in Single vs. Multiple Funds?

[25:12 – 26:56] Listener: Emma in Georgia

• Compounding is about total portfolio size—not the number of funds.

  • $100,000 in one fund compounds at the same rate as $100k split across several funds (if investments are identical).
  • Performance differences arise only if assets are split among different types of funds (e.g., international vs. domestic equities).

  “The math is exactly the same…from a compounding perspective, it’s all your accounts in aggregate.” — Wes Moss [26:33]

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8. Target Date Funds in Distribution Phase

[26:56 – 28:34] Listener: Roger in Connecticut

• Target Date Funds: Accumulation vs. Withdrawal Years

  • Wes agrees they're efficient in the saving phase but less optimal in retirement; withdrawals force you to sell both stocks and bonds regardless of market conditions.
  • Maintaining separate stock/bond accounts allows more strategic withdrawals (selling bonds when stocks are low).

  “If you are pulling money from your accounts, ... why wouldn't you want to be able to choose where you're pulling it from?” — Wes Moss [27:46]

  • Fun moment: “I love that you use the word toilet. If stocks are in the toilet, that’s a great way to think about it.” — Wes Moss [27:37]

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Memorable Quotes & Timestamps

• “Buckets as a grand strategy, really, really helpful. But if you get too locked into making sure every bucket is the exact percentage that you need in each investment, it can be a little bit overwhelming.”
  — Wes Moss [03:07]

• "I always think about if you're gonna do anything in the world we live in, sell a product or go into a career, think about the demand for that career long-term."
  — Wes Moss [18:54]

• "Vanguard will do it for you. Vanguard will break up with Advisor.”
  — Wes Moss [24:40]

• “They’re good, but when you’re in distribution, why would you want to be selling everything when you need cash every month if stocks are in the toilet?”
  — Wes Moss [27:37]

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Key Timestamps

• 02:11 – [Bucket Approach Overview]
• 07:27 – [Withdrawal Strategies in Retirement]
• 09:53 – [401(k) and Roth IRA Advice]
• 12:42 – [Expense Ratios in Target Date Funds]
• 16:02 – [Second Careers & Becoming a Financial Advisor]
• 23:00 – [Breaking Up with Your Financial Advisor]
• 25:12 – [Does Compounding Work the Same Across Multiple Funds?]
• 26:56 – [Target Date Funds in the Distribution Phase]
• 28:34 – [Wrap-up]

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Conclusion

This robust Q&A episode addresses a spectrum of real-life financial questions with clarity and empathy—from making sense of complex investing strategies to confidently navigating career changes and do-it-yourself investing. Wes Moss delivers expert advice grounded in practical application, and Krista Dibiaz ensures listener concerns are front and center. Their conversational tone welcomes even the financially anxious to take charge of their money and career decisions.

Next episode: Wes is off for the week after July 4th—returning in two weeks!

Transcript

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[Krista Dibiaz]

Welcome to Ask an Advisor where we here on Team Clark go deeper on all things investing. I'm Krista Dibiaz. I'm here with Wes Moss.

[Wes Moss]

Wes Moss, everyone.

[Krista Dibiaz]

Our the only fiduciary advisor here and we have lots of your questions to get to. If you have a question for Wes, you can go to wesmoss.com ask and today Wes, you're talking buckets.

[Wes Moss]

Somebody on the Clark team actually asked this question of me which was I hear so much about buckets. Is there a downside to thinking about investments with a bucket approach?

[Krista Dibiaz]

Okay. And then also what we hear from a lot of people who are nearing retirement, they've heard you talking about core pursuits. What if you want to change careers? What if you want a part time job, for example, you want to become a financial advisor. You're so interested in this show or Clark show. We've heard from a lot of people like that.

[Wes Moss]

Yeah.

[Krista Dibiaz]

And so you're going to talk about that.

[Wes Moss]

What are the three steps to becoming either a career change and or career change into being a financial advisor?

[Krista Dibiaz]

I love it. Okay, okay, let's talk about.

[Wes Moss]

All right, let's talk buckets. So first of all, you probably know what I'm talking about at least tangentially, which is, hey, I'm heard about the bucket approach. Is it a good methodology to use and what are the downsides and what are the upsides? I think the two downsides are this one, there's a lot of different versions of it and I have a version. I've read other versions. There's a couple books that are just about the bucket approach to investing. And I think that's the first issue. So I'm going to go over how I see the buckets and how I utilize them to try to get some clarity for our listeners and our viewers. That's one, two. The other downside is that there's some complexity around them, even though they're meant to simplify everything. And buckets as a grand strategy, really, really helpful. But if you get too locked into making sure every bucket is the exact percentage that you need in each investment, it can be a little bit overwhelming. So I want to start with how I see them. And if you think about all the different complexities within retirement planning, tax planning, investment planning, accumulation phase, distribution phase, and then you've got to invest around that with your risk tolerance and your time horizon. That's like 10 things right there. So clearly there's got to be some way to think about investing that makes it visually palatable and understanding. And I think that's what is the strong suit of when I'm drawing out buckets. That is why I do that. And so think of it this way and I know you're listening, but if you just think about all the different complexities in the retirement planning world, in the investment world, think of it as just four very simple buckets. And it could be a pail that you'd use at the ocean, on the beach or I like to sketch these out. I've gotten better at it over the years. They used to be very rudimentary. Now I have some buckets that I pre draw that I can copy and paste and think about how I can segment my investments very simply into four categories. And the first one we already all know, which is just cash or money market. And that's the bucket that is there for total safety and that your income flows into eventually when it's time to retire. So that's the easy one. The other three of the investment buckets, one I call income, one I call growth and one is alternative income. And those three are kind of the pistons of the engine that we're hoping grow the assets through only two ways. Krista, we've talked about the formula for total return, which we're all after total return. It's only two things. It's growth or appreciation. And then it's income, which is the faucet dripping into your account. That can be dividends, it can be interest, it can be distribution. So think of the primary inflation fighting bucket is the growth bucket and that would be your percentage that you will have in stocks over at any given time. That is bucket engine piston, if you want to call it that is the inflation fighter. And that can be growth stocks that don't pay dividends, or it can be dividend paying stocks. But you're getting appreciation hopefully over time and potentially some very real income. If you're looking at dividends, let's go next to the bond bucket or the income bucket. That's where you have investments that are meant to pay you interest and give you your money back over the course of time. And there's stability there, but there's a little bit of risk in that income bucket. Put those two together and you have one for appreciation, one for stability, but also to stay ahead of inflation. That's fixed income or bond investing. And then that third investment bucket I call alternative income, that could be energy pipeline companies, real estate areas that don't neatly fit into the stock or bond category. Those also can appreciate, those also can pay out cash flow or distribution. So put those three together and you've taken this crazy, complex, almost infinite world of choices into three simple categories. And I think that's the strength of the bucket system. And the two phases are very simple. One, accumulation. So age 20. I think some of our listeners are starting to save at age 20 all the way to 60 or 65 when you stop working. These buckets are all connected, but I think that during that phase I think of them as closed. So the money's not flowing into that first cash bucket. When you get into retirement or distribution, the gates open and all those dividends and interest and distributions, that cash flow can start flowing into the cash bucket, which is your checking account. And to me that visual I think is super powerful. There's phase one of accumulation, phase two of distribution. And putting that together visually is really helping you determine. And you've got to determine how much you want in each bucket. Percentages, which goes back to your risk tolerance and timeline, but or time horizon. But if you think about the complexity of the world we live in, simplifying this down into just four very distinct investment categories in just good old fashioned buckets. I think it really, really helps to simplify a very complex world.

[Krista Dibiaz]

Okay, let's go to some questions. Mark in Florida sent this one in. I'm currently 45 and I'm planning on retiring at 50. I know my retirement number, but have some lack of clarity on how much would be appropriate to withdraw during a good year versus a bad year versus the 4% rule. I keep hearing Wes mention sequence of return risk and that you should follow guardrails for withdrawal strategy from your portfolio. For example, you would spend more from your portfolio in a good year and less in a bad year. How do you determine what's considered a good year? Do you look back at the last 12 months of returns and look for a target percentage increase, for example 6%? Do you look at several year average for your specific portfolio and determine if the portfolio is doing quote unquote better than average? For example, it was down 10% this year, but it has averaged 12% over two years. So it's still up. Thanks for any further clarity you can bring.

[Wes Moss]

Mark. There's one very simple way to look at this. I think this is the most straightforward. If you are ahead of schedule, then you can always take out more. And this is why you got to start with planning. So if you've planned and you're saying when I'm 62 and I'm going to stop working and I plan to have a million dollars or a million and a half or 2 million, then if you're ahead of schedule, then you could always be taking more than you had planned for. If in five years you're projected to have a portfolio that's let's say $2 million, but it's 2.2 million or $2.3 million because things have gone better than your planning assumptions, which often happens if you use conservative assumptions. Then if you think about it, if you're ahead of your own plan, then to some extent a lot of that is that excess capital you could take more of that would maybe go beyond the 4% rule. So that's the easy way to look at it. And that's why I love planning and giving conservative rates of return. Because if you're ahead of schedule, it's always, it's easier to take a little bit more if you're behind schedules. When you have to be careful not to go beyond that 4% rule, that's the simple answer. Another way to look at it is if markets have averaged 10, 11, 12% per year on average. If you look over history, if you have a 15 or 20% year, then that is clearly well above the average. And that's when you can start thinking, oh, maybe I can take a little bit extra this year.

[Krista Dibiaz]

Okay. Brent in Nevada. Brent says, I've been contributing to my 401k at work, but it doesn't seem to be growing very fast. My company doesn't offer a match. Most of my retirement funds are tied up in an employer funded plan. I don't have access to and it's invested very conservatively with about a 6 1/2% return. My personal 401k Roth contributions through my employer plan have a personalized rate of return of about 9%. But I think that includes my contributions, so the rate of return is probably lower. I'm wondering if I should stop contributing to my 401k and invest in a Roth IRA outside of my employer plan to try and realize better returns. I always hear that using a broker advisor yields higher returns. I've also considered using Robinhood to get the 3% match. I contribute about 1500 dollars a month and I'm wondering if my 401k is the best option for investing considering I'm in my late 50s and a little behind where I'd like to be for retirement. I'd love your thoughts for 1K or venture into a Roth IRA to get the best returns.

[Wes Moss]

Brent, the answer is both. The answer is both yes and yes. Very rarely would I ever see your own contributions get counted in your rate of return. If you're looking at your 401k or a brokerage account or any sort of software that tracks that to give you a rate of return, it almost. It could. You can ask it to count your contributions or withdrawals. But rate of return is about how the money that's invested has done so. It shouldn't be counting what you're putting in. That's a kind of a false rate of return because it's you putting money in. So that's number one. Number two, you really should be doing both. Do not give up on the 401k. It's not the 401k's fault that the investments aren't doing well because almost every 401k I've ever seen in the history of the world has plenty of good options. It may be, and you had mentioned that your company funded plan is really conservatively invested. It may be that your 401k is too heavily weighted to super conservative assets. Maybe it's bond heavy, maybe it's a target date fund that's already shifted much into safety assets.

[Krista Dibiaz]

But 9% doesn't sound terrible to me if it doesn't include his contributions for the 401k.

[Wes Moss]

Yeah, but if you look depending on when you're looking at this market. Right.

[Krista Dibiaz]

The last few years.

[Wes Moss]

Yeah, the last. Over the past year. Yes. The S&P 500 is up way above that. So it probably just means you haven't been participating in stocks at a high percentage. And it may be very much about your own mix. So just take a look at the mix. And I would be saying yes to both. Do not stop the 401k. No, no, no and yes, yes, yes to starting and also doing the Roth.

[Krista Dibiaz]

Okay. Jack in Missouri says, hi Wes, I have a target date fund that has an expense ratio. The TDF holds other index funds with their own expense ratios. Am I getting charged by both the TDF and the index funds? I have Vforx for reference.

[Wes Moss]

Jack, I thought about this. I've thought your same question over the years and once every so often I'll look this one up. It kind of makes sense if you open up a target date fund and it's got seven different mutual funds in it and each one has an expense ratio and then you look and see that the target date fund expense ratio is the IS X. I've thought the same thing, man. I've thought is that the expense ratio but it's also 0.2 and 0.1 and 0.05 and 0.72. I've been there and I've looked this up. So I'm very secure in this answer, very sure of this. The mutual fund is going to publish the all in expense. There's not another double dipping that's happening. So if your target date fund is 0.12%, it's counting all of the underlying costs and all those other components within. It's not going to be more than what is published as the parent fund fund, if you will, ETF or and this goes for ETFs too. It's not just mutual funds. You're seeing the all in cost.

[Krista Dibiaz]

All right, we're going to take a quick break and then when we come back you're going to talk about potential second careers, side hustles, maybe even becoming a financial advisor.

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[Wes Moss]

Welcome back to Ask an Advisor. Wes Moss along with Krista Dibias. And you brought this topic up, which I think is a really good idea on just second careers. We get a lot of questions about that.

[Krista Dibiaz]

We do, we do. And we hear stories from people too, or part time work or maybe one of their core pursuits is, I mean volunteering is a little different but you know, they don't want to completely get out of the workforce or they want to try a new career they've always wanted to try.

[Wes Moss]

There are two ways to think about this. One is just career switching and one is second act career. When you maybe you're further along in your planning, you've already saved a fair amount of money and you can afford to maybe take a step down on income to have better quality of life. And Chris, I do see this all the time. I mean we, we run ragged in America, we work so hard and companies continue to ratchet up the expectation. I, I'm, I think a lot of people have noticed this. Wall Street Journal wrote about this a couple months ago, artificial intelligence as an example. What has it done? It's created more work for everyone and more expectation. So if you were contributing or producing five things a week now your boss might be saying you need 15 things a week because you can do everything faster and better. Which is an interesting phenomenon. We have more pressure than we ever have and that leads to people saying, look, I'm really burned out on my primary career so I want to switch. So the first question to ask is, are you financially ready to downshift? Because it's very difficult to go from that 247 type job that so many of us have making 100,000 or 200 or $300,000 a year to doing something with a lot more flexibility than you actually like and still get the same amount of comp compensation. So it's usually for folks that are a little later in the planning phase and you can afford, you've already saved a fair amount, you can afford to take a little bit of an income, step back. So you. The first question in all these career switches is just why? Why do I want to do that? And very often the answer is I need to do this for my life and I need to do it for my family. And there's no better answer than that. There are no better reason than that. So I'm a big supporter of being able to do this. Number two, what are your transferable skills? Very often people can take what they were so good at and made a whole lot of money in taking those same skills and doing it in another industry or another career and they are transferable maybe for not, not the same amount of money, but at least some that continues to support your plan. And, and then three, gotta just mention one of those.

[Krista Dibiaz]

I makes me think about it becoming a teacher. Some people wanna teach, you know, what they did in their career, but then they have maybe summers off and which

[Wes Moss]

leads me to the point of demand. I always think about if you're gonna do anything in the world we live in, sell a product or go into a career, think about the demand for that career long term. So that's what sparked this. Yeah, there's a huge shortage of teachers and there will be for probably, who knows, forever. There's a huge shortage of people in the medical profession. There's a huge shortage in a lot of different industries. There's ironically a big shortage of software folks. You want to be in a career where there is a shortage or there's a lots of demand for what you're going to be doing, which goes to another group. Kristen. If you're listening to financial podcasts like the Clark Howard show and many other great podcasts, you're probably interested in money. So we get a lot of questions about people becoming financial advisors. And even though we answer questions here very often about do it yourself investors, here's the reality of the demand picture for financial advice in America. We have 11,000 people a day turning 65 this year. Those people, 51% of those people or more are using financial advisors. So more than half of the nation. And as assets go up, the percentage of those families with higher and higher net worth, the percentage of folks using financial or getting financial advice, seeking it, finding it goes up and up and up. There is a huge shortage of financial advisors or I've read articles that were 300,000 financial advisors short in the United States because it is a very popular career in the 90s and the average financial advisor is getting ready to retire as well. So you've got a lot of people retiring from the industry, less people coming into the industry and more people getting wealthy and more people turning 65 than ever. So the demographic set up that there's a huge shift. There's three quick things to do and if you've ever thought and I'm going to try to talk Krista into becoming a financial advisor one day. First of all, you have to have the educational background, not necessarily financial education or accounting or finance or even business, but you do need to have a bachelor's degree. And yes, it's better to have it in economics or finance or something. But I know lots of great financial advisors who were history majors, biology majors, music majors, all across the board. But you do need a bachelor's degree. That's one. And the cfp, that is something that after college you can go ahead and study for on your own and take the certified financial planner certification which takes maybe a year, could take two or three years. Those are the first two steps is the education side. The second step would be you've got almost have to get a job at some sort of financial firm to get the real world education of doing the trade, if you will. A lot of solo financial practitioners out there that didn't necessarily work for the big firms, which I don't know how that happened. Well, for every solo financial Advisor out there, 95% of them worked somewhere first before they went out on the roads. You've got to get the experience at a larger firm which will help you also get your licenses. So this is the education real world advice to get a license. And then three is working with a firm to build up a client base and start. You're either maybe supporting a team that has plenty of clients that need lots of work to do and there's a lot of those financial advice jobs out there or you're building up your own practice and finding your own families to help. So those would be the three things. Takes a couple of years to get that done. But it's a great long term career. Just looking at the demographics of the under supply and great demand when it comes to financial advice.

[Krista Dibiaz]

All right, well, Amy in Indiana has a related question. She says hello, how Do I end my relationship with my financial advisor? Two years ago, I realized that I'm paying approximately $800 a month in management fees. So I took 15k, opened a Vanguard account, and with the help of Clark and Wes, started teaching myself how to manage my own investments. Through regular contributions and diversified investing, I've managed to grow that 15k to 174k. I have read just about every article on clark.com has on investing. I listened to every one of Clark and Wes's podcasts religiously. And I feel like I'm comfortable managing all my investments on my own without the assistance of an advisor. I'm just not sure what the process is to transfer my various accounts from my financial advisor to my Vanguard account, though every time I look at these accounts, I feel overwhelmed. Please help. I appreciate Clark and West so much, and I'm so thankful to have found them. So how does she break up with her financial planner, Amy?

[Wes Moss]

It's. It's a very straightforward process. It sounds like you've got a bunch of different accounts, so that can be overwhelming. Let's say you have five different. You may have 10 different accounts. What you need to do at the firm you're going to be using moving forward. You mentioned Vanguard is open an account in the same name or the same titling as where they are today. That's the main thing you need to do. Then the firm, once you instruct them, you'll do paperwork for this. The firm, in this case, it's Vanguard. You'll sign the paperwork to move the assets and they will instruct the firm of where they are currently held. Vanguard will do it for you. Vanguard will break up with Advisor.

[Krista Dibiaz]

So you don't even have to send them a text.

[Wes Moss]

Not really. Not really. And as long as the account titles are the same. Brokerage account to brokerage account. IRA to ira. Inherited IRA to inherited ira. Roth to Roth in your name. Let's say as long as those match up, you can move the assets as they are. It's called in kind. And the funds, ETFs, individual companies should go over into your new accounts as they are so that you. You're not having tax consequences.

[Krista Dibiaz]

So the advisor just comes into work one day and all of his stuff's gone.

[Wes Moss]

And Amy's gone. And Amy's just gone.

[Krista Dibiaz]

All her money's gone. Good luck with that, Amy. Okay. Emma in Georgia says, for Wes, I hear a lot of having more invested accelerates the compounding. But I wonder whether that needs to be in one index fund versus having A little bit spread out across different funds. For example, does a portfolio with a hundred thousand dollars in VT compound more quickly than one split between multiple funds like 50k in VXUS and 50 in VTI? Or does it not work that way?

[Wes Moss]

Yeah, there is a little bit of this. The way our brains look at an account, we hear about compounding. You want a big number that starts to compound on itself. So you get this visual of this snowball. The reality is, mathematically, whether you chop the snow, let's say there's a hundred thousand flakes, whether it's in one big snowball or 10 different accounts, the math is exactly the same. If you have four accounts with all the same investment and they're all doing the same, it will grow in aggregate the exact same amount mathematically as if it were one account or 10 accounts. The additional question you're asking is different investments. One's a total market index. I think one was a total, maybe an international index. That just depends on how that particular investment does. So there's no way to say that this ETF or this fund will do a little bit better or worse than another fund. But from a compounding perspective, it's all your accounts in aggregate that compound the same as if they were in one.

[Krista Dibiaz]

Okay. Roger in Connecticut says, hi, Wes. I have a question relating to target date funds. Tell me if I'm wrong. To me, target date funds are perfectly fine for the accumulation phase. But once you retire, I don't think these funds are good at all. The way I see it is that when you need to pull money selling target date funds shares, you are selling both stocks and bonds. If stocks are in the toilet, you're selling them at a loss. It seems to me that stocks and bonds should be isolated so you can sell based on market conditions. At the time, I had a CFP pushing this to me, and I flatly refused. But perhaps I'm wrong. Thanks. I love the show don't tell Clark, but I prefer the content on West Days.

[Wes Moss]

Roger, I like you for so many reasons. I love that you use the word toilet. If stocks are in the toilet, that's a great way to think about it. I agree. Yeah. I mean, if you are pulling money from your accounts, you're in this new phase, distribution. You got to pull money out. Why wouldn't you want to be able to choose where you're pulling it from? And if you have one fund, that's the target date fund, which is a good. Clark and I've talked about this. They're good. They're not great, right? They're pretty good. All one size fits all type investments are pretty good and better than what people used to do. A lot of people used to before target date funds are invented so they're good. But when you're in distribution, why would you want to be selling everything when you need cash every month if stocks are in the toilet? That's why you have dry powder to sell that piece of the equation to wait for stocks to come out of the toilet. Exactly.

[Krista Dibiaz]

Tempted to call something else?

[Wes Moss]

You're right on so many fronts, my friend.

[Krista Dibiaz]

Right. Okay. Well that's it for us. Actually that was the last question for today's podcast. Thank you for being with us. Next week we're actually going to give Wes the week off the week after the 4th of July.

[Wes Moss]

Thank you, Krista.

[Krista Dibiaz]

And we will be back in two weeks with another episode. Enjoy the rest of your day.