07.22.25 Ask An Advisor With Wes Moss

Summary

The Clark Howard Podcast – Episode Summary: "Ask An Advisor With Wes Moss" (Released July 22, 2025)

In this insightful episode of The Clark Howard Podcast, host Clark Howard teams up with financial advisor Wes Moss and Krista Dibiaz to debunk common investment myths and address listener questions. The episode, titled "Ask An Advisor With Wes Moss," offers a wealth of knowledge for both novice and seasoned investors aiming to optimize their financial strategies.

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1. Introduction to Investment Myths

The episode kicks off with Krista Dibiaz introducing Wes Moss, who delves into the topic of investment myths—a prevalent theme that often misguides investors. Wes emphasizes the importance of distinguishing between commonly held beliefs and factual investment principles.

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2. Debunking the Top 10 Investment Myths

Myth 1: You Have to Be Rich to Invest

Wes Moss [00:55]:
"You've got to be rich or wealthy to really invest."

Wes challenges the outdated notion that investing is exclusive to the wealthy. He highlights the democratization of investing, noting the reduction in trading costs and the availability of low-minimum investment options. Platforms like online brokers have eliminated barriers, allowing individuals with modest funds to participate in various investment categories, including stocks and private markets.

Myth 2: Investment Timing is Everything

Wes Moss [02:30]:
"Timing is not everything in the stock market."

While acknowledging that timing can influence investment outcomes, Wes argues that consistent participation is far more crucial. The unpredictable nature of markets makes perfect timing nearly impossible. Instead, a disciplined approach of regular investments tends to yield better long-term results.

Myth 3: Cash is King

Wes Moss [05:06]:
"Cash is not king. It's good in measured doses."

Although holding cash can provide safety during market downturns, Wes cautions against overreliance on cash investments. With returns barely keeping pace with inflation, excessive cash holdings can erode purchasing power over time. He recommends maintaining a balanced portfolio that includes equities to ensure growth.

Myth 4: Bonds Are Always Safe

Wes Moss [05:19]:
"Not all bonds are safe."

Wes explains that the safety of bonds varies based on factors like duration and credit quality. Short-term government bonds may offer lower risk, whereas long-term bonds can be volatile and susceptible to interest rate fluctuations. Additionally, corporate bonds carry credit risks dependent on the issuing company's health.

Myth 5: The Stock Market is Like Gambling

Wes Moss [09:25]:
"The stock market is like gambling in the really short term. But over time, it's not that the house always wins."

Comparing the stock market to gambling underscores the short-term volatility and risk. However, Wes points out that, unlike a casino, the stock market doesn't have a "house" and historically tends to grow over the long term. Consistent investment and staying the course can lead to substantial wealth accumulation.

Myth 6: If the Market Goes Down, You've Lost Money

Wes Moss [25:16]:
"If the market is down, no, you haven't lost money if you haven't sold."

Temporary market declines do not equate to permanent losses if investments are held. Wes likens investing to an escalator with inevitable dips, emphasizing the importance of remaining invested to benefit from eventual recoveries and long-term growth.

Myth 7: Past Performance Tells You Everything

Wes Moss [29:55]:
"Past performance really does not predict future results all the time."

While historical performance can provide insights, it doesn't guarantee future outcomes. Wes advises caution against relying solely on past performance, especially with actively managed funds that may falter once initial success periods end.

Myth 8: Real Estate Always Goes Up

Wes Moss [30:50]:
"Real estate has been pretty darn steady in an uptrend. However, we've had some massive dips."

Wes dispels the belief that real estate is perpetually appreciating by recalling the housing crisis of 2006, where national prices fell by 35%, and some regions experienced declines of up to 70%. He underscores the cyclical nature of real estate markets and the importance of considering maintenance costs and taxes.

Myth 9: You Need to Beat the Market to Win

Wes Moss [31:15]:
"You don't need to do it to win."

Attempting to outperform the market consistently is challenging and often unnecessary. Wes advocates for average market returns, such as 7%, which can sufficiently grow investments over time without the pressure of outperforming benchmarks.

Myth 10: Happy Retirement is All About Money

Wes Moss [33:01]:
"Happy retirement is all about money—but it's only half of the equation."

Financial security is vital for a comfortable retirement, but Wes highlights that non-financial aspects like health, social networks, and personal pursuits are equally important. Balancing financial planning with fulfilling personal activities leads to a more holistic and satisfying retirement.

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3. Listener Questions and Expert Advice

A. David from Georgia: Portfolio Allocation Calculator

David's Concern:
David seeks a free tool to assess his portfolio's allocation across stocks, bonds, and cash without sharing sensitive information.

Wes Moss [10:32]:
"There are tools that will do this, but you still have to sign up and make an account."

Wes suggests platforms like Morningstar, Empower, and SigFig, which require account creation to analyze holdings. He also mentions the innovative use of artificial intelligence (AI) tools that can provide detailed portfolio insights without the need for traditional services.

B. Daniel from Iowa: Feeling Behind in Retirement Savings

Daniel's Situation:
At 43, earning $50,000 annually, Daniel has $110,000 in his Roth IRA, $110,000 in a brokerage account, and $15,000 in a 401(k). He's concerned about lagging behind peers.

Wes Moss [14:13]:
"You're way ahead when it comes to the median number. The average is always going to be higher because there's a few of them that have a ton of money."

Wes reassures Daniel that his savings exceed the national median and average, emphasizing the skewed nature of averages due to extremely wealthy individuals. He encourages focusing on personal progress rather than external comparisons.

C. Derek from New Jersey: Whole Life Policy for a Special Needs Child

Derek's Inquiry:
Derek questions whether maintaining a whole life insurance policy is better than investing the same funds in index funds for his special needs child.

Wes Moss [19:46]:
"There is some stability to that. It can serve some sort of role or place in your overall planning, but it's not the most effective way to maximize your investment return over time."

Wes advises that while whole life policies offer certain benefits, such as borrowing against cash value, they typically provide lower returns compared to investing in equities. He recommends considering term life insurance paired with investment in index funds for better long-term growth.

D. Darren from Tennessee: Auditing Managed Accounts

Darren's Question:
With over $4 million in professionally managed Vanguard accounts, Darren wonders if he should have his accounts audited regularly.

Wes Moss [35:46]:
"You don't need to hire an audit firm or even a CPA to do this, but you should be looking at your statements every month."

Wes assures that Vanguard is a reputable firm with minimal error rates. He emphasizes the importance of regularly reviewing account statements to monitor fees and investment allocations, rather than seeking formal audits.

E. Patrick from New York: Robo-Investor vs. Index Funds

Patrick's Dilemma:
At 35, Patrick and his wife are maxing out their 401(k)s and contributing to a vacation brokerage account managed by Schwab's robo-advisor. Dissatisfied with the portfolio's performance and cash allocation, he wonders whether to shift to a low-cost S&P 500 index fund.

Wes Moss [39:21]:
"I wouldn't fold it down and pay a bunch of taxes in order to do something else. But what I would do is open another one and start contributing to that one."

Wes advises maintaining the existing robo-advisor account to avoid tax implications and suggests opening a separate brokerage account for direct investment in low-cost index funds. This approach allows Patrick to optimize returns without disrupting his current investments.

F. Aaron from Ohio: ETF vs. Mutual Fund for Donations

Aaron's Challenge:
Aaron finds it cumbersome to donate mutual fund shares to his donor-advised fund (DAF) and considers switching to ETFs but is concerned about costs.

Wes Moss [41:27]:
"ETFs are actually a really good answer."

Wes recommends transitioning to ETFs, which are treated like stocks and typically incur lower transaction fees. He suggests aligning the brokerage and DAF accounts within the same firm to streamline the donation process and minimize costs.

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4. Conclusion: Balancing Financial and Personal Well-being in Retirement

The episode wraps up with a discussion on the dual importance of financial security and personal fulfillment in achieving a happy retirement. Wes Moss underscores that while financial planning is critical to eliminate anxiety and provide comfort, personal pursuits and strong social networks are equally vital for overall well-being.

Wes Moss [33:06]:
"Happy retirement is all about money—but it's only half of the equation."

Krista Dibiaz adds that retirees should focus on developing core pursuits and nurturing relationships to ensure a fulfilling post-working life.

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Key Takeaways

• Investing is Accessible: Modern investment platforms have democratized access, allowing individuals with varying financial backgrounds to invest effectively.

• Consistency Over Timing: Regular investment participation typically yields better long-term results than attempting to time the market.

• Balanced Portfolios: Diversifying investments beyond cash and bonds to include equities can help combat inflation and promote growth.

• Critical Evaluation of Myths: Understanding and debunking investment myths is essential for making informed financial decisions.

• Personalized Financial Advice: Tailoring investment strategies to individual circumstances ensures optimal outcomes, as demonstrated through listener questions.

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This episode of The Clark Howard Podcast serves as a comprehensive guide for listeners seeking to enhance their investment knowledge and financial planning strategies. By addressing common myths and providing expert advice on real-world financial dilemmas, Clark Howard and his team empower individuals to achieve greater financial freedom and security.

Transcript

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[Krista Dibiaz]

Welcome to Ask an advisor Krista Dibiaz here.

[Wes Moss]

With the West Moss Wesmoss. Hey Krista.

[Krista Dibiaz]

Hello. We are going to talk investing as we do every single week on Tuesdays. Share it with a friend if you are subscribed to our yout YouTube channel YouTube.comclark and wherever you're listening, if you could follow the podcast. It really helps us out and share with a friend.

[Wes Moss]

All right, so we're gonna be diving into a long list of Q and A today, which I love and kind of inspire. They're, they're inspiring, I would say. The questions are keeps me on my toes, makes me think. And today I wanted to just talk about investment myths. There's so many of them. I mean maybe we probably do 100 of these, but really let's just do I think 10 that just jump out when I was sitting down kind of thinking this through. These are like the first 10 I got to, I think I couldn't stop at 10. So I have a bonus one and another bonus one. But I, I think we're going to get to five right now and then we'll do the other five a little bit later in this same episode. But let's start with 10 investment myths. All right, first of all, what gets said oftentimes can sound right and make sense. Of course that sounds right but can be totally pretty misleading or mostly untrue. And that's why, why it's a myth. And there's a lot of them when it comes to the investing world. But most of these sound like good ideas and they sound pretty much right. And maybe in some instances they do apply. But for the most part I think they mislead folks or they Take people down the wrong path. So here are a couple of them and I'll say them as if they really are true. So number one is you. You've got to be rich or wealthy to really invest.

[Krista Dibiaz]

It's super intimidating for so many people.

[Wes Moss]

Number two, investment timing. Is everything really about this? Cash is king. Especially in uncertain times. Of course that's true. Or is it a myth? Number four, bonds are, they're safe. Maybe sometimes they are, sometimes they're not. Myth number five, the stock market is like gambling. Who's gonna argue with that? Stock market is like gambling. Well, is it? So those are the five. And let's just talk these through. You, you have to be rich to invest. There was a time and a lot of these have some legacy or anchor of truth. And then in the world has changed and we still HEAR Something said 50 years ago. Well, isn't that still a way that grow up and it kind of passes down generation to generation? It sticks a little bit. But, but there was a time when it was only really wealthy investors who had a stockbroker on Wall street that could afford to put extra money away and actually buy shares in a company. And that's just, that's just not true at all anymore. It's not. For a select super wealthy audience, there's been great democratization when it comes to investing, particularly in anything in the public markets. Used to be a hundred dollars a share to buy a stock or 50 or ridiculous commissions. And then the big discount brokers came along and they went down to $50 and $25, then $15 and $12 and $9 and $0. So trading costs have been virtually eliminated. So you don't have to spend a lot of money to invest. You're investing the money and it's not necessarily. You don't have a big chunk going to someone else as a middleman. The online investment companies have, have totally brought down, have brought down the walls on not just stocks, but on all sorts of categories. Stocks, commodities, et cetera. It even used to be true, not all that long ago that to get into private company deals was only for the really rich. It's the hundred millionaires and the billionaires and they're the only people that can get into the private markets. There have been a flurry of companies that have brought even private investing down to minimum investment here. A million bucks if you want to get into this private company deal. There are several companies that brought that down to $5,000 or $10,000. So the walls of isolation for the super rich have been mostly destroyed. And investing is not just for the rich. Investing can be accessed by anyone that wants to really be an investor.

[Krista Dibiaz]

Proven by so many people over the years. On Clark's birthday episode, so many people wrote in thanking him where they started with so little. I mean it's just get rich slow, right? It's investing dollar cost averaging and it.

[Wes Moss]

Really, I've seen it work so many times. Folks not making a ton of money, saving a little bit, but they're doing it. It's not the fastest investor, it's the investor with the most endurance. Number two, timing is everything. That of course timing is everything. Would I rather buy a stock or get into the market when it's down 20% than up 20%? The answer is that timing can help, but it is. Timing is not everything in the stock market. Participation is everything. So it kind of relates back to the first one. Participation is first of all. You cannot ever have perfect anything when it comes to timing. The markets are too erratic. I mean they'll react on a headline, a word, social media posts. There's no way to ever time. If we thought it was hard to time it 20 years ago and 10 years ago, it's got to be even harder today. So erratic in any given day because of headlines and news and media. So timing can help you but because we can't ever have perfect timing over and over and over and over again, you have to default to the what I think is the next best, best thing and that's participation. Meaning that as long as you're participating for large chunks of time and we're talking about the general equity markets here, that's really what matters and that's what gets people rich. Timing is not everything. Maybe something, but it is not everything in investing. Number three, cash is king. Cash is king. Every time there's a crisis, I think Covid the housing crisis, even the tariffs earlier this year and we're still in that world but the market meltdown reaction to that invariably you're going to have people come on television say I've been in cash and cash is king. Okay, you can't argue that you want to have some cash. But if you're an investor that is sitting out all the tough spots in the market in cash, the market leaves you behind and when it recovers, you do not get that cash to work by and large because the market leaves you the cash investors behind. Cash over time as well has it's been an okay rate of return depending on which period of time you're looking at it it's been 2%, 3% a year on average. That really barely keeps up with inflation. If you're a long term cash investor and of course we need to have some cash and some safety money but if that is your overall investment strategy, it's not going to keep up with inflation over time. So cash is not king. It's good in measured doses for bonds are always safe. Well in some cases really short term ULTRA High quality U.S. government bonds, they are known as the risk free rate. But there's a lot more to it than just short term government bonds. There are intermediate term and longer term bonds and the longer the duration of a bond maturity. So a 30 day bond, I would say that's very, very safe. A 30 year bond that'll move in price as much as a stock will very erratic in price because you're way out on the seesaw. And as rates go down those prices can go web rates go up. A long term bond can go way down in price, not to mention the credit quality of bonds. And not every bond is going to have the ability to pay its owners back. So if you have a company that's doing well, all of a sudden it's not doing well, it could have problems paying interest and paying you back a maturity. So not all bonds are safe. Some bonds can be really safe, some bonds can be really risky. Number five, the stock market is like gambling in the really short term. I would say that is true is that in any given day the market is a gamble. We don't know even if you have good earnings numbers, stocks can still go down and you've. I think my company is going to do really well this quarter and they do stock down 8%. What. So there is an element of, of risk and high uncertainty. A little bit like gambling in any given day, week even in any given year. But over time it's not that the house always wins. There's, there's not a house.

[Krista Dibiaz]

Right.

[Wes Moss]

It's your money, it's your house.

[Krista Dibiaz]

In fact over time if you're broadly invested, the house doesn't win. Right. I mean if there were a house, you win.

[Wes Moss]

Yeah, but in implying that there's like somebody else wins like a casino.

[Krista Dibiaz]

No, no, it's totally.

[Wes Moss]

Maybe if you think the big companies they take rake money off of it. There's much less of that today.

[Krista Dibiaz]

Like if you gamble in a, in a casino you're set up statistically to fail. But if you dollar cost average your money and you stay in the stock market over a long period of time.

[Wes Moss]

The Odds are in your favor.

[Krista Dibiaz]

Your favor. Right.

[Wes Moss]

Not the house. So it's. In a lot of ways, it is the. If you're in it for a long period of time, which, by the way, is the opposite of gambling. The longer you gamble, the more you lose.

[Krista Dibiaz]

Yes.

[Wes Moss]

The longer you invest, the more over time we win. So it's really. That is quite a myth, that stock market is like gambling.

[Krista Dibiaz]

All right, and we'll go to questions. This one came in from David in Georgia. I have most, if not all, of my investments or retirement accounts in mutual funds and would like to know where I'm in terms of allocation for my overall portfolio. Do you know of a free app or website calculator that would be able to tell me what the percentage breakdown of my portfolio is in terms of stocks, bonds and cash?

[Wes Moss]

Okay. This has changed a lot over the years, too. So David's in mutual funds. Where can you get analysis? There was a time, I don't know if this is 15 years ago. I remember Morningstar, which still does a great job of what you're doing. So what David's trying to do here is If I've got 10 mutual funds or five mutual funds, and they all have different stocks and they're. All those funds are different, wouldn't it be nice to be able to see what the whole pie looks like? Top 10 holdings, overall yield. If there's a bond portion to the allocation, what's the duration? Is. Are the short term, intermediate, long term bonds? What's the duration of those bonds? I've got seven different funds. But what are really the. If I opened up the hood, what are the holdings? And there. There are tools that will do this. The. There was a time, I remember you didn't even to sign up. You could just plug these things in and get a nice report. That is not the case anymore. So, yes, there are some free sites, but everyone that I've ever checked, you still have to sign up and make an account. So Empower does this. Sig Fig does this. Morning Star still does this, but you still haven't had an account. And the reason you have to have an account and you have to either type in or upload your holdings and then you can get this great report. It shows everything David is looking for. The catch is that they're going to be calling you and dripping on you because they're looking at your assets, too, and they want you as a client.

[Krista Dibiaz]

Mm.

[Wes Moss]

The one way I think around that would be maybe you sign up for a month on something like Morningstar at a really nominal fee for the month, utilize the tools and you don't have to keep being a subscriber the whole year. Now there's one more way to do this and this is pretty much brand new in the last year and I would say again pretty much no cost. If you already are using artificial if you're already using an LLM like Perplexity Cloud or GPT, it's remarkable at how they can X ray different ETFs, different mutual funds for you and what you used to have to use a service for. You can ask a language model or in use AI and get everything you're look almost anything you're looking for. Here are 10 funds. Well you can get the duration, the yield, top 10 holdings, top 25 holdings, average market sizes, industry sectors, all through just using AI.

[Krista Dibiaz]

Wow. All right, here's a question from Daniel in Iowa. I've heard the saying comparison is the thief of joy. This saying sums up how I feel about my retirement savings when I listen to financial podcasts and I hear about people half my age with more money than I'll ever be able to see save for context. I'm 43. I make $50,000 a year. I have around $110,000 in my Roth IRA, $110,000 in a brokerage account and $15,000 in my company 401K. I'm able to max out my Roth IRA every year and plan to do so with the catch up after age 50 until 66 or so. I contribute 16% of my pay to my company 401k with a 50% match up to 6%. I've looked at all the retirement calculators and to be honest I'm not sure I believe them when most say that I will have about a million to one and a half million in savings by age 66 based on a 7% return. I know that isn't a lot of money, but it probably enough to retire. But that being said, what would you suggest to avoid comparing what I have to what others have and not feel like a failure when looking at what others have done in a small amount of time compared to what's taken me years to save this much? Daniel I bet a lot of people feel like that. And doesn't Daniel have more than most people will ever have right now?

[Wes Moss]

Daniel I mean you're way your head of what you think. Yeah, and now I don't have this perfectly memorized in my brain, but the Federal Reserve does this survey of consumer finances and you can go in there And I think the last time they updated the historical version that you can use is 2022. So it's been a couple years. But in the category that goes, I think it's 35 to 45. You're double the retirement savings of a lot of people. So you're, you may feel like you're behind but you're, you're ahead when it comes to the average. And I think you're probably 4 or 5x above the median. Remember, the average is always going to be higher because, and this goes back to, and I love this comparison is the thief of joy. It's, you're so right about that. So I'm even playing into that by saying, well you're actually, if you really do want to compare yourself to America, you're way ahead when it comes to the median number. You're way ahead. And you're even ahead when it comes to the average of the meat. Now we just compared. So that's the thief of joy. So I shouldn't even have done that. But I just, that's the reality.

[Krista Dibiaz]

Well, I think in this way it's probably a good positive thing.

[Wes Moss]

You did really well. Yeah, and I'm not based on looking around, but the only thing that we see, all we see are home runs. Nobody writes about singles and doubles. I read an article recently about three friends that started a chicken truck in L. A. One was a stand up comedian and it was his idea. I've never done any like just not a business guy. $900. They started with $900. They sold three meals on their first night. It was like a hot chicken. I can't remember the name. Dave's Hot Chicken something. Now they have 300 locations. They did 7,600 million in revenue, projected to 1.2 billion. Just got bought by a private equity firm for a billion dollars. Wow, that's a story. Are they going to write about Daniel who's you know, saving 7% a year in his 401k? Yeah, I guess we're talking about it. But the world is full of home grand slams. Really grand slam stories, not singles and doubles. The reality is 99.9% of people that are going to end up wealthy are going to get there through the singles and doubles, singles and doubles for a long period of time. That doesn't count. So you're also comparing yourself to people who get inheritance, people who can get lucky, right place, right time. Imagine if you were even the first a thousand people that worked at Facebook. Well, those people are all multi hundred millionaires. Because they happen to work at a company that mushroomed and was a mega grand slam. So those numbers skew the averages because there's a few of them that have a ton of money and that's just not the reality. That is, it's possible, but the vast majority of people are not in those.

[Krista Dibiaz]

I would also say he's comparing himself to other listeners of financial podcasts who are making it on the air. And I mean, I'm stunned. I've worked with Clark for 28 years. I'm stunned by what I hear some people have accumulated at their ages too. I mean, people who are listening and writing into financial podcasts are really, really tuned. They're engaged, and they are doing everything they can. And so that's definitely skewed too. I love listening to it because it inspires me to do more, but I definitely don't feel like I need to be Clark or them. I just do the best I can for me. And it sounds like he is on track and doing amazing with his salary, maxing out the Roth, all these things. I mean, wow.

[Wes Moss]

It would great to do a survey and understand the average net worth of financial show podcast listeners, general population. I bet you it's 3, 4 or 5.

[Krista Dibiaz]

Super skewed.

[Wes Moss]

If you're listening to financial radio, podcasts, television watching, you're probably have saved double, triple, quadruple the population. That would just be my guess. But then we go back to. And here's why. The numbers, the questions that we've been getting over the last year, they don't surprise me at all. When somebody writes in and says, I have $4 million or $5 million, I'm not surprised at all. Because anybody that's been listening to something like this for 25 years, they're gonna probably get there. Maybe not 5 million. But Daniel, if you. Those calculators, I've seen them happen in real life over and over and over and over and over again. If you're maxing out your 401k, you're saving 10 or 20% a year, 500,000 bucks a month at 7% a year, when the equity markets have really done much more than that over time. That's just the math. It's hard to see it when you're at 50 grand and 200 grand, but all of a sudden you're at a million and the market's up 20%. Now you're at 1.2 million. Just made $200,000 in new net worth. It took you the first 10 years to get there, and it happened in a year. So that goes back to compounding. It gets really evident in the later years. Hard to see in the early years, but you're doing amazing and just have faith, keep doing it. The system will eventually work over time.

[Krista Dibiaz]

All right, this is from Derek in New Jersey. Is a whole life policy a good way to plan for a special needs child? I have enough term insurance and I'm also contributing to an Able account. I pay $775 a month for a $500,000 death benefit with a long term care rider. Am I better invest in cash in an index fund or stay with the whole life policy? Of note, I am a high income earner.

[Wes Moss]

First of all, the able account, which is a state account that I think in Georgia it's stable state. Georgia state Able, stable. That allows for you to you and family members to contribute a certain amount for someone that has a disability. So you're already doing that, which it sounds like for your son, which is amazing. If I'm doing some math here, on $775 a month times 12, it's $9,300 a year you're putting towards a whole life policy. And if you did that for 30 years, you'd have contributed $279,000 to the policy so that if you pass away, you get 500. So you, if you contribute that long, you're putting in more than half of what you're getting back. And over a really long period of time. If you look at the internal rate of return on that, it's, it's very low. Yeah, really low. You probably be 50, 75, 100% higher if you were doing that same 775,000 and you were doing some sort of broad market index over the next 30 years. Now we don't know the. I would say it would be much higher if you were investing that money in equities over time versus the most you can make no longer. The caveat is you can't be here for it. It would be $500,000. It's certainly not in my book a really good way to maximize your investment return over time. Now there is some stability to that. And yes, you can borrow from the cash value in your whole life policy. So it's not all bad and all wrong and it can serve some sort of role or place in your overall planning. And maybe it's even more important if something does happen earlier in life. And that's why we buy life insurance, so that your son is taking care of with that insurance money in your family. So I'm not saying it's a bad thing, but it's covering you in that shorter period of time.

[Krista Dibiaz]

Isn't that what term life is for?

[Wes Moss]

Right, and that's why I don't do any whole life myself. I've always just done term. It's the least expensive way to cover the risk. And that's really what insurance, life insurance is all about, of you not being here to be able to continue to earn for your family. So I like to maximize the insurance for the least amount of cost, which is just term. And then you would have much more money left over to invest that. That's by term. Invest the difference. That's the way I look at doing it. So may not all be wrong because you're doing a lot of different things here. You're doing the able account, you're doing the whole life policy. But that's a lot of money to be putting in every year for a whole life policy when you could be putting it in markets over time.

[Krista Dibiaz]

All right, we're going to take a quick break and when we come back, you're going to get to the rest of those investing myths.

[Wes Moss]

Myths? What if a myth. If a myth is a lie, does that make it true? I don't know. When we come back, we'll find out.

[Krista Dibiaz]

Okay.

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We all have moments when we could have done better. Like cutting your own hair. Yikes. Or forgetting sunscreen so now you look like a tomato.

[Krista Dibiaz]

Or ouch.

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Could have done better. Same goes for where you invest. Level up and invest smarter with Schwab. Get market insights, education and human help when you need it. Learn [e-mail].

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[Wes Moss]

Welcome back to Ask an Advisor. I'm Wes Moss along with Krista Dibiaz. We've got some more myths to go through.

[Krista Dibiaz]

I know. I'm looking forward to that. And I have more questions for you as well. And if you have a question for Wes or for Clark Howard, you can go to clark.com/ask.

[Wes Moss]

You know, I guess a myth is just, it really is. It's not a lie necessarily. It's a story that people believe that's not fully true. And that's what these are. There, there is a little bit of truth to them, but they're not completely true and they overgeneralize. And I think that can be that could hurt us as investors. So the number six on the list here, if the market goes down, you've lost money. If the market goes down, you've lost money. Sounds true. I should wait to invest until things feel better. Okay. Past performance tells you everything you need to know when it comes to investing real estate. Real estate always goes up, doesn't it? That's a myth, of course. And then you need to beat the market to win. Or wouldn't it be nice to beat the market? That's the only way you really win. Again, all myths. We'll start with the first one of the market's down, you've lost your money. So on paper, again, there's partially true. You have less value in your investment account because of 100 goes from $100,000 down to $9,000. And we also know that one of the most Popular benchmark. It's not the S&P 500. It is our own personal high watermark. That's what we're looking at as investors. So my account got up to $101,000. I'm always going to remember it got up to 101. So if it's anything less than that, if it's at 93, then I've quote, lost money in my brain. And the reality here is that very rarely will you ever be sitting at your high water mark. There'll be a day when the market, your account maybe makes a new high or maybe another day it makes a new high, but it invariably is going to be dipping from that and then eventually catching up. So it's this escalator with lots of drops along the way. And if the market is down, no, you haven't lost money if you haven't sold, because a temporary loss does not mean it's a permanent loss. And that's why I think that is a myth. I've lost money. Well, not yet you haven't sold. Stay invested to recover over time. I should wait till things calm down. It's the most I hear people say that every day. Every day. Should we just wait till these tariffs are all cleared up and everything's, we're not dealing with this mess anymore? Well, when it comes to equity investing, that strategy, it's almost the opposite is true. It's really, if you look at in the most recent big correction, the time that you really wanted to be invested. And again, I'm going against my timing myth here. But if you're really looking at markets where at their worst or the best time to be buying or not selling out at least was when we had maximum uncertainty volatility index when it peaked at 55 earlier this year. The markets have almost been been up ever since as the volatility has come down. So if we're waiting for no more uncertainty and everything to be cleared up, you're missing those times to be invested when you get a rebound. So that's another myth. Past performance tells you everything we need to know. So there is something to this past performance I think does matter. Why is Warren Buffett so popular? Because if you look at his investment history, it's been tremendous. So that matters and that should not be discounted. We invest in the s and P500 because we see over the last 20, 50, 100 years it's done about 10, 11% a year. So that past performance matters. But past performance really does not predict future results all the time. Particularly in the shorter run. And I've seen several studies that show five star mutual funds that are five star because they had really good performance, that invariably dropped down to one or two star funds because they had really good performance. But because they were somewhat in the right place at the right time, they were lucky in a trend and then the trend goes the other way. So when it comes to picking a particular investment, yes, I think a super long term track record is helpful. But if you're looking at an active mutual fund and you're relying on a team to be picking stocks, it sometimes can even be the opposite. Is that they did really well, but that means now they're not going to do well because they were caught in a nice tailwind that can and wins can change. Real estate always goes up. If you look generally over time. Again, just like most investment assets, whether it's the stock market, whether it's gold, whether it's bonds. If you look over a really long. When I do this, I'm thinking about a chart. A chart like this doesn't really help. A chart like this really helps.

[Krista Dibiaz]

So you had little hands chart like this and then big, wide, big wide hands.

[Wes Moss]

For those listening term chart I'm looking at is that real estate has been pretty darn steady in an uptrend. However, we've had some massive. We remember the housing crisis. The housing prices peaked in 2006 and they went down for almost two and a half, three straight years. Housing prices went down nationally 35% as the average house. And then we saw some towns were really bubbly. Cities like Las Vegas and Miami and some towns in California where we saw real estate prices drop by 50%, 60%, sometimes 70%. So there is this nice feeling of if I buy real estate, I own an asset and I get some utility out of out of it. But it doesn't mean that the prices always go up. They go up over long periods of time. That's something we can count on. But anything that's a year, two, three years. Absolutely. That's a myth that it always goes.

[Krista Dibiaz]

Sure. And if you, you know, you had the, the recent run up in real estate for so many people, you know, if you're new to the market and you see that happen, you might think oh, this is a no brainer. But yeah, if you've been a long term real estate investor or homeowner, you know that the ebbs and flows are real. And then the cost of owning a home, you have to think about that as well. A lot of times we don't think about that. The yearly maintenance costs, I mean, all the things.

[Wes Moss]

Property taxes.

[Krista Dibiaz]

Yeah, the taxes.

[Wes Moss]

So can be tremendous, which can outweigh the appreciation your property taxes can outweigh. So the cost of carry can be outweighed by the appreciation. Myth number 10, you need to beat the market to win. And this reminds me of one of our questions, I think earlier today or over the last couple of weeks is, are people thinking, gosh, it would be if the markets does 10 and I can do 11 or 12 or 15, then that's really how I can win. And the reality is here, that's another version of perfection. It's almost the cousin of great perfect timing is beating the market. Those cousins, they're not completely unattainable, but they're very unlikely that it's going to work out that way over time. You might beat the market in a given year or even a given couple of years, but it's really hard to continue to do that consistently over time. And you don't need to do it to win. When you do a retirement calculator, even the stock market is averaged. Call it 10%, a little more than that over a long period of time, even if you run those numbers at 7%. And if I think about just the mathematical rule, which is how long does it take money to double certain percentages? The rule of 72, you divide 7.2 into 72 and you get 10. That means if you're averaging 7.2% a year, just mathematically, you double your money in 10 years and that leads to winning. Your 100 goes to 2, your 2 goes to 4, and then your 4 goes to 800. And that's not with contributions, and that's only if you get that 7.2% rate of return. So it's very realistic to really win financially. And you don't need 10% in here to get it.

[Krista Dibiaz]

Okay.

[Wes Moss]

The quick bonus, which is my overarching theme, is that happy retirement is all about money.

[Krista Dibiaz]

Oh, yes, that's so true. I know that only because of you.

[Wes Moss]

Because of all your happy retirement. Part of it is true. Half of it is about money. And the number one financial concern we have in this world, and it's tied with number two, you would think would be number one. I would think number one is health.

[Krista Dibiaz]

Right?

[Wes Moss]

Health and wellness. That should be number one. But in my recent research, tied for number one and actually even slightly higher, if I'm looking granularly, is financial concerns.

[Krista Dibiaz]

Will I run out of money?

[Wes Moss]

Well, that's even. That's A different one. But my overall financial concerns in retirement weigh on Americans just as much as will my health hold up. So money is really important just because it allows us to have comfort and a lack of anxiety and economic freedom. And it allows me to do the things that I want to do, which is the other half of retirement, which is our core pursuits are our new purpose in retirement, which are all the things that we love to do. That doesn't need to be saving the world. It does need to be a full, robust schedule of the things you love to do and spend time to do it. It takes some capital, it takes some assets to be able to. So money's an important part of retirement, but it's only half of the equation.

[Krista Dibiaz]

I guess you would add on. And we don't have to go through it all. We've talked about it. But the happiest retirees, like you're saying, it's not really all about money, it's about those core pursuits. You know, everything about your life.

[Wes Moss]

Well, it's important to have some level of money, but we get also diminishing marginal returns or happiness per new dollar.

[Krista Dibiaz]

I mean, at a certain point, I'm not even near retirement, but you've got me thinking about what pursuits am I going to have in retirement to stay happy?

[Wes Moss]

What core pursuits are you going to develop, curate and explore? So you want a bench of these core pursuits and then what is your social network going to look like? Because those two components are social network, your family and your friends. Those three things, your core pursuits, your social network, family, friends, they cannot be understated. It is just as important as the money side of the equation.

[Krista Dibiaz]

All right, we'll go to questions. Darren in Tennessee wrote in with this one. I have professionally managed retirement accounts with Vanguard for me and my wife. The accounts include rollover 401ks IRAs, active 401ks brokerage accounts with cash, stocks, bonds, et cetera. We are still contributing every week above and beyond our 401ks. I get estatements constantly that I don't have time to read. Total in accounts is excess of $4 million. My question is, should I have someone audit my accounts every once in a while? Hopefully they're like a bank and they rarely screw up. What do you think? Am I asking for trouble?

[Wes Moss]

The short answer is no. You don't need to hire an audit firm or even a CPA to do this, but you should be looking at your statements every month or and Vanguard.

[Krista Dibiaz]

Has an advisory you could go to too.

[Wes Moss]

Well, it sounds like he's in the Vanguard advisory program.

[Krista Dibiaz]

Yeah. Yeah. Must be right.

[Wes Moss]

So, Darren, here's what I'm thinking is that first of all, Vanguard, I've never heard of any thing that's really. I've never known of a mistake or an issue with Vanguard. I just have not known that. And the knock on wood. And I'm sure there are mistakes, but there's such a big asset management company, I would think if there is one, they will rectify it for you. And this is why you do want to pay attention to your statements. Think of this. If you're in the professionally managed group, and I don't know what you're getting charged for that, but let's call it a third of a percent is one fee that you could be charged on $4 million. A third of a percent. It's approximately 12 grand a year. Now, it may be divided up in all your different accounts that are being managed. But if your fees are 15 and your accounts are at 4, then there's something wrong. If your fees are 5,000 a year for the professionally managed fees and your account's 5 million, then maybe I wouldn't ask them any questions because it's low. But the reality here is that you really do want to have a general idea of the numbers seem to make sense. When something starts to not make sense, that's when you make a call and you try to get a real answer. And that takes not really an audit for him to do. So I think that's you as an investor can go through and just make sure that the fees and charges in those accounts line up, you're able to log in. This is the other, I think advantage today to see if something's off. We can look at our accounts every day. I mean, if the market's up 20% in a year and your account is down for the year, maybe there's something wrong or you're. And I don't. I think it'd be less about a mistake and more about some sort of miscommunication. Hey, I thought I was doing. I thought I was in. In mostly stock funds. Turns out I was in all bond funds and bonds when were flat or down this year and stocks are up 20%, I think it's more likely that you would have a mistake. That's a miscommunication between you and the firm versus they're charging you some giant number or money's leaving the account again. Watch for all of that. But I think that's highly unlikely. You're gonna have to deal with it More likely it's a miscommunication. And that is why it's nice to be able to log in, look once a day, once a week, once a month so that you know you're not off track.

[Krista Dibiaz]

All right. Patrick in New York says my wife and I are maxing out our 401k but also contributing to a retirement vacations brokerage account with when we have any extra change to add. We're 35 now, so hoping to find a long term portfolio for the money. Currently we have about $42,000 in a Schwab intelligent portfolio robo investor. But after reviewing the performance, it looks like investing in just The S&P 500 would have significantly better returns. Plus they keep a good chunk of assets in cash, $3,000 currently, which we don't love. My question, would you cut ties with all of the funds in RoboInvestor, sell and reinvest elsewhere or just keep that money invested with the robot and start fresh with a new brokerage account and try to earn better returns via good old fashioned low cost index funds? Not sure of the implications on liquidating a seemingly complex brokerage account. Thank you, Patrick.

[Wes Moss]

Have you had the robot? And again, there's lots of different ways to be invested in a robo. There's 10, 20, 30 different ways. Usually if you've had it for a while you probably have a fair amount of gains and I would be hesitant to close it down and do something else because you might have a bunch of taxes in order to do so. By the way, I love that you have a vacation brokerage account. How cool is that?

[Krista Dibiaz]

I know.

[Wes Moss]

And it's already 42 grand. I mean that's a lot vacation, that's a lot of really nice trips, especially as you let that grow over time. So that's first of all, I think it's cool that you're doing it that way. I love when people are bucketing money. It removes a little bit of our guilt to when we want to spend it. Most of these robos do hold some cash and maybe one way they make a little bit extra money. But most of them now, and I'm not talking in particularly here about the one you mentioned, but they usually pay you commensurate cash rates. So if rates are at 3.5% usually your robocash should be at 3.5% too. So it shouldn't be that it's just sitting there doing nothing. And that may be part of a strategic allocation, but it's not a balanced portfolio with some cash which that's almost 7% and bonds and US international. That's probably, that's there's really no way that would keep up with the s and P500 because it's not the S&P500. So over time it's really hard for a balanced portfolio to keep up with a fully exposed, fully maxed out, no holds barred stock equity portfolio that's going to that's the whole market. And it's hard for a balanced portfolio to beat that. I wouldn't fold it down and pay a bunch of taxes in order to do something else. But what I would do if you don't love this kind of an account, open another one and start contribute to that one. And then yes. John Bogle, Clark, Howard, Krista, we would all be proud if you're doing low cost index funds.

[Krista Dibiaz]

All right, and this one comes in from Aaron in Ohio. I like to auto invest in Vfiax in my Vanguard brokerage account, but it's not a smooth process to donate shares to my non Vanguard donor advisory fund daf.

[Wes Moss]

That's what a daft.

[Krista Dibiaz]

Yeah, I'm thinking of using a brokerage account somewhere else. But would it cost me more to purchase Vfiax outside of Vanguard? I know that that fund and other Vanguard funds are tax like ETFs. Would auto investing in an ETF at somewhere like Fidelity or Schwab be an option? Anything else you would recommend?

[Wes Moss]

So again, a mutual fund is 5 symbol 5 letters and an ETF is usually 3. So you can tell the difference between the two. You can usually you can own these mutual funds that are let's call it Vanguard in Schwab or Fidelity. Most of those funds are all available but you may end up with a transaction charge for those and that's usually $25 or $30 somewhere in that neighborhood. So it does give you a little barrier to entry. And the very easy answer to that is that ETFs shouldn't have that problem is ETFs are treated just like stocks and you don't have a commission or a fee to buy them. And there should be no reinvestment fee as you're reinvesting your dividends. And there should be no problem when you're transferring. Well, less of a problem when you're transferring money from an ETF to the DAF of the donor advised fund. Now I think it's really simple to have a donor advised fund and a brokerage account in the same company. That makes it super easy. That's how I do it. So if you just go to an ETF portfolio versus mutual fund, you're bringing down the friction in the scenario of getting money into your donor advised fund. So I think ETFs are actually a really good answer.

[Krista Dibiaz]

Okay, well that. That does it for us today on Ask an Advisor. Thank you for being with us. Hope you have a great rest of your day. Clark will be back tomorrow with a brand new episode.