← The Clark Howard Podcast
The Clark Howard Podcast
10.21.25 Ask An Advisor With Wes Moss
00:34:41
The Next Big Shift in Retirement Investing
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- [00:00]
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- [01:00]
Krista Dibiaz
Welcome to Ask An Advisor where we here at Team Clark go deeper on all things investing for your future, having a happy retirement, how to manage your money. I'm Krista DIBIAZ here with Mr. Wes.
- [01:13]
Wes Moss
Moss and we are fresh off of comparing credit cards with Clark.
- [01:16]
Krista Dibiaz
Oh my gosh, it was so funny. We did film a little bit of it, but that was hilarious. Wes and Clark were looking at credit cards and Clark was telling you which ones you need to use for what things and how. What points are valuable, what points are not valuable.
- [01:29]
Wes Moss
I have one of those wallets that the credit cards kind of stick out and then you have to squeeze the money in the middle of all of them. It's not like it's not the best wallet, but so it kind of shows your cards and he goes, oh, you like that card?
- [01:42]
Krista Dibiaz
And you were like, I don't even know what it does.
- [01:44]
Wes Moss
Started a wonderful conversation about credit cards and then he started whipping out different credit cards. Say, why this one? This is why I like this one. This is my. How many points I get on this one? This is where I booked my travel through.
- [01:54]
Krista Dibiaz
Yeah, I know. All right, so today on the show, you're going to be not talking about travel or credit cards, but private equity. Which now is.
- [02:04]
Wes Moss
Huh.
- [02:05]
Krista Dibiaz
Private equity finding its way into our 401k plans.
- [02:08]
Wes Moss
It is. Private equity is coming to a 401k plan near you. Here's the reason I want to talk about this because it's first of all, it's happening. Or at least it seems like it's happening. Meaning that we have talked for a century about stocks and bonds and that's what's been in your 401k. And that's it. Now you may have a commodities fund that has some gold in it, maybe you have an option on that. But you have lots of different stock fund choices. You've got US and international and small cap and large cap and mid cap and maybe some sectors. And then you have some bond funds. And the bond you have corporate and government. And we've talked about those two categories literally forever. And it's a very big deal that there's going to be a new category in all of our 401k plans. Now it may not happen tomorrow, but the way that the Department of Labor and the SEC are looking at this, they've opened the door and the door's been open now for going all the way back to 2020. Then it was kind of shut. Now it's back open through a new executive order that they are looking into making private equity available as a new category inside your 401k plan. And that is the. I don't know of a bigger shift in the 401k world since I've been talking about 401ks. It's a really big deal. And what's interesting about it is that the Wall Street Journal has been writing about this all year and I saw an article recently and they essentially did a poll that asked, hey, who are you satisfied with the choices you have inside your 401k? And only 10% of people said no, I want more choices. So. So America's pretty satisfied with the choice they have inside their four 1.
- [03:53]
Krista Dibiaz
I think most people are kind of confused even between the choices they have. Most people are not, you know, they're just wish someone would tell them just what to go into for sure.
- [04:01]
Wes Moss
But what is private equity period? And there's a lot of private equity categories and then what it could look like in practice inside your 401k. And I don't know if it'll be next year or the beginning of next year when, when we start to see these as options within or at least exposure to because that's it's going to be interesting to see how you're able to invest in it. It's not, it's not going to be. You go out and pick a couple different private equity funds, there'll likely be slivers that you can opt into maybe inside of a target date type fund. So here's what's interesting. And only 10% of people said they were dissatisfied with the number of choices, 40 or 50% of people, depending on the kind of private equity they were asked about, even knew what private equity was. But once people learned that, essentially. Let's hear the numbers. 87% of all businesses in a large businesses in America, defined by $100 million of revenue or more are private. That's the vast, vast majority of the American economy. It's driven by private companies. And how do we know that? Well, think about the numbers. Back in the 90s, there were about. There were over 8,000 publicly traded companies in the United States. Today, there's only about 4,000. Really. So we remember the stock market has been shrinking in the number of companies forever. So that's still a lot. But You've got about 4,000 companies to choose from.
- [05:28]
Krista Dibiaz
Have the companies gotten bigger?
- [05:29]
Wes Moss
They've gotten a lot huger. Yeah, they've gotten enormously bigger. I remember when, I think it was Apple was the first company that hit a trillion. It was. Wait a minute. This, this has got to be the top. Now we have. We have 10 stocks in the S&P 500 that are way over a trillion.
- [05:45]
Krista Dibiaz
Right. But people wise too. I wonder.
- [05:48]
Wes Moss
People, as far as them and the size of companies.
- [05:50]
Krista Dibiaz
Yeah.
- [05:51]
Wes Moss
Well, here's what's happening. There's always been a huge private market, and it makes sense. It's a big deal to go public. You have to make the decision to now have a much more regulatory scrutiny. It's expensive to be a publicly traded company. So there are hundreds of thousands, if not millions of businesses in the United States. And they might start out as a mom and pop H vac company, but 30 years later, if that H vac company has $200 million in revenue, that's not a stock.
- [06:19]
Krista Dibiaz
Right.
- [06:19]
Wes Moss
It's a private company. So it kind of makes sense that there's. Of course, this is through lobbying and you've got the big private equity firms have been, of course, lobbying for. But it kind of makes sense. If there's only 4,000 companies in all of America to invest in on a public basis, then it maybe makes some sense for Americans to be able to tap into a whole nother world where investment firms think of them like mutual funds, private equity funds. They go out and they individually buy private companies, and they try to make those private companies more valuable, bigger, and eventually they will sell those private companies, and that's how they realize their profit. That's what private equity is. It's going out and buying a company that most people have never heard of, but still a giant company. Could be really a big company. So it's an interesting shift in the world that we live in, and it really does make sense. And my final analysis on this is that I'm excited about it. I am a fan of private equity investing. It's been some of the best returns I've gotten over the years in private equity, private funds. But I would say I would. I would be very cautious about it too, because it is. There's a lot of other things to think about. Here's the other thing. Private equity has been only for accredited investors. So even to this day, if you want to go out and put 100,000 or a million dollars. I know that sounds like a lot. Into a private company through an investment firm, you have to be qualified. You have to either be an accredited investor with a million dollars in net worth and 200 or $300,000 in income, or a qualified investor, which is a $5 million net worth. So private equity investing is really not open to many people. It's really only open to the point or the 1% or the 0.1%. What's interesting about. If this legislation or this new change goes through, your 401k plan becomes the qualified purchaser. Mm. So that means that anybody inside that 401k plan can have access to private equity exposure. There's private equity, there's private credit, there's private infrastructure, there's private markets, there are. There's cryptocurrencies. I don't think they'll show up in 401ks anytime.
- [08:38]
Krista Dibiaz
Oh my gosh.
- [08:39]
Wes Moss
Soon. But private equity is. Is kind of cracking the code. Through a new executive order in August, Department of Labor, the sec, all looking at being able to put private equity as part of your options or at least maybe within a larger fund for more diversification. And it'll be interesting to see how, how that goes. But it's a. I think it's a positive development. It's a brand new category that people have not been able to invest in for a very long time.
- [09:09]
Krista Dibiaz
Okay. Makes me a little nervous. But you're going to talk some more later about how to go about it, right?
- [09:13]
Wes Moss
Well, how it will likely work within a 401k plan.
- [09:17]
Krista Dibiaz
Okay.
- [09:18]
Wes Moss
And then we'll talk about what the different categories mean. Private equity, private credit, private markets, infrastructure, Evergreen private equity funds. It's a lot. It's a whole new topic.
- [09:29]
Krista Dibiaz
Yeah, it's exciting. Okay, we'll go to questions now. John in New York says, Wes, my wife and I have a pretty sizable net worth. Well, into the eight figures. We acquired this through smart investing, inheritance, and a lot of luck. We've been keeping the true value of our assets a secret from our three teenage children. We don't want them to grow up being entitled or feeling they don't have to try hard in school or work because they stood to inherit a large sum of money. Once they all finish college or decide what career path they want to go down, that's when we plan on informing them. My question is, what's a good financial course online class book to read that will give them enough know how so they have some sense of what they can do with the money? They had financial literacy class in high school, but that was more using credit cards, balancing their checkbook, and how to get a car loan. I want them to understand how investing works and how to be good stewards of their money.
- [10:17]
Wes Moss
John, I can think of a podcast.
- [10:19]
Krista Dibiaz
I could listen to a podcast or two.
- [10:21]
Wes Moss
It features Krista Dibiaz and Clark Howard, and I think that's a really good way to do it. So think of it. If you've got teenagers, yes, kids still read, but they still read books when forced to read. But it may be even easier for them to listen to podcasts and financial education. My short answer is this. I don't know if I agree with John on keeping this a secret. In my opinion, I don't think that's a good idea. There should be no clandestine you're secretly wealthy and that all of a sudden in 10 or 15 years now, you take the kids out to dinner and say, hey, by the way, we have $2 million saved. So for what? Just because you have money today doesn't mean your kids are going to grow up entitled. That's. That's your education around money and how hard it is to acquire, how hard it is to invest it, the long journey that it is. Because there is no podcast episode that all of a sudden teach them about the values of money and the understanding of money. And there's no book that will teach them. It is a lifetime of their, of what they're exposed to on how to respect money and understand how difficult it is to attain. And the pain of losing money or losing money on an investment, the upside of when you see money work for you and you have a financial gain, that's a lifetime process. And you're the teacher, John. You're the one that will educate them and, and if you want them to have the right values, well, guess what? They've got a good teacher. His name is John. And you're the one that gets to teach them the money values you want them to have. And I would start it like today. There's no reason to wait until they're older. Maybe. Yes, I get that they will be more responsible, but I think the education starts right now. John. And you're the best teacher.
- [12:19]
Krista Dibiaz
AJ In Oklahoma says hi Wes. I recently heard that if you have a certain amount, that is a million dollars in liquid assets, then you can then move to part time work. While liquid assets can supplement the loss of income, I assume through income investing. Is this a feasible strategy? And if so, how can we go about planning and working towards this? My wife and I are both in our mid to late 20s with only a small amount saved in a high yield savings account. But fortunately we have no debt. Thank you.
- [12:44]
Wes Moss
AJ My man. I think you're talking about fire. You're talking about the fire movements, financial independence, retire early, you have a million dollars and now you can take your foot off the gas. But it doesn't work in real life, in my opinion, when it comes to, in a really young age, I think it still doesn't work because what a million dollars would do if, let's say by the time you're 35 or something, you're in your 20s, you save aggressively, maybe you invest really well, you start a company, you sell it. I don't know what it is, but if you're in your 30s and you have a million dollars, technically that's enough to retire on. But that's if you were in your 60s and remember what a million dollars will be worth by the time you are in your retirement age, which then has to last another 30 years. So by the time you're 60, AJ you're going to need more than a million dollars to be retired. It might be two or three million dollars by then, but if you have it early, then there's no reason it shouldn't grow to that. What you don't want to do is start living off it this early so it's not compounding and not growing for the future. I think getting to a million dollars has a huge amount of advantages and it gets you lots of flexibility and optionality. So I think getting there doesn't necessarily mean, hey, you can stop working then. It also goes back to how much you're spending. I mean, if you're living, if you have no debt, you have a million dollars and you're only spending 50 grand a year, then sure, maybe you can work part time, you and your wife, and you're covering all your living expenses and you're still letting the money grow so that when you're in your 60s, it's got another 30 years to go and it gets you all the way to your 90s. So it gives you lots of optionality. I think you can make better career choices. When you have a nest egg, you can maybe take a little more risk, you maybe go start a business, but I think it affords you optionality and flexibility. And I don't look at the fire movement and I think they probably get the wrong branding. I don't. I don't really think fire is get 2 million bucks and you're retired. I don't. It's not really how it works because if you want to have kids and those kids are expensive, and then you have health care and your health care, their health care, then their college and then their weddings, that's a marathon that it's really difficult to just get to a million bucks and say, now I can just pay for all these things if I have a family for the next 10 or 15 or 20 years and then retire. I think it's a. Getting that million dollars does help. I think of it as the financial green zone for Americans through my research. So it's awesome to be able to get there. And maybe it gives you optionality and you can maybe work less. You don't have to be fully tied to a job full time that you don't love. But that to me is the. It's an optionality as opposed to, hey, now I can work part time all of a sudden.
- [15:36]
Krista Dibiaz
All right, Mike in California sent this one in. Vanguard recently published recommending having 70% of your portfolio in bonds. And there's a link to that story. If Vanguard is recommending 70% in bonds, isn't this something we should consider?
- [15:50]
Wes Moss
Mike? The answer is just remember where the source is. Vanguard does a timing model. I want to say it's the tv, it's the Vanguard value. I'm going to butcher this. They essentially run a timing model and they have an expected rate of return. That's pretty conservative for the timing model. If I'm getting this right, I could be wrong on this. It's around 5.5%. So it's a conservative goal they have. Think of it as almost how a pension fund might invest. Super long term, relatively modest goal of rate of return over time. Then what they do is that they will take their balanced model and they will adjust it between stocks and bonds. Essentially. Maybe one day it'll be with private equity too. So when stocks do really well and they're in the point where they're historically a little bit overvalued, which is really kind of where we are today, they look at that and they'll say, well, stock future returns over the next couple of years, maybe less than normal because they've already been so good and we have a conservative mandate or target, if you will. So for them, it doesn't really hurt them all that much to shift to be that conservative and have that much in bonds because bonds are paying 4 to 5%. So they can say, well, we're taking less risk because that gets us closer to our target anyway. It's a timing model. Good, bad or indifferent, they're just saying at this point in their goal, trying to get to their goal, it's okay for them to do that. Is it okay for somebody who's 30 or 40 or 50 to say, all of a sudden markets have done really well. Now I'm just going to go into bonds. I think that's a slippery slope as well, because now you're also trying to time the market and then you miss out on overall equity returns that we really, that that investment return we need is how we protect against inflation. So I think it's very interesting to look at what the Vanguard timing model is saying. I think it does speak that stocks have already done really well over the last three years, but I don't know if I would be following it to the letter.
- [18:05]
Krista Dibiaz
Okay, we're going to take a quick break right now and we come back more of your questions and you're going to talk about sort of the practicality. What is this?
- [18:12]
Wes Moss
Part two private equity coming to a 401k plan near you.
- [18:17]
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- [19:28]
Wes Moss
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- [19:56]
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- [20:48]
Wes Moss
Welcome back to Ask An Advisor Wes Moss, along with Krista Dibiaz, and we're headed straight back into private equity.
- [20:56]
Krista Dibiaz
Private equity pe.
- [20:57]
Wes Moss
I don't want people to take my excitement over this topic as though that they need to run out and do everything with private equity because it's just that I've dealt with private equity for many, many years, so I'm very familiar with it. And it's just fascinating to me that there's a real movement now in having private equity options included in your 401k. It's the SEC is looking at this, the Department of Labor. The door's kind of been open since about 2020. Then it kind of got shut. Now it's open again. The through a new executive order that came this past summer. And I don't know exactly when this is going to happen, but I wouldn't be surprised if starting next year or maybe the next, we'll start to see private equity as options in your 401k plan. Now, what's it going to look like and what are the different categories? So private equity. And during the break, we were talking through some examples. Private equity is geared around and think of this as very much fund based, by the way. If we all have exposure now in 401k plans, it's going to be through a fund and the private equity manager brings in money, they might bring in $100 million. And then they take that money and they go out and try to find a private business and they want to pay $20 million for it. They want to go in, they want to make it more efficient, they want to make sales better and cost tighter and turn that $20 million private company into a $40 million company and eventually sell that, whether it's to a competitor of the company or another private equity fund, and then that's how they realize their gains. As you can imagine, that can take a really long time. So the upside of private equity is that you're getting access now to not just the 4,000 or so public stocks we have in the United States, but the other 87% of the economy which are considered large businesses. In the U.S. 87% of them are private, $100 million in revenue per year companies. So the downside of this is that or the upside is that the returns in private equity. And again, this is also very manager by manager. Right, that's, it's very much like, it's like, like we're going back to the mutual fund a which one's a good manager. So it's not just as though we're going to have one big ETF that does all private equity. It's still going to be manager based. Makes me feel like we're going back 20 or 30 years with mutual funds. Who's good at this? Who's good at buying the $20 million company turned into 40? Who's good at buying the $100 billion company that's still private and turning into 200 billion?
- [23:35]
Krista Dibiaz
Yeah, because what if they buy a $20 million company and then it's worth 10 or 0?
- [23:40]
Wes Moss
And that happens a lot too.
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Krista Dibiaz
Yeah.
- [23:42]
Wes Moss
And that's why private equity funds are very much like mutual funds where they might have 20, 30, 50, 100 different businesses in one fund. So they're trying to get diversification, knowing that some of them will go to zero, some of them might not make it.
- [23:56]
Krista Dibiaz
Right.
- [23:58]
Wes Moss
So that's private equity. That's what they're trying to do. And it's across all different scales. It can be companies where they're buying for 10 or 20 or 30 million or billion dollar transactions that are private. The private world has gotten really big. I mean OpenAI now it's the biggest private company on the planet, is a $500 billion company. It's still not a stock, it's private. So that's what private equity is trying to do. And it's going to be in the form of if these end up in 401k plans, it'll be in something called a collective investment trust or a cit.
- [24:32]
Krista Dibiaz
Okay.
- [24:33]
Wes Moss
And we'll hear more and more I think about these CITs, but essentially a CIT is like a fund but instead of having stocks or bonds, it holds private companies. That's the mechanic. I think that's mechanically how these will enter into a 401 plan.
- [24:49]
Krista Dibiaz
Do you see like Vanguard having this?
- [24:51]
Wes Moss
Yes.
- [24:52]
Krista Dibiaz
So everyone will probably have this.
- [24:54]
Wes Moss
I absolutely do. There are going to be a lot of categories too. There's private equity proper, if you will buy a company for 50 million, sell it for 100. Then there's private credit that's lending privately to companies. So these would be investors that are saying, oh, this company needs a loan. We're going to give it to them because the bank's not going to give it to them because they have, let's say, risky credit and they are receiving the interest on that debt and they're trying to get the money back when the term of the loan ends. So that's called private credit. Again, a massive market outside of traditional lending infrastructure funds. We've probably heard of big companies where they. BlackRock mentioned this recently where they're trying to enter the world of building bridges and building airports and building roadways. Again, private infrastructure in the United States. These are multi billion dollar projects and a lot of them private equity is taking these on and if, if we end up investing in these and who's. No, who knows what'll actually be available in these 401 plans. But that's another category that you'll hear about.
- [26:03]
Krista Dibiaz
Okay.
- [26:03]
Wes Moss
And we'll see. So again, I like it because the rate of return in general have been more than the s and P500.
- [26:11]
Krista Dibiaz
Yeah.
- [26:12]
Wes Moss
In some cases 15 to 20% on average per year. The downside is the holding time and the illiquidity in a lot of these. And I think they're trying to solve for that in these cities. These collect these trusts and we'll see if they're able to solve for that. But you're not going to See S&P 500 International Fund Apollo Global Fund 17. It's not going to be that way. It's going to be more as though in your target date fund you're going to have all these options and maybe one of them says private equity exposure. And it'll be a bunch of different firms probably pooling money together and you'll get general exposure to what they're doing and what they're investing in in private equity.
- [26:53]
Krista Dibiaz
Okay. All right. This question came in from Orlando in Texas. I started a company, 401k for my employees this year and a few of them are already in a traditional IRA. I started with traditional 401k and then I added the Roth option as soon as I was aware of it. Would it be a good idea to encourage my employees to make the switch to Roth since the accounts are still fairly new? And would it be okay to leave any funds in the traditional as is, or would it be okay to cash out if the balance is fairly small? Our provider does not give us the option to do a rollover from one product to the other. So we essentially end up with different 401s. Please advise and I really enjoy the show.
- [27:32]
Wes Moss
Thank you. Orlando in Texas. I think the answer here for you is about education. Part of having a 401 plan is all about educating your employees to make the right decision for them. As you probably know, they're in different financial situations. Maybe you have somebody that's earning $50,000 and they're eligible for the 401 plan. Maybe you have somebody making $300,000. Their choice on whether to use the traditional side of the 401 or the Roth side of the 401, it's up to them. It is not your responsibility as an employer to help them make the exact right choice. It's your job to educate them so that they can make their informed choice. Because everybody has their own unique financial situation. So maybe the folks that are making 300 plus at your company, they may want to stick with the traditional because they're getting a big pre tax contribution and it's really valuable to them because they're high bracket and maybe the rest of the employees that are under that level, or let's call it 300 or let's call it $200,000 or less in income. Maybe it makes more sense for them to be really leaning on the Roth side of the 401k. So it's your job, Orlando, not to make the call for them or even encourage them. It's to make sure they know about it and they, they Understand what the Roth side means and the traditional side means so they can make their own choice. Sounds like by asking this question you're already doing an awesome job.
- [29:02]
Krista Dibiaz
Okay. Anne Washington says my husband is the likely heir for his sister, including her 401k and IRA. He is less than 10 years younger than she is. Is there any way for him to refuse the 401k and IRA money like there is for others with heritable assets? Alternatively, is there a way for him to keep this as his separate property? Washington is a community property state, but assets you inherit could be maintained as your sole property. I'm concerned for how this inheritance could affect our RMDs and hence Medicare costs.
- [29:34]
Wes Moss
There's a lot to this, Ann. First of all, the answer is yes. Well, let me start out by saying Ann, this is really an estate planning question. So you've got a. I would make sure you're talking to a Washington based estate planning attorney because the rules in Washington are going to differ from other states. So number one, let me just start out by saying this is definitely, this can be pretty complicated and you're going to want an estate planning attorney to walk you through this. If something happens to his sister and now he inherits this, he can, from my understanding, he can disclaim it as long as he doesn't have any distributions from it. I think he has to do it within nine months. But yes, he can disclaim the ira. He can't necessarily though choose who it goes to. So I believe it would go to the contingent beneficiary that's listed and then if there's no contingency, it may go back to the estate and then the estate would have to either be probated or you'd have to look at the will. But the other thing that's interesting about this is that if you are close in age, so if you're within 10 years, I think we all hear about the secure 2.0 act that got rid of the stretch IRA. And now you've got to, if you inherit an IRA, you've got to take all the money within 10 years. Well, if you're closer together in age, so sub 10 years, you're in a different category and you do get to do the stretch ira. So you do, your husband would get to potentially only have to take out required minimum distributions based on his lifetime and not just in the short 10 year window. I think most of the time you think of someone is maybe it's a parent or a grandparent and they leave money to another generation. And there's a huge age gap. So most people inheriting an IRA are subject to the Secure Act. You have to have the money pulled out in 10 years. In this case, it's in a different category. So one, I think he can disclaim it if he were to choose to. Two, he'd fall into a category where he could stretch it out over time. And three, and this is probably the most important part of this is that if you inherit money and again, financially, I can't see it being a net negative in any way. So just because you have RMDs and your income goes up, if it's that significant, that RMDs are a lot, you would probably end up having hundreds of thousands of dollars in an ira. So there's no real scenario that I can see financially where you would want to disclaim money because you think it's going to cost you money. There's almost no way for that to happen. Could an RMD increase your income and then increase your IRMAA amount in Medicare? If that's happening, that means there's a lot of money in that ira. So you have way more retirement money to be working with. So unless you really do not need the money, and that could very well be the case, then I don't see why you would need to be disclaiming it.
- [32:29]
Krista Dibiaz
All right. Steve in Georgia says, I'm recently retired and researching how to generate more income from my investments. I've seen people talking about covered call ETFs. Can you give us your thoughts on these?
- [32:41]
Wes Moss
Yes, I can, Steve. So first of all, this is something where think of a covered call. You can do this on your own, first of all. Second of all, you can hire some sort of or have an ETF to do it.
- [32:57]
Krista Dibiaz
Can you explain what a covered call is real quick?
- [32:59]
Wes Moss
Yeah. A covered call is when you own a stock, you sell the right. So you're, you're selling a call which is you're selling a right for somebody to buy that stock from you at a specific price. And if you think about the environment, why would you want to do that? If you think a stock is going to move sideways and not doesn't have a ton of upside, you may sell a call on a stock and bring in some income. So it's an income oriented investment scenario, thinking that the stock's going to just lumber along and not go up a whole lot in price. If you end up, let's say you have a stock at 50, you sell a call at 55 and the stock goes to 60. You sold the right for somebody to come and buy the stock from you at 55. So you've missed out on your upside, you've missed out on your 60 bucks, or at least you've missed out on $5, but you collected, let's call it two. So you still made some money, but you have to be willing to part with that stock.
- [34:00]
Krista Dibiaz
Right?
- [34:01]
Wes Moss
So as you can imagine, it gets pretty complicated. And that's why you would want to. Usually you'd be doing in a fund or you'd have a professional manager that is managing a whole, a longer list or diversified list of covered calls. Here's the I'll give you a house analogy around this. Think of it like this. You own a house, that's your stock. You agree to rent it out with a twist. The tenant pays your monthly rent, but the tenant has the option to buy the house at a set price in the future. Now, let's say he never buys it because the house value doesn't go through the roof and he could get it at a lesser price that you agreed upon. Then you just keep renting it. You just keep holding your stock. If they do, you get paid the fixed agreed price for the house, but you miss out on anything above that.
- [34:53]
Sponsor/Advertisement Voice
Right.
- [34:53]
Krista Dibiaz
Like if I had made that deal with someone in 2016 and then in 2023 they called me on that, the real value of the house would probably be a lot higher than they agreed to price.
- [35:04]
Wes Moss
Exactly. It could be, yeah. Okay, Steve, you're trading covered call writing on a, on a stock. Let's say you're trading some upside in the stock price for immediate income. And again, you can find this in ETFs. These are more income oriented and that's how I'd be looking at this as an income investor. I like these. I like covered call writing. You don't want to have it be a huge, huge part of your portfolio, but I think you can sprinkle this in for more income.
- [35:33]
Krista Dibiaz
Okay. All right, well, that does it. That's it for this week.
- [35:36]
Wes Moss
Okay.
- [35:37]
Krista Dibiaz
We'll be back next week. Remember to send your questions in to Wes or to clark@clark.com and hope that you have a wonderful rest of your day. Thank you, Wes.
- [35:47]
Wes Moss
Thanks, Krista.
- [35:52]
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