06.03.25 Ask An Advisor With Wes Moss

Investing in Gold: Smart Move or Mistake? and Will Entry-Level Jobs Disappear? Should you own gold? How much should you own? Fiduciary financial advisor Wes Moss breaks down the data and shares his take on investing in gold to help you determine if it belongs in your portfolio. Also, the CEO of a major AI company recently said that 50% of all entry-level white collar jobs will go away over the next 1-5 years. Could this prediction be right? It’s possible. Wes explains what may happen and what we can do about it. Plus, Christa shares your #AskWes questions and Wes gives his take. All this and more on the June 3, 2025, Ask an Advisor episode of the Clark Howard podcast. Submit your questions at clark.com/ask. We hope you enjoy our weekly Ask An Advisor episodes, in which Christa and Wes discuss investing and retirement savings in depth. Let us know what you think in the comments! Learn more about Wes: Wes Moss, CFP® Learn more about your ad choices: megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

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• 1:03Speaker 02

  Welcome to Ask an Advisor, where we here at Team Clark go deeper on all things investing with fiduciary, Wes Moss. So good to see you, Wes. Today's topics are great. I feel like a lot of people are going to be interested in both of these things. First, gold.

• 1:20Speaker 03

  Gold.

• 1:21Speaker 02

  Gold. I like gold. Austin Powers. Everyone asks, I mean, we get so many questions about gold. I've heard Clark's take. Very interested to hear your take. I don't know what it is yet. And then later, something that Clark and I have kind of gone around and around about, AI and I also would throw in robotics. And jobs. There was a recent headline that over half of 50% of white collar jobs could be lost AI in the next.

• 1:46Speaker 03

  Entry level, but still, it's a giant number. I did the math on that. It could be, if that comes true, 50% of entry-level jobs in the next five years could be 9 million jobs in jeopardy.

• 1:57Speaker 02

  So we're going to talk about that as well.

• 1:59Speaker 03

  Okay, well, let's get going. Let's start with gold. Look, gold's been around for thousands and thousands of years, so it's nothing new. We all know exactly what gold is. Of course, I think most of our listeners and viewers know that you can invest in gold. There's a couple of different ways to do it. You can buy gold bars, gold coins, gold bullions, so physical gold, keeping it safe. Or you can buy an ETF that tracks gold. And there's several ways to do that, so it's very accessible today. The question is, is it a good asset class? And there really is some controversy around it. And I would say, not really controversy, just there's not a consensus that it's a a great long-term asset or not.

• 2:39Speaker 03

  So what's, I think, most interesting more recently is the price of gold has gone up pretty dramatically. As we sit here today, it's around $3,300 per ounce. When I, in the early years of the investment business, go back 25 years, gold just lingered and lingered and lingered. There was a period of time that was almost a 25-year slog, that gold went from 500 an ounce and filtered down a little bit and then went back to 500 all over the course of 25 years. And so essentially, flat. And remember, gold doesn't pay any sort of dividend. There's no interest, there's no dividends, actually, cost to store it. So I think that the reemergence of interest around gold is because the price has gone up a lot lately.

• 3:22Speaker 03

  So people are saying, wait a minute, why don't I own more gold? So I wanted to just look at a chart. I think that tells the story about the price of gold, because again, you're owning it as a store value and for some appreciation. Again, you're not getting any income. So how, should you own it? How much should you own? And there's no perfect answer. This is just kind of my opinion on this. The first thing I would go back to, and I've thought about for the last 25 years, is what is Warren Buffett's opinion on gold? And he has famously said a bunch of lines over the years, because again, he has never really owned gold. I think there was a period of time where he owned one of the gold mining companies, but that was a relatively brief period of time, is that gold, what does gold do? It just sits there and it stares at you.

• 4:08Speaker 03

  One, two, not only do you not get paid from gold, but you have to pay somebody to store the gold. So it actually costs money. It's like reverse rent to own gold. The next line that I always remember, I think is fascinating is that he would, Warren Buffett would rather, he said he would rather own all the farmland in the U.S. versus all the gold in the world. That's a pretty serious statement. Now again, the way he looks at it, you own farmland, you've got crops and you've got something coming in. And you've got income coming in every year. And whether you do the math on that or not, that's just emblematic of how this guy thinks about it. So he's been consistent for 50 years plus about not really wanting to own gold.

• 4:52Speaker 03

  However, the gold industry is massive. Price of gold has gone up, so people are interested in it. If I were to look at a charts and just tell the real story, I mean, this is what's happened. If I go back to, call it 1980 approximately, gold hit 500 bucks an ounce. And then over the next, call it 25 years, it filtered down to 300, $350 an ounce, only to get back to 500 in around, call it 2005. So 1980 to 2005, gold went from 500 to 500. So you didn't make any money. In fact, you were losing money for a lot of that period of time and then it kind of rebounded.

• 5:32Speaker 03

  Then from 2000 to 2011, it had a big run and went from 500 to 1700 an ounce. Then it went back down to 1100 an ounce. And now it's kind of shot up to 3300 an ounce. So the reason, if you zoom completely out, what is that rate of return? If you would have just bought it back in the, let's call it 1980, and just held it until about where it is today, it would be about an 8.4% rate of return. Pretty good. So if you look at the economic history, if you've had the patience. And you've held it this whole period of time. So that was a super long-term hold.

• 6:12Speaker 03

  You made money. It's hard to argue. The problem is when you have an asset that is supposed to be a store of value, it doesn't necessarily act like that when you've got that much volatility. So I think that if you're going to own gold, I would be prepared for some pretty serious volatility. Here's some of the numbers. 80% spike in the 73 to 75 recession, a 50% loss from 1980 to 82, a 30% jump in 2020, a 35% loss from 2011 to 2015, and a 65% gain from 2020. So that to me, doesn't sound like a sleepy asset. Over time, it sounds like a sleepy asset. Eight, 8.4%, pretty good. So just know that it's volatile.

• 6:54Speaker 03

  The other thing that I have to give gold credit for, if I go back and look at recession periods, so when the economy's not doing well, and people are nervous and scared, and stocks are not necessarily doing well, gold does hold up pretty well. So if you look at periods of time during recessions, Krista, these are the shaded lines. Back in the 70s, gold pretty flat. The early part of the 90s, pretty flat during the recession. 2000's, pretty flat during the recession. During the financial crisis, relatively flat. So I will give it credit as a, as an asset that you can invest in. It does seem to kind of hold up when the economy is getting nerve wracking. But it's also not this perfect elixir. I mean, I remember hearing a gold commercial,

• 7:39Speaker 03

  I think it was on the radio, and it said, "Gold, you know, buy gold for inflation. Buy gold for deflation. Buy gold in a bad economy. Buy gold in a good economy." There's this thought that it's this perfect asset that does well no matter what. That's just not true. It's super volatile, but it has been good over time. So knowing, if you take all that into account, my take on it is, first of all, I know that some people want to own physical gold, and I don't blame, I don't blame investors for doing that. You literally want the gold bars. And you want to put them in a safe and that, nobody can take that away from you. So I get that. More logistically, where I've invested in gold ETFs.

• 8:22Speaker 03

  So that I think is my preferred way to do it. It's still a financial derivative that tracks the price of gold supposedly. It is backed by physical gold. I haven't been to the Fort Knox or wherever it's held to see it. But the gold ETFs, at least some of the gold ETFs are really supposedly backed by physical gold. So my take on it is 5% ownership of your total investment pie is totally okay. If you really, really like some sort of quiet asset during tough economic times, knowing it's going to be volatile other times, maybe even go up to 10%. That's too rich for my blood, but I'm okay with five. So that's my take, 5% gold.

• 9:07Speaker 02

  Paul in Illinois said, with the dollar and the stock market absolutely getting trampled, and with all this talk of the world moving back to the gold standard, would it make sense for me to move some or most of my 401k funds into an IRA gold account? I have 13 years until retirement.

• 9:22Speaker 03

  See, this is the other thing about gold. It has this literal, this attraction shine to it. And when people think about it, they think, well, should I just put everything in it? I think that's a total mistake because it's not the perfect asset that always steadily goes up. So if you put your whole retirement, if you have $500,000 in retirement, you put the whole thing in gold, well, it could go down 20%, it could go down 30, 40%. So it's really not quite like being completely invested in stocks. It's more like being invested in one stock. So that's the way I look at this. So I absolutely know in my book, my opinion is that you don't want to just put everything in gold. And that's actually how I often get the question. It's not, hey, should I add some gold?

• 10:07Speaker 03

  It's should I go to gold? If you want safety. And you want stability during rough economic times, then short-term treasuries, to me, are a safer place to do it. There should be almost no volatility. You get some income, three, four today, close to 5% for long-term treasuries, but let's call it four for intermediate treasuries. That, to me, is safety. So I don't think it's advisable to be jumping all into this one asset that is more volatile than people really think.

• 10:39Speaker 02

  You know what makes me nervous about it, too? It's just the fact that they now can create lab-created diamonds that are chemically identical to diamonds, and the price and the value of diamonds and the lab-created diamonds is going to go down and down and down, in my opinion. I don't think they're going to be very special anymore at all. And I just think if they can do that now, can they create, are they going to be able to create any, you know, in a lab, any precious metal or other thing in the future? And I could see that happening.

• 11:06Speaker 03

  There's very few things that we can't recreate in the world today, including movies. And there's a million, look, there's been fool's gold since the gold rush.

• 11:15Speaker 02

  Right.

• 11:15Speaker 03

  But I don't know of that happening yet.

• 11:19Speaker 02

  But the idea of it, it was supposed to be, it's supposed to be a finite resource, which is why we had the standard. And I think that that's potentially at risk.

• 11:27Speaker 03

  I have read that all the gold in the world, put together, would melt down into the size of an Olympic swimming pool.

• 11:34Speaker 02

  Wow.

• 11:35Speaker 03

  I don't know if that's true, but I've read that many a time.

• 11:39Speaker 02

  All right. Next question's from Tom in Florida. "I have a commercial property that I will be closing on in June this month. I do not want to do a 1031 exchange, but rather just pay the capital gains and cash out, then put the money in an investment that is fairly safe. I would like to get 7% or better on the return. Any suggestions?"

• 11:58Speaker 03

  So first of all, that's super realistic, Tom. Getting 7% is very realistic, but there are different ways to think about getting to that 7%. The total return equation we're all looking for in the world is super simple. It's G plus I, growth plus income. So if you have 7% in income and 0% in growth, you get there. If you have 7% growth, you have 0% in income, you get there. What you do have to look out for is that if something is paying 7%, then anything over 4 in the world we live in today, you're taking on a lot of risk and it's a lot to get to 5 and a lot to get to 6 and even more to get to 7. So if you're looking for a real estate like investment

• 12:42Speaker 03

  that just pays income of 7%, totally possible to do, but you're looking at a riskier situation to do that. You're looking at almost a private, you could find a private deal where you own a building that's maybe paying 7%. The problem with that is not all that liquid. And again, you don't have to do it in a 1031 exchange. You could literally buy into a private credit fund or a private real estate fund. And that's where you're getting that higher yield. You really lose liquidity doing that. So, once you put an investment in something that's a private deal, that can be illiquid for 5, 7, 10 years. You should get compensated for that. But 7% is more like, is really a high yield or junk bond yield right now. If you were to buy a high yield ETF,

• 13:27Speaker 03

  that's all junk bonds, C rated bonds and lower, then you can get around 7%. Problem is, what happens to the price of that ETF or the price of junk bonds? So, there are definitely ways to do it, but if you're looking for that much current income, it's gonna, it really takes a lot of risk to do so. And you just have to, all you have to look at is, where's the 10-year treasury? And your treasury is around 4.4. So you're almost double that. That takes on a whole lot of risk. The other thing to think about is just a balanced stock bond portfolio. Look at what the market's done over time. It's averaged around 10 or slightly more than that percent over time.

• 14:06Speaker 03

  So a balanced portfolio of equities and fixed income should over time also do 10%. What you're going to get there, most likely, and again, no one knows the future, is a little bit of G and a little bit of I. So you get a little bit of growth, a little bit of income, and that could add up to the 7% you're looking for over time. But it's, it's hard to find just a steady 7% clip or coupon without taking a lot of risk. Realistic, but a lot of different ways to do it.

• 14:36Speaker 02

  Okay. And Lulu in New York says, I'm 66 and already retired.

• 14:39Speaker 03

  Lulu, what a cool name. Lulu in New York.

• 14:43Speaker 02

  I recently decided to move my 401k into a traditional brokerage IRA account to access more investment options. I transferred 1.8 plus million to a traditional IRA account.

• 14:53Speaker 03

  How much?

• 14:54Speaker 02

  1.8 million.

• 14:55Speaker 03

  Okay.

• 14:55Speaker 02

  To a traditional IRA account in late February, but my 401k provider did not allow me to do a like to like transfer. So all the funds are held in a money market fund, which pays 3.6% interest. Due to the volatility of the market in the past few months, I have not made any investment moves. Now the market is back to where I left it. The question is, how should I get back to into the market so I know my money can continue to grow? I don't need to withdraw any money from this account until my RMD.

• 15:23Speaker 03

  So Lulu, this is such a, this is real life. You do a rollover. You don't really have access. It takes a little time before your money shows up from 401k into an IRA. And most of the time, it does come over as cash. So then it presents you with one fresh challenge, which Lulu lived. Well, probably in the middle of the tariff storm in 2025, and markets are dropping like a rock. And Lulu's thinking, well, maybe I should get invested here because the market's on sale. However, you're nervous because the market is dropping like a rock. You're thinking, well, it's down 20%. Maybe it's going to be down another 20%. So it makes investing really hard during those scary times, even though we know always in retrospect, well, wait a minute, it was down 20. Sort of just

• 16:08Speaker 03

  bought it then. So first step, of course, is to get your long-term plan. So know that long-term, you, Lulu, feel comfortable with allocation. Let's say it's 50% to stocks and the other 50% to fixed income. Maybe it's some gold. Maybe it's some of these other areas. I think of them as alternative income classes that also give you exposure to the commodity space, not just gold, but other commodities. Probably should have said that during my talk about gold. There's other commodities besides gold. So, once you have that and you're comfortable with that plan, that's really the first step. Then you know that long-term, this is the way I want to be invested. And again, that's the first step.

• 16:51Speaker 03

  Then, because we don't know the yo-yo-ness of the market, the last correction, well, really bear market almost, and almost full recovery, or full recovery, happened within six weeks. Down for two to three weeks, up for two to three weeks. And you look around and say, wait a minute, we're back to where we were. If you had just taken a six-month nap, you wouldn't have seen the market. You ripped Van Winkle for six weeks. So, there's no perfect way to time this. And emotionally, it's hard to get $1.8 million to work when you're collecting a nice 3.6% in money market. So, the only way I know to do it, because this is really behavioral investing. This is an emotional question.

• 17:34Speaker 03

  So, you figure out the math, the allocation, this is where I want to go. And then you just do this over an appropriate period of time. The way I look at it is that you do this over six months, dollar-cost average in, not just the market, but the whole allocation. So, the way I typically do it, there's no perfect way to do this. You could do it equally. I think it's 16 or 17% per month. For six months, you're at 100%. I like to do the first quarter, do 25%. It means you have 75% left. Over five months, you do 15%, you're at 100%. And there's no perfect way to do this. You could do 10% a month for 10 months. But I like to do this over six. You might want to do it over a longer period of time. It smooths out where you're buying into all these different asset classes over the

• 18:19Speaker 03

  course of markets going up and down, and you end up with a more of an average price. That's dollar cost averaging. So Lulu is a good problem to have. You've got tons of money saved for retirement. You do want to get it invested. Easiest way to do it, both statistically, math-wise, plus human behavior, is to set a plan to do it over the next six to 10 months.

• 18:42Speaker 02

  Okay. We're going to be right back and we're going to talk about AI and jobs.

• 18:47Speaker 03

  AI and jobs.

• 18:48Speaker 02

  We have more questions, too. And if you want to ask a question, go to clark.com/ask.

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• 21:26Speaker 03

  Welcome back to Ask an Advisor. Wes Moss along with Krista DiBiase. I was listening to somebody, or somebody was asking me the other day about this and they were like, oh, I love that Krista. What's your last name? DiBiase? What is it? It's Krista DiBiase. And they love you on this show.

• 21:45Speaker 02

  That's very sweet. Not everyone does, but that's, that's the way it goes every time. Just don't read the comments.

• 21:52Speaker 03

  It's real Krista, not AI Krista.

• 21:54Speaker 02

  No.

• 21:55Speaker 03

  And at least for now, it's real me and not AI me. And that's what I wanted to talk about. This has been in the ethos now for a while, but recently, the CEO of Anthropic, and Anthropic is one of the big, think of them as OpenAI. OpenAI does ChatGPT, Anthropic does Perplexity. So they're one of the leaders in AI. The CEO came out, this was an interview with Axios, and said that he believes that 50% of all entry-level white collar jobs in the United States will go away over the next one to five years. Like screech, stop the record. Whoa. And now, now he's not saying this to kind of talk his book, if you will, which means

• 22:39Speaker 03

  just talk about how great his company is. He's using it to kind of raise the awareness of this, of the potential for that. And it's a very real question that I've been hearing about in the media and I really wanted just to give my take on this because there's no right answer because we can't see five years into the future. But I am taking it seriously. First of all, I did the math on this. The US labor force is about 167 million people. If you just look at the 25 to 34 year old group, let's call that more likely to be entry level. 50% of those are, let's call them service or white collar type jobs that could be impacted. It's about eight or nine million jobs that could go away if he's right. We don't know if he's right.

• 23:24Speaker 03

  But if he's right, within five years, that's eight million job displacements. It's a really big number. That would take unemployment to over 10, almost 20%. So the question is, what do we do about it? So first of all, could he be right? Maybe he could be right. I'm usually very optimistic about the economy. So I'm not going to brush this off and say, oh, more jobs will be created that are then are lost. And I'll get to that in a minute. But the reality here is that he could be right. And the way I look at this is that there's, I think of the analogy for this is there was a major earthquake in the middle of the ocean, 300 miles out, and the tsunami is coming. It is going to hit the shore.

• 24:07Speaker 03

  And the people that are on the shore need to understand, and the people on the shore, coders, entry level coders, entry level copywriters, entry level writers for marketing companies. It's really a long list. Anyone that's doing Excel work for a company or entry level analysis, first couple of year jobs. Instead of having 10 people on a team to do all that analysis, there may only be five people. Because now one person utilizing the tools with an AI can do the job of two people, three people, maybe even five people. So it stands to reason that he's not crazy to say this.

• 24:47Speaker 03

  The way I look at it is this, every time we've had a big innovation, the Industrial Revolution, the printing press, cars, trains, the internet.

• 24:58Speaker 02

  The internet, I was gonna say.

• 24:59Speaker 03

  Every time there's been a big seismic change, cyclical, a giant change, it has caused disruption and we've lost jobs, but we've created more jobs than we had lost. So the economy actually grew during those technological revolutions. Anything brand new that really changes, I think, is a tech. It's a technology that's something new. So it stands to reason that is, he may be right, the Anthropic CEO may be right, that that many jobs get lost, but what he's not saying is how many jobs could be gained. So we could lose 8 million jobs, but we could have 10 million new jobs. But imagine just the disruption to do that. So this is an assignment, I actually, I've written about this and I actually am making

• 25:43Speaker 03

  my kids write about this. One of mine is a high schooler, so by the time he gets out of college and call it six years or approximately, this will have happened already, this change. So I think the answer for all of us is to sit down and understand our industry, because the question about AI and taking jobs is going to be different for every single industry and then every job within the industry. So I think it's important for all of us to kind of do a roadmap and say, okay, could my job be impacted? And if it's impacted, what are the other jobs that could be impacted or lost? At the same time, in that same exercise I'm having my kids do, this is again, a thought experiment, but I want them to understand this is the reality of the world we live in.

• 26:27Speaker 03

  What are 10 jobs that could be created, even though these jobs are lost? So let's think about what could be created. Next, I also want them to think, and my 13-year-old asked me, we're driving back from a lacrosse tournament, we had a lot of fun time, and he goes, he said, Dad, what jobs are going to be here in the future?

• 26:47Speaker 03

  As we talked it through, anything that's a necessity, so think food, energy, power, anything that's physical, think real estate as an example, and anything that has to deal with human emotion, because the one thing you could AI, at least in the not so distant future, I cannot see it replacing, even though you could say, well, I could have an AI therapist and it can talk to me and I can never, in the end, a lot of jobs are both science and human, they are math and they are people. And those jobs, we just cannot replace relationships with a computer screen. We can't replace relationships completely, maybe a little bit, with what Elon Musk is talking about, having a robot in our house to walk around,

• 27:32Speaker 03

  do our dishes, cook our meals. He just this week said there could be a million of these things.

• 27:37Speaker 02

  Well, how great would that be for the elderly who struggle?

• 27:40Speaker 03

  It could be good.

• 27:41Speaker 02

  Yeah.

• 27:42Speaker 03

  So if you're elderly, it'd be nice to have a chatty robot.

• 27:45Speaker 02

  Right.

• 27:46Speaker 03

  Hang out with you every day.

• 27:46Speaker 02

  Well, and just do tasks that maybe are more difficult because the cost of long-term care is so astronomical, I could see that being extremely helpful.

• 27:55Speaker 03

  Eventually, but it won't replace a relationship.

• 27:58Speaker 02

  No.

• 27:59Speaker 03

  And, and so much of business in the service and advanced economy we have in the United States is relationship-based. And I just don't see how that gets replaced. Human emotion will never go away. If you're in industry where part of your job is that, I don't think it goes away. So do your own inventory on what could be lost, what could be gained, and what areas are AI-proof, at least proof-ish. And I think my larger takeaway is that, here's what I think will happen. Again, we'll see, you can check the tape in five years and see if I'm right. Every new innovation has allowed us to tackle incrementally bigger problems. So think about industrial revolution, making things faster. We were

• 28:43Speaker 03

  already making things, but we're making faster. That was, that's the size of a stone. We solve for the stone. Then the internet came and it connected the entire world and made everything more efficient. That's a boulder. We moved a giant boulder to change the economy. I think the same thing happens here, except now we're trying to move mountains. Meaning, think about the big societal problems that are just too big to even, to chip away at. Think infrastructure in the United States. We've got every bridge and every road, it needs work, it needs help. But it's too overwhelming to actually tackle. Think about the curing of diseases and the sequencing of genomics. And some of those tasks are so big that they're almost insurmountable.

• 29:27Speaker 03

  They're mountains that we're barely moving. And there's a lot of those problems that I can think of that we just don't have the manpower. We don't have the money to move. And AI may allow us to start moving those. And those are the jobs I can see getting created. And we don't know them today. How is AI going to help us rebuild all of our infrastructure in the United States? I don't know. Maybe it builds smart cities and we reroute traffic so we have less potholes. And where are all the jobs tied to that? What if you could identify all the bridges that really need work over the next two years? Whereas before, we couldn't even figure that out. So I think that the longer term creation of jobs is in bigger problems to be solved.

• 30:10Speaker 03

  I know it's hard to envision what they're going to be. But I just don't think we're going to be sitting around in five years with no jobs. And us just hanging out in a society where-

• 30:21Speaker 02

  In a virtual world?

• 30:22Speaker 03

  In a virtual world. I just, even though you can make a great case to do that, I just don't-

• 30:26Speaker 02

  Wow, you've given me hope, I have to say. Nobody else has given me hope around this, but you've definitely given me some hope today.

• 30:32Speaker 03

  I think about it.

• 30:33Speaker 02

  Okay, speaking of AI-

• 30:35Speaker 03

  Speaking of AI.

• 30:35Speaker 02

  This question came in from David in Florida. He has been watching videos of people running AI companies, warning about the jobs going away. And so he says, "It'd be great if you could do a segment on what investment choices one should start considering now for that new world where stock markets are probably going to have issues."

• 30:55Speaker 03

  This again, so great question. Wait a minute, if jobs are going to go away, what's that mean for the economy? Or if new jobs are created, who's going to win that battle? You know, one example would be, I think about what Salesforce did. Salesforce is a software company that does CRM, customer or customer relations management. And it's, it's a way to keep track of all your customers and notes and reminders of when to speak to who. It's a super useful technology, but it's really complicated to integrate to any given company. So what happened when people started to really use robust, not just Salesforce, but robust CRM software?

• 31:39Speaker 03

  A whole new job was created at most companies, or really a whole industry, to serve companies to make sure that the software was implemented the right way. It didn't necessarily take away jobs. It made everybody more efficient and it added new jobs because now we're using more software to be even more efficient. Now, you can argue that really robust CRM, because now, let's say, a particular person at a company can have 50 accounts as opposed to 25. And you could say, well, that's going to be terrible. We're going to be so efficient that Johnny can have 100 accounts because we're so much more efficient. There's going to be less jobs. Well, there was a whole nother job created, an industry around making sure that software worked.

• 32:25Speaker 03

  The challenge we have, you have, Don, is figuring out what companies will emerge with many industries or bigger industries. And we don't know that yet. And it's hard to just, this is so new and so transformative, artificial intelligence in so many different areas in almost any industry. We don't know what's going to emerge as successful business. So in my opinion, as opposed to saying, well, AI is going to revolutionize the world. I'm going to invest in AI companies. I think that is a little bit too targeted and you're dealing with a big economic change and transition. The best way to at least know you're going to capture at least who's winning is to own the whole market.

• 33:10Speaker 03

  And it kind of goes back to index investing that you own all 500 companies as opposed to two or three you think are going to be the winners. Because someone within that 500 or that 1,000, depending on how the size of the index of the ETF, somebody's going to emerge as a winner. And the way to really capture that is to be a broad index investor that, again, it's a, there's a good idea for, in a lot of different economic environments, but it's even more so, I think, in terms of economic transition. So broad stock ETFs that cover all industries, I have preference to that versus just trying to find a few AI companies.

• 33:47Speaker 02

  And if you want to ask a question, go to Clark.com/ask. Lucas in California says, what would happen if they got rid of the weighted index and everything was equally weighted, especially ETFs? Would that help calm these fears of an ETF bubble at all?

• 34:01Speaker 03

  You know, Lucas, you bring up this real point about market being bubble oriented. A little bit of it has to go back to AI, what I just talked about. You've got a few players that are facilitating the technology behind all that. And those companies were already well established, they are already gigantic, and now they're even more gigantic. They're mega, mega, ultra mega caps. Think about the semiconductor companies, think about the big, think about what Alphabet just did with, Alphabet just did, one thing I didn't mention is VO3, have you heard of VO3? The creation of, my kids and I were watching some of the examples of what VO3 can do,

• 34:43Speaker 03

  which is from Google Labs, that'll create whole movies that are completely realistic without any people. So the, these are companies that already have this giant head start and they have the money to do it. And, and you've seen, I'm not saying to run out and buy Alphabet here, but

• 34:59Speaker 03

  Indices are weighted towards the biggest companies and that's been a worry. If everything were to be equally weighted, and there's lots of ETFs that'll do that, where you own the same percentage of every company as opposed to 10% in one, or 30% in the top 10, that would really change markets. So it could happen, and you can do it. That's the other great thing is that investor can invest in equal weighted sectors. You can either buy the individual sectors, you can buy an ETF that has the sectors equally weighted, or you can buy an ETF that has stocks equally weighted. I actually do that in some of my investing, so I don't think it's a bad idea. But the market for cap weighted indices is so gigantic.

• 35:43Speaker 03

  It's a multi-trillion dollar industry. Just the S and P 500, there's, I don't know how many ETFs there are that track that. It would take a century or 50 years worth of investing. Everybody now changing and moving towards these equally weighted industries or indexes or investments in order to do that. So on a big picture, it's not going to happen. It's always going to be weighted towards the big companies. The good news is you don't have to participate in that and you can be more equally weighted and balanced.

• 36:13Speaker 02

  Okay. Okay, this question's from Don in North Carolina. Hello Wes, welcome to the new addition to the Clarkies. That's what Clark fans call themselves.

• 36:22Speaker 03

  Clarkies, got it. Thank you, Don.

• 36:24Speaker 02

  We enjoy your weekly insights. We're in the process of moving to a new home and our current home is fully paid off. We contribute fully to our retirement accounts and have sufficient money saved there. We have an emergency money saved in cash equivalents to last one year. Our question is whether to sell this house for about 460K and pay off our new home, or rent this house for about 2,300 a month and cover the mortgage of the new home of about the same 2,300. The HOA fee plus yearly property taxes comes to about $5,000 a year.

• 36:57Speaker 03

  Hmm. And they're in retirement? This is Don in North Carolina.

• 37:02Speaker 02

  We contribute fully to our retirement accounts, so no, I don't think they are retired.

• 37:06Speaker 03

  You know, look, I think it's a question of leverage and work. And what I mean by that is work, it's work, physical, manual work to own a second home and collect the rent and make sure it's up to standards. Plumbing, roof, AC. It's a mini job. I think owning one investment property is a mini job. It's not that big of a deal. It does get to be a really big deal when you've got five houses. So know that one, I think, is super manageable for most people if you like doing it. That's the other thing. You kind of have to like having an investment type property because your primary home, if you don't sell and you move into a new home, technically, what used to be your primary is now an investment property. So treat it as such. If you like doing that and you're getting decent rent,

• 37:51Speaker 03

  $2,300 a month on an asset that is, well, let's call it around $400,000, it sounds like, and you're getting 24K a year, you're getting about 5%, let me make sure I'm doing my math here. I'm just assuming it's around 400. That's a 2,300 times 12 is 27,000 divided by 400,000. My denominator could be wrong, but that's a 7% gross return, maybe a 4% net return. So it's not a bad investment. And then that doesn't count the appreciation of the home over time. That's the second part of the answer here, which is leverage. This is if you hold on to it,

• 38:34Speaker 03

  you are now creating leverage in your financial situation because that one's paid for, but you'll have to get a new mortgage for the new house. So you still have debt. And the more leverage, the more overall assets you can have and the more nominal dollars you get for the same rate of return, meaning that if everything goes up by 5%, if you've got two houses, you have appreciation on 400 plus 400 on 800,000. So if you're getting some rent and getting some appreciation, then it's not crazy to keep both. It's just some work and just understand that you've now put everything in a slightly riskier situation, not crazy risk. What I will say is that through my research, happy retirees don't have a mortgage on their

• 39:18Speaker 03

  primary home. So it sounds like you've got some years before doing that. Just note that when you get into retirement, it's a huge mental burden off of your plate to no longer have a mortgage on your primary home. So just consider that into the future. That would be the more conservative route to go. Sell your old house, pay off the new one. That's a really easy, low-stress, conservative way to do it. Giving up a little leverage. So if you're young enough and you want to do it, I like the rental option.

• 39:49Speaker 02

  All right. That does it for us today. Thank you, Wes, for all that. I think this was a great show. I hope everyone enjoyed it and you learned something. Please share this episode with a friend if you think they'd like to hear it and subscribe if you haven't already subscribed wherever you listen or watch on YouTube, youtube.com/Clark. Thank you so much for being with us. Have a great day and Clark will be back tomorrow.

• 40:17Speaker 04

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