Pod Insights The Clark Howard Podcast 07.14.26 Ask An Advisor With Wes Moss About this episode The 200-Hour Friendship Rule & Are Financial Advisors Worth It?
Making friends as an adult is harder than ever – but just how much time does it actually take to build a close friendship? In this episode, Wes Moss discusses the growing friendship gap in America and the surprising research behind forming meaningful connections. A study from the University of Kansas found that becoming a close friend takes far more intentional time than most people realize. Wes explains why friendships become more difficult to maintain as we age and what you can do to build and preserve strong relationships throughout life. Plus, are financial advisors really worth the cost? With about half of pre-retirees working with an advisor and half managing on their own, Wes breaks down who can benefit from professional financial guidance—and who may not need it. From investing and tax planning to estate and family considerations, learn when financial advice can add real value.
Mentioned on the show: Early Mortgage Payoff Calculator - Clark Howard
Plus, Christa shares your #AskWes questions and Wes gives his take. All this and more on the July 14, 2026, Ask an Advisor episode of the Clark Howard podcast. Submit your questions: WesMoss.com/ask
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Transcript 0:00 Speaker 00 This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at indeed.com/podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed sponsored jobs.
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1:04 Speaker 02 Welcome to this week's edition of Ask an Advisor. We're freshly off of a week off. You had a week off, Wes.
1:12 Speaker 03 Yeah, I love it.
1:13 Speaker 02 Did you enjoy your 4th of July holiday?
1:15 Speaker 03 Of course.
1:15 Speaker 02 Of course you did. All right, well, today, we've got a lot of questions. I've got a great story for you from some listeners about the core pursuit that they found.
1:25 Speaker 03 Oh.
1:25 Speaker 02 Which is really cool.
1:27 Speaker 03 I love to hear that.
1:28 Speaker 02 And so, you're going to actually talk about something that makes us very happy. It was relationships. Everyone talks about that, how important our relationships are. And you've got some research on the time it takes to make a close friend, right?
1:40 Speaker 03 Yeah, I have a bunch of research around socialization that I wrote about in Retire Sooner Method and know how hard that is. And there's brand new research out of the University of Kansas about how many hours it really takes to make an actual close friend.
1:57 Speaker 02 And Retire Sooner Method, Wes mentioned is his new book, which I really, really enjoyed reading.
2:03 Speaker 03 It's about the same color as your shirt.
2:05 Speaker 02 I hope you've ordered it. Yeah, I'm wearing retired.
2:08 Speaker 03 The little green book on Amazon.
2:10 Speaker 02 And then later on, you're going to talk about, we had Amy in Indiana, the last show we did. She was trying to break up with her financial advisor.
2:18 Speaker 03 I felt bad for the financial advisor. Kind of hurt me a little bit.
2:22 Speaker 02 Well, because you are one. So when is it worth it? What makes a financial advisor worth it versus not worth it? And you're going to address that, just to go more in depth on that.
2:30 Speaker 03 Well, okay, so we're going to start with, did you have a story for me?
2:34 Speaker 02 I do. Do you want to hear the story first before you talk about making friends? All right, let's start out with Earl and Joyce.
2:40 Speaker 03 Your listeners are all like, well, Krista, tell us the story.
2:43 Speaker 02 I'll tell the story. And you haven't heard this yet. I didn't share this with you. I love the core pursuit discussion. My wife and I retired in February of 2020. What a scary time, but we sold the house and moved to live full time on our sailboat. We've been sailing the West Indies, Eastern Caribbean for five years now and are in no hurry to come back to the States. Every time we think about having a house and living in the same location year after year, going to the same church every Sunday and seeing the same people week after week, it makes us cringe. This sailing life is so good and the core pursuits are hard to count. On a sailboat, you have to be the captain, the mechanic, the plumber, the electrician, the weatherman, and so on. I often call sailing the Sudoku for old people.
3:26 Speaker 02 It keeps our minds and bodies very busy. Plus, all the other sailors out here support and take care of each other. There's the community. It is such a close community. Expenses are mostly low throughout the year as we spend 10 months a year on anchor. Sailing burns very little fuel and the fresh produce and food in the Caribbean is wonderful. And we get lots of exercise, hiking the islands, exploring waterfalls, and swimming in the sea as much as we can. We do haul the boat out for maintenance each year during hurricane season, where we do a good bit of preventative maintenance and fly back to the States for two months to see friends and family. It's an amazing life and we will look out over the Caribbean Sea at every sunset and say, we live here. Isn't that fun?
4:08 Speaker 03 That is so cool. It's such a good example of how one thing leads to one core pursuit. These are hobbies on steroids. These are your super activities. Things that you love to do, one leads to another. That's the cool thing about having a long list of them. And this is an exact example of that. I haven't heard from a whole lot of sailors. Now, I'm from a sailor type family. My wife's side is very sailor heavy. And it is a little bit like Sudoku for my father in law is in his 80s. And he still sails and you're, and you're totally right is that there's so many things to do on a boat to keep you sharp. It's got to be cleaned. It's got to be craft, especially sailing, because there's some intricacies around that.
4:54 Speaker 03 And maintaining a sailboat and then charting a course, going to another destination. Wind is free, which is amazing. There's very few feelings that are better when you're going 10 knots sailing because of the wind and it's quiet. It's an amazing, as long as you don't get seasick. It's one of the coolest things that you can experience. But my favorite part of this is the sailing community part. And that's so true is that you're anchoring or at a place very often for a long period of time and you get to know all your other boaters around. And I've seen that happen with many folks that are big fans of sailing. So it is one of the ultimate core pursuits. Not a ton of people do it because it's, it's a scary proposition to learn later in life. But it's pretty awesome.
5:39 Speaker 02 And speaking of community, it's part of what makes people happy retirees, as you've talked about. And having friendships is an important part of that, right?
5:48 Speaker 03 Yeah. Okay. So this is cool. First of all, this is the problem in America is that friendship has been in decline for 30 straight years. More than that. And there's two things. One, I asked a question, how easy or hard is it for you to make a close personal friend? And I had a bunch of categories from really easy to really difficult.
6:12 Speaker 02 And this is part of your research?
6:14 Speaker 03 This is part of the research that I did for the retired student method.
6:19 Speaker 02 Just want to make sure.
6:19 Speaker 03 And so this shows up in the socialization chapter. That, that chapter is titled, get a life, because it is so important to have these close personal friendships. As we get older. By decade, it gets harder and harder and harder for people to meet new people and to make actual friendships. There's two things. One, you gotta meet somebody. Two, they have to actually become someone that's close to you. And it just gets harder from our 20s, 30s, 40s, every single decade. We, my research shows that it gets just more and more difficult. It gets difficult for a lot of different reasons. One, when work stops, that's an auto-socialization that kinda goes away. Number two, our kids get older, they move away, and there's so
7:02 Speaker 03 much socialization you have around your kids and their school and other parents. And then the third thing is just geographical and life change. So people move away, people unfortunately die, they get divorced. So friendships fracture over time. So just the natural evolution of geography and our own lives makes it hard to continue to maintain a core pool of folks. In Get a Life, which is one of the chapters in the Retired Student Method, my research shows you really want to maintain at least four or more close, personal friends throughout your entire life. Now, that may be easy in your 20s, 30s, 40s, but it just gets harder
7:44 Speaker 03 as time goes on. So we have to focus in on it. So first step, meet somebody. I've met somebody next to me on the dock. Great. How long does it actually take for them to become a real friend? Not a clique friend, not an acquaintance friend, but a real friend. And the University of Kansas just published a new study about the time it takes, which is the first time I've ever, ever seen research on this. Here are the categories they give. They go acquaintance to casual friend, casual friend to real friend, real friend to close friend. So Krista, here are the hours it takes. Did I, do you know the answer to this?
8:24 Speaker 02 I don't, actually.
8:24 Speaker 03 Okay. How many hours does it take?
8:29 Speaker 03 To have a close friend. How much time do you have to spend with a human?
8:33 Speaker 02 Like the closest kind of thing, like someone, that's in your categories.
8:37 Speaker 03 Yeah, a close friend.
8:39 Speaker 02 Oh, my gosh. I would think, I don't know, it'd be at least like 500 hours.
8:45 Speaker 03 Okay. Oh, yeah. Think of it this way, like if you're an evening out, a dinner.
8:50 Speaker 02 Yeah, that's an acquaintance.
8:51 Speaker 03 That's like three hours. No, no, just think about the amount of time. That's like three hours. And think about how many of those you would have to do to get to.
8:58 Speaker 02 Yeah, it would be.
8:59 Speaker 03 The number of hours, right?
9:00 Speaker 02 A lot, yeah.
9:02 Speaker 03 The number, according to this research, is 200 hours. So we got to get to, Dr. Jeffrey Hall from the University of Kansas is who published this. We need 200 hours to have a really close friend. 40 to 60 to go from just knowing somebody is acquaintance to a casual friend. Let's call it 100 hours to become a real friend. And then 200 plus hours to become a close friend, according to the research. So think about what that takes and how much time that takes. The other thing is that the research also cited that work hours count less. School hours, being in class with someone also counts less. It's time that we voluntarily choose to be with someone.
9:47 Speaker 03 So it takes some real time. And that's why traveling with friends, and one of the best examples ever, is a sailing trip. I'll just use that as an example, or a golfing trip. You get two, three, four days in a row with people, you really get to know them.
10:04 Speaker 02 Right. And sometimes that might backfire.
10:06 Speaker 03 Well, exactly. Then you'll know that that person's not going to be a friend. Like, I can't believe I just spent three days on a catamaran in the BVI. I love the term West Indies. Doesn't it just sound like romantic and adventurous?
10:20 Speaker 02 It does. But sailing is not for me. I think that's great that.
10:23 Speaker 03 Hey, great. Good for you if you like sailing.
10:25 Speaker 02 Yeah, Earl and Joyce enjoy. That is, yeah, I like being on land, but I think that's so cool.
10:31 Speaker 03 So it takes time. It takes energy and effort. And naturally, we have to fight the anthropological headwind.
10:38 Speaker 03 Of keeping and maintaining a friendship circle. And that's why we've got to focus on it.
10:43 Speaker 02 All right, let's take a couple more questions here. Sharon in California wrote in to us with this one. I'm three to four years away from retiring as a public school teacher in California. When I retire, I'll have a pension that covers about 60 to 70% of my present salary. I'll also have about a hundred thousand in a defined benefit supplemental account that I can draw on for up to 10 years. I have about $30,000 in my savings. Two questions. I presently have about $300,000 in VT, S A X and Vanguard. I have both a 403B and a Roth IRA. Should I diversify despite having the pension? And if so, what percentage should I leave in VT, S A X? And what percentage should go into a different investment?
11:26 Speaker 02 And which other products should I consider diversifying into if you say to diversify? A grateful educator. We're grateful to you for being an educator.
11:35 Speaker 03 We are, we are Sharon. Very few jobs as tough as being a teacher and an educator. And it is like the foundation of America to be educated. And particularly in the world we live in. It is one of the most directly correlated variables in a productive economy. So thank you to have an educated population Sharon. You can look at this a couple of different ways. One, you get this pension. I'm going to do round numbers and it's California. So it's probably higher than this, but if you're making a hundred K and your pension's 50K a year, you can equate that back to what you would need to have in liquid assets to do that.
12:14 Speaker 03 Krista, so on $50,000 a year, and it may be more than that for you Sharon, but I would divide that by even 5% or four to five percent. It's a million dollars. To some extent, you have a million dollars in the pension is worth that. But you also can't get to it when you need to fix the air conditioner or buy a new car. You do need some liquidity or you do want some liquidity. And the fund you mentioned is, I believe, a 100% stock fund. So you can make the case Sharon, that you could just keep 100% in that stock fund because you technically have a giant amount of dry powder that is the pension. But that's not quite right because you can't get to it.
12:58 Speaker 03 So I would still have some balance and it, for me, I would probably have at least 10, maybe 20% of my investments. In those safety categories, we consider dry powder, I talk about which would be high-quality bonds, US Treasuries, high-quality corporate bonds. Because of the same reason anybody else would have that is that when you need to dip into it, let's say you need to put on a new roof or get a new car and the market's down 30%, it's nice to be able to get to a sliver of the overall pie, a part of the bucket that didn't go down during this period of market correction. And that's why, to me, it does help to have some dry powder.
13:39 Speaker 03 And I think it also helps maintain, I think it makes many of us better stock or equity investors because we have some safety.
13:47 Speaker 02 All right. And this one is from Ray in Florida. He wants you to explain the pros and cons of Fidelity's fully paid lending program.
13:55 Speaker 03 Hey, Ray, the fully paid lending program, I do not use it, but it's an interesting program. So I'm not advocating for it or against it, but it is interesting. You're essentially pledging, allowing Fidel, or any firm that does this, allowing the firm to pledge your assets so that they can go borrow on securities, so people can short stocks. So it's good for them, for you to be able to allow them to do that. It helps them allow other clients and investors to short stocks. What's interesting about it, though, is that if you own really high-quality blue-chip stocks that are often not all that shorted, the APY, the annual percentage you're getting on
14:39 Speaker 03 a program like that is super low. It's like maybe a quarter of a percent, maybe one, maybe one and a half percent, which is not nothing. So that's the pro, is that you get a little bit of money for it. The con is that if you're pledging money for this, those assets don't count under the CIPIC protection at a firm, so there's a little bit of a risk there. I don't think it's a risk with a giant brokerage firm, but that is a very real risk. What's interesting is the more volatile the stocks that you own in that account, the more you start getting paid on this program. So if you have volatile growth stocks, you may get more like one and a half, two, three percent a year.
15:22 Speaker 03 If you have really speculative stocks that are heavily shorted and people want to short them and the brokerage firm wants to make that available, then you may get 5% a year or 10 or 20% a year. So that's a huge upside. The downside, of course, is that you're owning super speculative stocks that everyone wants to short. So does it really make up for it if your stocks are losing 30 or 40% and you're getting 10% in a program like this? So there's a lot on both sides of the equation, but that's the program, Ray.
15:52 Speaker 02 All right, we're going to take a break and straight ahead, you're going to talk about when financial advisors are worth it and not worth it. Isn't that kind of like asking a therapist if you should get a therapist? You would think that, but actually Wes, I've found you to be very fair about this and you're very open to people DIY-ing it, which so many people listen to.
16:11 Speaker 03 Ask a barber if you need a haircut. You know what he's going to say.
16:16 Speaker 02 We'll be right back.
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18:18 Speaker 03 Welcome back to Ask an Advisor. I'm Wes Moss, along with Krista DiBiase, here on The Clark Howard Show. And we're going to go into a topic, which is kind of a funny title. I'm going to read the actual title.
18:30 Speaker 02 It is funny.
18:31 Speaker 03 Financial advisors are popular, but are they worth it? I don't know who came up with that title. But it is a good topic to explore. Krista, before the break, you said that I really find it, I think we've got to be transparent about everything. This is no different. My transparency here is that, yeah, I'm a financial advisor, and I have been so for over a quarter of a century now. Jeez, it's a long time, most of my working life. So I obviously think there's real value there in a lot of different ways. But the reality is that there are many different organizations that publish how many people actually go seek and utilize financial advisors. Some of them are wealth management groups, and I think they may overinflate.
19:15 Speaker 03 So when I was writing this article, one of them said, for folks that have over $500,000, 76% of them all use financial advisors. I think that it was a wealth-oriented group, so I just discounted that. But even if you go to Gallup, which is they do surveys on everything from consumer sentiment to the economy to everything. Gallup, I always have really, I like Gallup. And they say that it's 51% of folks that are getting close to retirement age are using financial advisors. It's also important to understand that that means about half of folks don't use financial advisors.
19:55 Speaker 03 The reality is that not everyone needs a financial advisor or wants a financial advisor, because there have always been, not just in the world we live in today with artificial intelligence and great software, easily accessible. The reality is that most of these tools have been around for decades. Even when I was early, 25 years ago, there, there, some of this was available. It's very much over the past 10 years. And there's been a democratization of lower cost investment. That's been around for 30 plus years, 40 years. So all of these things have been around and it allows folks that do like
20:35 Speaker 03 to have an overall purview and be in charge of their investments to have that as a job. And if you enjoy it and you are on top of it and it doesn't kind of make you nervous or that human reaction, we know when we don't want to do something, you know it as a human. Some people love to work in the garage. Some people love to cut their own lawn and we can all do it.
21:01 Speaker 02 I mean, you've told me you even use other people to help you with your investments.
21:05 Speaker 03 I have, well, I'm also surrounded by a lot of great financial advisors, but I have used somebody separately for a long time. Just because I like a different opinion, because there's no perfect answer on investing. And because we can't see the future, there's so many paths that you can take. And it's nice to have other opinions about feeling confident in the decision that you've made. But it's more than the investing. It's much more than just investing. It's, it's the planning side, it's the cash flow side, it's the projection side, it's the tax planning side, which we, I know that. I think one of the things that you've noticed as we've done this segment now for a year and a half of how much of financial advice has to do with tax planning.
21:50 Speaker 02 It's, there's so much.
21:51 Speaker 03 It's a big, really big part of it.
21:53 Speaker 02 Definitely the biggest surprise to me.
21:55 Speaker 03 Then there's the estate side, there's the family side, there's the trust side. And if you've got a very simple financial life and you have a hundred thousand dollar 401k and that's it, you really need an advisor? No, I don't think you, I really don't think you do. You could still have one or get some advice from the retirement plan you're in. But when you start having many accounts, lots of people, multiple assets, some public, some private, it can very easily make people's heads spin. And if you're not one of those people that love doing it, then I think there's great value in having some sort of counsel for it. Vanguard, which is the ultimate do it yourself investor advocate, publishes a study called Advisor Alpha.
22:39 Speaker 03 They say that it could add up to 3% per year in your rate of return. Now, to be fair on that, that's not, the market does 10%, your advisor should do 13 every year. That's not what they're saying. What they're saying is relative to you doing it totally on your own, they're saying an advisor could add up to 3% a year through, a big part of it is behavioral coaching and keeping you disciplined in times when there's some real extremes, both good markets and bad. There's asset location, there's tax planning for your investments. And all of those different things put together, that's what they say with Advisor Alpha is about.
23:23 Speaker 03 Behavioral coaching, spending and withdrawal strategy, which is also tax oriented, asset location, which assets go in which accounts, and then cost effective implementation and rebalancing. Put all that together over time, it's not necessarily about beating the market by this 3%. Doing slightly better on a net basis than you may have otherwise done on your on your own. So even Vanguard says that, but again, I'm the first to say you may not need one. And you may enjoy the process of quarterbacking your financial life and being involved in it on a very regular basis. And I think there's nothing wrong with that either. It's always been that way. I think it will always, it'll always be that way. Some people love doing
24:07 Speaker 03 it on their own. And obviously, a giant percentage of the population, particularly as net worth goes up, is going to want some outside counsel and reassurance.
24:16 Speaker 02 All right. I've got some questions for you. If you have a question for Wes, you can go to wesmoss.com/ask. And wesmoss.com is where you can find out more about Wes. Candace in California sent a question in at that forum, and she says, My husband and I are 52, married, and have three children still at home, ages 13, 15, and 17. We currently rent, but we'd like to buy a home. We have about $15,000 saved, zero debt, and my husband has a very stable union job earning $200,000 a year with a $2 per hour raise each year. For retirement, we have $29,000 in a 401a and $53,000 in a PSP. We also have the option
24:57 Speaker 02 to contribute up to $8 per hour to a 401k, but we're currently contributing zero. We're planning on buying a $500,000 home with a 30-year conventional loan with 3% down. After monthly expenses, including the mortgage, we expect to have about $700 extra per month. That should increase by about $200 per month each year for the next 13 years until retirement at age 65. Our projected combined retirement income, including social security, is $9,600 per month. Here's their question. How should we invest our extra income each month? Should we make higher mortgage payments, contribute to the 401ks, or do both? Our goal is to pay down the mortgage as much as possible so we don't have a large mortgage payment in
25:42 Speaker 02 retirement. We're also wondering if it'd be smart to use the 401a and PSP funds to pay down the mortgage balance when we retire. We appreciate your consideration.
25:51 Speaker 03 Hey Candace in California.
25:53 Speaker 02 And Wade is her husband.
25:55 Speaker 03 Candace and Wade. By the way, you guys have done a lot of planning. I mean, you're talking about $700 a month extra after you get the mortgage, which is going to go up another 200 to 900 a month extra.
26:08 Speaker 02 With three teenagers at home.
26:10 Speaker 03 Yeah, I have a similar mix, plus an extra kid. I know the phase you're in Candace and Wade. And the other thing is that if you're mapping out the long run, it sounds like Wade's pension plus your socials will be, it's almost 10 grand a month. So it's 120 grand a year. So you're good now. And yes, we would also, that's a money green zone. I just heard a register ring. That's one of the money green zones I write about in the retire sooner method. So you're, you're good there. And you're also saying, I want to get another money green zone, which is basically having my mortgage paid off or getting close to it. It's another one. But in your case though, Candace and Wade, even though you have the extra money,
26:52 Speaker 03 I would be really leery of putting extra towards the mortgage right now. Normally I would say yes, and you guys, Krista on Clark.com, you have a great mortgage calculator where you can see extra 200 bucks a month, 300, 500 a month, how, how much it shaves off your long-term years of your mortgage. So it saves me seven and a half years of mortgage payoff, which is awesome. But in your case, I wouldn't be putting money extra right now, or at least over the next decade, to paying down the mortgage you're about to get beyond making the regular payments, because you guys need some liquidity. That's the short answer here is that you have the income and you're going to have a house and you can afford it.
27:35 Speaker 03 It seems like here, but you don't, and the kids will be out of the house, but y'all need some liquidity. So I would be absolutely leaning on the retirement plans that you have offered. Maybe you have a Roth retirement plan option as well. And that's where I'd be putting that 700 that goes to 900 a month. And you've got another 10 plus years. You could save a ton and at least have a cushion on top of all the income. That's what I'd be doing.
28:04 Speaker 02 Candace didn't mention a emergency fund. I don't know if they have one or not, but wouldn't you recommend building that up to house expenses and things that could just come up when you're a homeowner? You know, suddenly your AC unit's out and.
28:16 Speaker 03 I think she said something like 15,000 total.
28:18 Speaker 02 That's what they have to save for a down payment on the mortgage.
28:20 Speaker 03 Oh, yeah. Yeah, you need a cushion for house stuff that's going to come up. So, yes, be careful about putting too much towards that giant debt, leaving yourself no flexibility for all the things that are going to come at you as a homeowner.
28:35 Speaker 02 Okay, this one came in from Ron in Michigan. You often encourage him.
28:39 Speaker 03 Ron in Michigan?
28:40 Speaker 02 Yes, Michigan, one of your favorite states.
28:42 Speaker 03 That's my, my father-in-law. His name's Ron.
28:45 Speaker 02 And he's in Michigan?
28:46 Speaker 03 And he's in Michigan.
28:47 Speaker 02 All right.
28:47 Speaker 03 Could it be for my father-in-law?
28:48 Speaker 02 It could be. You often encourage investors to hold their equity investments during a downturn, but I'm wondering what your recommended strategy is for rebalancing the portfolio as your desired allocation of equities diminishes during this downturn. It takes some fortitude to retain your equity investments during a significant downturn, let alone pulling funds from your safe investments to replenish the diminished equity investments to maintain asset allocation.
29:14 Speaker 03 I think it's definitely not the Ron I know from Michigan because I think he's out on a sailboat somewhere, not writing in about this question. Ron, I would tell you that you've got, you bring up, these are two prongs that, that hurt us. Withdrawing the money, that's always a little painful for retirees to get used to when the market is down. And then two, having the fortitude to be rebalancing when the market is down, which is what, Krista? What are we buying when the market is down if we're rebalancing?
29:47 Speaker 02 Buying more stock.
29:48 Speaker 03 Yeah, because, because the stock side has gone down. So he, what he's saying is that if you normally have 60% in stocks and now you're at 55% because the market went down, you're pulling money out and raunting, but am I also supposed to go back to 60? And that's the other side that doesn't get talked about. Now, this is where there's a slippery continuum, is that you don't have to be rebalancing every time your allocation's off by one or 2%. That I think will drive people crazy. But in general, if you get way off target, the very nature of markets going down, typically rebalancing once a year is good practice that you would want to not only be
30:31 Speaker 03 taking some of your assets, because you need to live on them for spending, but also rebalancing when markets are down. That's absolutely true, but it works on the other side, too. When markets are, if your allocation to equities is 65% and that's your target, and now it's at 70, then your reallocation would be to sell stocks.
30:52 Speaker 02 All right, Sue in Wisconsin says, on a recent show, you talked about having some investments in a brokerage account. I would like to buy a five or seven year treasury note and put it in a brokerage account at Vanguard. The problem is when I look at the seven year note, there are many options with all different yields, prices, coupons, and maturities. How do I know which one is best? Secondly, are treasury notes a good choice for a low budget investor such as myself? Thank you and keep up the great work everyone's doing on the Clark Howard Show, Sue.
31:20 Speaker 03 Hey, Sue in Wisconsin. It is complicated. If you, when you bring up a list of bonds and you see different maturities, different prices, different yields to maturity, so many different options. I think of bonds as a par value. Thousand bucks for one bond at 5% makes it all very simple. It pays you 5% a year. End of five years, you get your thousand bucks back. Unfortunately, when you pull up a page of bonds, you're going to see bonds at 980 and bonds at 1100. And you're starting to think, well, what am I, wait, do I buy the premium bond? Do I buy the discount bond?
32:03 Speaker 03 Yield to maturity is what you get over the life of the bond. So if you have a bond that's trading at a discount, that may mean that it had a lower interest rate and the price has now dropped. So you may get lower income throughout, but the price should go back to maturity. So if it's trading at 95, remember it's coming back to 100 by the time it matures. And that can be tax advantageous if you're already in a really low tax bracket. So buying individual bonds is tricky and there's a lot to think about. But I would just tell you, if you're looking through that list,
32:44 Speaker 03 Yield to maturity is your friend because that's ultimately the rate of return you're going to achieve over the life of that bond.
32:53 Speaker 02 All right, that's going to do it for us this week. Thank you, Wes, for another great show.
32:57 Speaker 03 Thank you to our listeners for all these great questions.
33:00 Speaker 02 Lots to think about. I learn something new every single time we get together and do this, Wes, many things usually. And if you want to buy Wes's new book, where can they go? Amazon, wesmoss.com.
33:11 Speaker 03 People should make fun of me.
33:13 Speaker 02 Why?
33:13 Speaker 03 I think of this every day. The fact that we do not have a link on any of our websites that just go directly to the book on Amazon. Wes has got to be, this guy can't be a good marketer.
33:25 Speaker 02 Okay.
33:26 Speaker 03 It's because all of the regulation around books and reviews and all of those things, I can't list it. So that's why, I don't know if you've noticed, I say, go to Amazon.
33:38 Speaker 02 Okay.
33:39 Speaker 03 I don't ever say, go to my site and click on something because there is no link to the book.
33:42 Speaker 02 Well, can't we put a link at Clark.com?
33:45 Speaker 03 No, you can't do it either.
33:46 Speaker 02 What about in the, what about in the, the notes on this episode?
33:49 Speaker 03 Never. That's why I always say, you just go to Amazon, which the world we live in is, makes it so easy to do this.
33:56 Speaker 02 I know.
33:56 Speaker 03 You just go to Amazon, you type in retire sooner method, and it's the green book that comes up.
34:01 Speaker 02 Okay.
34:03 Speaker 03 It's that easy, thankfully.
34:05 Speaker 02 All right. Well, thank you for being with us. I hope that if you enjoyed this, you'll share it with a friend. Please subscribe wherever you listen or watch and hope the rest of your day is fantastic.
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