08.25.26 Ask An Advisor With Wes Moss

In this special episode, fiduciary financial advisor Wes Moss answers your top questions on high-yield savings accounts, college planning, investing for grandchildren, preparing for retirement, and more. Whether you’re dealing with falling savings rates or trying to navigate high-yield dividend options, Wes breaks down the practical strategies you need to keep your money working for you. Mentioned on the show: Where Should You Keep Your Cash Reserve? - Clark Howard Backdoor Roth IRA: How High Earners Can Still Contribute The Biggest Investing Lesson From Trump Accounts - Clark Howard Best 529 College Savings Plans By State All this and more on the August 25, 2026, Ask an Advisor episode of the Clark Howard podcast. Submit your questions: WesMoss.com/ask Discover the research-backed path to a happier retirement – pre-order The Retire Sooner Method by Wes Moss today at retiresoonermethod.com We hope you enjoy our weekly Ask An Advisor episodes. Let us know what you think in the comments! Learn more about Wes: BOOKS BY WES MOSS Wes Moss, CFP® Wes Moss - Clark.com Learn more about your ad choices. Visit megaphone.fm/adchoices

• 0:00Speaker 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.

• 0:30Speaker 01

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• 0:42Speaker 02

  Price and participation may vary. Promotion pricing may be lower than meal pricing.

• 0:49Speaker 03

  Welcome to Ask an Advisor. Special edition today, Wes. We're going to try some rapid fire questions, mainly because I have a lot of questions to get through for you. And we really need to-

• 1:01Speaker 04

  You want me to keep these? Give me a time. I've got to be done the question like a shot clock.

• 1:06Speaker 03

  No, I'm not going to do that.

• 1:07Speaker 04

  60 seconds?

• 1:08Speaker 03

  I want you to get-

• 1:09Speaker 04

  120?

• 1:09Speaker 03

  Four questions in before we take a break.

• 1:12Speaker 04

  Okay, go.

• 1:12Speaker 03

  Okay. Let's start with Dawn in Kentucky. I have a high yield savings account with Ally Bank. Ally's interest rate keeps dropping. The current rate is 3%. Do you suggest I make a change to another bank or should I stay with Ally? I also have a brokerage account with Charles Schwab.

• 1:28Speaker 04

  Dawn in Kentucky. I would make your life a little simpler. You've got a bank and then you've got Schwab. You can probably get what you're looking for just at using one of the major brokerages, Schwab, Fidelity, Vanguard. And the money market funds are invested in super short-term securities, mostly government bonds, and they're going to be at whatever prevailing rate government bonds are. What a bank will do sometimes is give you a teaser rate and then they'll lower it over time. So you may have been at four and now it's at three. If you're just in a higher yielding money market fund that is owning short-term treasuries, then you don't have to deal with teaser rates.

• 2:10Speaker 04

  So I would look at utilizing something within a brokerage firm like a Schwab, Fidelity, Vanguard, so that you don't have to start keep shopping for new rates when they're right there in front of you.

• 2:22Speaker 03

  Okay. And by the way, you can submit these questions to Wes at wesmoss.com/ask. W E S M O S S dot com slash ask. Matthew in Ohio says, hi Wes. My wife is 28 and I'm 32. We're planning on having our second child in the next two years. We currently have an extra $2,000 a month after all expenses and Roth investments. We have been investing this into a taxable brokerage and 529. Should we continue investing or should we save cash to offset future daycare costs with two kids? That can be a lot. Oh yes, here we go. Daycare costs 1.3K a month for one child.

• 3:05Speaker 03

  We have 400K in investable assets and a 12 months emergency fund. Our mortgage is at 6.5% and we're saving 50,000 a year in retirement funds.

• 3:16Speaker 04

  Hey, Matthew in Ohio. You guys are young and really saving a lot of money.

• 3:20Speaker 03

  Impressive.

• 3:20Speaker 04

  Second kid, two grand a month extra. You've got 529s and taxable brokerage. Daycare, yes, it's 1,300 bucks a month for the first kid and maybe a little less, but you're talking 2,500 bucks a month. But that's going to be a little while. Daycare doesn't start right away. Well, it actually probably will start fairly soon. While you can, the one thing I didn't hear you say, Matthew, I know you're already doing 401ks because you're a maxer. What you may want to do this year before daycare starts to kick in, I don't know how much you help you have if you have family around and daycare won't be till it's fully the full amount of time and you need something 40 hours a week.

• 4:04Speaker 04

  But I would be looking at a mega backdoor Roth at your employer. Because if you have another extra two grand a month, that's another 24K. You still would be well within the limit of what 78,000. If you've already maxed out 401K pre-tax, then you could do that extra amount in after tax in the 401K and then convert it to Roth. And remember, we can always get to Roth conversion amounts. So you're not locking that money away forever. And it sounds like you already have some taxable brokerage money as well. Until the daycare costs kick in, I would be trying to get that money squirreled away

• 4:47Speaker 04

  in a tax advantage way and for your retirement long-term. Because once you do it, you probably won't want to touch it.

• 4:54Speaker 03

  Can you explain a mega backdoor Roth and backdoor Roth? Like what all that exactly means for people?

• 5:00Speaker 04

  Yeah, we think about our, we max our 401K plans and that is a certain dollar amount at 50 and under, and then it's a higher dollar amount at 50 and over, or actually under 50, then 50 plus. And then it's even a higher number when the new rules that gets you to age 63, it goes up even more. But the allowable amount that most plans, not all plans, but most plans allow is another number that is a risa number, I believe. And that's closer to 80K a year. Now I'm rounding here. Imagine if you've got, the ceiling is 80 and you're only putting, and you're maxing it,

• 5:43Speaker 04

  call it 20, I'm just going to use round numbers, 24. You have 50 grand worth of room, 55 grand worth of room to save money now, still out of your paycheck into the 401K plan, but it goes into what's called an after-tax 401K account. But if you're allowed to do that, then you're also, the plan is likely allows you to just immediately convert that into a Roth. Because again, it's after-tax money.

• 6:09Speaker 03

  Into a Roth IRA.

• 6:10Speaker 04

  Right. Because the Roth limits are the same as the IRA limits. They're much smaller than being able to put an extra 30, 40, 50K, whatever you can afford. That's why they call it the mega. And then the backdoor is just that you put it in a pre-tax account and then you roll it to a Roth.

• 6:29Speaker 03

  Got it. Okay. So just want to make sure. This came in from inheritance in Arizona. Hi Wes, I love your show. I haven't heard you talk about how to figure inheritance money into your financial or retirement plan. I know you should never fully rely on inheritance money as it's not guaranteed, but I assume it should be figured in at some point if you know the details of what you'll receive. Thanks for all your advice.

• 6:52Speaker 04

  Hey, we have not had a question on this. That's cool. Yeah, I love getting brand new, brand new questions. Here's what I would say. Look, if you know inheritance in Arizona, if you know what the amount will be and you're getting it even before someone passes away, and some families will do this, it's a living inheritance to some extent, maybe it's in a trust, then they totally, you should factor it in. I don't think that's what you're asking though. I think that what you're saying is that a lot of people kind of know that you're going to inherit a certain amount at some point into the future.

• 7:33Speaker 04

  And if mom and dad are already 85 years old, it would be, you know, conceivably in the next 10 to 15 years. People don't like to plan for it because it's a, it's a kind of an icky situation.

• 7:48Speaker 03

  Doesn't feel right.

• 7:49Speaker 04

  It doesn't feel right. And I will tell you that I think, I'm thinking back of just from experience, people that plan for it end up, it actually, I think, I know this sounds counterintuitive. I would, I would tell you not to plan for it. Because I've seen in a few cases where people are planning for it and then mom and dad live to 100.

• 8:13Speaker 03

  Sure, need intensive medical care, whatever.

• 8:16Speaker 04

  And they need money and they need to go to assisted living and then something changes over this longer period of time. And then all of a sudden, your family is saying, wait a minute, we're in retirement. We were thinking we'd have another million or two million. But mom and dad are still living and they're really the most expensive favors of their life. So I would tell you to not count it and not put it in a plan because it's super easy to plan for when it does happen. Now, on your parent's side and whoever, they need to do some estate planning, but it is not a difficult thing to plan all of a sudden with extra money. It just makes everything that much easier. So it's not this big maze that you have to

• 8:57Speaker 04

  figure out today. From my experience, it can go wrong if you're planning for it. It's almost never goes wrong if all of a sudden it's extra.

• 9:07Speaker 03

  Okay, this question is from John in Ohio. I've been hearing a lot of chatter about some ETFs paying dividends at rates from between 25 and 40%. My understanding is that they're the result of options trading. My question is, since this seems too good to be true, what additional information can you provide to better explain these funds? And can you share your thoughts on the risk level associated with them?

• 9:33Speaker 04

  What did we call structured products? Financial burritos?

• 9:36Speaker 03

  Oh, financial burritos.

• 9:39Speaker 04

  John in Ohio, these would be financial jalapeno habanero enchiladas.

• 9:45Speaker 03

  Wow. Ouch. Not good on the stomach.

• 9:48Speaker 04

  What, in what world can any investment pay you 40%? In what world can that happen? The answer is no world. There is no such thing that is reliable and sustainable for a long period of time. Just, it's possible. And sometimes they're paying you out with, they're maybe writing calls or selling puts and getting option premium in on the underlying equities that are owned in that ETF. And the yield may be, let's say, one month, it does pay out 8%. Well, what's eight times 12? It's a big number. All of a sudden, the annual yield looks huge. Anything that, that has a, even a whiff of something that

• 10:29Speaker 04

  high, that's a, that's a financial jalapeno enchilada waiting to just cause some real problems. So, all you need to know is stay away IMO. That stands for, in my opinion.

• 10:44Speaker 03

  Okay. And I do have a quick question for you, and then we'll take a, we'll take a break and go to more questions. How much of your time when you're doing financial planning and meeting with clients is taken up by, would you say, people worrying, like calling with worrying when the news changes versus like, you know, doing annual planning meetings versus, I'm just kind of curious.

• 11:03Speaker 04

  Yeah, it's a good question.

• 11:04Speaker 03

  We often have people who are considering the career, and I'm just wondering, like, what does that really look like for you in a day?

• 11:11Speaker 04

  Yeah. I would say that it's a mix of all of those things, that all of those things are ongoing in any given week, almost no matter what. So in any given week, I'm going to have some conversations about people worrying about something, whether it's the latest geopolitical headline, or maybe it's worrying about something financial in their own life, where they, something went wrong, renovation went wrong, extra cost. Hey, I've been taking $5,000 a month in my portfolio, and I don't think that's enough, and I need to take eight a month. Is that okay? Like, it makes me, I'm worried that that's too much. So, some of it is headline-driven worry, some of it is their families, their

• 11:52Speaker 04

  own financial planning worry. But what is usually the answer is, the answer is mapping out a plan or roadmap to make an informed decision on if something should work for you financially or not. And that way, you can have a lot of confidence that you can change your financial situation. The bigger question is that the world is always swirling and changing, and it's hard for people to not have those worries. A plan goes a long way, and education goes a really long way. As, and as I, what I've noticed, if folks that have been retired and been through the process for a lot of years, tend to worry less. Newer retirees are, I would say, more hypersensitive to new

• 12:35Speaker 04

  economic developments or new geopolitical, because when they're 45, they're just socking money away, and they're like, I don't care what's happening in this part of the world. When you're 65, you're like, wait a minute, this is all my money, and it needs to go well over time. And now we have this geopolitical problem. So there's a kind of a restart in that new phase of educating why you should be fine regardless of the headlines.

• 12:59Speaker 03

  Well, I think you're part therapist. I stand by that now, hearing that, because I do think, I was trying to get my daughter to consider the career, because she has a psychology undergrad degree, and she's really into that, but.

• 13:10Speaker 04

  Only the good, only the good half.

• 13:11Speaker 03

  Yeah. All right, we're going to take a quick break, and we're going to go to more of your questions.

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• 15:33Speaker 03

  Welcome back to Ask an Advisor. We are doing a special edition this week where I'm asking Wes questions.

• 15:40Speaker 04

  Just straight questions.

• 15:41Speaker 03

  Straight questions. We're getting to your questions. And again, you can submit those at wesmoss.com/ask. And here.

• 15:48Speaker 04

  An organic, all-natural edition of the Clark Howard Show.

• 15:52Speaker 03

  And you haven't seen any of these questions. You've never heard these questions. All right. Tiger Mom in Minnesota, gotta love that. Tiger Mom says, how do I set up a glide path or allocation of a 529 plan as my child will start college next year? Right now, they're at 70, 30 stocks and bonds. Do you change the allocation each year, quarter, or should I reallocate everything all at once to cash?

• 16:17Speaker 04

  Whoa, Tiger Mom. I love Tiger Moms. I actually call my wife, we call her lax mom.

• 16:24Speaker 03

  Oh.

• 16:25Speaker 04

  Because she's a lacrosse mom, which is a version of a Tiger Mom, but they're very lacrosse focused.

• 16:29Speaker 03

  But she's not lax, as in like lazy.

• 16:31Speaker 04

  No, not LA, no, it's LAX, as in lacrosse abbreviation. Glide, Tiger Mom, when you're on a glide path, if you were already in one of the glide path options in most, on almost any 529 plan, they start out all equities when, when your kids are age zero and age one. And because you're a Tiger Mom, you probably started these back when they were zero and one. And by the time they get to be 18, it's usually flipped from what you're telling me. It's usually the glide path has gotten it so that it's, it's about 30% in, 30% in stocks and 70% in bonds, because now it's a more stable allocation, and because you're going to use it most likely in the next couple of years. And it really is a time horizon question. It is, hey, I know I'm going to be using this.

• 17:17Speaker 04

  The nuance for you is that how much are you really going to use? If you've got 200K in a 529, and your expense is going to be 100, then think about, are you really going to spend the whole thing down over the next couple of years or not? If the answer is yes, like most people, you're going to spend most of the 529 money, it means you only have a four-year horizon, maybe five years. And that means it should be a more conservative allocation, closer to 20 to 30% in stocks, as opposed to the other way around.

• 17:50Speaker 03

  Okay, here's the second question. Charles in Florida says, can you comment on the advantages of investing in individual bonds versus bond funds? If individual bonds are generally more advantageous, how do I select the right portfolio of bonds? Thanks for the helpful information on the podcast.

• 18:08Speaker 04

  Charles in Florida, part of utilizing bond funds or bond ETFs is so you don't have to make those individual selections. And that's a big deal. The advantage and why people like having individual bonds is that you have individual maturities and you know exactly when you're supposed to get your money back. So you can have a bond that matures or a portion of the bonds in the total bond portfolio mature next year in 27, then in 28, 29, and so on. So you get a little more predictability knowing that a bond, when a bond matures, as opposed to most bond funds or ETFs, it's just a kind of an ongoing rolling. Bonds are maturing, they're buying new bonds.

• 18:50Speaker 04

  The one thing I would say that if you like that certainty of when something's going to mature, and I do too, I like that functionality in a bond investment, not for every bond investment, but I like using this. Most big bond ETF providers now, Charles, have what are essentially target date bond funds that all mature in a certain year. So you can still, without having to go and select individual bonds, you can have an ETF knowing that all the bonds mature in 2028 or 2030. So that's kind of a hybrid between the two things that you're looking at. They're still super low cost. You can pick the credit quality government, which would be the highest, or municipal,

• 19:34Speaker 04

  or corporate. But that's what I would be looking at is the target dated, knowing the maturity bond ETFs.

• 19:44Speaker 03

  Okay. Robert in South Carolina says, we have a three-year-old grandchild that we would like to start investing for. Given that she needs an income for most investing strategies, can you suggest the best way to invest for her? Naturally, we're looking for a maximum return.

• 19:58Speaker 04

  Okay, so she needs, because she needs an income to do a Roth or to do an IRA, right?

• 20:06Speaker 03

  For her to work.

• 20:07Speaker 04

  The, right. This is the problem with custodial retirement accounts because you technically need income. What's the solution for that in a brand new thing that just started this year in July? The Trump accounts. The Trump accounts, you can put up to 5K in them per year, and there's no income requirement. And if, they essentially become IRAs once your kids turn 18, I believe. And then hopefully they hold them until they're in their 60s and they use them for retirement accounts. They're not as good technically as a Roth in some ways because the money still gets taxed when you pull it out. But I like them because it's so simple that you don't have to worry about income and

• 20:52Speaker 04

  they have a part-time job and they have an internship and they're only seven, that doesn't make any sense. The Trump account, I think in a lot of ways, just solves that. Five grand a year per account, you can, it's getting invested in US-type equities. That's where I'd start.

• 21:07Speaker 03

  And what about 529 plans?

• 21:09Speaker 04

  529 plans, they're wonderful as well. They just are a little bit more targeted on what you can use the money for. And they have really high limits. So most people can't even put it, you can put in more in a 529 plan than most people can even do.

• 21:24Speaker 03

  If you do 529, I'm not sure if South Carolina offers a state income tax credit, but, or deduction or whatever, but you can check that out at Clark.com/529 because we have every plan rated. But you don't want to buy it through a bank or anything. You want to buy directly from the plan's website if you do that. But you can like convert over, if you've had it open 15 years, right now it's up to $35,000 into a Roth IRA if they don't go to college or they get scholarships or whatever, right?

• 21:53Speaker 04

  Yeah, and that's a great thing about existing 529 plans. You can do that. And that's another kind of out if they're not going to, if they end up not going to college or they get big scholarships. 529s are great, A, you can convert them, and B, you can switch the beneficiaries. And if nobody uses it from your kids, then you just go back to grad school. Maybe it's sailing school.

• 22:13Speaker 03

  All right. Frugal Phil in North Carolina wrote in, we love the show. Enjoy your lighthearted approach. We are one to two years away from retiring with $2 million in 401Ks, 1.6 million in real estate, and $330,000 in cash. Only 8% of my retirement is in Roth/Post-Tax Funds. Does it make sense to save more than the company match, which is 4%, when it all goes in non-Roth buckets?

• 22:41Speaker 04

  Frugal Phil, one step further, think about, first of all, max 401K, not just the match, and then convert within the 401K to a Roth 401K. That's maybe what you should start thinking about because you've got plenty of money. I mean, you've got $1,006 in real estate, 2.2 million in 401K, it seems like, or IRA money. And then 330 in cash and only a little bit of that IRA or retirement money sounds to be in the Roth. I bet you, Phil, it's in your retirement account. So maybe it's time to start thinking about, not converting, but doing a Roth after-tax

• 23:25Speaker 04

  contribution in the company plan, 401K, and then that gets converted to a Roth. And that's an easy way to get money into Roth. And to some extent, that's what you're looking to add to here.

• 23:39Speaker 03

  Okay, wow. I could have probably asked you some more questions. This is unbelievable. I hope you enjoyed this. Let us know. Comment on this episode on YouTube or wherever you listen. If you can add a comment, Spotify, I know you can. We'd love to hear about it. You could also fill out the question form and put a comment in there. And that question form is at WesMoss.com/Ask. And we will be back next week with a brand new Ask an Advisor. Tomorrow, Clark Howard will be back with a brand new Clark Howard Show. We appreciate each and every one of you. I swear this audience, they are just so awesome.

• 24:15Speaker 04

  They're cool. And the names are getting better and better.

• 24:17Speaker 03

  I was just going to say that. Tiger Mom, Frugal Phil. I mean...

• 24:20Speaker 04

  If Tiger Mom was only from a state that started with a T, it would have been even better. Tiger Mom from Texas.

• 24:25Speaker 03

  I know. Inheritance in Arizona. So we love it. Keep them coming and we'll see you next week.