10.27.26 Ask An Advisor With Wes Moss

Is Your Brokerage Account Safe from AI? & Market Myths Debunked In this episode, Wes Moss breaks down what you need to know about AI security and seasonal stock market lore. First, Wes addresses the rising safety concerns surrounding automated AI agents accessing brokerage accounts, sharing his two golden rules for protecting your money in a digital world. Then, he separates hype from reality when it comes to famous Wall Street legends like "Scary October," "Sell in May and Go Away," and the January Barometer, offering practical advice on how investors should actually navigate these seasonal market trends. Mentioned on the show: Why You Need To Lock Your Brokerage Account Today The New AI Voice Scam Threatening Your Life Savings — and How to Protect Yourself AI Agents Trading Stocks While You Sleep? Charles Schwab’s CEO Is Skeptical The Overlooked 'Rule of 55' Could Unlock an Earlier Retirement All this and more on the October 27, 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 – 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

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• 0:50Speaker 03

  Welcome to this week's Ask an Advisor. Actually, it's not going to be the only Ask an Advisor this week. We're going to do a special Q and A rapid fire edition on Thursday. I'm Krista Devias here with Wes Moss.

• 1:02Speaker 04

  Wes Moss.

• 1:04Speaker 03

  And today you're going to talk about a couple of things that I think are really important. First, AI and security, which

• 1:12Speaker 04

  Yes, bots.

• 1:13Speaker 03

  Yeah, it's on everyone's minds.

• 1:15Speaker 04

  Bots moving my money.

• 1:16Speaker 03

  Mm hmm. And then later on, the stock market, the hype, the hogwash, like what's hype? What is?

• 1:23Speaker 04

  What's hype?

• 1:24Speaker 03

  What's hogwash? What is going on? You know, you hear all these, I keep, my son even told me like he saw someone on TikTok.

• 1:31Speaker 04

  Well, you know, October.

• 1:33Speaker 03

  Oh, or they, they, they followed this person. They said that they predicted.

• 1:36Speaker 04

  Death cross.

• 1:37Speaker 03

  They predicted, you know, this thing, this historical stock market event. They predicted this housing crash.

• 1:42Speaker 04

  Sell in May.

• 1:43Speaker 03

  And now they know in January, something's going to happen.

• 1:46Speaker 04

  January fact, Santa Claus rally.

• 1:48Speaker 03

  Yeah. So let's talk about that, too. I think that would be great.

• 1:51Speaker 04

  There is some validity to some of these. And then there's the reason I think that the folklore of what happens at a certain calendar date in markets is that there is a little bit of truth to many of those folklore oriented sayings that people remember. We're going to get into that.

• 2:09Speaker 03

  Okay.

• 2:10Speaker 04

  First one to start with, and I'm going to thank you guys here, The Clark Howard Show, for a trove of emails and questions that I've been getting really for the last, the topic's been around now for about a year and it's a really important topic. And then you guys wrote another letter. Clark had another article about it in a recent newsletter and I immediately started getting emails, ding, ding, ding. And I'm just going to read this. Good morning, Wes. I just read an article that Clark Howard wrote and he strongly recommends having ACAT locks or account transfer freezes on all my brokerage accounts. I'm sure this is something that you've heard about. Let me know what we're doing.

• 2:52Speaker 04

  Another question, Wes, I heard Schwab is blocking bots that can drain your account. Just imagine how scary that thought is.

• 3:01Speaker 03

  Sure.

• 3:01Speaker 04

  I heard Schwab is blocking bots that can drain your account. How can it possibly be safe out there? I'm scared AI will drain my account. There are two things happening and these are two separate issues, but they all come back to the same thing, which is the security of your retirement account, your brokerage account, which is the paramount idea to begin with. We talk so much about investing in dry powder and 4% rule and how we manage our assets. Before you get to that, you've got to make sure that you have safety, security where your money is placed. Because if we don't have that, we don't, forget everything else. So it's the bedrock and the foundation that I wanted to start with today.

• 3:42Speaker 04

  And these are very real questions in the evolution of financial technology that's happened over the last 20 years and particularly the last year or two, because we've gone from digital technology and lots of ease and automation and I can set up money movement and it can all be through the website and it's digital and it's great and there's a little friction. Now let's add yet another level of ease on top of that. Ie, you can have a bot now or an agent that does things for you. And if you give them permission, that agent can potentially be moving money around for you.

• 4:24Speaker 04

  So we've gone from super easy to almost no friction. It's almost defies gravity. There's no gravity anymore. If you were to give an agent some sort of control or access to your accounts, which now raises a brand new worry and a threat. And here's the article paired with Clark's article that got people super nervous, Krista, which is the Wall Street Journal. A week or so ago, had the CEO Schwab talking about how they, as a company, were going to block outside agents like Muse, which is from Meta, Facebook, that's supposed to be able to do all these great things for you and schedule your life and book you travel and find a dog groomer.

• 5:07Speaker 04

  And oh, by the way, find you a better interest rate on your money market and potentially move your account somewhere. Well, what did Schwab do? I think very smartly said, no outside bots, period. That in itself made people nervous because wait a minute, if they're blocking these agents, doesn't it mean these agents are dangerous? So if a giant massive custodian like Schwab is saying, uh-uh, no Muse. My families that I work are, they're reading this and saying, well, doesn't that mean there's this other threat? And doesn't that mean that AI could now drain my account? So there are kind of two separate issues here. They're both about security. Clark talks about automated account, automated client account transfers. Those are ACATS that you guys talk about.

• 5:52Speaker 04

  Some companies will allow you to freeze your account so they can't transfer, much like you would do a credit freeze. Then you add in this other layer of digital ease. And now the whole bedrock of the stability and protection of where my money lies or where my money rests or where it's held, the custodian, comes into question. We're in a new paradigm. We're in a new era. It's 2026, but this is a new world that we live in and we should pay attention. So number one, yes, we live in a world where we can start to give access to very smart,

• 6:32Speaker 04

  what I would consider, I think of young Sheldon, this super genius kid who's, let's say 10 years old and he's super smart. But imagine if you gave young Sheldon the keys to your semi truck and said, why don't you drive from California to Philadelphia and deliver this precious cargo? What do you think would happen?

• 6:51Speaker 03

  Right.

• 6:52Speaker 04

  Super smart kid, but I would imagine that somewhere along the way, something very wrong could happen. So right out of the gate, as we're in this new world of being able to give agents access, I think that the big custodians like Schwab are smartly saying, no, as should you. I don't know a world ever that we're going to be in where I would allow any sort of agent to have any sort of access to anything that's related to moving, trading, accessing my money. Neither should you ever in the history of the world. There may be a generation, Krista, maybe our kids that grow up and gain this level

• 7:35Speaker 04

  of trust over time, but not in my lifetime will that ever happen. So I don't want anyone ever to do that, number one. Number two, Krista, I think that where are we getting the next layer of protection? We've gotten very good at being smart around dual authentication. The dual authentication, as we all know, we log in, but then there's another app that verifies it's us. We need that today more than ever. There's another layer of protection. And this has to do what I call this human dual authentication. You guys talk about someone potentially setting up an account somewhere else, sending an automated request to another firm where your money actually resides.

• 8:18Speaker 04

  And the firm just says, sure, and sends the money to this new account, which you have no access to. In the world that we live in, there are all these digital controls that are supposed to stop that. But the layer that makes me feel as though money is safe is when it's, there's another additional human layer that says, wait a minute, we don't ever let anything just go out automatically. And a human or a team of humans reviews something and says, does this make sense? That Krista is moving this account to this other firm or this big wire is going out? Nobody's talked to her about that. The relationship you have with a human, which is ironic that we're in this easy world of everything is automated and digitized.

• 9:02Speaker 04

  To me, I think that now having a human at your bank or your brokerage firm, a representative that actually knows you, a financial advisor, an independent financial advisor, to be able to be another layer of dual authentication, human dual authentication, to make sure your money doesn't go somewhere it's not supposed to go. That's the extra layer I think we all need. So everyone needs to know someone that knows them, understands them, understands their family. As we do business in this very digitized world, ironically, I think humans today are this extra safety valve that makes me feel comfortable about where my money resides.

• 9:45Speaker 03

  I love it. Okay, we're going to go to some questions. You can ask Wes a question at wesmoss.com/ask. Bruno in Georgia sent this one in. Hello, Wes. My wife and I are both 22 and I've been listening to your podcast for the past few months after my father-in-law introduced me to the show.

• 10:03Speaker 04

  Go Bruno, thank you, ma'am.

• 10:05Speaker 03

  It has quickly become part of my commute to work. I work full time and my wife is in grad school with about three years remaining. Her tuition is around $12,000 per semester with six semesters left. So far, we've been able to pay for school as we go using our savings and my income. We currently have about $80,000 saved with roughly $70,000 in a Schwab. Do you want me to read the fund, SWVXX through Schwab?

• 10:32Speaker 04

  It's my market fund.

• 10:33Speaker 03

  And $10,000 in checking. After our normal monthly expenses, not including tuition, we have about $1,500 left over from my paycheck each month. My question is, what should we do with our savings over the next three years? Should we keep most of the 80,000 in money market, knowing we'll need a significant amount for tuition? Or should we start putting some of it into ETFs for long-term investing? We want to avoid taking on student debt, but we also don't want to miss out on investing while we're young. How would you balance the two? I love the show and look forward to listening every morning on my commute. Thanks for any advice you can give us.

• 11:09Speaker 04

  You know, Bruno, I'm just doing the math here. 12,000 times six semesters is 72 grand and you've got about 80 in cash. But at the same time, I want to make sure I get this right, Krista. He has $1,500 left over a month, or he's 1,500 short per month?

• 11:25Speaker 03

  No, he has 1,500 left over, he's saying. $1,500 left over from my paycheck each month.

• 11:32Speaker 04

  And that's after paying for the tuition?

• 11:33Speaker 03

  That's impressive.

• 11:34Speaker 04

  That's after paying for the tuition. Bruno, the simple answer is that you've got a liability that's 72K and you've got 72 in savings and you line those two up and you keep the money in money market and you pay for the tuition over the next three years. If I'm doing the math here, you already, you're paying for it and you're not having to access the 70. So it sounds like your income is already able to cover the tuition from what I'm seeing here. And if that's the case, then a portion of that $70,000 should not just stay in money market. I mean, you're 22.

• 12:20Speaker 04

  It's so important just to get going with investing. Now, I was thinking that the Fed just came out with their survey of consumer finances. You look at people per age, what happens with, with net worth? It just goes up over time and it's because we start earlier and time gives you an advantage. So I want everyone to be able to get started with investing as soon as you can. And if you've got a little bit of a surplus, then technically you don't need that $70,000 to just pay for the tuition. So if I'm hearing these numbers correctly, that is money you can get invested or at least maybe you take three or four months or even six months worth of spending in your emergency fund.

• 13:05Speaker 04

  But after that, maybe half of that or 30 or $40,000 of the 70 can get started in broad index fund investing because you're 22 and you're not going to, you're not going to need it until you're 62. And that's a very long time horizon and the sooner you get started having it compound, the better.

• 13:24Speaker 03

  I wonder also about, it may not make as much sense with how much you can earn in just, you know, savings right now, but I know the Georgia 529 plan has a state tax deduction. So they can put, right now it's, I think $4,000 each for, for an account. So $8,000 a couple into that and then pay the tuition out of that. And that may also, you know, give them some tax money back from the state.

• 13:48Speaker 04

  To fund a 529 just for her current?

• 13:51Speaker 03

  Right.

• 13:52Speaker 04

  Yeah, that's interesting too. That's a CPA question too.

• 13:55Speaker 03

  Tim in Virginia says, I'm 44 years old with a solid retirement savings and no mortgage. With rising bond rates, I'm considering diverting a portion of assets to long-term treasuries, then building a bond ladder from the returns. Is it better to use a brokerage or treasury direct? And is that a smart strategy?

• 14:14Speaker 04

  Okay, Tim, we've gone from Tina to Tara. You know what I'm talking about?

• 14:18Speaker 03

  No.

• 14:19Speaker 04

  Tina was, when rates are really low, interest rates were really low for way over a decade, there was this Wall Street euphemism called Tina that stood for there is no alternative. So there was, it's stocks or then nothing else. And when rates are really low, that favored a certain kind of stock. Well, now with rates back to long-term historical averages, 25-year highs, Tara comes into play. There are reasonable alternatives to stocks. So Tim, you're thinking about, hey, I can get five, five and a half percent. Maybe that's an option for me. So I think that's the first part, number one.

• 15:01Speaker 04

  Number two, treasury direct is great and you can invest for as little as a hundred bucks using treasury direct. I just don't know, that's not how I would use it. If you're going to do bond investing, why not just do it in a brokerage account? And then you can still buy individual treasuries if you want through any brokerage firm or you can buy treasury oriented, specific year ETFs. And to me, that is a much more flexible and almost as low cost, close to no cost. There's a tiny bit of, there's a little bit of an expense ratio in some of these bond ETFs, but I would be using a brokerage account to access treasuries, mostly ETFs that do

• 15:46Speaker 04

  this as opposed to using treasury direct.

• 15:49Speaker 03

  Derek in Colorado says, I'm 54 and I have a 401k with my current company that is a moderate size and I have a larger 401k with my previous employer. My current employer 401k is with a large insurer and my previous employer 401k is in fidelity. I'm able to roll the fidelity into the insurance company. This will allow me to configure the rule of 55 next year. How would I know if one plan has better investments than the other? And should I do the rollover? What should I look for?

• 16:18Speaker 04

  Derek, first of all, you may really not have a lot of choice. If you have, let's just make some, if you have 500K in the old 401k and 50 in the new one, and you're going to be using the rule of 55 and you need to have money in that, in the current plan so you can access it early without a penalty, you really don't have a lot of choice. The bulk of your assets almost have to be in that new plan that you're going to leave age 55 plus. So I, you may not have a lot of choice, number one. Number two, even the big insurance company 401k plans, which I remember 20 years ago, they were awful and they're expensive and they, they were double, triple, quadruple

• 17:00Speaker 04

  the cost of a Vanguard retirement plan or a fidelity retirement plan. That's changed a lot. And even though it may be a big insurance company that now does investments, you usually have 20 or 30 different fund options. And very often those expense ratios are very competitive. I would be looking at the list of securities. You probably have index oriented options, meaning an S and P 500 type of fund or MSCI international type fund. Usually because they're index oriented, the fees are super low. Now, if they're point one at fidelity and they're point two with this insurance company,

• 17:43Speaker 04

  it's not quite as good, but the world has changed from one 401k being point two and another being two. It's not 10 times like it used to be. So, so the new plan options that you can reinvest your assets in should be competitively priced, but to some extent, to be able to utilize the, the rule of 55, you almost have to be moving money into the new plan.

• 18:08Speaker 03

  I'm glad to hear that's changed because I know that's something that Clark always cringes at when someone says that they've got a 401k with an insurance company. And I just thought, ask you this question because I did receive three of these this week. Adam in Colorado says, I'm excited the retire sooner method is finally here and wondering when it might be available as an audiobook for us audiophiles.

• 18:28Speaker 04

  Never.

• 18:29Speaker 03

  Makes sense that comes from the podcast.

• 18:31Speaker 04

  Never coming, Adam. It's never, I did, it took me a week to record it. It's taken three months to edit it and they're still not done. So I don't think it's ever coming.

• 18:40Speaker 03

  It will be coming out.

• 18:41Speaker 04

  Never. It's almost done and it is, I've recorded it. It took quadruple the amount of time. No wonder people do this professionally. I'm not a pro at narrating a book. I thought it'd be easy. It was not easy, it took forever, but it's even harder for the people editing it because I had to read every sentence like three times.

• 19:00Speaker 03

  Okay.

• 19:01Speaker 04

  But it is almost done, Adam. It'll be out, I would say in the next month or so. So keep looking on Amazon for the audio version of the retire sooner method.

• 19:11Speaker 03

  All right. Coming up next, we're going to talk about stock market legend and lore, hype or hogwash?

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• 22:04Speaker 04

  Welcome back to Ask an Advisor. Wes Moss along with Krista Debiass. You brought this up. Somebody has been asking you about maybe scary October, which there's scary September, then there's scary October. Is that real? Is there any credibility behind so many different calendar based, market oriented, I don't know if you want to call them euphemisms or legends or lore, but there are a lot of them. There's, there's one for almost every, every season. And I wanted to go through some of the ones that I think are well known, but maybe also misunderstood and see, do they have any real teeth to them? Or is it just kind of all bark and, and no bite?

• 22:49Speaker 04

  And I think the reason right out of the gate, the reason these perpetuate is that there is a little bit of truth to most of them. And then some of them were actually very accurate for a little while, and then it maybe lost their luster. So we're looking at history, stock market history. Does a season or a calendar matter? And the answer is mostly, I would say they're mostly hype, a lot of hogwash, but at least probably worth understanding. And here are a couple of the big ones. Number one, there's this thought that September is really bad for the market. And then October is also bad for the market. Part of that is because of the reputation of

• 23:31Speaker 04

  October. There were some real disasters. So October 24th through 29th of 1929, Krista, that was the Black Monday period. In 1987, that was one of the biggest one day decline that we've had. That was Black Monday on October 19th, 1987. And that is kind of given October really bad reputation. And then if you think about the financial crisis in, in October of 08, the market was down almost 17% in one month. However, if you look over the course of history, October is positive on average. September is actually negative on average. So September is arguably

• 24:14Speaker 04

  the worst month, or it has a weak track record. October has kind of the bigger scary moments, but on average has been a decent positive month, about a half a percent gain over the course of history. If you go back from 1928 through 2024. So I would say that we're already through, we're already almost through October anyway, and September's the bad month. Now, again, do you get out of the stock market because historically September's a bad month? No, that doesn't make sense either, but at least it, it helps to understand history. Another one that gets a ton of press is the sell in May and go away, meaning that stock market returns from November to April

• 24:59Speaker 04

  are really strong, then from May through October, traditionally weak. We ran the numbers on this, Krista, on sell in May, and we looked at September of, so sell in May from 1989 through 2025. If you were to just do a buy and hold strategy, and you were invested the whole time, you averaged about 11%. If you were to sell in May and go away, now that your money is out of all investments, we transferred money into whatever the, the treasury rate was at that point. So it's almost like an asset allocation. Sell in May and go away. So you were out May through October, but

• 25:42Speaker 04

  you were in November, December, January, February, March, April, you averaged 8.6%. You did not do nearly as well if you sell in May. So it just doesn't

• 25:54Speaker 03

  Time in the stock market.

• 25:55Speaker 04

  Doesn't hold water. A growth of a dollar, if you do sell in May over that period of time, a dollar grew to 20 bucks. If you didn't sell in May and go away, you were invested the whole time, grows to 41 bucks.

• 26:07Speaker 03

  Wow.

• 26:08Speaker 04

  I mean, so it's, it's pretty obvious that even though there is a little truth to that's a slightly weaker period of time, it's not weak enough to try to sidestep it. So again, a little bit of validity, not in practice would you ever want to do that, in my opinion. How about the Santa? That's like the friendliest one of them, the Santa Claus rally. Santa Claus rally is the idea that the last five days of the year and the first two calendar days of the next year is a really good time to be invested. And then the January effect is that how January goes, so goes the year. Now, there's a little validity in this one.

• 26:53Speaker 03

  Really?

• 26:54Speaker 04

  Again, we looked at 1950 through 2025. In all of these years, you had an average of 8.2%. On average, 76% of those years were positive. If you had a negative Santa rally, or it wasn't up during that seven day period, if you only isolated those years, and now there's only 17 of these out of that whole long period of time, markets only averaged six and a half percent. So if Santa wasn't around, then that means the rest of the years is bad. Well, historically, but that's 17 out of 76 years. So I don't know. Again, you can slice and dice history and kind of make a point

• 27:38Speaker 04

  here, but I don't think that's enough in the sample to really make it work. This is one that is interesting though. If you have a positive January, the next, again, we're looking at what happens February through December, the rest of the year. You have a positive January, the rest of the year is positive 87% of the time on average, 12.2%. Okay. Now, what if you have a negative January? Well, the next 11 months are positive only, only 60% of the time.

• 28:09Speaker 03

  Oh, okay.

• 28:11Speaker 04

  With an average of 2.1%. So it gives a little weight to, hey, if January is good, you're getting some momentum for the rest of the year. And historically, markets do better. Now, do you do this and actually trade on it? Maybe if you're an algorithmic trader, it, it weighs into whether you're in and out of the market on any given day. But for how I invest and how we invest and how we talk about investing, which is really a long-term endeavor, then these are important and fun to kind of understand and know. But I, I wouldn't be putting those into my investment decisions or calculations about when to be invested or when not to.

• 28:55Speaker 03

  Okay, we'll go to a couple of questions that came in for you, Wes. Steve in Indiana says, "I'm planning to retire in June of 2027 at age 53, and my wife plans to retire a year later in June of 2028 at age 55. Right now, even after maxing out my 401k, her 403B, and our catch-up contributions, we're still in the 24% tax bracket. We have about 2.9 million saved for retirement, roughly 2.1 in pre-tax retirement accounts, 715k in a taxable brokerage account, and 35 in Roth accounts. Our income is going to change dramatically as we retire. In 2027, we expect to earn about

• 29:33Speaker 03

  $190,000 before retirement contributions. In 2028, that should fall to around $40,000. How can we take advantage of those lower income years? Should we continue maxing out our retirement contributions while we're still working? Should I shift some or all of my 401k contributions to Roth? And once our income drops, would 2027 or 28 be a good time to start doing Roth conversions? We expect to need about 100K a year after taxes to live comfortably, although we could spend a little less if it makes sense. Part-time work in retirement is also a possibility."

• 30:09Speaker 04

  All right, Steve, you're in a classic situation here for Roth conversions because you're, you're thinking about becoming a super early retiree. What matters in your case is the change in income. And going from 2027 of 190K all the way down to 40 creates this great opportunity. And by then you'll be 55, and you have, you have 20 years at that point before your RMDs will kick in. So 55 to 65 to 75, your RMDs won't be till 75. So you technically have 20 years of low income or managed

• 30:49Speaker 04

  income to be able to do Roth conversions. And the way to do Roth conversions is to spread them out over time. The good news for you, you've got, you've got a ton of time to do this. 2027 is not the year to do it. It'd be 2028 when you're down to 40, which gives you the opportunity to say, okay, I'm comfortable paying taxes to convert into a Roth only up to a certain level. And in your case, you may say, I only want to get to the the 22 bracket in order to do my conversions, which will leave you, you may be able to do a hundred thousand dollars in conversions and still stay in 22. And again, I'm not running these exact numbers here, maybe 130, 140,000.

• 31:34Speaker 04

  So you have to do those calculations with a CPA and do a Roth conversion calculation. And again, tax rates will be different potentially in the future. But think of all that room. You're going to go from being in the virtually 0% bracket to saying, hey, I'm going to do Roth conversions all the way up to 22, maybe 24. You get to, you get to pick your effective rate. So that's how I would be looking at it. You've got, you've got two years before you need to start this, but the, but then the window is going to be wide open.

• 32:06Speaker 03

  Fantastic. Okay. Tony in Georgia says, hi Wes, I wanted to ask a question about setting aside money for a family member in retirement, but keeping it secret. I've been blessed to end up with a very high paying job in my life, and I have very little desire to live a lavish lifestyle. I'm in my early 40s and I'm already starting to cut back on work and plan to have the ability to fully retire by age 50, although I may keep working in some capacity. I have one sibling who means so much to me. They have numerous kids. And while they make a decent living, they have not been very good with money and spending over the years and are very behind on retirement and trying to get debt paid off before they can make any headway. I know that they are working on doing better and trying to get on track,

• 32:51Speaker 03

  but I worry my sibling will end up struggling in their older years, even if they start heading in the right direction now. I can't imagine living an early retirement life while someone so important to me is struggling to pay their bills, even if a lot of it is self inflicted and bad spending habits. I want to set aside money while I'm still working, probably one or 200 grand to let grow over the next 20 years and be there to help supplement their retirement. I also don't want to let them know about it because I worry they may think this covers them, which it won't, and they may not do as well getting their own spending and saving under control. What is the best strategy from a tax standpoint to set aside money in an investment and give to them later? Is my only option to take out money from brokerage accounts when I'm older,

• 33:35Speaker 03

  eat the tax bill and gift it to them annually? I know there's a gift tax exclusion of $19,000 per year currently, but then I would be paying capital gains taxes when I take it out. Is there a good way to save money for another adult and transfer it to them later in life without letting them know about it?

• 33:52Speaker 04

  Who doesn't want Tony as their brother?

• 33:54Speaker 03

  I know.

• 33:56Speaker 04

  That's cool. Yeah, it's, it's interesting. You'd like to help. There's a lot, a lot of things happening here, Tony. You want to help, but you're worried about the financial responsibility. And you're very nice to think about this. And I think there are some ways to do this. I think the easy, long-term way would be able to help your sibling have some financial education. And two routes come to mind. One, help them fund a Roth every year. And if they don't have the money that they're not doing it, maybe you gift 7,500 bucks. And guess what? You could do this if, if your sibling is married, you could give 7,500 and 7,500 and they both do a Roth.

• 34:37Speaker 04

  And then you do that every year and you've got 15K over the next decade is 150K. And now you've got your sibling plus their spouse with a real accumulation of money. And it helps bring them into the fold and maybe helps them be more enrolled in their finances. Maybe that's the altruist, you're, you're giving me a side eye on this one.

• 35:02Speaker 03

  Only because it sounds like, well, it sounds like he's concerned that the sibling, if they know, yeah, well, they will know, the sibling will know about it. And so also if the sibling knows you can take out contributions for any reason, that could be a problem. And so maybe they will do less, they will be less motivated to, you know,

• 35:21Speaker 04

  Fair, fair. Yeah. Okay. Now, well, what's another way to do it? What I'm thinking here would be maybe it's a revocable trust where you stay the trustee, it's revocable and your sibling is the beneficiary. And you gift, you gift stock into the revocable trust. Yes, you will likely have to be responsible for the taxes and the dividends moving forward. If you're going to just leave stock in an account, that you could then change your mind on it, it would be a way to say, hey, sibling,

• 36:02Speaker 04

  this 100K today could be worth a lot in 10 and 15 and 20 years, but we want to make sure you stay responsible. Now, you need an estate planning attorney to do this. It's a little more complicated. You got to spend a little bit of money to set up a trust to be able to potentially do that. But it would be a way to, if you do the Roth route, your sibling would have to know. If you do the revocable trust route, you may be able to keep it a little more opaque.

• 36:31Speaker 03

  Oh, I would keep it secret and then you can will it, you put it in your will, right?

• 36:35Speaker 04

  Let me say this. I get questions about this whole, like, I want to do this for somebody who doesn't know. That's, that is bolder dash. There's no, I, I am not a believer in, in, hey, but this person can't handle it. And so I'm going to do this for them. These are grownups. We're talking about.

• 36:56Speaker 03

  Well, but this is what Tony asked for.

• 36:58Speaker 04

  Yeah. I, I don't really believe in the whole, I want to do it secret thing.

• 37:01Speaker 03

  Okay.

• 37:02Speaker 04

  I don't believe in it. It's just, we, money is such a hard thing to accumulate. It's so hard to do it. And if you are willing to help someone and they, even with free money and they can't handle free money, then the drain is open. So no matter how much water you pour in it, the tub still stays empty. There's gotta be some level of restraint, personal responsibility when it comes to assets. I'm just, that is my belief. It's, well, let's say you're able to do this secretly. You accumulate a million dollars, your sibling gets it. What happens to the money? Have you saved the sibling or does the sibling spend it in a year or two and blow it anyway?

• 37:44Speaker 03

  Okay. Well, that.

• 37:47Speaker 04

  Still want Tony as my brother.

• 37:48Speaker 03

  On that happy note, that does it for us today. I want Tony as my brother as well. And congratulations on your upcoming early retirement, Tony. We are going to have another episode, as I said, on Thursday. We're going to do a rapid fire Q and A. Thank you for being with us. Please review the podcast wherever you listen or watch. We really appreciate that. If it's on Apple Podcasts, review it there. If it's on Spotify, review it there. It really helps us out and helps us spread the word. Have a wonderful rest of your day.

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