There are no secrets: The single path to higher returns (11 30 25)

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Ever heard a coworker brag about their 100% crypto gains or a relative swear by their "can't-miss" rental property? They're only telling you half the story.

The reality is that for every single penny of extra return you chase, you are signing up for an equal amount of extra risk. There is no way around this fundamental law of investing. Today, we break down the true cost of chasing higher returns.

Here’s what we’re covering in today’s Clark Smart Investing newsletter:

• Want higher investment returns? There’s only one way.

• Do you really want a vacation home? 8 questions to ask yourself.

• The most popular portfolio strategies (and what’s right for you).

• Q&A: Should I make changes to my target date fund to prepare for withdrawals?

• Smart money move of the week

💵 There Are No Secrets: The Single Path to Higher Returns

You've probably heard someone brag about their incredible investment returns. Maybe it was a coworker who doubled their money in crypto, or a relative who swears by their rental properties, or that guy at the barbecue who has a "can't miss" opportunity he wants to tell you about.

Here's what they're not telling you: every penny of extra return they're chasing comes with extra risk attached. There's no way around it.

The full article pulls back the curtain on the risk/return spectrum, from the safest U.S. Treasury bonds earning 4-5% (your baseline) to high-flying individual stocks, volatile real estate, and extreme crypto plays. We detail the specific, potentially painful risks you accept in exchange for higher potential gains, and break down what this means for your money as an investor.

📚️ Recommended Reading

✅ Poll: What’s Your Take?

Every week, we'll ask a new question to get your take on the latest financial trends and topics.

Last Week’s Poll Results

We asked: “When you get a raise or bonus, what do you do with the money?” Here’s how you answered:

• Invest 100% of it immediately (27%)

• Spend a portion and save a portion (51%)

• Pay down debt (18%)

• Spend it all! (4%)

💬 Ask an Advisor

In this recurring Q&A, we share questions that have been answered by Clark Howard or Wes Moss on the podcast. Submit your question today!

Phyllis in Alabama asks: If the majority of your 401(k) retirement money is in a 2020 Target Date Retirement fund should I move a portion into bonds when I get ready to make withdrawals? I have read that withdrawals should be made from bonds.

Wes Moss says: The answer is simply no, you can’t choose which asset class, such as bonds, your withdrawal comes from within a target date fund. A target date fund is structured as a single, set allocation; the managing company constantly rebalances and adjusts this allocation over time, making it one unified "pie." When you need to take money out, that withdrawal is processed proportionally across the entire fund to maintain the existing balance. For instance, if you need $10,000, it will come from the whole pie, not just one section. While this lack of choice is a reality of these funds, it is not necessarily a bad thing. In fact, if you are in a 2020 fund, it is likely already heavily weighted toward fixed income — possibly 50% to 65% in bonds — as it assumes you are already in retirement. The main advantage of this structure is that it keeps your allocation simple and automatically balanced, which is why target date funds are highly effective for many investors.

💸 Money Tip of the Week

☎️ Need Money Help?

The Team Clark Consumer Action Center is a free helpline that can help you navigate your money questions. Call 636-492-5275. Visit clark.com/cac for more information.

This information is provided to you as a resource for informational purposes only and is not to be viewed as investment advice or recommendations. Investing involves risk, including the possible loss of principal. There is no guarantee offered that investment return, yield, or performance will be achieved. This information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Any company names shown are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. The views and opinions expressed are for educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions. Always consult your own legal, tax, or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.

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