Motley Fool Money - Elon Hangs On

Episode Date: May 20, 2025

Elon Musk is committed to Tesla for at least five more years. (00:21) Jason Moser and Ricky Mulvey discuss: - Investing in companies with a singular leader. - Earnings results from Home Depot. - A listener's suggestion to create a “laziness” stock basket. Then, (17:04) Robert Brokamp answers listener questions about Roth IRAs and dividend investing. Companies discussed: TSLA, TTD, HD, DASH, UBER, DPZ, AMZN, WMT, NFLX, LYFT Host: Ricky Mulvey Guest: Jason Moser, Robert Brokamp Producer: Mary Long Engineer: Dan Boyd Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, "TMF") do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi everyone, I'm Charlie Cox. Join us on Disney Plus as we talk with the cast and crew of Marvel Television's Daredevil Born Again. What haven't you gotten to do as Daredevil? Being the Avengers. Charlie and Vincent came to play. I get emotional when I think about it. One of the great finale of any episode we've ever done. We are going to play Truth or Daredevil.

What? Oh, boy. Fantastic. You guys go hard. Daredevil Born Again official podcast Tuesdays, and stream Season 2 of Marvel Television's Daredevil Born Again on Disney Plus. more years. You're listening to Motley Full Money. I'm Ricky Mulvey joined today by Jason Mezzar. J-Mo, good to see him, my man. Ricky, happy to be here. How has everything going?

Oh, it's going great. Let's talk about Elon Musk, of all things. Elon Musk virtually joined the Qatar Economic Forum earlier this morning. One big takeaway, J-Mo, is that Elon said he still plans to be the CEO of Tesla in five years. Additionally, quote, in terms of political spending, I'm going to do a lot of lot less in the future, end quote. I guess I could say that as well, but that quote is attributed to Yvonne Musk. Good news for Tesla shareholders, question mark. I think it is. I mean, I think shareholders are likely happy to hear that Musk intends to stay in his role for at least the next five years. Like you said, I mean, the interview, when I ask the question, he said, and I quote, yes, no doubt about that at all, end quote. So he seems to be committed. And I mean, in regard to

political spending. And it makes a lot of sense. I mean, I was reading about that and he feels like, okay, well, I don't need to spend as much because I don't see the use or the need for it. So, I mean, we all know. Musk has been a, he's a polarizing figure regardless, but he's been a very polarizing figure as of late, of course, with his foray into politics and his work on Doge. And it could certainly be argued that the Tesla has suffered some brand damage because of it. Now, I mean, time will tell ultimately how forgiving consumers will be. But I definitely think in regard to the business, the certainty of who's running the show for the foreseeable future, I think is a net win for the company.

And so I'd imagine shareholders feel pretty good. I chatted with David Gardner on the show that's going to come out this Saturday. It's about how rule breakers think about valuation. I really enjoyed the chat. And I think listeners will as well. And we talked about Tesla a little bit. And one of the things that I want to highlight from that is basically how, how unpredictable, not just the stock market in general is, but specifically Tesla.

Like, J-Moh, if you knew every news story about Musk and Tesla, we went in a time machine to May 20th, 2024, and you knew everything that was to come over the next year, every story, but not the stock price, would you buy, sell or hold the stock? Well, those are, I mean, that's a fun sort of backward-looking exercise. Chats with DG are just always so much fun. Well, clearly a lot of people did sell the stock, right? I mean, at least in the early days, I'm not a Tesla shareholder. I've never been, and I probably will never be, because I really just kind of like to be able to follow the company more objectively and not worry about it from an ownership perspective.

Given what I've seen through the years with Tesla, I'd like to say that I probably would have considered buying shares because those types of events are, you could call it self-inflicted if you want, but you can recover at least. In knowing what we know about Musk, I mean, he defies all odds, right? And so it's hard to ever bet against him coming back. And so I'd like to think I would have bought, but I mean, obviously, I didn't sell or anything. I mean, I've never owned it. But yeah, you know, I mean, listen, it's going to,

time's going to tell how the consumer really actually reacts to all this and how forgiving the consumer ultimately will be. But my suspicion is, I say never bet against Musk, man. I think he'll, I think he'll be fun. I'm on your side. Don't bet against him, but I'm also happy to look at that company and say, wow, Jason, that is an interesting bird. Not one that I would personally own, but that bird sure is interesting.

and I do not want to bet on what it will do next. And there was an immense amount of pessimism about this company. I was seeing people wanting to short the stock on my Facebook feed. If they followed through on that at the time of peak pessimism, when sales were going down, Musk was really involved in the White House, you'd have gotten absolutely burned. And in fact, to answer the question, in the past 12 months, Tesla stock has almost doubled.

I think it highlights, again, the importance of separating your political beliefs from your investing beliefs. And the other thing the story highlights to me is just sometimes it's good, to have a singular CEO leader firmly in control of a company. Elon Musk has the voting rights at Tesla. If you are an investor in Tesla, you are an investor in Elon Musk, and sometimes that control can be a good thing. So, you know, Tesla isn't inherently a polarizing company.

So maybe not that as an example, but there are any other companies you look at and think, wow, I'm really happy to see this company with a, you know, a very solid vision with a singular leader in control. Yeah, it's nice to saddle up with the smartest person in the room. And I think in regard to Tesla, certainly Muskets has done something that really wasn't being done until he started it. So a company I do own, I own the trade desk. I've owned it for a long time. And Jeff Green with the trade desk, to me, he's one that comes to mine. Now, the proxy, they just filed here in April,

noted he's got 48% of the total voting power of the company. And obviously, the trade desk is going through a little bit of a lull right now. I mean, shares are down a bit from recent highs. But I look at the programmatic advertising space and the opportunity there. Jeff Green seems to me to be one of the smartest people in the room. And so I absolutely have no problem signing up for that trip. And I will say, you know, when Tesla was getting smacked, there was a part of me. I heard commentators, oh, this stock is going to continue to sink. maybe I should short it, but I didn't act on that. And for me, that was an important lesson.

It's okay to separate your thoughts and your action sometimes. And also the trade desk, a stock that's absolutely gotten beat up lately and one that I personally own and am along for the ride for. So glad to hear you say that, JMO. Let's move on to Home Depot. Home Depot reported this morning. First, the business results. Total sales up about 9%.

But what investors really like looking at are those comp sales numbers. Those were down a scosh overall, but back's rising. in the United States. When you broke down earnings from Home Depot, kind of a sleeper stock, what did you notice in the results? Yeah, this is another one that I own, and I think this was a good quarter overall. They benefit from the SRS acquisition here, and that's about a year now, close to a year since they closed that deal. earnings per share down slightly from a year ago, and that really was due to a little bit of a bump in operating expenses. But looking at, when we talk about retail, you want to focus on traffic and ticket size,

during the quarter, their average ticket was essentially flat. Transactions were down about half a percent. So not very surprising. One thing I did notice in the call, and I was a little bit surprised by this, just given the language we've heard from so many leaders these days, big-ticket comp transactions, those are transactions over $1,000. Those transactions were actually positive. They were up three-tenths of a percent from the same quarter a year ago.

So I'm at home ownership and just the housing market in general. I mean, it's sort of a necessity. And so we kind of spend there even when we may not necessarily want to. We may kind of have to, right? Your dishwasher goes out, well, you kind of got to get a new one. I did notice inventories are up about 15 percent, though. So that's something worth keeping an eye on. Operating margin, as I said, was down a full percentage point to 12.9 percent from 13.9 percent.

a year ago. But all in all, I think it was also really encouraging to see that they reaffirmed their full year guidance, right? And I think we've talked about this on some shows here recently where, I mean, there's a lot of uncertainty out there. A lot of companies are kind of, they're either pulling guidance or offering various scenarios. Home Depot is pretty cut and dry with this quarter, which I thought was encouraging. And again, I think that just speaks to the market that it serves. A huge part of the American economy when you think about Home Depot, for listeners to put this into context, the second story of today. And yet over just one quarter, Home Depot does about the entire global box office in revenue through their stores. And that's global box office over a year.

Home Depot does it in just one quarter. Now, you mentioned guidance. This is a big dog. And, you know, CFO Richard McPhail highlighting that no single country outside of the United States will represent more than 10% of the country's purchases by next year. And kind of highlighting that nimbleness to CNBC and also saying, quote, because of our scale, the great partnerships we have with our suppliers and productivity that we continue to drive in our business, we intend to generally maintain our current pricing levels across our portfolio, basically saying, we're not raising prices due to tariffs. You buying that? Yeah. I do. And I think when you look at Home Depot and you compare it to something like a Walmart,

for example, and Home Depot noted in the call, right? They said today that more than 50% of their overall purchases are actually sourced here in the U.S. And then, tier point about the 10% number there, that seems to be plausible, seems to be very reasonable. And so you compare that to something like a Walmart where Walmart is exposed somewhere in the neighborhood of 60 to 70% globally. Their supply chain relies on China. But when you look at it from just the U.S. market, it's more like 75% or so. And so I think Home Depot just has a little bit more flexibility there. They don't need to necessarily raise prices because they just just aren't as exposed to the current tariff environment.

So it's good news to hear. So one thing I watch with Home Depot, and I'm a shareholder, but I've sort of, I've been paying attention to this. You've heard about the long-term outperformance of Home Depot over the decades, and a lot of that has to do with the company becoming a cash cow story in no small part due to share repurchases. Home Depot, yes, they've made a big acquisition, but still this quarter really chilled on on share repurchases. I didn't see anything in the income statement on that. And while the stock

has been a long-term outperformer, it significantly underperformed the S&P 500 over the past five years. And if you want to use a more appropriate comp, we can. Let's use the Schwab high dividend ETF, SCHD. It's basically tracked that, but paid a lower dividend. That's a lot of setup, but all of it's to say, you know, what are your expectations for this thing over the next five years? Well, I'm not really, as a shareholder myself, and as someone who's recommended the stock, I don't really look at this as a stock to view over the course of five years. I mean, truly, this is, and you said it, the word decades. I mean, I think this is one of those stocks that you need to look even further out, right?

Five years for this company is a blip. This is one you want to think of in terms of decades. And a lot of that really is based on the housing market and how vital it is to our economy. They noted in the call today more than 50 percent, or I'm sorry, they noted. that 55% of homes here in the U.S. are 40 years or older, and we talked about that statistic before. I mean, that just begets more spending on home improvement, and I think as rates become a little bit more attractive. The housing market starts to loosen up than you see probably things work out even better for the company. But again, I mean, I look at this company

in the terms of decades. You look at the 10-year chart, total returns up close to 330 percent outperforming the market and Schwab nicely. They've paid dividend now for 153 consecutive quarters. And to your point on share repurchases, no, they didn't really repurchase anything this quarter. Now, the share count is down about 8% over the last five years, but I think it's important to note their priorities. And they very clearly state this quarter in and quarter out. They say they're after investing in the business and after paying the dividend, then they intend to return excess cash to shareholders in the form of repurchases. And so it's just a matter of priorities for the company.

And I think it makes a lot of sense for them to play a little defense right now. I mean, they don't need to repurchase shares right now. They could kind of wait and see how this overall trade negotiation or war, or whatever you want to call it, shakes out. But I think right now it makes a lot of sense to stick with their explicit priorities. And that just boils down to reinvesting in the business first. then paying the dividend. And if you got anything left over,

they'll continue to repurchase shares. And those repurchases will accelerate when the time is right. You know, I think you said something there. I really want to highlight. This is good relationship advice for anyone listening. If you're unsure, just say, is this a negotiation or is this a war?

But I appreciate your perspective on zooming out there. Let's get to the mailbag. So we have personal finance mailbag questions coming up in the B segment with Robert Brokamp. If you've got a question for the show, Podcasts at fool.com. That's Podcasts at fool.com. J-Mell, I thought this was a fun one. It comes from Colin. Longtime listener, first-time caller, idea from a show you did last week. If you were to create a basket of stocks focused on human laziness, what companies could be

included. Some ideas, DoorDash, Uber, Dominoes, Amazon, Walmart, Netflix, and Lyft, interested in more ideas. A bit pessimistic, but thanks, Colin. Jamo. What do you think? I love this idea. I think this actually dates back. I'm going to give a little bit of a shout out to our former colleague Ron Gross, because I think we talked about this before on the Motley Full Money radio show many years back. And it's always a fun exercise. And I blame Amazon ultimately for this, because Amazon is the one that really re-ent, they sort of introduced to us this new paradigm of being able to do other things with our time. And we can be a little bit lazier. I like all of, listen, I'm as lazy as the next guy, so don't get me wrong here. But I mean,

I love all of those names that Colin mentioned there. I mean, I wouldn't say I would necessarily recommend them all, but I think they're absolutely all qualifiers for the basket. Some other names that could fit in there. I mean, like Netflix, I think, hey, throw Spotify in the mix. I mean, it's basically the same thing. Wayfair, I mean, we're talking about Home Depot, but man, Wayfair sure does make it easy to furnish your home and update your home. I think, Chewy. I'm a long-time chewy user. My daughters are shareholders. They make it very easy for us to

take care of our pets. Instacart, another one out there. And I would even look at something like Google and the main reason are well, alphabet, I suppose. But I think one thing to keep an eye on with alphabet is, I mean, hey, listen, Gemini is taken off.

I mean, all of these large language models and the capabilities there, you don't want to necessarily write a paper or put together the research. I mean, if you have some decent prompting skills, you could probably get that technology to do it for you. And I'll also say, you know, some of this can be laziness and some of this is also, you know, fighting for my wallet. You know, I've used this example before, but why would I go to a home goods store and buy a refill of hand soap when I can get it on Amazon for the same price and have it at my door in 24 hours? Is that laziness or is that efficiency?

Or let's use Uber and Lyft as an example, both game changers, but if I'm driving back, if I'm, if I'm, coming back from an airport while I'm traveling, is it laziness that I don't want to stand in a cab line and then accept whatever fare may come my way or be able to price compare and take an Uber or a Lyft? There is something in here too where it's, I think there's a cynical view, but also a positive view,

which is a lot of these companies have made your life better and it's also where you're spending money. My household, we're spending money on Chewy. We're spending money on Netflix. We spend money on Uber, Walmart, and Amazon, all of those. Never a bad idea to look at your debit cards. statement or your credit card statement and maybe get some stock ideas from there, J-Mow.

Oh, there's just no question about it. And I like to look at this rather than calling it laziness. I just like to call it the evolution of the consumer, right? We just, we're finding new ways to do things that make our lives better and more efficient, like you said. And so all of these companies, really, they're succeeding for a reason. And I think a big part of that reason is just bringing the world to all of our fingertips. It just be the snap of the thing. And come on, Colin, no cruise ships. We'll leave it there. Jason Moser, thank you for time and your insight. Appreciate you joining us on Motley Full Money.

Thank you. The old adage goes, it isn't what you say, it's how you say it, because to truly make an impact, you need to set an example and take the lead. You have to adapt to whatever comes your way. When you're that driven, you drive an equally determined vehicle, the Range Rover Sport. The Range Rover Sport blends power, poise, and performance. Its design is distinctly British and free from unnecessary details, allowing its raw agility to shine through.

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Up next, Robert Brokamp answers your personal finance questions about buying a home and Roth IRAs. The first question comes from TED. I recall an earlier interview where Malcolm Etheridge discussed self-directed IRAs and using funds for alternate investments. In part due to that education, this past week I opened a self-directed IRA with a focus on a specific private equity offering via a safe, a simple agreement for future equity instrument. A lot of stuff in there I don't know about, bro. I would love to hear a foolish take on safe investments. Love the show. Well, thanks, Ted. Thank you, Ted. Let's start to hear with, first of all, what a self-directed IRA is. When you open an IRA with a typical broker like Vanguardi, Trade and Fidelity, whomever,

you're basically limited to exchange traded investments like stocks, bonds, funds, ETFs, things like that. However, you can use your IRA to invest really all kinds of assets, real estate, businesses, startups, private debt. However, to do that, you'll have to find a specialized custodian that will let you hold these types of alternative assets. And they will offer what has been termed a self-directed IRA. And I think it's a bit of a misnomer because, you know, if you have an IRA with Schwab, for example, you're picking your investments, you're self-directing it. But this is a specific term meant to be an IRA that holds these sort of offbeat investments. And these IRAs do tend to have higher costs, though it varies by a provider. And there are still a lot of rules about

what you can and can't do. So, for example, you can't use the money to invest in a vacation home that you personally use. You can't use the money to start your own business. And a lot of these are called prohibited transactions. And if you engage in one of those, it can result in the whole IRA being taxed and possibly penalized. So you have to be very careful. Now, let's move on to a simple agreement for future equity, aka a safe. Now, it's a way to invest in a startup. And that sort of like a stock warrant, if you know what those are. You basically invest a certain amount of money in a company, a startup, not publicly traded yet, and it gives you the right to some form of equity based on a specified future liquidity event, like maybe another round of financing

or an IPO. It could also result in a cash payout in the future, depending on the terms of the safe. So it's not alone. You're not earning interest or anything like that. In most situations, you invest today, often at a discount, in hopes of getting some form of equity or payout in the future. Generally, I don't like to speak too favorably about investments without long track records. And safes have only been around since 2013. So there's no solid historical returns we can point to. Plus, despite the fact that the S and SAFE stands for simple, these agreements actually are very complex.

You really have to understand the terms by which you'll actually see a return on and of your investment. But of course, things like private equity, venture capital, just investing in startups in general, that's been around for a long time. In fact, it's crucial to capitalism. It can be summed up as very high risk with potentially high returns. The truth is, most startups fail. But if you happen to invest very early in something that becomes successful, it could be one of the best investments you ever make.

So my question for anyone considering these investments is, what compels you to make that kind of trade-off? It may be that you're an entrepreneur at heart, right? And you have experience maybe launching and supporting businesses that have mostly been successful, and you feel that you have the knowledge and insight to separate the wheat from the chaff, and if so, more power to you. Plus, investing in startups is unquestionably just interesting, intellectually challenging, and just plain old exciting.

So I understand the appeal. But for most investors, I don't think there's a need for this kind of investing, and sticking with a stock market is good enough. If you're going to invest in startups or private equity anyway, I would say limit it to no more than 5% of your portfolio. The next question comes from Kevin. I'm saving up for a down payment on a home, but I'm wondering if I should wait until the Fed cuts rates to get.

get a mortgage. What do you think? Well, you've likely heard, Kevin, that it's difficult or impossible to time the stock market. And I would say the same mostly goes with interest rates as well. There are certainly times when it seems very likely what the Fed will do, especially since they often give strong hints. But even that can change very quickly, depending on what's going on in the world or in the economy. On top of that, the Fed has the most control over very short-term rates. The bond market is what mostly determines intermediate to long-term rates, and those are the rates that determined mortgage rates. And I would say what's going on right now is a perfect example. The consensus is that the Fed will cut rates this year. But last week, Moody's lower the credit

rating for the U.S., which pushed Treasury rates upward this week, and I think mortgage rates are probably going to follow. So here's what I generally recommend. Buy a house when you find when you like, and you can afford the payments based on current rates. If rates go down later, you can always refinance. If rates go up, you'll be happy with the rate you have. Also, once you're ready to buy a house and you're ready to lock in a mortgage rate with a lender, you might consider getting something known as a float-down option. That'll allow you to get a lower rate if rates declined by a specific amount. But there's usually a fee charged often as a percentage of the loan, so you have to decide if that option is worth the extra cost.

The next question comes from Ryan. I'm in my 30s and am trying to set myself up for early retirement in 10 to 15 years. Should I invest in Vanguard's high dividend yield ETF? I see some retired people making half a million dollars a year with a lot of interest income, and dividend income, and I want to follow their lead. Well, first off, Ryan, kudos to you for trying to retire early. I always admire someone so young in their 20s or 30s planning their financial independence. My first question for anyone who's considering adding a specific ETF to their portfolio is, what will it add to your existing portfolio?

And to answer that, you need to understand how the ETF selects its investment. So maybe look under the hood, see what the top holdings are, maybe how it breaks down by sector. So, in this example, it's the Vanguard high dividend yield ETF, ticker VYM. It tracks the Futsi high dividend yield index, which starts with large and mid-cap U.S. stocks, then ranks them by their expected dividend yield over the next 12 months and invests in the half with the highest yields. And to give me an idea what kind of stocks it invests in, here are the current top 10 holdings. Broadcom, JPMorgan, Exxon, Walmart, Procter & Gamble, United Health Group, Johnson & Johnson,

Home Depot, Abbey, and Coke. So only you can decide whether those are the types of comprehensive. that would be appropriate for you. I own this ETF personally because, like many dividend-oriented ETFs, it's a good complement to the more growth-oriented, maybe tech-adjacent side of my portfolio. Also, these types of companies tend to be less volatile than the overall market, though not always the case, but just as an example, you know, in 2022, the SAB 500 was down 18%. Nasdaq was down 33%. This ETF was down 0.5%. So it held up pretty well. Also, as you suggest, I do think it sense to have a good dose of dividend paying stocks once you're in retirement, given that dividends

have historically been a reliable inflation-beating source of income. But if you're 10 to 15 years from retirement, it sounds like you don't quite need that income right now. So I'd be more inclined to choose this ETF because you think these types of investments will get you closer to retirement more than for the income it'll eventually produce in retirement. And finally, despite the name of this ETF, you know, it's a high dividend yield ETF. Its current yield is only 2.7%. Ryan, you said, that you see retired people generating a half million dollars a year from their portfolios, to get that much from this ETF would require an investment of more than $18 million. So I would say dig more into the stories you're hearing about the people generating $500,000

using an ETF like this. They're either exaggerating or doing something else that might be more risky or they just have an awful lot of money. Next question. From Save and Fool, I often see the recommendation that I should save in a Roth versus a traditional IRA. I don't understand why I should save in a Roth since my tax bracket in retirement is likely lower than what I'm working.

Is there a tax bracket where I should prioritize traditional IRA savings versus Roth savings? While saving full, you have the math right. If you expect to be in a lower tax bracket in retirement, then you should go with the traditional IRA as long as you're getting the deduction. So that way you get the tax break today when you're in the higher tax bracket. This really is an individual decision. It depends on, again, your tax bracket today and you do have to do a bit of an analysis of what you think your income will be in retirement. But since you asked about tax brackets, I would

guess that most experts would say that once you're solidly in the 24% tax bracket or higher, the traditional likely is the best choice. However, I will add a few other considerations, right? So if you're contributing to a traditional account and getting a tax break, make sure you invest the tax savings. In other words, contributing to the traditional should allow you to save even more for retirement. If you're instead spending it on something that doesn't appreciate in value, whether it's TVs, closed trips, whatever, you'd better off probably investing in the Roth. Also, if you're covered by a retirement plan at work and earn above a certain amount of money, you won't be able to deduct the contributions to a

traditional IRA. In that case, go with the Roth IRA at least until you reach a point where your income prevents you from contributing to the Roth. And I'll add a couple other benefits of the Roth IRA. First, contributions, not earnings, can be withdrawn at any time tax and penalty free. And secondly, Roth accounts are not subject to a required minimum distributions at age 73 or age 75 if you were born in 1960 or later. So those benefits might push you toward the Roth if you're on the fence, but it doesn't have to be an either-or decision. You can contribute to both the traditional and the Roth as long as the combined amounts don't exceed the annual contribution limit. Last question is from Anonymous. My daughter is starting high school in the fall,

so college is hopefully four years away. Maybe a little too short to keep her savings in the market. Should I move her from a growth portfolio to something else? I'm assuming they're talking about a 529 plan. Yes, I would assume so as well. And I will start with a typical Motleyful advice that any money you need in the next three to five years shouldn't be in stocks, but of course, you can adjust that for your own risk tolerance. So that would suggest that at least most of the money your daughter needs in the first year of college probably should be in a high-yield savings account, or again, if it is in a 529, whatever the highest yielding cash option is in that plan. That way, it'll be safe and ready come the fall of 2029. But, you know, college is a unique goal that you don't

need all the money in 2029, right? It'll be spread out over four years with the last payment coming due for the spring semester of 2033. So if you have the risk tolerance for it, you could still leave a good bit of your college savings in stocks. If you are investing into 529, or even if you're not, you'll probably have noticed that each program has age-based portfolios that provide a reasonable asset allocation based on the college enrollment year, and they get gradually more conservative as the kid gets closer to college. And I like to look at these allocations, just just to see what the experts think is the right mix of cash bonds and stocks for college savings at different ages.

So let's take a look at Utah's plan, which is regularly rated as one of the best in the country. And just so you know, you don't have to participate in your state's plan. You can participate in another state's plan, but there might be some benefits to staying in state. But let's take a look at Utah's plan because it is considered one of the best. For someone enrolling in college in 2028 or 2029, the fund is roughly 41% stocks, 59% bonds and cash. Then it gets more conservative from there.

But interestingly, their target enrollment funds always have some money in stocks, even for kids in college. From what I can see, it looks like it's about 20% for freshman year, dropping down to 10% for later years. Now, that violates the foolish rule of any money in the next three to five years shouldn't be in stocks. It's not what I did. Once my kids were in college, all their money was in cash.

But the stock market does go up three out of four years on average or so, and it's a small amount. So I'm not going to argue with that asset allocation because in the end, you have to adjust it for your own risk tolerance. And really, you need to take risk, right? If you've already saved more than enough, maybe you don't need to take much risk at all. But I do think that looking at these target A to base portfolios and 529s are a good starting point for most investors. As always, people on the program may have interests in the stocks they talk about.

And the Motley Fool may have formal recommendations for or against. Don't buy yourself stocks based solely on what you hear. All personal finance content follows Motleyful editorial standards and are not approved by advertisers, advertisements are sponsored content and provided for informational purposes only to see our full advertising disclosure. Please check out our show notes. I'm Ricky Mulvey. Thanks for joining us. We'll be back to