Anne from Pennsylvania wrote into the Clark Howard Podcast with a problem that sounds like prudence but functions like paralysis. She and her husband, 64 and 74 respectively, hold about $5 million in savings with no debt, and have been out of the stock market for years, keeping everything in bonds and CDs. Her concern: “With the market overvalued in our opinion and talk of an AI bubble, I’m worried about investing now, but also about not keeping up with inflation.”
Financial advisor Wes Moss, appearing on the podcast, named the pattern directly: “You’re caught in the everything’s overvalued trap.” He is right. And the math behind why he is right is something every near-retiree holding bonds and CDs should understand before making another allocation decision.
Why Waiting for “Undervalued” Markets Destroys Long-Term Returns
Moss’s core argument cuts through the noise quickly: “If we only were invested in markets when things were undervalued, we wouldn’t be invested all that often. So we’d miss an enormous part of that journey.” This is a documented feature of how equity returns are distributed.
The S&P 500, tracked by SPDR S&P 500 ETF Trust (NYSEARCA:SPY | SPY Price Prediction), is down about 4% year-to-date through April 1, 2026, after a volatile March. But zoom out: the same index is up 17% over the past year and 217% over the past decade. Investors who exited in 2022 citing overvaluation and AI bubble fears missed a substantial portion of that decade-long compounding.
Anne’s inflation concern is entirely valid, and the numbers confirm it. The Consumer Price Index has risen steadily from 320.3 in April 2025 to 327.5 in February 2026. Core PCE, the Fed’s preferred inflation gauge, reached 128.4 in January 2026, up 0.4% from the prior month. Fixed income that yields less than inflation does not preserve wealth. It erodes it slowly, with the appearance of safety.
The Fed has cut rates three times since September 2025. The federal funds rate now sits at 3.75%, down from 4.5% a year ago. The 10-year Treasury yields 4.3%. A CD ladder or Treasury-heavy portfolio at these rates barely clears inflation on a pre-tax basis, and does not clear it after taxes in a taxable account.
The Efficient Frontier Argument Is the Real Lesson Here
Moss went beyond the market-timing critique and raised something more technically precise. He explained that “when you get to 100% in just bonds… the risk actually goes up” compared to an 80% bond, 20% stock allocation. This is the efficient frontier concept, and it is counterintuitive enough that most investors never internalize it.
A portfolio of 100% bonds carries more volatility-adjusted risk than a mixed portfolio because bonds alone expose the holder to inflation risk, reinvestment risk as rates fall, and the corrosive effect of taxes on nominal yields. Adding a modest equity allocation historically reduces the overall risk of the portfolio while improving expected returns, because stocks and bonds do not move in perfect lockstep. The diversification itself does the work.
For Anne and her husband, with $5 million and a desire to leave something to one adult child, this matters enormously. A 4% withdrawal rate on $5 million produces $200,000 per year in income. Inflation at even 3% annually cuts the real purchasing power of that draw meaningfully over a 20-year horizon. Equities, historically, have been the primary tool for outrunning that erosion.
When a Phased Entry Strategy Makes Sense
Moss’s suggested path was measured: “Maybe you do 10% in markets today to the portfolio, and in 6 months, you do another 10%, and maybe that’s all you need and you’re at 20%, but at least you have some balance.” For a couple at this wealth level, that phased entry approach makes sense. It sidesteps the psychological trap of committing everything at once while still establishing the equity exposure the efficient frontier demands.
The approach fits anyone 60 or older with at least $1 million saved, no debt, and a multi-decade spending horizon. It fits less well for someone who will need most of their portfolio within five years, where sequence-of-returns risk is a genuine concern.
Consumer sentiment sits at 56.6, well below the 80-point neutral threshold, which means there will always be a reason to wait. That is precisely Moss’s point. “There is always something to worry about.” The question is whether worry is a strategy. For a $5 million portfolio bleeding purchasing power in bonds and CDs, it clearly is not.
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