Let's Talk Money

August 19th, 2023

Episode Transcript

(00:00):
Good morning everyone. My name isMartin Shields. I'm the chief wealth devisor
at Bouchet Financial Group and I'm gonnabe your host today for Let's Talk Money.
It's great to be here with youon this Saturday morning in the summer.
Hopefully you're going to be out andenjoying it doing something nice. I
think the brain's gonna hold off fortoday and tomorrow's gonna be a gorgeous day.

(00:25):
And again I hope you get outto enjoy it with friends and family
or just yourself with your dog maybewhatever it works for you. It's great
to have you here, and it'sgreat to answer any questions you may have
regarding your financial planning or investment managementconcerns, and I encourage you to calling
with those questions. You can reachme at eight hundred eight two five five

(00:48):
nine four nine. Again that's eighthundred eight two five five nine four nine.
So not a great week in themarkets, the S and P five
hundred and as dec we're down aroundtwo percent, and really since we started
August. You look at when thistrend down started happening. It was August

(01:08):
first that started. And you know, this is what happens with the market
folks, it you know, reallyprobably got away from itself a little bit,
going up too high too quickly,and it pulls back. And you
know, in general, the economicdata continues to point to what could be

(01:29):
a soft landing. Right, soyou have inflation moving slowly to that two
percent target, and the economic datais very resilient. You have to say
that unemployment at three point five percent, it's lowest in fifty plus years.
The real estate market, if you'reout there buying or selling, you know

(01:53):
that it is a very resilient market. Basically, I think prices are a
team to move higher in the Capperregion, even though the thirty year mortgage
now is up over seven percent.So really what you have is the supplying
demand issue that we've talked about.There's just not enough supply for the demand

(02:14):
that's out there, and all thingsconsidered, that is in part because of
a healthy economy, but also theyhave basically not been building enough homes over
the last fifteen years, really sinceseven o eight, the number of homes
being built has not been enough tomeet the demand and the growth in the

(02:34):
population. And there are a fewcities or markets where you've seen real estate
prices either plateau or decline. Butthose are areas like Phoenix or Austin where
the increase was just mind boggling throughthe pandemic, and so it really just
kind of get settling down with thoseprices. But in most other markets,

(03:00):
real estate prices continue to be veryresilient and really continue to move higher.
That's what you're seeing. And sowhen you look at the overall academic data
retail sales just came out this pastweek, it shows a very strong consumer
and you know, just more anecdotal, if you talk to individuals, what

(03:22):
we see is still small business ownersstruggling to hire the right people, having
to provide raises to retain their toptalent. And even those individuals that have
lost jobs here or there, fromour experience, they are finding jobs pretty
quickly in many cases with a payincrease. So this economy remains very strong.

(03:43):
And the real crux of courses we'vetalked about is you have to have
inflation moved to that two percent target. Now we'll see what happens with the
Federal Reserve. They raised rates bya quarter percentage point in July. We
have the next opportunity for them todo that in September, and Jay Paul,
the Fodder Reserved Chair, will bespeaking at Jackson Hole this next Friday,

(04:08):
and he'll give some guidance as towhat he's going to be expecting to
do. You know, he's notThey're not only looking at the CPI and
the cp which are factors that determinethe inflation rate that's out there, but
they are looking at the overall economyas well. Right, So it is

(04:30):
safe to say that with unemployment atthree point five percent, and with such
a tight real estate market, thateven if inflation is moving lower from the
current data, that there is thelikelihood or the possibility that it could shoot
higher at some point. Now,there are a couple of things that are
working in the favor of inflation continueto move lower, one of which you

(04:57):
see in the headlines, and that'sChina. So you've seen the headlines that
China's economy is really not doing well, and that's probably a fairly big understatement.
You never really know what exactly ishappening. The data that you get
from them or sometimes many times notoverly accurate, and that's because the Chinese

(05:18):
government controls exactly what they're going toallow to be put out there, but
you do hear that things like theunemployment rate for young people in China under
an age of twenty five is aroundtwenty percent. That's right, around twenty
percent. So when you have thattype of economic weakness, what starts to

(05:39):
happen is you have deflation, notinflation, right, so you have prices
that are declining. So China isthe world's second biggest economy, right behind
the US, and has been growingat a rate of anyone from five to
ten percent annually. The expectations arethat at some point it will overtake the
US. It has a population ofover a billion people, so with the

(06:02):
US at three hundred and fifty millionpeople, you're talking about three times the
size as far as total population.Now, they have the same population issues
that a lot of other countries do. You know, They had a one
child policy for many years and nowthey really need to have more first going

(06:25):
on. First of all, theyhave a large skew towards men versus women,
and then secondly, they just don'thave enough kids being born to kind
of gettem to the country to increase. It's actually starting to become an aging
population. But their economy has beenbuilt on really built on increasing infrastructure and

(06:47):
real estate. You'll look at thesecities that have been built. It's mind
boggling. I mean, it reallyis mind boggling how quickly they've built these
cities. And we've talked about this. They've moved from an agrarian culture an
economy to more of a city andan industrial economy and cultural the last twenty
five to thirty years. But alot of the demand has been and the

(07:11):
increase in the economy has not beenconsumer driven like it is here in the
US, where the consumer makes upseventy to seventy five percent of the economy.
In China, it's really been drivenby the investment in real estate and
in infrastructure, which is good inmany ways, but at the same time,
you have to have demand that isdriven by consumers within that country.

(07:35):
So a lot of the demand thatyou've seen is from outside the country,
countries like the US buying goods andservices from China, And we've talked about
this. Many multinational companies are movingaway from having China certainly be the sole
provider of the goods and services,and that makes sense. Right after COVID,

(07:58):
after the Ukraine, in Russia,war after the terrace against China.
If you're a big multinational company,you don't want to be reliant upon one
country, who, by the way, is we're not in the best of
terms with China. You don't wantto have that one country be your sole
provider. You want to have multiplecountries. And that's what's happening is many

(08:20):
companies are moving their production away,maybe not completely from China, but to
other places where frankly, some ofthese other countries now are cheaper to have
these goods and services completed in theseother countries. But we have this weakness
going on in China, that deflationaryelement. When you talking about a global

(08:41):
economy, actually it can be goodnews for the US. Right So if
you're talking about global commodities or energyprices, when you look at those markets,
if China, the second world's secondlargest country and economy is not doing
well, that's going to keep thosecommodity prices a little bit lower, a
little bit more stable, and thatcould be good for the US economy as

(09:03):
far as inflation is concerned. Sowe'll have to see how that plays out.
Now that when the challenges are canbe that if you have real weakness
in China that could spread to theUS in certain areas, in particular,
if there's banks in the US thathave lent much money over there, and

(09:26):
in general that's not the case.There's really not the case that US banks
are lending a lot in China.So I don't think that's a huge risk,
but it's something that will continue tolook at. But that can be
a positive as we look out andsee the US economy remain very resilient,
but if you have the Chinese economyweakening, that could help from an inflationary
perspective. And you know, thismark of altility that we're seeing right now,

(09:50):
it's it's just a good reminder,a good test. I always when
we're talking with clients, I wetalk about how do they feel with their
risk tolerance? You know, youknow they have to coming off of last
year where the market was down inbear market territory, and you know,
risk tolerance is a personal decision.It is no right or wrong answer.

(10:11):
We have many clients that are intheir sixties and seventies that could be at
one hundred percent equity or eighty percentequity, and they feel comfortable with that.
They feel very comfortable with that.Allocation. They know what it means
in the short term with market volatility, but they also know that long term
they're probably gonna get greater return.And as we've talked about on the show,

(10:31):
with our clients or taking distributions,we always make sure that we have
two years with the distributions set aside, so you don't have to worry about
those distributions during times of volatility andwith the market hitting all time highs like
it did last month, you know, those are times when we take advantage
of that growth in the market toreplenish those two years with the distributions,

(10:54):
and you know, it can godown, you know, as we spend
down those distributions that go down toone year. But our target is try
to reach them to two years andthat allows them to take on more risk
and allows them to have greater growth. But that may not be you,
right, You may be an individualthat gets very concerned over the market volatility.
We have some clients like that thereare in great financial position. You

(11:16):
know, they may even have pensions, they've got so security, they have
no debt, but even when there'sany market volatility, they get very nervous.
And for those individuals, this couldbe a good time to become more
conservative. Yes, the market's officehighs from where it was back in the
end of July, and yes wehaven't got to the all time highs that

(11:37):
we saw back in twenty twenty one, but it's still not a bad time
if if you are just too nervousto make sure you rebalance. And here's
the upside, folks, Right now, bonds are not a bad place to
put some money. Right, So, as we've talked about in the show
before, we are buying individual bondswhere appropriate for our clients, and you

(12:00):
can get a pretty good yield oneither US treasuries or investment grade corporates.
So an investment grade corporate bond issimply a bond like blue chip companies like
jane Ja or Apple companies that youhave to ask yourself the question if you
buy a five year bond or aseven year bond, ten year bond,
whatever the maturity is, you askyourself the question, will that company be

(12:24):
in a situation? Well, they'llpay back both the interest and the principle
in that bond over that time period. So it's a different valuation. There's
a different lens that you look atit than if you are a equity investor.
Right, So, if you're goingto buy a JJ stock or Apple
stock, you're saying, hey,is that company gonna be able to grow

(12:45):
it's earnings in cash flow over thenext two, three or four five years
and in doing so provide dividends andin doing so see that stock appreciate.
Whereas a bond investor, you know, even if the stock goes down or
even if the companies have in trouble, you're really okay with that as long
as they can pay back their principleand interest on that bond over that maturity.

(13:09):
So if you look at an investmentgrade company, these are big blue
chip companies that good cash flow,very strong balance sheets. The odds of
them being able to payback even ifthere's a recession, the odds of them
being on the payback the interest andprinciple on their bonds for let's say five
years or seven years or even tenis pretty high. So you know,

(13:31):
in this situation, if you wantto become more conservative and move out of
some equities and into more of alarge allocation to bonds, this is not
a bad time to do that,right Versus let's say three or four years
ago, when if you did that, you were going to get very little
for your bond allocation. Now,if you want to do that, you
can actually get paid a decent amountfor making that change. And if it

(13:54):
gives you peace of mind, it'snot a bad thing to do, folks.
It's one of those things you've gotto make. That decision is to
what makes you feel comfortable and whatallows you to sleep at night. We're
gonna move on to another topic,but if you have any questions, feel
free to give me a call.You can reach me at eight hundred eight
two five five nine four nine againeight hundred eight two five five nine four

(14:18):
nine. So one of the thingswe want to talk about. I think
if you're a listener to the show, you know that we use primarily ets
exchange trader funds, and the reasonwe do that one is cost. ETF
expense ratios for our portfolio depends onexactly the portfolio, but it's around twenty
five basis points and one quarter ofa percent could be a little bit lower

(14:39):
depending on the allocation, but relativelyspeaking, very reasonable cost. And if
you compare that to an active manager, whether it's what's called a separately managed
account or whether it's a mutual fund. Those fees tend to be a boid.
They could go anywhere from half apercentage point up to one point five
percent, right, So real,you know, wide range is to what

(15:03):
that could cost you, and relativelyspeaking, compared to an ETF, you
know, just a dramatic increase ourlargest position in our client portfolios. The
average expense ratio is point zero threepercent, so one thirtieth of a percent
for the year. And so youcompare that to again a mutual fund that's

(15:24):
just charging one percent, huge differencein cost. And then you look at
the performance of those actually manage accountscompared to an ETF or the benchmark,
and in general, over a threeto five year period, about sixty five
to seventy five percent of those managersunderperform that benchmark that you could get at
that low rate through an ETF.So one is cost, too is performance,

(15:50):
and then the third one is taxefficiency. And this is such an
impointant one, folks. You know, it doesn't really apply if you're talking
about an IRA where there's there's notax impact. But in a taxbill account,
taxwell a brokech account, if youhave a mutual fund. That mutro
fund is going to distribute gains usuallyin the November or December time frame,

(16:14):
depending on what it had to buyor sell in the mutual fund, whereas
with an ETF, not one hundredpercent of the time, but let's say
ninety nine point five percent at thetime. The only time you have a
gain in an ETF this distributed toyou or that where you incur is if
you sell that position. Right,so you have to have that bought that
ETF, it has gotten up invalue and you have to sell it to

(16:37):
realize that gain. And now youhave realized gains you have to pay taxes
on with that mutual fund. Youcan literally this is literally can be literally
the case. You could have boughtit in September, it could have gone
down from there, and then inNovember December you could get realized gains distributed
to you because you held that mutualfund for that time period. So you

(17:00):
know, you think about that,so you actually only just bought in September,
You've actually lost money in it,you didn't sell it, and you're
getting gains distributed to you. Sothat that's a really really important one when
it comes to a tax ball account. So those are the reasons. I
just bring this up because you know, we do see this with clients who

(17:22):
are coming on board and they wereworking with an advisor that was using mutual
funds or on their own. They'rebuying mutual funds and tax all accounts.
And the problem we have is theymight have owned them for many years.
You know, it could be tenfifteen years, so they have a large
gain in them, and so itcould be difficult for us to sell them
because they would incur a lot ofcapital gains taxes in doing so. But

(17:45):
I will tell you you know,with our tax team, we've talked about
this or CPAs or old agents.That's one of the things we're doing is
doing tax projections if we sell thesepositions. And in many cases it still
makes sense to sell them one sometimesjust because of the fees and the performance,
but also sometimes because the amount ofgames that are distributed on an annual

(18:07):
basis, it can actually make senseto sell them now and take that game.
The other thing to remember is whenyou're getting the one upside to those
gains getting distributed is it does increaseyour cost bases. So when that mutual
fund ABC distribute its gains, itactually also increases your cost basis, so

(18:30):
when you do go to sell,you actually will have less of a gain
in that position. And so againfor many times, as we evaluate new
clients coming on board, it canactually make sense to sell those positions,
incurse some capital gains, but toget out of those mutual funds. But
just something to be aware of asyou're you know, coming out of you're

(18:52):
a work with an advisor or you'redoing this on your own, really think
about this. You're putting mutual fundsin there, and what is the applications
of doing that, what is itgoing to cost you, what is it,
what is the performance like? Andthen also what is a tax ramification.
The other thing I would talk abouttoo is, you know, we
talked about this annuities and let's saya whole life insurance again, so often

(19:14):
when we have new clients coming on, they have an annuity, they have
a whole life insurance insurance policy.And it's what's amazing, not too surprising,
is many times these clients don't fullyappreciate why they have them, right,
what is the reason they have anannuity? And again, if you're
buying an annuity, the main goalshould be that you're putting money into this.

(19:36):
It basically it's an insurance wrapper rights, it's it's agreement between you and
the insurance company, and that youwant to annuitize it down the road.
And all that means is uh thatyou know, if you bought it,
Let's say when you're in your fortiesor fifties, you get invested either in
a fixed rate or in a mutualfund or annuity that has mutual funds in

(19:57):
it, and that when you reachhigher at age sixty five, you take
that annuity and you turn it basicallyinto a pension, right, you turn
it to a stream of income thatwill be guaranteed for the remainder of your
life. I mean, if you'reif you're buying annuity, that's really the
idea behind it, because that growthin that annuity is not taxed. It's

(20:18):
like an irate, it's not taxed, and then when it's distributed it out,
it's providing that kind of pension likeincome over that time period. But
so many people who have annuities haveno idea that that's the actual the purpose
behind them. They're actually just soldthem. Because that individual is selling them
makes a lot of money a bigcommission by selling them. They don't realize
that they're going to get locked upwith fees in order if they wanted to

(20:41):
get out and change the mind foranywhere from eight to twelve years. Twelve
years, you're gonna lock up yourmoney for twelve years, or if you
want to get it out, you'regonna pay early termination penalty fees of around
anywhere up to eight to ten percent. So and then you know, the

(21:02):
other issue is performance. You know, when we look at performance, and
many times with these annuities, itis horrible. It is it's hard to
explain to how bad it can be. And I don't want to paint every
annuity in that category, but itcan be very poor performance. And again
then it's difficult to get that moneyout. And here's the other thing is

(21:23):
if you decide that you do wantto get out, and you've held it
for a while outside in the IRA, when you take that money out,
if there is a gain in it, first of all, any dollars to
come out our first gain dollars,they're not premium, it's not the principal
amount you put in there. Thefirst dollars that come out of annuity unless
you've annuitized it are going to bethe gains, and those dollars are tax

(21:47):
at ordinary income, not long termcapital gains tax. So let me repeat
that. So when you take ifevnuity, it has it gained in it,
and even let's say it's worth onehundred and fifty thousand dollars and you
want to take you have ten thousanddollars out of it, and the gain
let's say in this case, isfifty thousand. When you take out that
ten thousand dollars, that is allgoing to be gained, right, because

(22:11):
you're not taking principal first. Youtake gain first, and that is going
to be taxed as ordinary income,which is a much higher tax rate than
long term capital gains from most people. Long term capital gains can be as
low as zero percent, but formost people it's around fifteen percent and could
be as high as twenty. I'mtalking about this is from a federal perspective,

(22:33):
but most people don't understand that,right. They don't want to understand
what the real purpose of the annuityis. They don't understand that there's going
to be a lock up period wherethey're gonna have to pay early termination fees
to get out. They don't appreciatethe costs that are associated. So I
talked about ETFs and how low coststhey are, and then you compare them
to a mutual fund. Now,with an annuity, you usually have mutual

(22:56):
funds in that annuity, so youhave both the annuity fees and the mutual
fund fees that could cost you somewherearound one percent up to to two and
a half percent. So again Isaid again one to two to two and
a half percent annually. That's theexpense ratio for the mutual funds and the

(23:18):
annuity itself. So when you talkabout fees, very high expense ratios.
So I always say if you're goingto buy a whole life insurance policy,
and that's a whole nother category,but that they can be. There can
be times when it makes sense toget a whole life insurance policy. There
can be times when it makes senseto get annuity. But before you do
that, do not get your soleadvice from the person selling you that annuity

(23:44):
or that whole life insurance policy.Make sure you're talking to a fiduciary to
get guidance one of it. Well, folks, we're gonna come back and
give you more guidance. It's greattalk with you and join us as we
come back and take your questions.Well Matt, folks. For those of
you who are just joining us,my name is Martin Shield. So I'm
the chief wealth Visor here at BroucheFinancial Group and it's great to be here

(24:08):
with you this morning. Now.I had given out the number to call
in, but I heard from Zach, our producer, that that is not
working right now. So if youdid call that number and you weren't able
to get through, is that iswhy. So they're working on that.
Zach's gonna let me know when thatnumber is up and running, but right
now it's not. But if youdo want to email a question in you

(24:32):
can. You can email Zach atZachary Harris at iHeartMedia dot com. It's
a long email adjust but actually it'spretty straightforward. So Zachary Harris all together
at iHeartMedia dot com and you canemail him the question. He'll relate it
to me. By the way,Zach, I love your name. It's
a great name, Zack. Thankyou. I appreciate that. It's a

(24:57):
good name. I like it.So if you have any questions, feel
free to email Zachary and I'll letyou know if they're able to get the
eight hundred number up and running.But we will move on to taking some
of your questions. I'm sorry givingsome of your guidance from a punach of
planning and investment management perspective. Andyou know, I talk about how fortunate

(25:18):
I am, and I think Ioh my colleagues feel the same way.
I wanted to work for a greatfirm that is just so team focused and
it's so focused on our clients.And you know, if you can go
to work every day and just helppeople in our situation, help them make
the right decisions to be successful financiallyand to avoid the pitfalls that people can

(25:45):
get themselves in. And I willtell you, I mean people ask about
who our clients are. I mean, they're basically successful individuals, right.
They are individuals that have been ableto manage their spending and put money away
to get them in the good andthen when we start working with them,
we usually just move them to thatnext level and we make sure that as
they move into what we call financialindependence or into their retirement, that they're

(26:11):
doing everything in a way that's gonnathat money's gonna last them all the way
through for the rest of their life. And so you think about it,
it really is a great job thatwe have to be able to give them
that guidance. And I will tellyou too, when you work with our
clients, you know, there arepeople we enjoy being with. Uh.
They really appreciate our conversations and ourand our guidance. But you know,

(26:37):
I think it's just, you know, I don't take it for granted in
any given day that what we getto do and the people we get to
do it with. But there's alot of questions that come up, and
I think about the last fifteen yearsI've been in this industry. I was
in corporate finance for about twelve thirteenyears before that in the telecom space down

(26:57):
in DC. But last fifteen yearsI've been in this industry, it just
gets more and more complex, right, the tax rules, the retirement rules,
everything about it gets more complex.So the concept of doing this on
your own, especially as you're movingto retirement where you want to enjoy your

(27:17):
your kids, your grandkids or traveling, I would personally think it would be
challenging. I would never want todo that knowing what I know now,
I would never want to do that, even though I was in finance.
I think it would be a challengingand probably a situation where you could easily
make mistakes that could have real ramifications. But one of the questions we get

(27:38):
caught off is on social security andwhen people should take it now social security,
As they just talked about things gettingmore complex, it's probably one area
that where it's gotten a little moresimplistic. There used to be some strategies
where you know, you could dodifferent things with you and your spouse to
try to maximize your benefits and socialadministration. I would actually say, for

(28:00):
you know, to their credit,made it more simple. And I think
I'm a big believer in the Kissprinciple, which is keep it simple right,
and I support this. I thinkit actually, even though it removes
some of these strategies from our client'sability to try to maximize their social security,
it actually, in some respects hassimplified the decisions. But it doesn't.

(28:22):
It still means that you've got thisdecision to make and you have to
understand the parameters by which to makeit. And what we always tell clients
is that it is not going tomatter to your plan one way or the
other is to when you take itright. If you take it age sixty
two, age sixty seven, orage seventy, it doesn't matter. Your
plan is going to be about thesame one way or the other. But

(28:45):
we will give you a guidances towhat you need to be aware of.
Now. One thing that many timepeople want to take it early because they
say, hey, I put moneyinto the sit into the system. I
don't know what's going to happen tothe system down the road or by the
way, What's gonna happen to meif I'm going to live here or die,
So I want to get the moneyright away. And in those situation

(29:06):
situations, I say, go rightahead, take it. If that what
gives you more peace of mind todo it, then go go right ahead
and do them. But the thingyou have to appreciate is that each year
you delay, and starting at agesixty two, the amount you're going to
get increases by eight percent right allthe way up until age seventy. So
you definitely don't want to delay afterage seventy. And here's the thing to

(29:30):
remember too, is they're not goingto let you know that, hey,
you've got to take it at ageseventy or seventy one to seventy two.
If you don't apply for it,you won't get it. So that's important
thing to remember. I've seen thisbefore where somebody thinks that they're going to
get reminded by Sociality administration or youneed to take it. No, that
that is not the case. Ifyou're seventy one seventy two and you haven't

(29:52):
taken it, they're not going tolet you know. So you've got to
make sure that you get it atage seventy because again you're basically just missing
out the benefit if you don't getit by age seventy. But every year
you delay, you get an increaseof eight percent. So I say,
where do you get a guaranteed eightpercent increase? Anywhere? That just does

(30:12):
not exist. So that's a prettypowerful factor in delaying. The other thing
is by delaying, you're really protectingfrom a longevity issue, right, meaning
that if you live very long.You know, one of the concerns that
can be out there is that youknow, you run out of money,
not when you're sixty five or seventyfive. Most cases that's not an issue,

(30:36):
but you live to be ninety fiveor one hundred and you incur expenses.
Maybe you're not anticipating. That's thepotential issue from most people from a
retired perspective, it is that it'sway down the road that they come into
a number of big expenses they werenot anticipated in that, and that they
have a financial limitation at that point. Well, by delaying your soci security

(31:00):
to age sixty seven or seventy,you actually help protect yourself against that possibility
of running out of money longer downthe road. Now, the break even
point for security is between age seventyeight and eighty eighty one. Depends on
how you look at this, butif you live past that point, you

(31:22):
will have been better off getting delayingon your SoC security right. And so
you know, I always say ifpeople have health issues, absolutely go ahead
and take your right away. Ifyou need your soci security for spending for
cash flow purposes, then go aheadand take it right away. Or if
it gives you peace of mind thatyou have put money into the system and
you want to get it back,then go ahead and take it. But

(31:45):
all things consider, if you're married, then at the very minimum, the
largest breadwinner should go ahead and delayas long as they can, and to
the extent that it can delay intoage seventy and they you and your spouse
have good health. That can bebeneficial. Because the thing to remember is
this too, which is, ifthat made breadwinner delays in age seventy and

(32:07):
something happens to that individual at anypoint, the remaining spouse gets that larger
benefit, right, so that largeramount will stay within the household, even
if that individual who got the largeramount and had delayed it passes away.
So that could be a really powerfulfactor from a retired planning perspective, and

(32:29):
it can help protect against longevity andunexpected expenses as you get older. But
these are questions we have with ourclients and we show them the different scenarios
if you would take it earlier orlater, and that could be very powerful.
You know, you've got to makesure that one way or the other,

(32:50):
you are going through these different planningscenarios when you approach your retirement.
You know, I see it allthe times with new clients coming on who
don't have a plan in place.They've never been through that process, whether
you know, looking at their estateplan and tax planning and retirement planning,
and then after they go through Ialways say within six months, nine months,

(33:12):
or a year, any new clientthat comes on they get it.
They understand what it means to workwith our firm. They understand what it
means to work with a fiduciary.They understand what it means to have a
plan in place, know what theyneed to be doing to make sure that
they're in a good spot when theyretire, and to understand where their income
is can be coming from when theydo retire. And that is just very

(33:35):
important. The other element with thistoo is you know, if you're an
individual that manage your own portfolio,that ability to hand that off to somebody
and say, hey, listen,this is not my responsibility now it's even
better. That makes your situation justthat much more enjoyable and less stressful when
you retire. And I see thatall the time with individuals that used to

(34:00):
manage their own portfolio. And again, when you're in your thirties or forties,
you could do different things. Youcould be more aggressive, and you
could be fine. But I tellyou, we see it all the time.
If somebody thinks they're going to tryto be very tactical with a portfolio
when they retire, it is soeasy to make mistakes, so easy to

(34:21):
make mistakes. And that's probably oneof the conversations that you know, if
somebody manage their own portfolio and nowthey're on with us, and in particular
if they're retired, and they talkabout the difference that they're not worried about
the stress of managing, that they'renot taking the time that's needed to be
successful and managing their portfolio. Andalso they say that things that they might

(34:42):
have done and been successful in theirthirties or forties, they probably wouldn't be
able to do now retirement, right, and made the analogy that in the
last time I did the show thatreally that portfolio, and this is truer
when you're in retirement, is reallya small business. Think about that portfolio
that could be you know, fivehundred thousand dollars million, four million,
dollars, five million, whatever itis, that is a small business.

(35:06):
And you're hiring us to manage thatsmall business. And you want somebody to
manage that small business that has expertisein that field, that you have complete
trust in, and that you're notgonna be worrying about that small business anymore,
and you know you're gonna want toget updates as to what's going on
with that small business. You wantunderstand to make sure that the cash flow
and the distributions from that small businessare sufficient to allow you to retire.

(35:30):
But you want somebody managing that smallbusiness that has years of experience, that
has a process in place, andthat's not doing things willy nilly right,
that makes the decisions based on dataand executes properly. It's so important.
Well, folks, we're gonna goonto other topics, but I got notification
from Zach that we have a numberout there, so if you want a

(35:52):
calling, you can you can reachme at five one eight six nine zero
zero nine eight zero. Let merepeat that, so it's five one eight
six nine zero zero nine eight zeroone last time, five one eight six
nine zero zero nine eight zero.And as I always say, you may

(36:15):
be doing your fellow listener favor byasking that question that they have. They
have that exact same question, butyou know some people are shy. They
don't want to get on the onthe phone and have their voice on the
radio, So you're doing them afavor by asking them that question. For
them and giving them guidance. Let'smove on to let's talk about some economic
data. So if you as youknow, if you listen to the show,

(36:37):
my background is economics. I havemy master's and undergraduate in economics.
You may not know this, butI actually wasn't a PhD program in economics
down in Virginia Tech. Not onlyI'm a Bonnie's grad, by I'm a
hokey grad as well. And Iget asked why I didn't go through and
get my past, and I willtell you it really is a decision.

(36:58):
I'm pretty happy with these days.I have a number of friends are PhDs,
and these are amazing individuals, butboy, it is a lot of
work. And what I saw wasindividuals that were graduating five years, six
years after getting their PhD and notmaking much money. Really like the amount
of money that we're making I probablycould have made coming out of undergrad.

(37:20):
And you got to be passionate todo anything like that. I mean,
you cannot spend five or six yearsdoing that and not be passionate. So
for me, getting my masters ofVirginia Tech and economics was the right move.
But I love talking about economic data. It's just interesting how all comes
together, and the July CPI data, that Consumer Price Index data again shows

(37:42):
inflation really slowly moving towards that twopercent target. The one thing that stood
out with me though, that I'mgoing to tell you sometimes it kind of
it's a little bit head scratching.Is supposedly one of the areas where it
was some of the greatest decline.What was with airfares that supposedly had some
of the greatest declimb. And Idon't know about you, but if you're

(38:04):
trying to book a flight I wastrying to book some flights in the fall
for the upcoming winner, I'm notseeing that at all. If anything,
I'm seeing prices substantially higher. SoI'm not sure exactly how they track that,
but it's that's definitely one area whereI'm not seeing that. And you
hear when the airlines report their earnings, their earnings are strong, I mean,
and you you can tell that whenyou fly those uh you know,

(38:29):
the airports and the airplanes they're packed. And so I'm not sure exactly how
they capture that data, but itis interesting to see in general, uh,
you know, the CPI inflation datamove towards that that target. Now,
what would be interesting to see is, you know, if the Federal
Reserve really if they have to actuallyget to that two percent target, or

(38:51):
if they can kind of get inthat range, and if that will give
them some solace, the Federal Reservessome solace that they can pause at that
point. I've said from the verybeginning of this year, I don't see,
uh, you know, the feedcutting rates anytime soon. I think
if the feed is cutting rates,that indicates to me that the economy is

(39:13):
not in good straights, right,That is, they're not a good situation,
kind of is not in a goodsituation if the Federal Reserve is gonna
cut rates, because you think aboutit, let's say the economy continues to
do well, Let's say inflation continuesto move towards that that target, why
would they cut rates. They justput themselves in a situation where inflation could
spark again. So you know,with the maybe the exception, if inflation

(39:37):
moves well below that two percent target, let's say it moves to one percent
or something less, and the economymeans really really strong, maybe a little
bit weaker, that might give thema reason to cut rates, But I
think it really it has to bemore of the other way around, which
is it would have to be asituation where they kind of really falls off

(39:57):
cliff they see real economic weakness.That would be the one situation where the
cut rates. But it'll be curiousto see what happens. Again, We've
got a ten minutes left, soif you have any questions now, the
new phone line, folks is fiveone eight six nine zero zero nine eight
zero. One of the other thingsthat I want to talk about is we

(40:17):
just put a new webinar out thereonto our website. I talk about all
the talented colleagues we have. SamanthaMacy and Katie Buck just did a webinar
on our portal, and that wouldencourage you to look at it, even
if you're not a client of ours, because it does give you a good
understanding of what we have for ourclients to be able to look at their

(40:42):
portfolio performance. And Katie and Samdid a great job of going through that.
So this is on our website atBouchet dot com under Insights, And
as we've talked about, there's alot of we basically put a webinar and
or a blog out there every weekon a lot of great topics, and
this one's a great one to lookat. And I will tell you you
know, for our clients to havethey can always go look at their accounts

(41:02):
at Charles Schwabs. So Charles Schwabis our custodian and all clients can go
online to Charles Schwab to look atthat. That's real time data that's updated
during the day, whereas our portalas updated as the previous day's closed.
But you know, for most peoplethat is sufficient enough and you can look
at it performance by in total allyour accounts together. You can look at

(41:28):
performance by individual account, you canlook at performance of individual positions, and
then you can look at any gainsthat are both realized or unrealized, any
income. It really is a greatway that our clients can look at their
portfolio and understand what's going on.And you know, that's what I always
say with our clients. I feelvery comfortable in saying that they understand how

(41:52):
they're allocated. You know, whatdo they have in stocks, what do
they have in bonds, and howthey're performing, and you know what are
the concerns or risk out there.And you know we've talked about with our
portfolios. Uh, you know rightnow, we're very comfortable way we're allocated.
We've had, you know, positionsto the portfolio that have done very
well year to date with the rallyof technology, which if you listen,

(42:15):
you know we're big believers technology andwe will continue to be. But we
also have allocations to consumer staples,healthcare, and dividend paying funds that will
do well in times of atility.And I was just looking at it,
you know, a month to dateand those positions, those last three I
describe, have done much better thanthe broad market has over that time period.

(42:38):
And again that's the value of havinga portfolio manager like Bouchet Finance Groups
that just as we're looking at theoverall data, we want to make sure
that our portfolios are well positioned.And last we got talked about our alternative
sleeve and how well that's doing andhow well it did last year versus both

(42:59):
bonds stocks, and in year today it's also doing very well. But
these decisions and you know, howthey're implementing the portfolio things uh, that
you don't need to be worked worriedabout. And I mentioned earlier in the
show, how we're you know wherewe have the opportunities. We're buying individual
bonds because we really we've come toa situation where you know, rates have

(43:20):
gotten that good. Uh, they'vereally moved moved higher. But one of
the things I want to highlight forfolks is, you know, we've used
Charles Schwaber as our custodian for thelast almost twenty five years. They're they're
a great partner of ours. Wedon't pay them anything, they don't pay
us anything, so they're really apartner that allows our clients to have access

(43:44):
to the world of investments. Andthey're great because they really protect our clients
data, they protect our clients assets. And we talk about that importance of
cybersecurity and and you know how asa as a firm, we're constantly doing
training to protect that and it isjust one of those things that I cannot

(44:04):
stress it out there enough. Wejust sent out an email to our clients
about things they should be doing toprotect themselves from a cybersecurity perspective. And
it's probably once every couple of weeksthat we are talking to either perspective clients
or clients about a situation where they'vehad somebody trying to access their data,
or in this most recent situation,it was somebody that got a hold of

(44:27):
a check that was we think wasstolen from a local post office, and
that check was manipulated so that ifthe check was for two hundred dollars,
it was manipulated to change it toseventy five hundred dollars. And that check
was cashed at a bank in Ohio. And luckily, this individual checks their

(44:50):
bank accounts online probably once a week, and they noticed it that they had
a seventy five hundred dollar check,which obviously a big check cashed, and
right away they were in touch witha bank and they were able to get
that money back. But I justwould tell you to be extra vigilant with
your situation, whether it's an emailcoming in and certainly not clicking on any
links, whether it's somebody calling posingas I don't care if it's the irs,

(45:16):
or if it's a company that youknow right away that you say I'm
going to call back at your youknow a hundred number that you find online,
that you never take that call andgive them any information, and that
you check your accounts. I reallywould encourage you, if you can to
get online access with dual authentication,So that means that you just don't have

(45:37):
a password and user name, butyou also get a code from your cell
phone for that to protect yourself andthat you you know, check your accounts
at least maybe once every couple ofweeks, just to look at them real
quickly, especially at bank account whereyou know that money, if it goes
out, it could be more difficultto get back. And that's why you

(45:58):
know, we always counsel individuals that, you know, if you have a
credit card, make sure you paidoff monthly, right, you do not
want to be incurring those those highfees. But at the same time,
you should really be using your creditcard for many charges because you know,
in this situation they wrote a check. If they had called that company and

(46:19):
paid off that bill with their creditcard, that would not have there had
been no risk for them. Andyou're protected much in a much stronger fashion
with a credit card with fraud thanyou are with your debit card or your
checking account. And you know,I mentioned this in the show last week.
With my kids, I always tellthem, you know, my daughter's
in college, she just got acredit card. Use that credit card,

(46:43):
build up your credit score, paythat off every month, but really try
not to use your debit card becauseif they get access to that debit card,
which they can through different ways,you know, they could access your
cash and your checking account, andin that regard, know, you do
have protection as I just described inthis situation, but it's not as strong

(47:04):
as the fall protection through a creditcard. So I would really encourage you
to use a credit card for asmuch as you can on a weekly basis.
You know, real just quickly lookat your checking account and your bank
account and just make sure that allthose charges look correct and that there's no
concerns, and that you know,you also look at your credit score.

(47:27):
You can. With many of ourolder clients, we actually lock down their
credit right because they don't need acredit card. They're not gonna get it.
They're not gonna a new car loan. So if you're not going to
be getting a loan out anytime soon, you can lock it down that it
can not access at all, oryou can get notification if you do need
to access it. Well, folks, we went through this great hour.

(47:49):
Hopefully you learn a lot. Iwill actually back tomorrow at eight am to
do the show, so come backand join us as we continue to discussion
and we take your question. You'lllisten to Let's Talk Money. Have a
great day out there, folks.Take care of yourself and take care of
each other.