Episode Transcript
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Speaker 1 (00:08):
Well, good morning and happy new year. Welcome to the
first show in twenty twenty five of Leg's Talk Money
at eight ten WGY. We want to start out this
morning by thank you for tuning in and making us
a part of your weekend. I'm job a light and
joining me this morning is my co host, Samantha Macy.
(00:30):
I'm a certified public accountant and the CFO and chief
Operating Officer and wealth Advisor at Bouchet Financial Group. Samantha
is a certified financial planner and a wealth advisor at
the firm. Beyond our expertise in financial planning, Sam plays
a critical role in our firm marketing efforts, ensharing our website,
(00:51):
social media, and everything we do in the public stays
up to date with engaging in valuable content. Samantha, thank
you for joining me this morning.
Speaker 2 (01:01):
Thanks John, Good morning everyone. It's great to be here
with you today.
Speaker 1 (01:06):
It is great to be here in this first weekend
in January. We're excited to kick off the year as
we dive into the latest and investing financial planning in
the markets. Whether you're setting new financial goals for the year,
curious about what's ahead for the economy or the markets
are just looking for practical advice to start off the
(01:26):
new year. Right. We got you covered this morning. Thank
you for tuning in, and I encourage listeners to call
with any questions. You can reach us at eight hundred
talk WGY. That's eight hundred eight two five, five nine
four nine. Well, twenty twenty five marks some several significant
milestones for Bouchet Financial Group. You know, this year we
(01:48):
celebrate thirty five years of serving our clients with dedication
and excellence. In addition, thirty in this year, Steve will
have been hosted Let's Talk Money for an impressive thirty years,
sharing invaluable insights and advice to the listening audience. So
you know, these are significant milestones, things we're proud of,
(02:13):
and they're a testament to the firm's legacy and Steve's
enduring commitment. So this will be a nice celebratory year
for the firm and we appreciate you tuning in this
morning to listen to Sam and I hope everyone had
a fantastic holiday season. It's hard to believe here we
are the first weekend in January. Already here we are
twenty twenty five, but we made it through the holidays.
(02:35):
I hope everybody had a great time. I know I
certainly did, had a great time celebrating with friends and family,
so I hope you did as well. And here we
are the first show of twenty twenty five, and I
think Sam and I agree the best show of twenty
twenty five. So we're gonna retire with that trophy for
the year. So appreciate you tuning in. And again, you know,
(02:56):
if you're listening and have a question, I guarantee another
listener does, so certainly pick up the phone call us.
There's no such thing as a dumb question when it
comes to your money, So reach out. Uh, And again,
as I mentioned before, encourage listeners to call. You can
reach us eight hundred talk WGY. That's eight hundred eight
(03:18):
two five five nine four nine. Well, we'll start off
by talking about the markets, and uh, you know, the
S and P five hundred ASDAC broke out of a
five session slump on Friday, posting solid gains, So it
was nice to see. Uh. The S and P closed
out the session of Friday with a solid one point
(03:40):
three percent gain, and it was the best one day
performance of the SMP since November sixth, which has happened
to be the day after the presidential election. So it
was great to see the SMP break out of that
little slump and the tech having ASDAK gained to whopping
one point seven to seven percent on Friday, So a
(04:00):
strong showing by the NASDAK as well, and the Dow
rounded out the major indexes with a point eight percent increase,
So great finish to the week. But despite that great week,
it was still besides that great finish on Friday, it
was still a losing week for all the major industries.
(04:21):
The Dow finished down the week at point six percent.
S and P five hundred dropped almost half a percent,
and similar with the NASDAK just lost right half a
percent as well. So, you know, so much for this
so called Santa rally. You know, we had a lot
of discussion in December about the hopes of a Santa rally,
which you know is a period that covers the five
(04:44):
days ending the year and then the first two trading
days of the next year. And you know, on average
there's been the S and P has been up about
one point three percent during that period. You know, this year,
during that period, the S and P lost another half
a percent. So the Santa rally that was much talked
about hoping to finish out a great year, just did
(05:06):
not materialize. And so people say, well, what does that
mean for twenty twenty five. Absolutely nothing. There is nothing
that shows that there's any correlation between what happens between
that very small period of time and then the next
trading year. So a lot is talked about the Santa rally,
(05:28):
but in reality it's a nice way to finish out
the year if it's positive, but it really has no
impact on the year in front of us. So again
wrapping up the markets, SMP down a little less than
half for the week. Now if you look at not
year to date, but the last year, right, so the
rolling twelve months. Yeah, the S and P twenty seven
(05:51):
percent over that period. Now, certainly the year today number
will become more important as we get more time under
our belt. But I will say, you know, as investors,
most of us have very long time horizons. So it's
in some ways, you know, resetting the clock to zero
at the January first, it seems a little odd in
(06:12):
some ways because you know I in person, you know
particularly I have an investment horizon. It's not retirement, right,
and so my horizon has many years out, and you
know others may have shorter time horizons because of maybe
they're investing for a certain cause, you know, could be
funding a child's education, could be something else. But again,
(06:34):
you know, we go through this routine of resetting the clock,
like forgetting everything that just happened the previous twelve months.
But again, S and P. If you look at it
rolling twelve months of twenty seven percent uh Nasdaq, as
I mentioned, you know, down about half a percent for
the week. Uh and and but again if you look
at the last twelve month period of thirty five percent
(06:57):
and similar to the down about point six percent and
up fourteen percent if you look at that year as well. Now,
the Russell two thousand was actually up this week. You know,
you know, we saw the small cap stocks rally around
the election. Then we saw them give a lot of
that back, but we saw a nice finish. So the
(07:21):
Russell two thousand finished up the week up one percent
and up about sixteen percent for the year. So you
know that's gonna be important. We'll talk about that a
little bit more as we you know, talk about what's
what we're looking at in twenty twenty five. This certainly
has been a year about concentration. You know, we talk
about the Max seven and how much they contributed to
(07:41):
the market's returns, and we really want to see a
greater breadth to the market. We started to see some
of that this year, you know, right around the election
to period, but hoping for twenty twenty five we see
much more broadening of the breadth of the market recovery.
So but it was good to see the Russell two
thousand finish up the week positive territory. You know, in
(08:04):
the treasuries, we saw a slight uptick in the treasuries
on Friday, the ten year and did rater out four
point six percent, and then you know, just a week
before that, so the previous Friday finished at four point
sixty one nine, which is was as Hiatt's level since
May twenty nine. So certainly, you know, as we're seeing
(08:25):
the Fed cut interest rates, we're seeing you know, the
yield on the on the ten year maintain and actually increase,
So interesting phenomenal going on there. And then you know,
the two year treasury again closed a little bit higher,
marginally higher on Friday, closing at four point two seven
nine percent, So still some great yields out there in
(08:46):
the treasuries, and you know, I would encourage you. We'll
talk again as we talk about allocation a little bit
later in the show. Certainly treasury still continue to be
a great place to park some of your fixed income,
getting some really solid returns with absolutely no risk. So
certainly some great opportunities continue there. If you can get
(09:08):
a you know, two year treasury almost four point three percent,
or even a ten year at four to six with
really risk free money, that's certainly a good way to
put some of your fixed income allocation to work. And
you know, as we look at the calendar head so
(09:28):
the markets will be a short another short week in
the markets next week, you know, Thursday, markets will be
closed for a day, a national day of Morning for
former President Jimmy Carter. So markets will be closed on Thursday.
So that'll be you know, another short trading week to
continue some highlights of what we're going to see this week.
(09:49):
You know, we're gonna see jobs report out next week,
also going to see the start of you know, fourth
quarter earnings releases, which only a few earns released next
we really can't get a higher gear more middle of January,
but certainly we'll start to see earnings where you know
that's going to be important. You know, as we talk
about what we're looking at for twenty twenty five, you
(10:11):
know earnings are going to be key. The expectations are
for earnings growth for next year, and I think we're
going to see markets reward those companies that deliver solid
performance and punish those at don't. So certainly, middle of
January we'll start to see more earnings release also start
(10:31):
to see you know, some of the minutes this week
from the mid December FOMC meeting. You may recall the
Fed continued cutting rates. You know, they reduced rates by
a quarter twenty five basis points, but they issued some
cautions for twenty twenty five that they're going to have
fewer rate cuts. So certainly markets did not react well
(10:54):
to that, and we saw some sela. But we'll see
we'll get to dive a little deeper to what the FOMC,
what they're thinking about with Fitchairman Powell's thinking about when
those minutes are released. And you know, another interesting thing,
I'm not sure it'll have a huge effect in the markets,
but on Friday, you know, the Supreme Court, we'll be
(11:16):
hearing arguments about the the highly anticipated TikTok band, so
it'll be interesting to see how that plays out. So overall,
you know, great great year twenty twenty four, it was
just you know, it didn't quite enter or you know,
exit the year with the strength that we wanted to see.
(11:37):
So but good to see things tick up on Friday.
So I encourage listeners you can call, please call in
with questions. You can reach Sam and I at eight
hundred talk WGY. That's eight hundred eight two five five
nine four nine. So, as we talked about market share,
twenty twenty four, another solid solid year for US stocks.
(12:03):
You know, we saw the S and P rise over
twenty three percent and achieving fifty seven record closes. So
it was just a solid year and you know, continuation
really of our bull market run. And you know, we
can contribute that. We've had solid economic growth. We've had
inflation coming down. It's not quite at the Fed's targeted
(12:24):
two percent, but it is showing that is coming down
getting under control. The FED has been cutting interest rates
one hundred basis points of rate cuts in twenty twenty four.
We've had healthy corporate earnings, and you know, certainly saw
positive reaction to the November election results, and I mentioned
you know, we certainly at that point saw a small
(12:45):
cap stocks really start to rally, and that was nice
to see if you look get a little breadth. And
AI certainly, you know, you can't talk about twenty twenty
four without talking about AI and the impact it's on
big tech stocks. And really, you know we'll talk about
in a moment, big tech really you know, leading the markets.
(13:09):
But you know, we did have we finished but still
solid solid year. You know, the S and P five
hundred posted its best two year performance of the twenty
first century. So the S and P jumped up twenty
three point three percent after twenty after twenty twenty threes
twenty four percent advanced, So you know, together that's a
(13:31):
fifty three pointy two percent gain, which the most we've
seen since ninety seven ninety eight when it rose sixty
five point nine percent. So great back to back twenty
three twenty four. You know, if you've been in the
markets those years invested US equities, you know you you
did well and so hopefully hopefully you had your a
(13:53):
major part of your portfolio allocate to US equities. You know,
Nasdaq also you know, rallied twenty eight point six percent
in twenty twenty four. It was that represents the two
year gain of eighty four point five percent. When you
combine twenty four and twenty three, that's the best since
(14:14):
twenty nineteen twenty And the Dow climbed almost thirteen percent
twelve point nine percent in the past year and combined
with twenty twenty three for a twenty eight point three
five percent increase, and that's the best uh since nineteen
twenty nineteen and twenty twenty. So, you know, a great
(14:34):
year for all the major US indexes, and especially you know,
two years back to back, which is you know, great
to see. Certainly, we this year we talked a lot
about concentration in large cap growth, you know, particularly the
BAG seven. You know, so you've got Amazon, Apple, Alphabet,
(14:56):
you know, Google, Meta, Microsoft, Navidia, and Tesla, and they
certainly drove markets in twenty twenty four. And uh, you know,
the Max seven accounted for you know, over fifty percent
of the S and P five hundreds return. And you know,
when you look at the market cap of the ten
largest stocks in the S and P five hundred, they
(15:17):
kind of for forty percent of the indexes market capitalization,
which is, you know, the largest share we've seen in
over thirty years. So certainly twenty twenty four a year
about concentration, concentration in the Max seven and how that
has impacted the markets in such a positive way. And
(15:38):
you know, we did start to see some some increase
in small caps, which you know, we want to see
that market breath really for a healthy, healthy recovery. Now
as we looked ahead to twenty twenty five, I think
there's gonna be a lot of focus on on small cap,
in mid cap, you know, the Max seven. You know,
(16:00):
from an earnings growth perspective, it's hard to see the
MAG seven contributing in the same fashion they have, but
certainly for twenty twenty four, it was a great, great
contribution there. You know, bonds certainly did not have as
stellar as a year. You know, bond market we're you know,
we're really underperformed. You know, the AG performing just above
(16:23):
one percent one point three percent for the year total return,
you know, and certainly you know, the it's it's been
a challenging rate environment, and so overall bond markets did
not perform as expected. But you know, again is Sam's
going to touch on a little bit later in the show.
You know, looking, you know readdressing your portfolio and your
(16:46):
allocation between stocks, bonds, fixed income and cash is really important.
It's something you know, you really should be doing at
least every year to allocate, make sure you're invested in
a way that's a appropriate based on your risk tolerance
and what's happening with the economy. So overall, twenty twenty four,
(17:06):
you know, fantastic year in the US markets, and again
the question becomes, you know what's going to happen in
twenty twenty five, and we'll talk about that a little bit.
You know, to have back to back twenty plus years
in the S and B five hundred, you know, can
that be repeated for a third year, And you know,
we'll talk a little bit about that in a moment.
(17:28):
So again, encourage listeners to call in with questions. You
can reach Sam and I at eight hundred talk WGY.
That's eight hundred eight to five five ninety four nine.
You know, one of the things I touched on in
twenty twenty four was, you know, the FED had their
final FOMC meeting in mid to late It was December seventeenth, eighteenth,
(17:54):
and as expected, they they cut rates. They cut raised
by twenty five basis points, and that I was expected,
so no surprise there. But certainly, you know, they came
out with caution for what we're going to see in
twenty twenty five and really signaled that we may see
only two rate cuts. And I'll say, one thing we've
(18:15):
learned with this FED is they're going to be very
data driven. They're going to be looking at the data.
And I will say, you know, they have a dual mandate, right,
so it's not only about getting price stability through inflation,
but it's also maximum sustainable employment. And it seems like
the employment, you know, the unemployment rate and making sure
(18:36):
that there's no surprises there is really getting a lot
of focus from the FED. Eral Now, I think inflation,
the inflation numbers continue to show that inflation is getting
under control. You know, we still have some stubborn inflation
with housing, but we're so we're not quite down to
the target, but we're we're getting closer and closer. So
(18:57):
I think Fed's getting more comfortable that inflation is control.
But they're gonna be cautious, you know, certainly as we
head into twenty twenty five, certainly with some of the
talks about aggressive tariffs, some of the concerns about you know,
what's happening in the ward in Ukraine, possible Mid East,
Middle East, you know that that could have certainly impact
(19:19):
on inflation. So the Fed's gonna be cautious and they're
gonna be very data driven. So you know, the markets
reacted a little negatively because you know, FED really signaled
that they're gonna expect that fewer rate cuts in twenty
twenty five, so I think we're going to prepare for
an environment of higher rates for longer, and you know,
(19:40):
the market did not react well that. We saw a
little bit of the market reaction at the end of
December that certainly drove part of that. But as we
you know, we'll again we'll get released the minutes from
that meeting this week, so we'll get a little bit
more insight into what the FED is thinking about. But
I think they've shown their cards. They're very they're gonna
be data driven. They're gonna to really be cautious and
(20:03):
wait to see, you know, what the jobs data what
the inflation data shows before we see any really signal
of any more aggressive rate cuts. So I think they
showed their cards. And so as we we wrap out
the year there, I think we have a good sense
of where the FED is going to be as we
(20:23):
headed to twenty twenty five, which is they're going to
be cautious and they're going to be really reducing rates
at a pace which is slower than what we expected
as we finished out twenty twenty four. So again I
encourage listeners to reach out with questions. You can reach
Sam and I at eight hundred talk WGY. That's eight
(20:45):
hundred eight to five five nine four nine. Well, we're
gonna be heading into a break shortly, but I know
Sam is going to be talking about some personal finance tips.
So Sam, I know I've been doing a lot of
talking in monopolizing here for a little while. I'm going
to turn it over to you to start off that segment.
Speaker 2 (21:06):
All right, thanks John, Well, happy new year everyone. I
will be talking about some personal finance tips for you
as we are starting the new year, and we are
coming up on a break soon, but that's what we
will be talking about after the break. I'm sure many
of you have been in conversations with people, friends, family
about your New Year's resolutions and have probably taken a
(21:28):
moment to reflect already on the past year and what
you did right and maybe what you could have done better.
So I thought now would be the perfect time to
talk about some personal finance tips to kick your year
off right and maybe inspire you to take some steps
to better position your financial future for the long term,
because it is, you know, a process of small steps
(21:49):
that can really have large payoffs over the long run.
So that's really what we want to do today, talk
about some financial habits that you can do and some
small changes that you can make to really put yourself
in a better position. And I might have a little
bit of time here, so I'll jump into the first one.
So the first one is really just to focus on
creating a budget. And you probably think to yourself, well,
(22:13):
I have a budget, right, and most people you know
have probably thought about hypothetically what they're spending their money on.
But it's the perfect time to tackle, you know, taking
some time to look at what you spent your money
on in twenty twenty four. What are your general spending habits,
what was good and what you should maybe change in
the new year, because it really will have a huge
(22:36):
impact on you know, just keeping all of it under
control and be realistic. Make sure that you have realistic
goals for what you could actually stick to and maybe
some plans for savings for paying off some things that
you need to. But it's really important to nail down
those items just with yourself as an individual. Maybe it's
(22:58):
your spouse, your family to have an understanding of you know,
what's going to be your sending goals for the year
twenty twenty five. So John, I will pass it back
to you. It looks like we're coming up on the
break here. Anything that you'd like to add before we
come to that midway.
Speaker 1 (23:17):
Break, perfect well, Thank you for that, Sam, and Sam
is saying thank you John for pasking to me with
two minutes before the break. But we again encourage listeners
to call them with questions. Thank We appreciate you tuning in.
I can't believe we're halfway through the show today. We're
going to be taking a short commercial break. We want
to thank you for tuning in with us so far.
We hope you are enjoying the show, hope you will
(23:40):
rejoin us after the break, and again we encourage listeners
call in with questions. Sam and I are here to
answer your questions. You can reach us at eight HUNDREDWGUI.
That's eight hundred and eighty two five five nine, four nine.
You're listening to Let's Talk Money, brought to you by
Bouchet Financial Group, where we help our clients prioritize their
health while we manage their wealth for life. So thank
(24:02):
you again for listening. Hope you stay with us through
the break and we'll be right back. Well, good morning,
and thank you for staying with us through that short
commercial break. I appreciate you tuning in to Let's Talk
(24:22):
Money at eight ten WGY this morning. You have John
Malay and Samantha Macy as your co host. We appreciate
you tuning in. Before Sam resumes her discussion about financial
planning topics, we have a caller, Kayleie from Malta. We
appreciate you listening this morning and what can we do
for you?
Speaker 3 (24:44):
Hi? I know Sam was talking about some like tips
for the new year, and I got me thinking. I
was just wondering how you know when you're ready to
invest for retirement or like when you should start doing that.
Speaker 1 (24:57):
Ooh, that's a great question, and Kayley and I will
say I'm gonna answer that as an advisor but also
as a father, and I will say, as soon as
you get your first job, you should be thinking about
saving for retirement. And that's the best case scenario, right,
(25:19):
So we all know, when you get your first job,
you've gone from maybe making very little money to maybe
maybe through part time jobs or summer jobs, to making
more money. And what do we as human nature? We
want to spend that money. So one of the things
we advise our clients and our clients children and quite
frankly my children I talk to as a father is
(25:43):
start investing that money in your retirement right away. Whether
you have a four to oh one K or four
or three B through work or through a roth IRA
or IRA, start to put some money aside. Because if
you can do that before you get used to spending it,
you're going to better are off. And so I always say,
there's it's never too early to start retire, you know,
(26:05):
saving for retirement. But conversely, it's never too late, right
because there's many have not been able to start when
they were younger for a number of reasons, and nobody
should feel bad about that. So ideally it's great to
start saving as soon as you start working. But really
I would just say now is the right time for anyone.
(26:27):
So if you've been working for a number of years
and you're you haven't really started to invest heavily, now's
the new year. Start on a on a new foot
and start to put money away. You know. Again, if
you if your employer has a plan where they match,
that's a great opportunity to start putting money into retirement.
So definitely encourage. Really, there's no you can never start
(26:50):
investing for retirement too early.
Speaker 3 (26:54):
Yeah, thank you, I appreciate that answer. What do you
do if your employer doesn't offer like.
Speaker 1 (26:59):
A for one k okay, yep, yep, And so you
have the ability through uh an i RA or a
wroth I RA to make contributions outside of an employer
based plan. And so certainly highly encourage that even if
you don't have an employer based plan that you you
(27:24):
know that you contribute to an IRA or wroth IRA
outside of your employer.
Speaker 3 (27:30):
That's something night like you guys would manage.
Speaker 1 (27:34):
Yeah, but it's also yeah, we we work with clients,
but also you can you know, you can open up
an account at Charles Schwab yourself or Fidelity. You know
you don't have okay, yeah, you don't have to go
through an advisor for that. You can you can open
up your own account for that. And again you know,
(27:54):
there's contribution limits right to the I R S because
because if you put money into an ira A that's
money that you basically get a tax deduction. Now if
you do a wroth IRA which is after tax money,
you don't get a tax deduction. But there but there's
benefits of putting money in a wroth IRA because when
you take money out, you don't pay tax on it.
But there's but there's limits to there's limits to how
(28:17):
much you can put in. But this is something you
can you don't have to work with an advisor on
you can you can actually, you know, using Charles Schwab
or Fidelity open up and open up an account online
and contribute. Cool.
Speaker 3 (28:31):
Thank you so much for that answer. I appreciate it.
Speaker 1 (28:33):
All right, thank you for listening. We appreciate the call.
Speaker 3 (28:37):
Of course, have a good one.
Speaker 1 (28:39):
You too, you too, so you know, it's a great
question there from our listener. And and you know what
I will say as a father, I do have conversations
with my kids, and again, the best scenario is to
start as early as possible for saving for retirement. But
again if individuals haven't had that opportunity, they just had
other things going on. You know, it's never too late
(29:02):
and starting small, it's better start and build momentum, get
into the market, get used to having money taken out
of your paycheck. So appreciate that call. You know, I
know Sam was just getting into going through some personal finances.
You know, it's that time of year, to start of
the year where it can start off, you know, really
setting new plans not only for our financial life, but
(29:25):
our health and other areas. So Sam, I appreciate you
taking us through this segment.
Speaker 2 (29:33):
Thank you, John. And yeah, Kaylee, that was a great
question and a really important one for people that are
looking to start saving now. And if you don't have
an employer plan, there are other options for you to
be saving and putting your dollars away for retirement. And
it's so important to start now because you have all
those years of compounding and putting those dollars to work
(29:54):
for you. So thank you for calling in.
Speaker 3 (29:57):
So I was talking.
Speaker 2 (29:58):
About creating a budget before we got to our commercial break,
and you know, as another part of that, you should
be looking to pay off your high interest debt this year.
I mean, if you have high interest rate debts, typically
these would be credit cards, or you know, there could
be other types of loans like student loans, parent plus loans,
(30:18):
private loans. You want to be as aggressive as possible
in terms of paying it off because these are the
types of debts that can really snowball over time and
get out of control. So trying to really focus on
paying those down first. If you have debt of any
kind is a top priority. No, I'm talking about debt, right,
(30:40):
but there there aren't good types of debt as well.
So if you are someone that's porched a home, of
course you probably have a mortgage, especially your first home,
and that's a good type of debt in general, I mean,
especially if you are someone that was fortunate enough to
have a mortgage with a very low interest rate from
that period of time. If you have a two three
(31:01):
four percent interest rate, you really don't want to be
paying that down quicker than by putting as your money
towards every month on your payment. You would be putting
those dollars to better use if you paid down other
debt or invested it instead, because you could be earning
more by investing those dollars. And again priority number one
(31:23):
should be paying off high interest rate debt. So that
is a really important tip for your personal finances for
this year. Another one would be having an emergency fund
to have three to six months worth of expenses set aside,
and you know, this really is your rainy day fund.
You need to make sure that if something did come up,
(31:45):
whether it's you know, your dishwasher breaks down or you know,
God forbid you need to have your roof replaced, you
know there it can vary in the amount that you
need in an emergency, but having something set aside would
really help in those situations, just to make sure that
you're not having to put any money, you know, on
a credit card or taking out more debt to cover
(32:07):
that and putting yourself in a bad position. So starting
to build up that emergency fund is something that would
be a really good goal for you if that's something
that you don't already have established. Jumping into you know,
another part of financial planning and personal finance would be
(32:28):
evaluating your saving schools. You know, what are you saving
tours in the short, mid and long term. And you know,
there are various saving vehicles that you could be using,
depending on the type of goal, the timeline, and how
aggressive you want to be with your investments. Some great
vehicles out there would be brokerage accounts, five twenty nine plans,
(32:51):
roughs by R Rays, and of course employer retirement plans.
I personally have a five to twenty nine plan for
my daughter. She is one, So we are starting to
put money aside every month into a five twenty nine
plan for her to say, for her college expenses, because
the expenses of you know, college have just been astronomical.
(33:14):
As things go on, it's going to continue to grease
over time, so we're planning a little bit ahead with that.
You know, doing that also offers a lot of flexibility.
These plans are great. They have a lot of different
ways that expenses would qualify as education expenses for the
future for her. And also if for some reason she
doesn't use the money, even whether she gets the scholarship
(33:36):
or she doesn't choose to attend college, and there's money
left over, you know, there are ways to actually use
those dollars. Still part of it could be moved to
a roth Ira in her name. That is one of
the newer ways that you could use those dollars. But
you also could use it for legacy planning you've changed
the beneficiary to different family member or maybe her future
(33:57):
kids as a legacy planning tool. So a great type
of plan to have in place. But if you are
currently working and you're thinking about retirement planning and savings,
which is what Kaylee called in about, it is a
great time to evaluate how you're maximizing this. It's always
(34:18):
a good idea to contribute enough to get your employer match.
At the very least. For a lot of people this
might be around three percent, So always at minimum contribute
enough to get that match, otherwise you're leaving free money
on the table. But a general rule of thumb is
to try to save ten to fifteen percent of your
salary to really put yourself on track to retire at
(34:41):
a normal retirement age. And you know that's really going
to put yourself in the best situation. So a really
good goal to strive for. How you're invested also matters.
If you are young or mid career, you should be
pretty aggressively invested, and by this I mean most flee
in the stock market, you know, and as you approach retirement,
(35:04):
you can become more conservative. Maybe that's more of an
eighty twenty or sixty forty blend, depending on your risk tolerance.
But that's you know, that's a discussion and that's something
that you navigate as you approach retirement. But early on
it's very important to take advantage of the stock market
in the returns it would give you over the long term.
(35:25):
For four to one k's four h three bs and
four fifty seven bees for twenty twenty five. The annual
contribution limit has increased by five hundred dollars this year,
so if you're someone that maxes us out, just make
sure to make that slight adjustment. The ketchup for those
over fifty is still seven thousand, five hundred. However, starting
(35:46):
this year, the Secure Act two point zero created what
we're calling a sweet spot, which is a super catchup
for individuals who are aged sixty to sixty three to
contribute an additional election even thousand, two hundred and fifty dollars.
So if you are someone that is in this age range,
(36:07):
still working and looking to contribute as much as possible
into your employer plan. This is a huge benefit for
you in something that you can start taking advantage of
this year now. As this is a brand new thing
this year, we don't quite know all the rules that
are going to go along with this, but something that
we will definitely update you as we learn more about
(36:27):
this this year. And lastly, for people like Kayley who
don't have an employer plan through work, a traditional IRA
or roth IRA is a great option for you if
you are looking to open a fun one. You can
actually still make contributions for twenty twenty four until April
(36:48):
fifteenth of this year, and the contribution limits for twenty
twenty five are the same as last year, so the
limit is seven thousand dollars for an individual and an
additional one thousand dollars if you are age fifty or older.
So my last personal finance tip for you would be
(37:10):
consider putting some cash to work if you are someone
that has an emergency fund established already, but then in
addition to that, has money in your checking or savings
that you know you're not touching. If you leave it there,
you're actually losing money to inflation. Now many people have
gotten comfortable with the idea of high old savings accounts,
(37:33):
and this has been a great tool for a lot
of people as it's a very secure investment and it's
offered some great rates for some time now. But as
the FED lowers interest rates over time, it might make
more and more sense to invest in the stock market,
because we know that the yield you're going to get
from these types of accounts is going to decline now
(37:55):
as we see the FED lower those rates. In general,
these types of accounts are really great for your emergency funds,
but maybe not the best place for your dollars to
generate long term wealth, you know, as you're planning ahead
for the long term. So, John, now that we've talked
about some personal finance tips for the year, can you
share a little bit about our market outlook for twenty
(38:16):
twenty five?
Speaker 1 (38:19):
Absolutely, Sam, and thank you for going through that. And
this is a you know, natural question we're getting right now. Right, So,
the the Dow I'm sorry, the S and P five
hundred was uh twenty four percent in twenty twenty three,
up a little over twenty three percent in twenty twenty four.
What's going to happen in twenty twenty five. I mean
(38:39):
back to back twenty plus years. What does history say
about that? And you know, when you look at the data,
it's only the four time in the past one hundred
years that the index has log twenty plus returns back
to back, and it's mixed, you know, some positive, some negative.
So no real help there. And I thought what I'd
do is look back at some of the in twenty
(39:01):
twenty three, some of the top analysts in what they
were saying about twenty twenty four. So you had, you know,
Mike Wilson from Morgan Stanley, who very prominent analysts projected
the SMP would hit forty five hundred. Tom Lee, who's
you know, recognized her optimistic views, thought we might have
the s and P five hundred hit fifty two hundred.
(39:24):
You had a lot of other firms, you know, JP
Morgan forty two hundred, Morgan Stanley forty five hundred. I
could go on and on, and here we did. In
twenty twenty four. We had the SMP hit six thousand
at one point and close up the year just a
little below that at fifty eight eighty one. So the
reality is nobody knows what the market's gonna do next year, right?
(39:47):
I mean, we can make all these guesses, but the
reality is a year is such a small period of
time in the overall investment horizon, Like who would have
predicted the pandemic coming on and the impact that it
would have. So when we look at the outlook, it's
so difficult to say, hey, here's exactly what's going to happen.
(40:09):
It's impossible, and you will. I'm sure you've been reading
and you will continue to read projections of the S
and P ranging from dramatically low to dramatically high numbers.
So before I continue, we have our caller Alan from Glenville. Allen,
we appreciate your tuning in this morning and what can
we do for it? Well?
Speaker 4 (40:30):
First and foremost, Happy New Year to you and your staff.
I enjoy your show every weekend.
Speaker 1 (40:37):
Happy New Year to you Allan too. We appreciate you listening.
Speaker 4 (40:41):
Just a quick question. No one has a crystal ball,
but I'll throw this out there hypothetically, as the ten
year tea built will march is towards five and perhaps
even a bit higher a do you see that getting
out of control? And be with the Federal Reserve having
(41:05):
paid down its balance sheet by about two and a
half trillion. Do you possibly see them re entering to
buy bonds to artificially keep the rates down. I just
wanted to hear what your thoughts were, and I'll hang up.
Speaker 1 (41:21):
Great, great, great question, Alan, appreciate you listening and appreciate
you calling in that with that question. You know, so
certainly we've seen you know, the ten year actually since
since the Fed started increasing rates I'm sorry, I started
reducing rates, we saw the ten year go in the
(41:41):
opposite direction, ten years gone up. And so will we
see it approach five? You know, we don't see that
in the next year. And certainly we do believe the
long term treasuries can provide and even the two year
can provide a great place to park some of your
fixed income. Know, we have several factors going on right now,
(42:03):
right you know, we from a monetary policy, and certainly
you know, the national debt is continued to bloom. The
interest payments on that national debt are continuing to absorb
more and more of our of the annual budget. I mean,
we spend more on interest in national debt than we
do in defense right now, and and projected just to
(42:26):
go higher. And so certainly, and let's face it, we
haven't seen either party really willing to tackle this issue
in a big way. So I think that is an
over our arching concern, that's that's there. But you know,
it has not really impacted how the economy is going
and how the FED is reacting right now. So certainly,
(42:47):
you know, the ten year we don't see it going
across five. Doesn't mean it can't, but you know where
we see things going. But I will say from using
as part of your fixed income, we believe that treasures
are great place to park, you know, as you look
at your diversified portfolio, looks at your fixed income sleeve,
we believe, you know, treasuries are a great place to
(43:10):
get some really some risk free reward. And so I
still believe it's a you know, a great place to
be diversifying, you know, stocks. We still are very bullish
on US equities. But again, you know, we don't really
have time today that you know, one of the sayings
we were going to talk about is really about your
(43:30):
you know, allocating your portfolio and your fixed income part.
You know, we believe bonds there should be a significant
part of that. Treasuries certainly provides some great opportunities as
well as alternatives. So al we appreciate that question. And
as you mentioned, we don't have a crystal ball, and
nobody has a crystal ball. I was going through a
little bit of a segment there, you know, talking about
(43:52):
some of you know, the top analysts, what they were
in late twenty twenty three, what we're looking for twenty
twenty four, and nobody saw what happened. And so as
we look out it next year, what we do know
in a year, there's a lot of randomness that can happen, right,
you know, we do know, you know, certainly with the
(44:13):
war in Ukraine, there's certainly possibility if that escalated or
turned in a bad way, that could impact things. Also
tensions in the Middle East, and those things are hard,
you know, really hard to plan for, right and but
we are planners by nature, and so I think more
than anything, as we look at the markets again, we
still the fundamentals are very strong. The economy is strong,
(44:37):
you know, we're seeing inflation come into control, We're seeing
the wage numbers. Although unemployment is uptacked a little bit,
it's still in very good territory. So economic fact, you know,
numbers all look strong. Yeah, we might be in an
environment where rates are higher for longer, but overall the
(44:59):
economic state just set well and corporate earnings have been there.
You know that the expectations are for the SP five
hundred about a fifteen percent increase in corporate earnings this year.
So if we see that, certainly that will help the
US equity market continue another strong year. Now, I will say,
you know, as we talked about, you know, twenty twenty
(45:19):
four was certainly a year about concentration. We had a
lot of concentration uh in high high tech growth, you
know the MAG seven, and you know twenty twenty five
we're hoping to see a broadening of that performance and
we really need to you know that. You know, just
when you when you look at the MAG seven and
(45:41):
look at earnings, it's hard to come up with a
scenario where they can repeat that kind of earnings growth
and continue to drive you know, markets through earnings growth.
And when you look at also, you know, pricing, you know,
the pricing is you know, we look at Ford pe ratios.
(46:01):
They're high, you know, on the S and P five hundred,
they're above twenty two percent, you know, on the tech,
high growth tech, they're above thirty percent, so they have
gotten pricey. So it's it's hard to see that we're
gonna have valuation increase just by pe expansion, right, It's
going to have to be by by earnings. And so
(46:22):
certainly the stage is set for small and mid cap
stocks to start to contribute more and see the growth
in those areas. So I will say, is, if I'm
having conversations with clients, you know, we're not seeing any
major changes to our portfolios for next year. Our core
holdings are still We're still solid. You know, we are
(46:45):
looking at sectors that we think will perform well under
you know, the current economic and regulatory environment. You know,
we certainly see financial services as an area where they
have done well last half of the year, and we
see they're going to continue to do well. But in
terms of you know, major overhauls, we're just big believers.
(47:08):
You know, that high tech is still going to be there.
We are, you know, hoping to see a broadening of
that recovery, so small and MidCap as well. And then
I think it's about being in the markets, right is
you know, we do know in any year we're going
to see an average draw down right from from the
top of the market to the bottom of fourteen percent,
(47:30):
and so we shouldn't be surprised if we see that
uh in twenty twenty five. And again, I think where
investors tend to get hurt is when they overreact, right
and all of a sudden, you know, they they read
too much, they see too many of the headlines, and
they start to get concerned and then you know, start
(47:51):
making major changes to their portfolio, which we certainly do
not believe. Twenty twenty five is a year to do that.
We believe stay invested, you look at your risk tolerance,
and it just as necessary. But certainly we don't see
any major systemic issues in the US equity market at all.
We're still very polish. Well, we are coming close to
(48:13):
the end of the show, and we want to thank
you for tuning in with sam Andi. We hope you
enjoyed the show. I know that we certainly did. I
hope you enjoy the rest of this weekend. Hope you
have an amazing week ahead. Also, be sure to tune
in tomorrow to another great show at eight am. Check
out our website Bouchet dot com for great content and
(48:34):
information on a variety of investment topics. You have been
listening to Let's Talk Money, brought to you by Bouchet
Financier Group, where we help our clients prioritize their health
while we manage their wealth for life. Thank you for
tuning in. Hope you enjoyed the show.
Well, good morning and happy new year. Welcome to the
first show in twenty twenty five of Leg's Talk Money
at eight ten WGY. We want to start out this
morning by thank you for tuning in and making us
a part of your weekend. I'm job a light and
joining me this morning is my co host, Samantha Macy.
(00:30):
I'm a certified public accountant and the CFO and chief
Operating Officer and wealth Advisor at Bouchet Financial Group. Samantha
is a certified financial planner and a wealth advisor at
the firm. Beyond our expertise in financial planning, Sam plays
a critical role in our firm marketing efforts, ensharing our website,
(00:51):
social media, and everything we do in the public stays
up to date with engaging in valuable content. Samantha, thank
you for joining me this morning.
Speaker 2 (01:01):
Thanks John, Good morning everyone. It's great to be here
with you today.
Speaker 1 (01:06):
It is great to be here in this first weekend
in January. We're excited to kick off the year as
we dive into the latest and investing financial planning in
the markets. Whether you're setting new financial goals for the year,
curious about what's ahead for the economy or the markets
are just looking for practical advice to start off the
(01:26):
new year. Right. We got you covered this morning. Thank
you for tuning in, and I encourage listeners to call
with any questions. You can reach us at eight hundred
talk WGY. That's eight hundred eight two five, five nine
four nine. Well, twenty twenty five marks some several significant
milestones for Bouchet Financial Group. You know, this year we
(01:48):
celebrate thirty five years of serving our clients with dedication
and excellence. In addition, thirty in this year, Steve will
have been hosted Let's Talk Money for an impressive thirty years,
sharing invaluable insights and advice to the listening audience. So
you know, these are significant milestones, things we're proud of,
(02:13):
and they're a testament to the firm's legacy and Steve's
enduring commitment. So this will be a nice celebratory year
for the firm and we appreciate you tuning in this
morning to listen to Sam and I hope everyone had
a fantastic holiday season. It's hard to believe here we
are the first weekend in January. Already here we are
twenty twenty five, but we made it through the holidays.
(02:35):
I hope everybody had a great time. I know I
certainly did, had a great time celebrating with friends and family,
so I hope you did as well. And here we
are the first show of twenty twenty five, and I
think Sam and I agree the best show of twenty
twenty five. So we're gonna retire with that trophy for
the year. So appreciate you tuning in. And again, you know,
(02:56):
if you're listening and have a question, I guarantee another
listener does, so certainly pick up the phone call us.
There's no such thing as a dumb question when it
comes to your money, So reach out. Uh, And again,
as I mentioned before, encourage listeners to call. You can
reach us eight hundred talk WGY. That's eight hundred eight
(03:18):
two five five nine four nine. Well, we'll start off
by talking about the markets, and uh, you know, the
S and P five hundred ASDAC broke out of a
five session slump on Friday, posting solid gains, So it
was nice to see. Uh. The S and P closed
out the session of Friday with a solid one point
(03:40):
three percent gain, and it was the best one day
performance of the SMP since November sixth, which has happened
to be the day after the presidential election. So it
was great to see the SMP break out of that
little slump and the tech having ASDAK gained to whopping
one point seven to seven percent on Friday, So a
(04:00):
strong showing by the NASDAK as well, and the Dow
rounded out the major indexes with a point eight percent increase,
So great finish to the week. But despite that great week,
it was still besides that great finish on Friday, it
was still a losing week for all the major industries.
(04:21):
The Dow finished down the week at point six percent.
S and P five hundred dropped almost half a percent,
and similar with the NASDAK just lost right half a
percent as well. So, you know, so much for this
so called Santa rally. You know, we had a lot
of discussion in December about the hopes of a Santa rally,
which you know is a period that covers the five
(04:44):
days ending the year and then the first two trading
days of the next year. And you know, on average
there's been the S and P has been up about
one point three percent during that period. You know, this year,
during that period, the S and P lost another half
a percent. So the Santa rally that was much talked
about hoping to finish out a great year, just did
(05:06):
not materialize. And so people say, well, what does that
mean for twenty twenty five. Absolutely nothing. There is nothing
that shows that there's any correlation between what happens between
that very small period of time and then the next
trading year. So a lot is talked about the Santa rally,
(05:28):
but in reality it's a nice way to finish out
the year if it's positive, but it really has no
impact on the year in front of us. So again
wrapping up the markets, SMP down a little less than
half for the week. Now if you look at not
year to date, but the last year, right, so the
rolling twelve months. Yeah, the S and P twenty seven
(05:51):
percent over that period. Now, certainly the year today number
will become more important as we get more time under
our belt. But I will say, you know, as investors,
most of us have very long time horizons. So it's
in some ways, you know, resetting the clock to zero
at the January first, it seems a little odd in
(06:12):
some ways because you know I in person, you know
particularly I have an investment horizon. It's not retirement, right,
and so my horizon has many years out, and you
know others may have shorter time horizons because of maybe
they're investing for a certain cause, you know, could be
funding a child's education, could be something else. But again,
(06:34):
you know, we go through this routine of resetting the clock,
like forgetting everything that just happened the previous twelve months.
But again, S and P. If you look at it
rolling twelve months of twenty seven percent uh Nasdaq, as
I mentioned, you know, down about half a percent for
the week. Uh and and but again if you look
at the last twelve month period of thirty five percent
(06:57):
and similar to the down about point six percent and
up fourteen percent if you look at that year as well. Now,
the Russell two thousand was actually up this week. You know,
you know, we saw the small cap stocks rally around
the election. Then we saw them give a lot of
that back, but we saw a nice finish. So the
(07:21):
Russell two thousand finished up the week up one percent
and up about sixteen percent for the year. So you
know that's gonna be important. We'll talk about that a
little bit more as we you know, talk about what's
what we're looking at in twenty twenty five. This certainly
has been a year about concentration. You know, we talk
about the Max seven and how much they contributed to
(07:41):
the market's returns, and we really want to see a
greater breadth to the market. We started to see some
of that this year, you know, right around the election
to period, but hoping for twenty twenty five we see
much more broadening of the breadth of the market recovery.
So but it was good to see the Russell two
thousand finish up the week positive territory. You know, in
(08:04):
the treasuries, we saw a slight uptick in the treasuries
on Friday, the ten year and did rater out four
point six percent, and then you know, just a week
before that, so the previous Friday finished at four point
sixty one nine, which is was as Hiatt's level since
May twenty nine. So certainly, you know, as we're seeing
(08:25):
the Fed cut interest rates, we're seeing you know, the
yield on the on the ten year maintain and actually increase,
So interesting phenomenal going on there. And then you know,
the two year treasury again closed a little bit higher,
marginally higher on Friday, closing at four point two seven
nine percent, So still some great yields out there in
(08:46):
the treasuries, and you know, I would encourage you. We'll
talk again as we talk about allocation a little bit
later in the show. Certainly treasury still continue to be
a great place to park some of your fixed income,
getting some really solid returns with absolutely no risk. So
certainly some great opportunities continue there. If you can get
(09:08):
a you know, two year treasury almost four point three percent,
or even a ten year at four to six with
really risk free money, that's certainly a good way to
put some of your fixed income allocation to work. And
you know, as we look at the calendar head so
(09:28):
the markets will be a short another short week in
the markets next week, you know, Thursday, markets will be
closed for a day, a national day of Morning for
former President Jimmy Carter. So markets will be closed on Thursday.
So that'll be you know, another short trading week to
continue some highlights of what we're going to see this week.
(09:49):
You know, we're gonna see jobs report out next week,
also going to see the start of you know, fourth
quarter earnings releases, which only a few earns released next
we really can't get a higher gear more middle of January,
but certainly we'll start to see earnings where you know
that's going to be important. You know, as we talk
about what we're looking at for twenty twenty five, you
(10:11):
know earnings are going to be key. The expectations are
for earnings growth for next year, and I think we're
going to see markets reward those companies that deliver solid
performance and punish those at don't. So certainly, middle of
January we'll start to see more earnings release also start
(10:31):
to see you know, some of the minutes this week
from the mid December FOMC meeting. You may recall the
Fed continued cutting rates. You know, they reduced rates by
a quarter twenty five basis points, but they issued some
cautions for twenty twenty five that they're going to have
fewer rate cuts. So certainly markets did not react well
(10:54):
to that, and we saw some sela. But we'll see
we'll get to dive a little deeper to what the FOMC,
what they're thinking about with Fitchairman Powell's thinking about when
those minutes are released. And you know, another interesting thing,
I'm not sure it'll have a huge effect in the markets,
but on Friday, you know, the Supreme Court, we'll be
(11:16):
hearing arguments about the the highly anticipated TikTok band, so
it'll be interesting to see how that plays out. So overall,
you know, great great year twenty twenty four, it was
just you know, it didn't quite enter or you know,
exit the year with the strength that we wanted to see.
(11:37):
So but good to see things tick up on Friday.
So I encourage listeners you can call, please call in
with questions. You can reach Sam and I at eight
hundred talk WGY. That's eight hundred eight two five five
nine four nine. So, as we talked about market share,
twenty twenty four, another solid solid year for US stocks.
(12:03):
You know, we saw the S and P rise over
twenty three percent and achieving fifty seven record closes. So
it was just a solid year and you know, continuation
really of our bull market run. And you know, we
can contribute that. We've had solid economic growth. We've had
inflation coming down. It's not quite at the Fed's targeted
(12:24):
two percent, but it is showing that is coming down
getting under control. The FED has been cutting interest rates
one hundred basis points of rate cuts in twenty twenty four.
We've had healthy corporate earnings, and you know, certainly saw
positive reaction to the November election results, and I mentioned
you know, we certainly at that point saw a small
(12:45):
cap stocks really start to rally, and that was nice
to see if you look get a little breadth. And
AI certainly, you know, you can't talk about twenty twenty
four without talking about AI and the impact it's on
big tech stocks. And really, you know we'll talk about
in a moment, big tech really you know, leading the markets.
(13:09):
But you know, we did have we finished but still
solid solid year. You know, the S and P five
hundred posted its best two year performance of the twenty
first century. So the S and P jumped up twenty
three point three percent after twenty after twenty twenty threes
twenty four percent advanced, So you know, together that's a
(13:31):
fifty three pointy two percent gain, which the most we've
seen since ninety seven ninety eight when it rose sixty
five point nine percent. So great back to back twenty
three twenty four. You know, if you've been in the
markets those years invested US equities, you know you you
did well and so hopefully hopefully you had your a
(13:53):
major part of your portfolio allocate to US equities. You know,
Nasdaq also you know, rallied twenty eight point six percent
in twenty twenty four. It was that represents the two
year gain of eighty four point five percent. When you
combine twenty four and twenty three, that's the best since
(14:14):
twenty nineteen twenty And the Dow climbed almost thirteen percent
twelve point nine percent in the past year and combined
with twenty twenty three for a twenty eight point three
five percent increase, and that's the best uh since nineteen
twenty nineteen and twenty twenty. So, you know, a great
(14:34):
year for all the major US indexes, and especially you know,
two years back to back, which is you know, great
to see. Certainly, we this year we talked a lot
about concentration in large cap growth, you know, particularly the
BAG seven. You know, so you've got Amazon, Apple, Alphabet,
(14:56):
you know, Google, Meta, Microsoft, Navidia, and Tesla, and they
certainly drove markets in twenty twenty four. And uh, you know,
the Max seven accounted for you know, over fifty percent
of the S and P five hundreds return. And you know,
when you look at the market cap of the ten
largest stocks in the S and P five hundred, they
(15:17):
kind of for forty percent of the indexes market capitalization,
which is, you know, the largest share we've seen in
over thirty years. So certainly twenty twenty four a year
about concentration, concentration in the Max seven and how that
has impacted the markets in such a positive way. And
(15:38):
you know, we did start to see some some increase
in small caps, which you know, we want to see
that market breath really for a healthy, healthy recovery. Now
as we looked ahead to twenty twenty five, I think
there's gonna be a lot of focus on on small cap,
in mid cap, you know, the Max seven. You know,
(16:00):
from an earnings growth perspective, it's hard to see the
MAG seven contributing in the same fashion they have, but
certainly for twenty twenty four, it was a great, great
contribution there. You know, bonds certainly did not have as
stellar as a year. You know, bond market we're you know,
we're really underperformed. You know, the AG performing just above
(16:23):
one percent one point three percent for the year total return,
you know, and certainly you know, the it's it's been
a challenging rate environment, and so overall bond markets did
not perform as expected. But you know, again is Sam's
going to touch on a little bit later in the show.
You know, looking, you know readdressing your portfolio and your
(16:46):
allocation between stocks, bonds, fixed income and cash is really important.
It's something you know, you really should be doing at
least every year to allocate, make sure you're invested in
a way that's a appropriate based on your risk tolerance
and what's happening with the economy. So overall, twenty twenty four,
(17:06):
you know, fantastic year in the US markets, and again
the question becomes, you know what's going to happen in
twenty twenty five, and we'll talk about that a little bit.
You know, to have back to back twenty plus years
in the S and B five hundred, you know, can
that be repeated for a third year, And you know,
we'll talk a little bit about that in a moment.
(17:28):
So again, encourage listeners to call in with questions. You
can reach Sam and I at eight hundred talk WGY.
That's eight hundred eight to five five ninety four nine.
You know, one of the things I touched on in
twenty twenty four was, you know, the FED had their
final FOMC meeting in mid to late It was December seventeenth, eighteenth,
(17:54):
and as expected, they they cut rates. They cut raised
by twenty five basis points, and that I was expected,
so no surprise there. But certainly, you know, they came
out with caution for what we're going to see in
twenty twenty five and really signaled that we may see
only two rate cuts. And I'll say, one thing we've
(18:15):
learned with this FED is they're going to be very
data driven. They're going to be looking at the data.
And I will say, you know, they have a dual mandate, right,
so it's not only about getting price stability through inflation,
but it's also maximum sustainable employment. And it seems like
the employment, you know, the unemployment rate and making sure
(18:36):
that there's no surprises there is really getting a lot
of focus from the FED. Eral Now, I think inflation,
the inflation numbers continue to show that inflation is getting
under control. You know, we still have some stubborn inflation
with housing, but we're so we're not quite down to
the target, but we're we're getting closer and closer. So
(18:57):
I think Fed's getting more comfortable that inflation is control.
But they're gonna be cautious, you know, certainly as we
head into twenty twenty five, certainly with some of the
talks about aggressive tariffs, some of the concerns about you know,
what's happening in the ward in Ukraine, possible Mid East,
Middle East, you know that that could have certainly impact
(19:19):
on inflation. So the Fed's gonna be cautious and they're
gonna be very data driven. So you know, the markets
reacted a little negatively because you know, FED really signaled
that they're gonna expect that fewer rate cuts in twenty
twenty five, so I think we're going to prepare for
an environment of higher rates for longer, and you know,
(19:40):
the market did not react well that. We saw a
little bit of the market reaction at the end of
December that certainly drove part of that. But as we
you know, we'll again we'll get released the minutes from
that meeting this week, so we'll get a little bit
more insight into what the FED is thinking about. But
I think they've shown their cards. They're very they're gonna
be data driven. They're gonna to really be cautious and
(20:03):
wait to see, you know, what the jobs data what
the inflation data shows before we see any really signal
of any more aggressive rate cuts. So I think they
showed their cards. And so as we we wrap out
the year there, I think we have a good sense
of where the FED is going to be as we
(20:23):
headed to twenty twenty five, which is they're going to
be cautious and they're going to be really reducing rates
at a pace which is slower than what we expected
as we finished out twenty twenty four. So again I
encourage listeners to reach out with questions. You can reach
Sam and I at eight hundred talk WGY. That's eight
(20:45):
hundred eight to five five nine four nine. Well, we're
gonna be heading into a break shortly, but I know
Sam is going to be talking about some personal finance tips.
So Sam, I know I've been doing a lot of
talking in monopolizing here for a little while. I'm going
to turn it over to you to start off that segment.
Speaker 2 (21:06):
All right, thanks John, Well, happy new year everyone. I
will be talking about some personal finance tips for you
as we are starting the new year, and we are
coming up on a break soon, but that's what we
will be talking about after the break. I'm sure many
of you have been in conversations with people, friends, family
about your New Year's resolutions and have probably taken a
(21:28):
moment to reflect already on the past year and what
you did right and maybe what you could have done better.
So I thought now would be the perfect time to
talk about some personal finance tips to kick your year
off right and maybe inspire you to take some steps
to better position your financial future for the long term,
because it is, you know, a process of small steps
(21:49):
that can really have large payoffs over the long run.
So that's really what we want to do today, talk
about some financial habits that you can do and some
small changes that you can make to really put yourself
in a better position. And I might have a little
bit of time here, so I'll jump into the first one.
So the first one is really just to focus on
creating a budget. And you probably think to yourself, well,
(22:13):
I have a budget, right, and most people you know
have probably thought about hypothetically what they're spending their money on.
But it's the perfect time to tackle, you know, taking
some time to look at what you spent your money
on in twenty twenty four. What are your general spending habits,
what was good and what you should maybe change in
the new year, because it really will have a huge
(22:36):
impact on you know, just keeping all of it under
control and be realistic. Make sure that you have realistic
goals for what you could actually stick to and maybe
some plans for savings for paying off some things that
you need to. But it's really important to nail down
those items just with yourself as an individual. Maybe it's
(22:58):
your spouse, your family to have an understanding of you know,
what's going to be your sending goals for the year
twenty twenty five. So John, I will pass it back
to you. It looks like we're coming up on the
break here. Anything that you'd like to add before we
come to that midway.
Speaker 1 (23:17):
Break, perfect well, Thank you for that, Sam, and Sam
is saying thank you John for pasking to me with
two minutes before the break. But we again encourage listeners
to call them with questions. Thank We appreciate you tuning in.
I can't believe we're halfway through the show today. We're
going to be taking a short commercial break. We want
to thank you for tuning in with us so far.
We hope you are enjoying the show, hope you will
(23:40):
rejoin us after the break, and again we encourage listeners
call in with questions. Sam and I are here to
answer your questions. You can reach us at eight HUNDREDWGUI.
That's eight hundred and eighty two five five nine, four nine.
You're listening to Let's Talk Money, brought to you by
Bouchet Financial Group, where we help our clients prioritize their
health while we manage their wealth for life. So thank
(24:02):
you again for listening. Hope you stay with us through
the break and we'll be right back. Well, good morning,
and thank you for staying with us through that short
commercial break. I appreciate you tuning in to Let's Talk
(24:22):
Money at eight ten WGY this morning. You have John
Malay and Samantha Macy as your co host. We appreciate
you tuning in. Before Sam resumes her discussion about financial
planning topics, we have a caller, Kayleie from Malta. We
appreciate you listening this morning and what can we do
for you?
Speaker 3 (24:44):
Hi? I know Sam was talking about some like tips
for the new year, and I got me thinking. I
was just wondering how you know when you're ready to
invest for retirement or like when you should start doing that.
Speaker 1 (24:57):
Ooh, that's a great question, and Kayley and I will
say I'm gonna answer that as an advisor but also
as a father, and I will say, as soon as
you get your first job, you should be thinking about
saving for retirement. And that's the best case scenario, right,
(25:19):
So we all know, when you get your first job,
you've gone from maybe making very little money to maybe
maybe through part time jobs or summer jobs, to making
more money. And what do we as human nature? We
want to spend that money. So one of the things
we advise our clients and our clients children and quite
frankly my children I talk to as a father is
(25:43):
start investing that money in your retirement right away. Whether
you have a four to oh one K or four
or three B through work or through a roth IRA
or IRA, start to put some money aside. Because if
you can do that before you get used to spending it,
you're going to better are off. And so I always say,
there's it's never too early to start retire, you know,
(26:05):
saving for retirement. But conversely, it's never too late, right
because there's many have not been able to start when
they were younger for a number of reasons, and nobody
should feel bad about that. So ideally it's great to
start saving as soon as you start working. But really
I would just say now is the right time for anyone.
(26:27):
So if you've been working for a number of years
and you're you haven't really started to invest heavily, now's
the new year. Start on a on a new foot
and start to put money away. You know. Again, if
you if your employer has a plan where they match,
that's a great opportunity to start putting money into retirement.
So definitely encourage. Really, there's no you can never start
(26:50):
investing for retirement too early.
Speaker 3 (26:54):
Yeah, thank you, I appreciate that answer. What do you
do if your employer doesn't offer like.
Speaker 1 (26:59):
A for one k okay, yep, yep, And so you
have the ability through uh an i RA or a
wroth I RA to make contributions outside of an employer
based plan. And so certainly highly encourage that even if
you don't have an employer based plan that you you
(27:24):
know that you contribute to an IRA or wroth IRA
outside of your employer.
Speaker 3 (27:30):
That's something night like you guys would manage.
Speaker 1 (27:34):
Yeah, but it's also yeah, we we work with clients,
but also you can you know, you can open up
an account at Charles Schwab yourself or Fidelity. You know
you don't have okay, yeah, you don't have to go
through an advisor for that. You can you can open
up your own account for that. And again you know,
(27:54):
there's contribution limits right to the I R S because
because if you put money into an ira A that's
money that you basically get a tax deduction. Now if
you do a wroth IRA which is after tax money,
you don't get a tax deduction. But there but there's
benefits of putting money in a wroth IRA because when
you take money out, you don't pay tax on it.
But there's but there's limits to there's limits to how
(28:17):
much you can put in. But this is something you
can you don't have to work with an advisor on
you can you can actually, you know, using Charles Schwab
or Fidelity open up and open up an account online
and contribute. Cool.
Speaker 3 (28:31):
Thank you so much for that answer. I appreciate it.
Speaker 1 (28:33):
All right, thank you for listening. We appreciate the call.
Speaker 3 (28:37):
Of course, have a good one.
Speaker 1 (28:39):
You too, you too, so you know, it's a great
question there from our listener. And and you know what
I will say as a father, I do have conversations
with my kids, and again, the best scenario is to
start as early as possible for saving for retirement. But
again if individuals haven't had that opportunity, they just had
other things going on. You know, it's never too late
(29:02):
and starting small, it's better start and build momentum, get
into the market, get used to having money taken out
of your paycheck. So appreciate that call. You know, I
know Sam was just getting into going through some personal finances.
You know, it's that time of year, to start of
the year where it can start off, you know, really
setting new plans not only for our financial life, but
(29:25):
our health and other areas. So Sam, I appreciate you
taking us through this segment.
Speaker 2 (29:33):
Thank you, John. And yeah, Kaylee, that was a great
question and a really important one for people that are
looking to start saving now. And if you don't have
an employer plan, there are other options for you to
be saving and putting your dollars away for retirement. And
it's so important to start now because you have all
those years of compounding and putting those dollars to work
(29:54):
for you. So thank you for calling in.
Speaker 3 (29:57):
So I was talking.
Speaker 2 (29:58):
About creating a budget before we got to our commercial break,
and you know, as another part of that, you should
be looking to pay off your high interest debt this year.
I mean, if you have high interest rate debts, typically
these would be credit cards, or you know, there could
be other types of loans like student loans, parent plus loans,
(30:18):
private loans. You want to be as aggressive as possible
in terms of paying it off because these are the
types of debts that can really snowball over time and
get out of control. So trying to really focus on
paying those down first. If you have debt of any
kind is a top priority. No, I'm talking about debt, right,
(30:40):
but there there aren't good types of debt as well.
So if you are someone that's porched a home, of
course you probably have a mortgage, especially your first home,
and that's a good type of debt in general, I mean,
especially if you are someone that was fortunate enough to
have a mortgage with a very low interest rate from
that period of time. If you have a two three
(31:01):
four percent interest rate, you really don't want to be
paying that down quicker than by putting as your money
towards every month on your payment. You would be putting
those dollars to better use if you paid down other
debt or invested it instead, because you could be earning
more by investing those dollars. And again priority number one
(31:23):
should be paying off high interest rate debt. So that
is a really important tip for your personal finances for
this year. Another one would be having an emergency fund
to have three to six months worth of expenses set aside,
and you know, this really is your rainy day fund.
You need to make sure that if something did come up,
(31:45):
whether it's you know, your dishwasher breaks down or you know,
God forbid you need to have your roof replaced, you
know there it can vary in the amount that you
need in an emergency, but having something set aside would
really help in those situations, just to make sure that
you're not having to put any money, you know, on
a credit card or taking out more debt to cover
(32:07):
that and putting yourself in a bad position. So starting
to build up that emergency fund is something that would
be a really good goal for you if that's something
that you don't already have established. Jumping into you know,
another part of financial planning and personal finance would be
(32:28):
evaluating your saving schools. You know, what are you saving
tours in the short, mid and long term. And you know,
there are various saving vehicles that you could be using,
depending on the type of goal, the timeline, and how
aggressive you want to be with your investments. Some great
vehicles out there would be brokerage accounts, five twenty nine plans,
(32:51):
roughs by R Rays, and of course employer retirement plans.
I personally have a five to twenty nine plan for
my daughter. She is one, So we are starting to
put money aside every month into a five twenty nine
plan for her to say, for her college expenses, because
the expenses of you know, college have just been astronomical.
(33:14):
As things go on, it's going to continue to grease
over time, so we're planning a little bit ahead with that.
You know, doing that also offers a lot of flexibility.
These plans are great. They have a lot of different
ways that expenses would qualify as education expenses for the
future for her. And also if for some reason she
doesn't use the money, even whether she gets the scholarship
(33:36):
or she doesn't choose to attend college, and there's money
left over, you know, there are ways to actually use
those dollars. Still part of it could be moved to
a roth Ira in her name. That is one of
the newer ways that you could use those dollars. But
you also could use it for legacy planning you've changed
the beneficiary to different family member or maybe her future
(33:57):
kids as a legacy planning tool. So a great type
of plan to have in place. But if you are
currently working and you're thinking about retirement planning and savings,
which is what Kaylee called in about, it is a
great time to evaluate how you're maximizing this. It's always
(34:18):
a good idea to contribute enough to get your employer match.
At the very least. For a lot of people this
might be around three percent, So always at minimum contribute
enough to get that match, otherwise you're leaving free money
on the table. But a general rule of thumb is
to try to save ten to fifteen percent of your
salary to really put yourself on track to retire at
(34:41):
a normal retirement age. And you know that's really going
to put yourself in the best situation. So a really
good goal to strive for. How you're invested also matters.
If you are young or mid career, you should be
pretty aggressively invested, and by this I mean most flee
in the stock market, you know, and as you approach retirement,
(35:04):
you can become more conservative. Maybe that's more of an
eighty twenty or sixty forty blend, depending on your risk tolerance.
But that's you know, that's a discussion and that's something
that you navigate as you approach retirement. But early on
it's very important to take advantage of the stock market
in the returns it would give you over the long term.
(35:25):
For four to one k's four h three bs and
four fifty seven bees for twenty twenty five. The annual
contribution limit has increased by five hundred dollars this year,
so if you're someone that maxes us out, just make
sure to make that slight adjustment. The ketchup for those
over fifty is still seven thousand, five hundred. However, starting
(35:46):
this year, the Secure Act two point zero created what
we're calling a sweet spot, which is a super catchup
for individuals who are aged sixty to sixty three to
contribute an additional election even thousand, two hundred and fifty dollars.
So if you are someone that is in this age range,
(36:07):
still working and looking to contribute as much as possible
into your employer plan. This is a huge benefit for
you in something that you can start taking advantage of
this year now. As this is a brand new thing
this year, we don't quite know all the rules that
are going to go along with this, but something that
we will definitely update you as we learn more about
(36:27):
this this year. And lastly, for people like Kayley who
don't have an employer plan through work, a traditional IRA
or roth IRA is a great option for you if
you are looking to open a fun one. You can
actually still make contributions for twenty twenty four until April
(36:48):
fifteenth of this year, and the contribution limits for twenty
twenty five are the same as last year, so the
limit is seven thousand dollars for an individual and an
additional one thousand dollars if you are age fifty or older.
So my last personal finance tip for you would be
(37:10):
consider putting some cash to work if you are someone
that has an emergency fund established already, but then in
addition to that, has money in your checking or savings
that you know you're not touching. If you leave it there,
you're actually losing money to inflation. Now many people have
gotten comfortable with the idea of high old savings accounts,
(37:33):
and this has been a great tool for a lot
of people as it's a very secure investment and it's
offered some great rates for some time now. But as
the FED lowers interest rates over time, it might make
more and more sense to invest in the stock market,
because we know that the yield you're going to get
from these types of accounts is going to decline now
(37:55):
as we see the FED lower those rates. In general,
these types of accounts are really great for your emergency funds,
but maybe not the best place for your dollars to
generate long term wealth, you know, as you're planning ahead
for the long term. So, John, now that we've talked
about some personal finance tips for the year, can you
share a little bit about our market outlook for twenty
(38:16):
twenty five?
Speaker 1 (38:19):
Absolutely, Sam, and thank you for going through that. And
this is a you know, natural question we're getting right now. Right, So,
the the Dow I'm sorry, the S and P five
hundred was uh twenty four percent in twenty twenty three,
up a little over twenty three percent in twenty twenty four.
What's going to happen in twenty twenty five. I mean
(38:39):
back to back twenty plus years. What does history say
about that? And you know, when you look at the data,
it's only the four time in the past one hundred
years that the index has log twenty plus returns back
to back, and it's mixed, you know, some positive, some negative.
So no real help there. And I thought what I'd
do is look back at some of the in twenty
(39:01):
twenty three, some of the top analysts in what they
were saying about twenty twenty four. So you had, you know,
Mike Wilson from Morgan Stanley, who very prominent analysts projected
the SMP would hit forty five hundred. Tom Lee, who's
you know, recognized her optimistic views, thought we might have
the s and P five hundred hit fifty two hundred.
(39:24):
You had a lot of other firms, you know, JP
Morgan forty two hundred, Morgan Stanley forty five hundred. I
could go on and on, and here we did. In
twenty twenty four. We had the SMP hit six thousand
at one point and close up the year just a
little below that at fifty eight eighty one. So the
reality is nobody knows what the market's gonna do next year, right?
(39:47):
I mean, we can make all these guesses, but the
reality is a year is such a small period of
time in the overall investment horizon, Like who would have
predicted the pandemic coming on and the impact that it
would have. So when we look at the outlook, it's
so difficult to say, hey, here's exactly what's going to happen.
(40:09):
It's impossible, and you will. I'm sure you've been reading
and you will continue to read projections of the S
and P ranging from dramatically low to dramatically high numbers.
So before I continue, we have our caller Alan from Glenville. Allen,
we appreciate your tuning in this morning and what can
we do for it? Well?
Speaker 4 (40:30):
First and foremost, Happy New Year to you and your staff.
I enjoy your show every weekend.
Speaker 1 (40:37):
Happy New Year to you Allan too. We appreciate you listening.
Speaker 4 (40:41):
Just a quick question. No one has a crystal ball,
but I'll throw this out there hypothetically, as the ten
year tea built will march is towards five and perhaps
even a bit higher a do you see that getting
out of control? And be with the Federal Reserve having
(41:05):
paid down its balance sheet by about two and a
half trillion. Do you possibly see them re entering to
buy bonds to artificially keep the rates down. I just
wanted to hear what your thoughts were, and I'll hang up.
Speaker 1 (41:21):
Great, great, great question, Alan, appreciate you listening and appreciate
you calling in that with that question. You know, so
certainly we've seen you know, the ten year actually since
since the Fed started increasing rates I'm sorry, I started
reducing rates, we saw the ten year go in the
(41:41):
opposite direction, ten years gone up. And so will we
see it approach five? You know, we don't see that
in the next year. And certainly we do believe the
long term treasuries can provide and even the two year
can provide a great place to park some of your
fixed income. Know, we have several factors going on right now,
(42:03):
right you know, we from a monetary policy, and certainly
you know, the national debt is continued to bloom. The
interest payments on that national debt are continuing to absorb
more and more of our of the annual budget. I mean,
we spend more on interest in national debt than we
do in defense right now, and and projected just to
(42:26):
go higher. And so certainly, and let's face it, we
haven't seen either party really willing to tackle this issue
in a big way. So I think that is an
over our arching concern, that's that's there. But you know,
it has not really impacted how the economy is going
and how the FED is reacting right now. So certainly,
(42:47):
you know, the ten year we don't see it going
across five. Doesn't mean it can't, but you know where
we see things going. But I will say from using
as part of your fixed income, we believe that treasures
are great place to park, you know, as you look
at your diversified portfolio, looks at your fixed income sleeve,
we believe, you know, treasuries are a great place to
(43:10):
get some really some risk free reward. And so I
still believe it's a you know, a great place to
be diversifying, you know, stocks. We still are very bullish
on US equities. But again, you know, we don't really
have time today that you know, one of the sayings
we were going to talk about is really about your
(43:30):
you know, allocating your portfolio and your fixed income part.
You know, we believe bonds there should be a significant
part of that. Treasuries certainly provides some great opportunities as
well as alternatives. So al we appreciate that question. And
as you mentioned, we don't have a crystal ball, and
nobody has a crystal ball. I was going through a
little bit of a segment there, you know, talking about
(43:52):
some of you know, the top analysts, what they were
in late twenty twenty three, what we're looking for twenty
twenty four, and nobody saw what happened. And so as
we look out it next year, what we do know
in a year, there's a lot of randomness that can happen, right,
you know, we do know, you know, certainly with the
(44:13):
war in Ukraine, there's certainly possibility if that escalated or
turned in a bad way, that could impact things. Also
tensions in the Middle East, and those things are hard,
you know, really hard to plan for, right and but
we are planners by nature, and so I think more
than anything, as we look at the markets again, we
still the fundamentals are very strong. The economy is strong,
(44:37):
you know, we're seeing inflation come into control, We're seeing
the wage numbers. Although unemployment is uptacked a little bit,
it's still in very good territory. So economic fact, you know,
numbers all look strong. Yeah, we might be in an
environment where rates are higher for longer, but overall the
(44:59):
economic state just set well and corporate earnings have been there.
You know that the expectations are for the SP five
hundred about a fifteen percent increase in corporate earnings this year.
So if we see that, certainly that will help the
US equity market continue another strong year. Now, I will say,
you know, as we talked about, you know, twenty twenty
(45:19):
four was certainly a year about concentration. We had a
lot of concentration uh in high high tech growth, you
know the MAG seven, and you know twenty twenty five
we're hoping to see a broadening of that performance and
we really need to you know that. You know, just
when you when you look at the MAG seven and
(45:41):
look at earnings, it's hard to come up with a
scenario where they can repeat that kind of earnings growth
and continue to drive you know, markets through earnings growth.
And when you look at also, you know, pricing, you know,
the pricing is you know, we look at Ford pe ratios.
(46:01):
They're high, you know, on the S and P five hundred,
they're above twenty two percent, you know, on the tech,
high growth tech, they're above thirty percent, so they have
gotten pricey. So it's it's hard to see that we're
gonna have valuation increase just by pe expansion, right, It's
going to have to be by by earnings. And so
(46:22):
certainly the stage is set for small and mid cap
stocks to start to contribute more and see the growth
in those areas. So I will say, is, if I'm
having conversations with clients, you know, we're not seeing any
major changes to our portfolios for next year. Our core
holdings are still We're still solid. You know, we are
(46:45):
looking at sectors that we think will perform well under
you know, the current economic and regulatory environment. You know,
we certainly see financial services as an area where they
have done well last half of the year, and we
see they're going to continue to do well. But in
terms of you know, major overhauls, we're just big believers.
(47:08):
You know, that high tech is still going to be there.
We are, you know, hoping to see a broadening of
that recovery, so small and MidCap as well. And then
I think it's about being in the markets, right is
you know, we do know in any year we're going
to see an average draw down right from from the
top of the market to the bottom of fourteen percent,
(47:30):
and so we shouldn't be surprised if we see that
uh in twenty twenty five. And again, I think where
investors tend to get hurt is when they overreact, right
and all of a sudden, you know, they they read
too much, they see too many of the headlines, and
they start to get concerned and then you know, start
(47:51):
making major changes to their portfolio, which we certainly do
not believe. Twenty twenty five is a year to do that.
We believe stay invested, you look at your risk tolerance,
and it just as necessary. But certainly we don't see
any major systemic issues in the US equity market at all.
We're still very polish. Well, we are coming close to
(48:13):
the end of the show, and we want to thank
you for tuning in with sam Andi. We hope you
enjoyed the show. I know that we certainly did. I
hope you enjoy the rest of this weekend. Hope you
have an amazing week ahead. Also, be sure to tune
in tomorrow to another great show at eight am. Check
out our website Bouchet dot com for great content and
(48:34):
information on a variety of investment topics. You have been
listening to Let's Talk Money, brought to you by Bouchet
Financier Group, where we help our clients prioritize their health
while we manage their wealth for life. Thank you for
tuning in. Hope you enjoyed the show.
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