Episode Transcript
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Speaker 1 (00:04):
Hi everyone. You're listening to Let's Talk Money, brought to
you by Bouchet Financial Group. My name is Vinceno Tesla.
I'm one of the wealth advisors here at Bouchet Financial Group.
I'm a CPA and a CFP. You do a lot
of tax planning and wealth advising and financial planning at
the firm for our clients. And I'm also joined by
my colleague Edward Wilhelm, who is a portfolio analyst. Ed
(00:25):
if you want to introduce yourself, please feel free. Yeah.
Speaker 2 (00:29):
Thanks Ben. Happy to be on today portfolio analysts. I'd say,
you know, my main role is probably more on the
trade operations side. I do other firms trading, but happy
to be on today and talk about some investments.
Speaker 1 (00:46):
Thanks. Yeah. So Ed on the trading side of the firm.
So Ed is studying for CFA, which is chartered Chartered
Financial Analysts. So Ed's really involved in the investment committee
with the firm. Does a lot of financial analysis, marketing
market segments and the US economy. You know, we are uh,
we are fully invested in the US. We have no international.
(01:06):
We sold out of international seven years ago and we've
been underweight international for sixteen years. So ED is heavily
involved in that process and selecting the investments we choose
for the portfolios. So thanks for coming on, ED. So
I just wanted to give a quick market recap for
the week. Uh, you know, I'll start off with the
major indicy. So the Dow Dow Jones Industrial Average increased
(01:27):
point three percent for the week, so not a ton
of valume there. The SMP decreased by one percent over
the past week, the Nasdaq decreased by one point six
percent over the past week, and the Russell two thousand
and twelve by a little bit under a percent. And
there was some news that came out this week in
regard to a Chinese company and uh, you know their
(01:48):
uh progress on AI and it really affected the tech
sector in the US, uh obviously due to increase competition,
but we do feel like it's sort of an overreaction. Ed,
could you go into a little bit more detail about
Deep Seek and and how it affected the tech sector.
Speaker 2 (02:03):
Yeah, so it's actually a pretty interesting story. I mean,
to my understanding, deep Seek was a you know, originally
you know, they're they're a hedge fund or funded by
a hedge fund, where you know, they do high frequency. Uh,
you know, quantitative based trading. And you know they leverage
a string of GPUs, you know, which is used the
(02:27):
same hardware that's used to train uh, you know, degenerative
AI models that we've seen, you know, like chat GPT
or maybe Grock and someone over there. You decided to
work on a generative AI model almost as a side project,
and you know, it ended up posting numbers that were
(02:47):
very similar, uh, and then better than chat GPT's you know,
most recent model. And and the big deal was that
they cited doing it with far less GPUs and more
outdated GPUs, you know, using one of the videos series.
But that really spooked markets, I think one from a
(03:09):
domestic versus international perspective. But then also it did scare
the future demand of these GPUs which require you know,
in vidious chips. So you know, it's it's understandable, but
I definitely agree with you. Then I think it is
an overreaction. You know, we're also starting to see some
(03:30):
data come out where there may be h some misleading
about how many chips they you know, originally said they
use when they were training it versus what they actually had.
Speaker 1 (03:41):
Uh.
Speaker 2 (03:41):
So I mean that's that's one thing for me. It's
it's it's definitely hard to trust what you're seeing come
out over there at base value. But overall, you know,
they're still using in video chips, they're still demand. But
this is the risk you start running into when you
have such high growth, you know, forecasted for a company
like in Vidia. You know, it really just takes one
(04:02):
domino or to start a tip and people do get
fearful of, you know, those future growth expectations.
Speaker 1 (04:09):
Yeah, I mean this kind of reminds me back in
the sixties and seventies when we're in a cold war
with Russia. Right, not to say that we're in a
cold war with China, but I mean there is obviously
touching between the US and China, and there has been
for a couple of years now. But it's sort of
like this this rat race now with AI and you know,
who knows if that company is being completely truthful. I mean,
like that could be said to be some sort of conspiracy,
(04:31):
but you know, who really knows where this information is
coming from and how accurate it really is? Right, and
it really you know, Navidia took a large dip, right,
and Nvidia is American based company part of the Magnificent seven. Right,
So that's Apple, Amazon, Navidia, Tesla, Microsoft, all those large
tech companies we have here in the US. And because
of this news, Navidia dropped. It was close to twenty
(04:54):
percent in one day. You know, it really affected the
stock price in the video. And you know, you know,
like I said, who knows how accurate this information really is,
Like you said that it is could be an overreaction,
and it probably is, but it's definitely something to look
out for. This artificial intelligence race that's going on between
American companies and obviously overseas. It's really interesting to see
(05:16):
and it's you know, ten years from now, it's kind
of hard to picture what it's going to look like.
I mean, it's honestly insane how far it's come thus far,
right with chat gybt and some of the other AI
tools that are coming out, and it's similar to the
right to start with the Internet, right, we had those
box you know, boxy white look at computers I remember
(05:37):
back in the early two thousands, and that we have
these laptops and these phones that we could do pretty
much anything on in terms of accessing the Internet and
using you know, the applications on a daily basis, so
it's you know, really interesting to see the progression we're
seeing an AI. So on January thirty, first, right, just
(05:58):
a few short days ago, we had two of the
Magnificent seven report earnings. Right, we had Apple and Microsoft
report their earnings, and the way those earning calls affected
the stock price differed a little bit between both of
the companies. So, ed, why don't you go into a
little bit more deeper detail on what happened with Apple
and Microsoft.
Speaker 2 (06:19):
Yeah, no, definitely my pleasure. Overall, a very big week
for earnings in general. So we will dive into Apple
here first. Pretty positive all around, you know, up around
two point seven percent, and they achieved all time revenue
(06:42):
your revenue growth of about four percent year over year,
so you know, it's still still positive to see. Earnings
per share also came in strong, you know, definitely saw
strong holiday sales. You know, it's definitely interesting to see
just how sick of Apple is, you know, especially in
(07:02):
their iPhone segment, just as you know during holiday season.
And then you know, CEO Tim Cook highlighted, you know,
Apple came out with you know, their own kind of
built in AI role and how it's improving user experience.
So that was something that was highlighted. And the only
issue you know, really that Apple is seeing is it
(07:24):
is slipping a little bit on iPhone shares, and especially
in China, it's it's it's it's losing a little bit
of market share over there. So that's the one area
of struggle. You know, I don't think that's too big
of a headwind for Apple in the long run, you know,
I would I would say that's maybe just a little
bit more cyclical in nature, given uh, just the tensions
(07:46):
geopolitically between us in China, just on the macro scale.
But that's definitely one area of earnings that we're watching specifically,
you know, the iPhone sales in China and how the
market share is being divided up there and switching over
to Microsoft, they got hit a little bit harder. They
(08:07):
were down about four and a half percent. They did
have strong performance. They beat Wall Street expectations, you know,
strong revenue growth of you know, seventy billion, and then
you know also strong earnings per share, so strong profitability.
And they've also committed and I'm sure maybe some of
you have seen in the news eighty billion towards AI expansion,
(08:32):
and I'd say the big issue is that they're facing
some challenges from deep Seek and other AI players. So
I mean, you know, part of the news is you know,
maybe based on earnings, but then also I think Microsoft
got hit a little bit harder on that Deep Seek,
the Chinese AI company on that news. Just a few
(08:52):
other earnings this week. It's interesting what we're seeing, you know, previously,
you know, I mean last year, really the story was
mag seven and their growth forecast and just continuing to
you know, post really strong earnings. But now this year
we're seeing it broaden out a little bit.
Speaker 3 (09:15):
You know.
Speaker 2 (09:15):
I think the best example of that is probably IBM.
They posted really strong earnings this week. You know, they
were up double digit percentages and citing you know a
lot of the AI kind of infrastructure and it's where
they're seeing a growing software demand for them. So I
think we are starting to see that AI trend uh
(09:37):
broaden out a little bit, and that's following through to markets.
I mean, even if we're just looking at performance, you know,
equal weight indices for Nasdaq and S and P five
hundred outperforming their market weighted counterparts. So far year to date,
So it's it's definitely nice to see. I think get
points to a healthier market. I think it's a much
(09:58):
more sustainable market. You know, we're thinking about long term
compounding growth. You know, having seven companies drive a majority
of returns is is not sustainable to me. So, you know, Vin,
I'd love to get your thoughts kind of in that area.
Speaker 1 (10:17):
Yeah, I mean, I just think it's really interesting how
much these companies are reinvesting in AI. Like I said earlier,
it's just a testament to the opportunity from a business standpoint,
you know, of the potential growth that you know there
will be an AI. I mean, everyone wants to get
their hand in it. Obviously. It's going to affect our
lives as a consumer and just as in our personal lives,
(10:39):
probably more than the Internet could have ever thought of, right,
I mean, just makes things easier, right, I mean chat
GPT alone is you know, such an amazing tool and
product to me. You know, we you know, we use
it a lot. I use it a lot. I use
it as sort of a Google, right if I want
to just look you know, I want to look up
with the earnings of a company, you know, that released
had their earnings called it, so we gotta use chad GPT.
(11:01):
If I want to look up the best restaurant from
you know, visiting Fort Waterdale, and I want to look
at the best restaurants in Fort Lauderdale, I use chat GPT.
It's an amazing tool and I'm really excited to see
what else is going to pop up in the realm
of AI. We're gonna take a quick break. You're listening
to Let's Talk Money, brought to you by Bouchet Financial Group,
where we help our clients prioritize their health when we
(11:22):
manage their wealth for life. I encourage all listeners to
call it a eight hundred Talk WGY. That's eight hundred
eight two five five nine four nine. Thank you, Hi.
This is Vincenzo Testa. I'm giving a well deserved break
to your usual host, Stephen Bouchet. You're listening to Let's
(11:44):
Talk Money. I encourage all listeners to call in at
eight hundred Talk WGY. That's eight hundred eight two five
five nine four nine. So kind of to deflect a
little bit from the finance talk. It is groundhog Day,
and unfortunately I never knew how to say the first
(12:05):
part of that Groundog's name. But Phil did see his shadow,
so you know on paper, that means that we're going
to be in for the extra six weeks of winter.
But to give you a little bit more clarity before
you cry and your pillow, Phil's only been right three
times out of the past ten years, and over the
past one hundred and thirty years, the predictions have been
accurate at a rate of forty percent. So who really
(12:29):
knows if spring's had to come early or win there's
gonna dawn on us. So I guess we'll have to
just wait and see a couple other items on the
market side and outlook of the US economy. Let's talk
about the labor market. So, ed, why don't you just
dive in a little bit and give a little bit
more clarity in the labor market. Oh, we do have
a caller. We have Diane from Saratoga, and let's see
(12:51):
what Diane has to ask.
Speaker 4 (12:54):
Yes, I've been saving some money and I want to
put it into bonds. I was told that I have
had it in my savings account. No, no save deposit box.
If I it's like, give me five thousand, So I
want to put it into a bond. But I was told,
(13:17):
now if I take up this a large money and
put it into the bond, ther IRS will question me
about it then not having it on the market someplace.
Speaker 1 (13:32):
That's a great question, Diane. So just how to carry out?
So you have twenty five thousand in cash and a
safe deposit box and you want to basically deposit into
account and put it in a bond. Is that you're
saying yes?
Speaker 4 (13:44):
Now will the IRS question that amount?
Speaker 1 (13:49):
Not necessarily?
Speaker 5 (13:51):
No.
Speaker 1 (13:51):
I mean if you deposited into the to a bank,
the bank would probably flag it because it's over a
certain deposit limit all at one time. I don't think
there'd be any negative implications for you if you were
to put it into a bond. I'm not sure what
bond you're looking at or your specific you know, financial picture, right,
that can give you some more clarity on that, Uh,
you know, if we're going to a little bit further.
Speaker 2 (14:12):
But Irs, it's just gonna want you to.
Speaker 1 (14:18):
Yeah. Yeah, So you would just earn interest on the
money that you deposited and invested in that bond, and
you would have to report that interest income that you
earn on your tax return. Right in the I r S.
Obviously it is the head of yeh, so that's the
irs is the head of the tax authority in the
United States, and you know they administer and monitor folks
(14:39):
tax returns. Right. It sounds like you're a person that
probably wouldn't get audited, right, I mean, either way, you'd
probably be reporting that interest income correctly on your tax return.
So I don't think there'd be any issue or any
risk of you getting in trouble if that's your concern.
Speaker 4 (14:55):
Yes, I just didn't want them to go. And you know, say, well,
you've got this, you know, in your saving box, do
you have any more?
Speaker 3 (15:03):
You know?
Speaker 1 (15:04):
Yeah, yeah, for sure, for sure. You know, at that amount, Diane,
I think you'd be safe. I don't think there's really
much risk at all. And and uh, yours, you know,
show off to your front door and uh, you know,
so it's kind of knocking you down there. So I
think you're fine doing that, And I don't think there's
much risk at all.
Speaker 4 (15:27):
Okay, then I won't have anything to fear if I
did do it.
Speaker 1 (15:32):
Yeah, I think you'd be completely fine. Yep, at that amount.
All right, I thank you so much. All right, Diane,
thanks for calling in. Again, I encourage encourage all listeners
to call on it. Eight hundred talk w g Y.
It's eight hundred eight two five five nine four nine.
And before Diane called in, I was just going to
(15:53):
jump into the labor market in the US with ED
and have ED kind of dive in and talk about,
you know, the unemployment rate and the employment rate in
the US right now. So why don't you talk about
that a little bit further?
Speaker 2 (16:06):
Yeah, I mean, you know, this week we didn't get
any new labor data specifically, you know, we did have
the Federal Reserve meeting. But you know, while we have
seen some volatility and you know, non farm payrolls, that's
probably the best measure. It's what kind of what the
FED really looks at for a month over months labor
market changes. You know, if we zoom out and we
(16:29):
and we just think about big picture, uh, we are
at you know, fairly historically low levels of unemployment. You know,
we see a strong labor market. The FED sees a
strong labor market. So I don't I don't think that's
too much of a concern for them, you know, just
if we're thinking about peace, and you know, of course
(16:57):
it only takes one data pri to who off right now,
because we are such a data dependent economy, and it
does it takes one print to come out and you know,
really change the entire narrative.
Speaker 1 (17:21):
Yeah, I mean, Ed, You're spot on. You know. I
think the common misconception right now is that the economy
is not strong, right, and it is. It is strong.
And I think the reason being is that, you know,
a lot of folks saw the inflation over the past
couple of years, and to a lot of folks, that's
an indication that the economy is not strong. But there
(17:41):
is growth going on in the US economy and and
there's a lot of good things going on. There's a
lot of growth potentials on the horizon, right like AI. Obviously,
you know we've been talking about a lot during this segment,
but AI is going to be a huge growth factor
the US economy, the global economy.
Speaker 3 (18:01):
Right.
Speaker 1 (18:01):
It's going to cut costs for companies, it's gonna make
our lives easier and more efficient. So there's definitely you know,
a lot of potential, uh, you know, in growth for
the US and global economy. And you know, since we're
just getting into twenty twenty four, one month into twenty
twenty five. I just figured I'd touched on a couple
of items on the tax side, right, So I am
(18:21):
a CPA. Uh. You know. Prior to coming to work
at Steve's firm, you know, I worked at KPMG, which
is a big four accounting firm, flash consulting firm in
downtown Albany. So from there I primarily did tax return
so you know, moved over to wealth management and those
two things go hand in hand. Right. We do tax
planning for our clients all the time. Right, It's a huge, uh,
(18:45):
outflow source for our clients. Right. Taxes are probably one
of the largest bills you will pay acutatively over the
course of your life. Right, So if we could plan
around your taxes and save you money, you know we're
doing a good thing, right. You know, if we could
reduce the bill that you're projected to pay the most
over the course of your lifetime, you know there's value
(19:07):
in that, right. So we pay attention to taxes very closely.
You know. Like I said, I'm a CPA. You know,
I study it well versed in it, so I think
it's really important to kind of tie that in with
financial planning, you know, just paying attention to the tax
updates and what the IRS is doing and any potential
changes in legislation that could affect our clients or paying
(19:29):
attention to that and you know, making sure that our
clients are aware of it. So you know, as you
all know, there's the standard deduction, right, So every year
the IRS issues a new standard induction, the standard deduction,
it's a deduction that everyone receives, right, no matter you
know who you are, you receive a standard reduction. Right.
(19:51):
And this year it's increased to fifteen thousand dollars for
people that are filing single. Right, it's up a little
bit from last year. Right. There's an inflation increase on
the standard reduction every year. So on the flip side,
there's the itemized deductions. That's when if you have mortgage
interest and charitable contributions in real estate taxes and state
income taxes, you combine those all together and if your
itemized deductions exceed your standard deduction, then you itemize, right,
(20:14):
but if they don't, you just use the standard right.
And then for married couples filing jointly, that numbers up
to thirty thousand dollars. Okay, tax brackets will remaining the same.
But another common misconception is that if you're in a
certain tax bracket, that's your tax rate across all of
(20:34):
your income. And that's not the case. Okay, tax brackets
are marginal. So there's the ten percent tax bracket, the
twelve percent tax bracket, the twenty two to twenty four,
the thirty two, the thirty seven. So a portion, if
you're in the thirty seven percent tax bracket, a portion
of your income is getting taxed at ten, a portion
of your income is getting taxed at twelve, at twenty
(20:55):
two and twenty four, and so on and so forth. Right,
And the spread of income in which that's getting taxed,
it's increased every you're similar to the standard deduction, there's
an inflation increase on the taxability of your money. Right,
So the top tax rate is still thirty seven percent.
And there are some serve taxes that high earners do have,
like the net investment income tax, which is a three
(21:17):
point eight percent tax in addition to your marginal tax rate.
Find your investment income right. And this is only for
higher earners, right, it's not for folks that you know
are living in poverty or you know earning fifty thousand
dollars a year. This is for folks that have investment
income and their high earners to wait for the high
erres to collect more revenue on high earners without you know,
(21:38):
basically hiring the top tax rate. Right, So the thirty
seven percent tax rate for single tax payers, it's for
income over six hundred and twenty six thousand, three hundred
and fifty dollars, and for married couples it's seven hundred
and fifty one thousand, six hundred dollars. Right, So between
those two numbers, there's only a one hundred and thirty
(21:58):
thousand dollars difference, but the difference is one person and
two people. So it's kind of a penalty to be
married if you're a higher earner because you're going to
have a higher tax bill. Right, They don't give you
a break on the highest tax rate if you're married.
It's actually a penalty to you. So something to pay
attention to their you know, this is all part of
tax planning, right. You know, decisions can be made in
(22:20):
terms of marriage if if you know, money is the
major objective for you as a couple, and it's something
to pay attention to because you could really get hit
with a larger tax bill if both of you are
high earners. We're going to take a quick break and
come back and talk about some more tax and trade
policies in the US. You're listening to Let's Talk Money.
I encourage all listeners to call on Moore back. It's
(22:42):
eight hundred talk WGY. That's eight hundred eighty two five
five nine four nine. Hi, you're listening to Let's Talk Money.
My name's Vincenzo Tesla. We're coming back from the break
(23:04):
and we're gonna go straight to the phones. We have Jim, Yeah, Manny.
Speaker 3 (23:11):
First of all, thanks for your time this morning. I
have I have a tax question and I'm gonna just
give you this scenario private quickly. So my wife and
I are looking to retire soon. All of our savings,
all of our retirement savings. For the most part, it's
going to be in an IRA or a four oh
(23:33):
one K. She does have a small pension, maybe about
fifteen thousand dollars a year. But I've got a brokerage
account that I've had for a long long time, Vanguard
Mutual Funds, and there's probably you know, there's several hundreds
(23:53):
of thousands of dollars of capital gains there that I'm
just sitting on, and i'd reading more about perhaps like
my first year of retirement or maybe even my second year.
You know, I don't take anything out of my IRA,
I don't take anything. I don't take my Social Security.
(24:13):
I keep deferring that out, and I start to sell
some of those mutual funds take the games because it
appears that there's like ninety six thousand dollars after my
standard deduction that I would actually be taxed at zero percent.
(24:35):
Have you heard of this or recommended this kind of
strategy for anybody?
Speaker 1 (24:40):
Or oh, yeah, for sure, for sure. So you know,
as a firm, we don't use mutual funds for one
of two reasons, right, we use ETFs and mutual fund
You don't use mutual funds because they have high expense ratios, right,
Because there's an active manager managing your mutual fund, right, and
that costs money. Right, So they're selling in and out
of positions within your mutual fund, and there's someone they're
(25:02):
paying to do that, right, So mutual funds tend to
have higher expense ratios than ets. On the flip side,
the positions are selling in and out of are generating
capital gains within themselves. So at the end of the year, Jim,
you're getting capital they call capital gain distributions, and you
have to report those on your tax return. And and
this is not if you sold your mutual one position,
you get these issued to you at the end of
(25:23):
the year. Either way, it doesn't matter, right, So you
have an uncontrollable amount of money coming into your taxable income, right.
So that's and I say this because that's one part
of your taxable income that you don't know what that's
going to look like at the end of the year, right,
And these mutual funds have deadlines, right that you have
to sell these positions by within the year or they'll
(25:46):
issue those capital gain distributions either way. So even if you,
let's say, sell on December fifteenth, but the deadline was
December tenth, they're still going to issue that capital gain
distribution for the end of the year, and you have
to pick up the capital gain that you sold that
you have to realize when you sold out of that position,
so you can get double wain meat essentially. So what
you're saying is correct. If you have I believe that
(26:08):
it's around that number too, Jim, it's abound ninety eighty
to ninety thousand. I don't know off the top of
my head, but if you have that in total taxable income,
you can have zero percent capital game tax. That's correct,
But the pension comes to the play too, right, and
then also monitoring how much that capital gain distribution is
going to be on the other positions that you don't
sell that year, right. So it's kind of complicated, and
(26:29):
it's something that I think you'd have to like really
analyze and do it a year end, and I'd probably
advise you to work with a professional on it if
you're not you know, that educated on you know, the
tax side of it, because it does get more complicated
than just that. But yes, that is a great strategy.
I have advised clients to do that, and we have
done you know, very in depth analysis and planning for
(26:51):
clients on that level. So yeah, that's a phenomenal strategy.
Definitely would recommend that. Yet, don't pull anything out of
the IRA, start exiting those mutual funds, maybe work with
an advisor, potentially invest those money into ets and get
them out of those high costs mutual funds that are
issuing those capital gain distributions at the end of the
year anyway that you're paying tax on. So definitely something
(27:11):
I've recommended multiple times of many clients and planned around that.
Speaker 3 (27:15):
Okay, so the topic of the mutual fund, So these
are Vanguard. So I'm in Vanguard mutual funds.
Speaker 1 (27:21):
Now.
Speaker 3 (27:21):
The problem that I have or is that you know,
I've been in them since I was thirty and now
I'm sixty, right, so I've got sizeable capital gains and
ETFs weren't available then. I mean, so for me to
get out of the mutual funds, and I totally understand
what you're talking about. Every year I see that they
they they whacked me with capital gains that I really
(27:42):
didn't see for I didn't wasn't me that sold them.
They did it, right, But you know, primarily Vanguard has
been low cost mutual funds as well, at least thirty
years ago they were, so Unfortunately time kind of went
on and I never had you know, every time I
would if I was to sell, you know, I would
(28:03):
have been paying capital gains and I was just like,
I ain't selling, right, I mean, just gonna keep holding
these things. But now now it comes to a point
in order me to convert them to an ETF, I'd
have to take a large capital gains hit to do that, right,
So that's why it sounds like maybe just bleeding it
off slowly might be the best answer. But I understand
(28:27):
that I don't know every year. It varies a little bit.
Last year, you know, there were twenty thousand of capital
gains this year of fifty thousand. You know, it's like
I don't control it, and I know what it is
because I see it issued at the end of the year.
Speaker 1 (28:44):
Yeah, exactly right. And that brings up an even better point. Right.
When I taught to clients about this, you're reluctant to
do it, right because you having to pay tax potentially
is a scary thing, like paying more tax than you
have to, right, But when they're issuing the capital gain
districts musions at the end of the year, you're paying
it anyway. Right. So what I tell my clients is
rip off the band aid, sell out of it. Figure
(29:05):
out how much you're comfortable paying to the I R
S and state though, right, like fign that number, work
with a professional and tell them that, right, and have
them exit those positions for you in efficient manner and
tax efficient manner. And if there is any tax do
from it. You're ripping. You're paying it year after year
anyway when they issue the capital gain distributions. Right, So
if you just get it out of the way, you know,
(29:26):
like I said, rip that mandate off and sell those
positions and get it over with. It's not something you
don't have to worry about anymore. It's not something you
have to think again, your vestments will be more efficient,
they'll be more tax efficient. And you know, mutual funds typically,
you know, they don't more often than not don't outperform
the S and P five hundred anyway, So you know,
you know, our philosophy is to just stay out of
(29:48):
mutual funds. And you know the advice I would give
you is work with work with a professional, rip off
that band aid, and do it in the most tax
efficient way possible.
Speaker 3 (29:56):
Okay, thanks for your time, have a good day.
Speaker 1 (29:59):
Thanks him. I encourage all listeners to call in at
eight hundred talk WGY. That's eight hundred and eight two five, five,
nine four nine. So just to dive a little bit
more deeper into the US economy, there is some big
news that came out this week regarding tariffs, right, and
you know, obviously Donald Trump is the president. Now he's
(30:20):
talked about and posting tariffs on you know, specific countries
mainly because of you know, trade imbalances, and he's trying
to kind of muscle these countries a little bit more
and kind of have them bring their companies and manufacturing
into the US and promote US jobs and things of
that nature. And obviously, you know, with Mexico, there are
some issues with drug trafficking and you know, Trump feels
(30:42):
that Mexico is not doing anything about it and they
should be. And we're you know, you know, getting the
negatives of the drug trafficking and that Mexico should pay
you know, because of this and and start doing something
about it. So, you know, effective in two days, there
will be tariffs implicated on Canada, Mexico, and China and ed,
why don't you talk a little bit further about those tariffs.
Speaker 2 (31:06):
Yeah, So for Canada and in Mexico, we're looking at
a twenty five percent tariff each and then while China
is going to start at only ten percent. So I mean,
he has said that, you know, he's open to adjusting these,
you know, I believe I even saw some news I
think Canada is going to be implementing a tariff of
(31:29):
their own on US goods, or at least plans too.
But it is certainly a way for you know, Trump to,
as you said, Vinnie, you know, kind of try and
muscle uh these other companies. And I think he really
is trying to reassert you know, America as the world superpower.
(31:51):
But the one big risk that these tariffs, you know,
have is is they are inflationary, and you know, a
lot of the aspect of them is passed through directly
to retail consumers unfortunately. I mean it's just what studies
have shown as far as tariffs go. I think it's
you know, almost seventy percent of the costs get passed
(32:12):
through to consumers, you know. And it's also certainly interesting
to see what industries are impacted the hardest. So you know,
that's kind of something that time will tell and we'll
see how these shakes out. But overall, I think the
Federal Reserve themselves are concerned about these tariffs, and so
(32:33):
are companies. I saw stat today that over one hundred
and sixty companies on earnings calls this year have mentioned tariffs.
That number is up drastically from you know, last year
where they may be mentioned in a handful. So companies
are concerned about them. The Federal Reserve is certainly concerned
(32:54):
about them. You know that they paused this week. That
was as expected. But one of their you know, big
citations for why to pause is, you know, they do
see some inflationary potential as a result of these these tariffs.
Speaker 1 (33:11):
Yeah, I mean for sure, you know, so anytime in
the short term, tariffs are going to be passed on
to the consumer, right, But you know, who knows what's
going to happen in the long term. Right. Trump is
doing this for a reason. He has a long term
goal planned to sort of force these companies or these
countries' hands and the companies within these countries to you know,
(33:33):
start to do things that benefit America. Right in the
short term, it's going to increase costs, and I don't
know what's going to happen in the long term, right,
But the idea is that you know, Mexico starts fixing
the issues of drug trafficking into the US and their
government starts doing something about that, and just like balancing
out the trade and balance we have with these countries.
(33:53):
So that's really what the goal is here. But in
the short term, there might it's obviously going to be inflationary, correct,
and who knows what's gonna happen in the long term,
But that's really the main goal. And hopefully, you know,
if these terrorists stay on, that is what happens, right,
these companies start bringing their manufacturing over to US, it
creates US jobs and you know, in turn lowers costs
(34:14):
of goods in the US. So hopefully we'll see what
happens there. But you know, we're talking earlier in the
show about China and how you know, there is obviously
tension between the US and China, but you know, that's
another risk like this is gonna it's it's heightening global
trade tensions for sure, between China and US. And I mean,
(34:36):
China is not gonna just put their head down and
you know, look the other way and just fold Canada
and Mexico, you know, may you know, they really don't
have as much leverage as China in terms of their
economy and their reliance on themselves as a nation. So
that's definitely a big risk. You know, ticking off China,
(34:56):
So just something to kind of monitor there and kind
of interested to see what happens moving forward. We're gonna
take a quick break. I encourage all listeners to call
when we come back at eight hundred Talk WGY. That's
eight hundred eight two five five nine four nine. You're
listening to Let's Talk Money, brought to you by Bouchet
(35:18):
Financial Group, where we help our clients prioritize their health
while we manage their wealth for life. Thank you. You're
listening to Let's Talk Money, brought to you by Bouchet
Financial Group. My name is Vincenzo Testa. I am encouraging
all listeners to call in at eight hundred talk WGY.
(35:38):
That's eight hundred eight two five five nine four nine.
So you know, like I told you guys before in
the show, I am a CPA and a CFP, but
I do have another license which is called ECA, and
it's what it means is equity compensation associate. Right, So
equity compensation is basically supplemental compensation and you receive from
(36:00):
your companies, usually public companies, when private companies do this too,
giving you ownership in the company that you're working for. Right,
and that could be through stock options, that could be
through RSUs, which are restricted stock units. It's basically the
company giving you the stock. Stock options are the company
allowing you to purchase the stock at a specific locked
in price. Right. And then there's espps right in employee
(36:24):
stock purchase Plans, which is the company giving you the
opportunity to buy the stock at ten to fifteen percent
discount potentially, right. So they have all of these forms
of equity compensation that companies will give to their employees, right,
and it kind of incentivizes the employees. Right, you're working
at this company. You not only you know, you know
(36:44):
you're working a collaborative team effort with all the people
you work with at this company, but now you own
the company essentially, so you kind of have some skin
in the game to increase the stock price. So if
the company does well on earnings calls, and you know,
moving forward year after year, you're going to get wealthier. Right,
So it gives employees some skin in the game, and
it gives them some motivation to work harder, you know,
(37:07):
for lack of a better term. So one of the
things that I do really deeply with clients at the firm,
and well, we're working with a lot of companies in
the area, you know, Regeneron, Amanti, all these companies in
the Albany area that are public on managing clients equity compensation. Right,
And there's a lot of reasons why it's so complex.
(37:28):
There's so many factors that go into play when managing
equity compensation and the tax ability and you know, aspects
of each type of equity compensation are different. Right. When
it comes to RSUs, when you get an RSU, there's
a vesting period, right, you might have to stay at
the company for three years before you're restricted stock units
(37:49):
vest and when they vest, they're all taxes ordinary income. Right.
And then if there's any gains on those RSUs and
you sell them, their capital gains, whether they're short term
or long term. So they're tax much differently than stock options. Right.
So stock options, you're not getting actual stock, you're getting
the opportunity to purchase the stock at a specific price. Right.
(38:11):
So let's say you worked at Apple, you and you
have stock options that the company issued you with an
exercise price of twenty dollars and the stock price is
one hundred, right, So they didn't invest until three years
after you receive them. But the stock price is now
one hundred, right, So if you exercise your stock options
and purchase Apple at twenty dollars, you now have eighty
dollars spread on each share that you have to pick
(38:33):
up as capital gains. So it does differ between which
equity comp you're receiving from the tax perspective, and it's
something that you have to monitor. And before I go
any further, we do have a caller route from Watervali. Hey,
good morning, Hey Ralph, how are you?
Speaker 5 (38:53):
I'm doing with it, but I'm good to splaining just
a couple just actually two quick questions, one being you
just talked about tariffs and bringing jobs back to the
United States. The jobs are actually now in Chine in
other countries because the labor is so much cheaper. So
now while we all want to bring them back, that
is also going to increase prices because the companies are
going to start to charge They're gonna have to pay
more for labor in the United States, which we all
(39:14):
deserve that and so those prices are gonna be pissed
on a consumer. Also, as far as I can, as
far as I think about it, what do you think
about that.
Speaker 1 (39:24):
Now? For sure? That definitely you know, that's definitely something
that could happen to right, And like I, like I said,
I don't know what the long term effects of this
are going to be. Obviously we all, you know, for
the sake of the US, we all hope they're positive
and increase the consumer's bottom line, right and good end
up being cheaper for sure, that's Ralph, That's a great point. Yeah,
definitely something that could occur as an effect of this
(39:46):
and something that we need to be monitored. Is scary,
right because you know, the fear of the unknown, right,
that's really what we're all feeling here with this. We
don't know what's gonna happen, and it's a really scary thing.
But I guess we will have to say.
Speaker 5 (40:01):
One of the two other questions, what is it an
ETF exactly? And I've heard another shows on this on
Sunday morning about insurance trust at l I T or
l I L t R something.
Speaker 1 (40:16):
Yeah, yeah, Life Trust Live Insurance Trust yeah yeah. Okay,
So so I'll let Ed as our portfolio analyst here
at the firm, and I'll let him describe exchange trade
funds to you.
Speaker 2 (40:34):
Yeah, so et I think extine trade fund. It's just
going to track an index, right, So, I mean while
the fund company is going to hold some of the
underlying investments, I mean it's essentially just like a mutual fund.
You know, most of them are going to be passive,
but there are a lot more tax efficient for the
(40:54):
fund family, which is why you get all the advantages.
You know, it requires them to do much less active
trading on their ends, but I mean for all intensive
purposes and for anyone listening, they're essentially just like a
mutual fund. They're just not going to pay out those
capital gain distributions and they are gonna tend to be
on the less expensive side.
Speaker 5 (41:16):
Now is that also an index fund?
Speaker 2 (41:21):
Yeah, so some of them are index funds. I mean
it's going to depend on ETF specifically, and they do
have actively managed ETFs now, which are you know, probably
more similar to a mutual fund than we'll kind of
be in between the price of a passive ETF and
a mutual fund.
Speaker 4 (41:42):
All right, thank you.
Speaker 5 (41:43):
How about the l I T or the life insurance
thing trust, I don't remember exactly what are you.
Speaker 1 (41:48):
Just curious to what it is? Ralph or give it
more specific question.
Speaker 5 (41:52):
Yeah, how do you get involved with it?
Speaker 1 (41:54):
Is that worth? Is that worth wild investment? Yeah? I
mean you know a life insurance try. I mean they're
obviously you know, a trust with life insurance in it. Right,
So basically you go to the state attorney and having
a discussion with them to see if it makes sense
for you to do this right. And there's two types
of life insurance trust. It's irrevocable right, which is a
trust that can't be revoked right by the person who
(42:17):
created it. And then there's revocable right, which can be altered.
The terms of it can be altered, but really the
purpose of it is to make sure life insurance proceeds
get to a beneficiary. Right. And then if you know
the individual who passed away had a pretty significant estate, right,
there could be a potential a state taxes. So having
a life insurance trust, I mean, and this that number
(42:39):
could be it has to be like your network has
to be like north of like twenty four million if
you're married, So just keep that in mind. But it
could help avoid a state taxes or reduce your state
tax liability if there is one already avoids probate, right,
so ons one passes away. You know, your assets have
to go through probate to pay off any creditors or
people that want to like you know kind of you know,
(43:01):
say you owe them money, So it has to go
to that probate court with the trust it does not.
So there's a lot of benefits to it, and I
think it's worth talking to with a state attorney and
determining if it's the right move for you. O.
Speaker 5 (43:14):
Thank you, thank you Jemen for your time. I'm listening
on Sunday morning a couple of different shows and there's
a lot of information. It's it's fun, ensorbable and sometimes Yeah.
Speaker 1 (43:23):
Always feel free to call in. Ralph, thanks for calling.
We do have another caller, Mike from Troy. Yeah, how
you're doing? Like the show real quick? I just have
a couple of quick Mike, you prefer target funds or
high yield diversified funds right now? In my work, Ira, Yeah,
(43:46):
so we so as a firm, we always recommend our
clients because we do look at client four one ks
and give guidance on investments right because we're not managing them,
so we do give our clients a guidance on investments.
So We're not big proponents of target date funds as
far as high yield index funds go. Let ed kind
of explain a little bit more about that.
Speaker 2 (44:08):
Yeah, So I mean I'll just touch a little bit
more on target date funds. I mean, I don't know
how familiar you are with them, but those are just
gonna change, you know, as time goes on. They're gonna
you know, scale back the risk just by using you know,
the ratio of equity to fixed income. So you know,
as time marches on, they're just going to increase the
allocation of fixed income in the account. But for most investors,
(44:29):
what I've seen is is it just leads to them
being you know, less risky, probably earlier than they they
would like or would be comfortable themselves. So you know,
you can you can just miss out on some of
those equity returns when you're you're definitely still more comfortable
taking that risk. So that's definitely why we like, uh,
you know, kind of a pool of you know, diversified
funds that you know, we put together and recommend for
(44:52):
our clients. And then on the high yield index fund,
can you give me a little bit more information, I mean,
is that just a a fixed income fund or you
know what type of high yield.
Speaker 4 (45:03):
It's an active high yield bond fund.
Speaker 2 (45:08):
Okay, yeah, I mean so high yield. Really you're just
to get that high yield compared to a normal bond fund,
you're gonna take a little bit more credit risk. So
you're not gonna be some investing in you know, investment
grade companies. You're gonna be looking more like double B
triple B rated companies right now. I don't I don't
think there's a ton of credit risk out there. I
(45:29):
think for the most part you'd be pretty stable. But
so you're gonna clip a higher yield in there. I
think it's good to maybe have a portion of your
fixed income allocation there. I definitely wouldn't put, you know,
your entire fixed income allocation into that fund, though I
would definitely leave some, you know, just on the intermediate
core side as well.
Speaker 1 (45:51):
Okay, thank you very much, thanks for calling in, Mike,
So before the break around for the phone calls in
rather talking about equity comps. So just want to quickly
touch you know, pass implications are different for each type
of equity compensation. You don't want to be overly concentrated
in the company you're working for right puts you a
(46:11):
lot of risk things go south. You might lose your job,
stock price might go down, your networks will go down,
could mess up your entire financial plan. So do a
lot of analysis for our clients in that regard when
it comes to equity comp If you do have any
equity comp and you're interested in getting some help, always
feel free to reach out. We're coming to the end
of the show. I appreciate you all listening in. I
(46:34):
can't promise Lea back by next week, but Steve will
probably be on. But you're listening to Let's Talk Money.
Brought to you by Bouchet Financial Group, where we help
our clients prioritize their health, where we manage their wealth
for life. Thank you.
Hi everyone. You're listening to Let's Talk Money, brought to
you by Bouchet Financial Group. My name is Vinceno Tesla.
I'm one of the wealth advisors here at Bouchet Financial Group.
I'm a CPA and a CFP. You do a lot
of tax planning and wealth advising and financial planning at
the firm for our clients. And I'm also joined by
my colleague Edward Wilhelm, who is a portfolio analyst. Ed
(00:25):
if you want to introduce yourself, please feel free. Yeah.
Speaker 2 (00:29):
Thanks Ben. Happy to be on today portfolio analysts. I'd say,
you know, my main role is probably more on the
trade operations side. I do other firms trading, but happy
to be on today and talk about some investments.
Speaker 1 (00:46):
Thanks. Yeah. So Ed on the trading side of the firm.
So Ed is studying for CFA, which is chartered Chartered
Financial Analysts. So Ed's really involved in the investment committee
with the firm. Does a lot of financial analysis, marketing
market segments and the US economy. You know, we are uh,
we are fully invested in the US. We have no international.
(01:06):
We sold out of international seven years ago and we've
been underweight international for sixteen years. So ED is heavily
involved in that process and selecting the investments we choose
for the portfolios. So thanks for coming on, ED. So
I just wanted to give a quick market recap for
the week. Uh, you know, I'll start off with the
major indicy. So the Dow Dow Jones Industrial Average increased
(01:27):
point three percent for the week, so not a ton
of valume there. The SMP decreased by one percent over
the past week, the Nasdaq decreased by one point six
percent over the past week, and the Russell two thousand
and twelve by a little bit under a percent. And
there was some news that came out this week in
regard to a Chinese company and uh, you know their
(01:48):
uh progress on AI and it really affected the tech
sector in the US, uh obviously due to increase competition,
but we do feel like it's sort of an overreaction. Ed,
could you go into a little bit more detail about
Deep Seek and and how it affected the tech sector.
Speaker 2 (02:03):
Yeah, so it's actually a pretty interesting story. I mean,
to my understanding, deep Seek was a you know, originally
you know, they're they're a hedge fund or funded by
a hedge fund, where you know, they do high frequency. Uh,
you know, quantitative based trading. And you know they leverage
a string of GPUs, you know, which is used the
(02:27):
same hardware that's used to train uh, you know, degenerative
AI models that we've seen, you know, like chat GPT
or maybe Grock and someone over there. You decided to
work on a generative AI model almost as a side project,
and you know, it ended up posting numbers that were
(02:47):
very similar, uh, and then better than chat GPT's you know,
most recent model. And and the big deal was that
they cited doing it with far less GPUs and more
outdated GPUs, you know, using one of the videos series.
But that really spooked markets, I think one from a
(03:09):
domestic versus international perspective. But then also it did scare
the future demand of these GPUs which require you know,
in vidious chips. So you know, it's it's understandable, but
I definitely agree with you. Then I think it is
an overreaction. You know, we're also starting to see some
(03:30):
data come out where there may be h some misleading
about how many chips they you know, originally said they
use when they were training it versus what they actually had.
Speaker 1 (03:41):
Uh.
Speaker 2 (03:41):
So I mean that's that's one thing for me. It's
it's it's definitely hard to trust what you're seeing come
out over there at base value. But overall, you know,
they're still using in video chips, they're still demand. But
this is the risk you start running into when you
have such high growth, you know, forecasted for a company
like in Vidia. You know, it really just takes one
(04:02):
domino or to start a tip and people do get
fearful of, you know, those future growth expectations.
Speaker 1 (04:09):
Yeah, I mean this kind of reminds me back in
the sixties and seventies when we're in a cold war
with Russia. Right, not to say that we're in a
cold war with China, but I mean there is obviously
touching between the US and China, and there has been
for a couple of years now. But it's sort of
like this this rat race now with AI and you know,
who knows if that company is being completely truthful. I mean,
like that could be said to be some sort of conspiracy,
(04:31):
but you know, who really knows where this information is
coming from and how accurate it really is? Right, and
it really you know, Navidia took a large dip, right,
and Nvidia is American based company part of the Magnificent seven. Right,
So that's Apple, Amazon, Navidia, Tesla, Microsoft, all those large
tech companies we have here in the US. And because
of this news, Navidia dropped. It was close to twenty
(04:54):
percent in one day. You know, it really affected the
stock price in the video. And you know, you know,
like I said, who knows how accurate this information really is,
Like you said that it is could be an overreaction,
and it probably is, but it's definitely something to look
out for. This artificial intelligence race that's going on between
American companies and obviously overseas. It's really interesting to see
(05:16):
and it's you know, ten years from now, it's kind
of hard to picture what it's going to look like.
I mean, it's honestly insane how far it's come thus far,
right with chat gybt and some of the other AI
tools that are coming out, and it's similar to the
right to start with the Internet, right, we had those
box you know, boxy white look at computers I remember
(05:37):
back in the early two thousands, and that we have
these laptops and these phones that we could do pretty
much anything on in terms of accessing the Internet and
using you know, the applications on a daily basis, so
it's you know, really interesting to see the progression we're
seeing an AI. So on January thirty, first, right, just
(05:58):
a few short days ago, we had two of the
Magnificent seven report earnings. Right, we had Apple and Microsoft
report their earnings, and the way those earning calls affected
the stock price differed a little bit between both of
the companies. So, ed, why don't you go into a
little bit more deeper detail on what happened with Apple
and Microsoft.
Speaker 2 (06:19):
Yeah, no, definitely my pleasure. Overall, a very big week
for earnings in general. So we will dive into Apple
here first. Pretty positive all around, you know, up around
two point seven percent, and they achieved all time revenue
(06:42):
your revenue growth of about four percent year over year,
so you know, it's still still positive to see. Earnings
per share also came in strong, you know, definitely saw
strong holiday sales. You know, it's definitely interesting to see
just how sick of Apple is, you know, especially in
(07:02):
their iPhone segment, just as you know during holiday season.
And then you know, CEO Tim Cook highlighted, you know,
Apple came out with you know, their own kind of
built in AI role and how it's improving user experience.
So that was something that was highlighted. And the only
issue you know, really that Apple is seeing is it
(07:24):
is slipping a little bit on iPhone shares, and especially
in China, it's it's it's it's losing a little bit
of market share over there. So that's the one area
of struggle. You know, I don't think that's too big
of a headwind for Apple in the long run, you know,
I would I would say that's maybe just a little
bit more cyclical in nature, given uh, just the tensions
(07:46):
geopolitically between us in China, just on the macro scale.
But that's definitely one area of earnings that we're watching specifically,
you know, the iPhone sales in China and how the
market share is being divided up there and switching over
to Microsoft, they got hit a little bit harder. They
(08:07):
were down about four and a half percent. They did
have strong performance. They beat Wall Street expectations, you know,
strong revenue growth of you know, seventy billion, and then
you know also strong earnings per share, so strong profitability.
And they've also committed and I'm sure maybe some of
you have seen in the news eighty billion towards AI expansion,
(08:32):
and I'd say the big issue is that they're facing
some challenges from deep Seek and other AI players. So
I mean, you know, part of the news is you know,
maybe based on earnings, but then also I think Microsoft
got hit a little bit harder on that Deep Seek,
the Chinese AI company on that news. Just a few
(08:52):
other earnings this week. It's interesting what we're seeing, you know, previously,
you know, I mean last year, really the story was
mag seven and their growth forecast and just continuing to
you know, post really strong earnings. But now this year
we're seeing it broaden out a little bit.
Speaker 3 (09:15):
You know.
Speaker 2 (09:15):
I think the best example of that is probably IBM.
They posted really strong earnings this week. You know, they
were up double digit percentages and citing you know a
lot of the AI kind of infrastructure and it's where
they're seeing a growing software demand for them. So I
think we are starting to see that AI trend uh
(09:37):
broaden out a little bit, and that's following through to markets.
I mean, even if we're just looking at performance, you know,
equal weight indices for Nasdaq and S and P five
hundred outperforming their market weighted counterparts. So far year to date,
So it's it's definitely nice to see. I think get
points to a healthier market. I think it's a much
(09:58):
more sustainable market. You know, we're thinking about long term
compounding growth. You know, having seven companies drive a majority
of returns is is not sustainable to me. So, you know, Vin,
I'd love to get your thoughts kind of in that area.
Speaker 1 (10:17):
Yeah, I mean, I just think it's really interesting how
much these companies are reinvesting in AI. Like I said earlier,
it's just a testament to the opportunity from a business standpoint,
you know, of the potential growth that you know there
will be an AI. I mean, everyone wants to get
their hand in it. Obviously. It's going to affect our
lives as a consumer and just as in our personal lives,
(10:39):
probably more than the Internet could have ever thought of, right,
I mean, just makes things easier, right, I mean chat
GPT alone is you know, such an amazing tool and
product to me. You know, we you know, we use
it a lot. I use it a lot. I use
it as sort of a Google, right if I want
to just look you know, I want to look up
with the earnings of a company, you know, that released
had their earnings called it, so we gotta use chad GPT.
(11:01):
If I want to look up the best restaurant from
you know, visiting Fort Waterdale, and I want to look
at the best restaurants in Fort Lauderdale, I use chat GPT.
It's an amazing tool and I'm really excited to see
what else is going to pop up in the realm
of AI. We're gonna take a quick break. You're listening
to Let's Talk Money, brought to you by Bouchet Financial Group,
where we help our clients prioritize their health when we
(11:22):
manage their wealth for life. I encourage all listeners to
call it a eight hundred Talk WGY. That's eight hundred
eight two five five nine four nine. Thank you, Hi.
This is Vincenzo Testa. I'm giving a well deserved break
to your usual host, Stephen Bouchet. You're listening to Let's
(11:44):
Talk Money. I encourage all listeners to call in at
eight hundred Talk WGY. That's eight hundred eight two five
five nine four nine. So kind of to deflect a
little bit from the finance talk. It is groundhog Day,
and unfortunately I never knew how to say the first
(12:05):
part of that Groundog's name. But Phil did see his shadow,
so you know on paper, that means that we're going
to be in for the extra six weeks of winter.
But to give you a little bit more clarity before
you cry and your pillow, Phil's only been right three
times out of the past ten years, and over the
past one hundred and thirty years, the predictions have been
accurate at a rate of forty percent. So who really
(12:29):
knows if spring's had to come early or win there's
gonna dawn on us. So I guess we'll have to
just wait and see a couple other items on the
market side and outlook of the US economy. Let's talk
about the labor market. So, ed, why don't you just
dive in a little bit and give a little bit
more clarity in the labor market. Oh, we do have
a caller. We have Diane from Saratoga, and let's see
(12:51):
what Diane has to ask.
Speaker 4 (12:54):
Yes, I've been saving some money and I want to
put it into bonds. I was told that I have
had it in my savings account. No, no save deposit box.
If I it's like, give me five thousand, So I
want to put it into a bond. But I was told,
(13:17):
now if I take up this a large money and
put it into the bond, ther IRS will question me
about it then not having it on the market someplace.
Speaker 1 (13:32):
That's a great question, Diane. So just how to carry out?
So you have twenty five thousand in cash and a
safe deposit box and you want to basically deposit into
account and put it in a bond. Is that you're
saying yes?
Speaker 4 (13:44):
Now will the IRS question that amount?
Speaker 1 (13:49):
Not necessarily?
Speaker 5 (13:51):
No.
Speaker 1 (13:51):
I mean if you deposited into the to a bank,
the bank would probably flag it because it's over a
certain deposit limit all at one time. I don't think
there'd be any negative implications for you if you were
to put it into a bond. I'm not sure what
bond you're looking at or your specific you know, financial picture, right,
that can give you some more clarity on that, Uh,
you know, if we're going to a little bit further.
Speaker 2 (14:12):
But Irs, it's just gonna want you to.
Speaker 1 (14:18):
Yeah. Yeah, So you would just earn interest on the
money that you deposited and invested in that bond, and
you would have to report that interest income that you
earn on your tax return. Right in the I r S.
Obviously it is the head of yeh, so that's the
irs is the head of the tax authority in the
United States, and you know they administer and monitor folks
(14:39):
tax returns. Right. It sounds like you're a person that
probably wouldn't get audited, right, I mean, either way, you'd
probably be reporting that interest income correctly on your tax return.
So I don't think there'd be any issue or any
risk of you getting in trouble if that's your concern.
Speaker 4 (14:55):
Yes, I just didn't want them to go. And you know, say, well,
you've got this, you know, in your saving box, do
you have any more?
Speaker 3 (15:03):
You know?
Speaker 1 (15:04):
Yeah, yeah, for sure, for sure. You know, at that amount, Diane,
I think you'd be safe. I don't think there's really
much risk at all. And and uh, yours, you know,
show off to your front door and uh, you know,
so it's kind of knocking you down there. So I
think you're fine doing that, And I don't think there's
much risk at all.
Speaker 4 (15:27):
Okay, then I won't have anything to fear if I
did do it.
Speaker 1 (15:32):
Yeah, I think you'd be completely fine. Yep, at that amount.
All right, I thank you so much. All right, Diane,
thanks for calling in. Again, I encourage encourage all listeners
to call on it. Eight hundred talk w g Y.
It's eight hundred eight two five five nine four nine.
And before Diane called in, I was just going to
(15:53):
jump into the labor market in the US with ED
and have ED kind of dive in and talk about,
you know, the unemployment rate and the employment rate in
the US right now. So why don't you talk about
that a little bit further?
Speaker 2 (16:06):
Yeah, I mean, you know, this week we didn't get
any new labor data specifically, you know, we did have
the Federal Reserve meeting. But you know, while we have
seen some volatility and you know, non farm payrolls, that's
probably the best measure. It's what kind of what the
FED really looks at for a month over months labor
market changes. You know, if we zoom out and we
(16:29):
and we just think about big picture, uh, we are
at you know, fairly historically low levels of unemployment. You know,
we see a strong labor market. The FED sees a
strong labor market. So I don't I don't think that's
too much of a concern for them, you know, just
if we're thinking about peace, and you know, of course
(16:57):
it only takes one data pri to who off right now,
because we are such a data dependent economy, and it
does it takes one print to come out and you know,
really change the entire narrative.
Speaker 1 (17:21):
Yeah, I mean, Ed, You're spot on. You know. I
think the common misconception right now is that the economy
is not strong, right, and it is. It is strong.
And I think the reason being is that, you know,
a lot of folks saw the inflation over the past
couple of years, and to a lot of folks, that's
an indication that the economy is not strong. But there
(17:41):
is growth going on in the US economy and and
there's a lot of good things going on. There's a
lot of growth potentials on the horizon, right like AI. Obviously,
you know we've been talking about a lot during this segment,
but AI is going to be a huge growth factor
the US economy, the global economy.
Speaker 3 (18:01):
Right.
Speaker 1 (18:01):
It's going to cut costs for companies, it's gonna make
our lives easier and more efficient. So there's definitely you know,
a lot of potential, uh, you know, in growth for
the US and global economy. And you know, since we're
just getting into twenty twenty four, one month into twenty
twenty five. I just figured I'd touched on a couple
of items on the tax side, right, So I am
(18:21):
a CPA. Uh. You know. Prior to coming to work
at Steve's firm, you know, I worked at KPMG, which
is a big four accounting firm, flash consulting firm in
downtown Albany. So from there I primarily did tax return
so you know, moved over to wealth management and those
two things go hand in hand. Right. We do tax
planning for our clients all the time. Right, It's a huge, uh,
(18:45):
outflow source for our clients. Right. Taxes are probably one
of the largest bills you will pay acutatively over the
course of your life. Right, So if we could plan
around your taxes and save you money, you know we're
doing a good thing, right. You know, if we could
reduce the bill that you're projected to pay the most
over the course of your lifetime, you know there's value
(19:07):
in that, right. So we pay attention to taxes very closely.
You know. Like I said, I'm a CPA. You know,
I study it well versed in it, so I think
it's really important to kind of tie that in with
financial planning, you know, just paying attention to the tax
updates and what the IRS is doing and any potential
changes in legislation that could affect our clients or paying
(19:29):
attention to that and you know, making sure that our
clients are aware of it. So you know, as you
all know, there's the standard deduction, right, So every year
the IRS issues a new standard induction, the standard deduction,
it's a deduction that everyone receives, right, no matter you
know who you are, you receive a standard reduction. Right.
(19:51):
And this year it's increased to fifteen thousand dollars for
people that are filing single. Right, it's up a little
bit from last year. Right. There's an inflation increase on
the standard reduction every year. So on the flip side,
there's the itemized deductions. That's when if you have mortgage
interest and charitable contributions in real estate taxes and state
income taxes, you combine those all together and if your
itemized deductions exceed your standard deduction, then you itemize, right,
(20:14):
but if they don't, you just use the standard right.
And then for married couples filing jointly, that numbers up
to thirty thousand dollars. Okay, tax brackets will remaining the same.
But another common misconception is that if you're in a
certain tax bracket, that's your tax rate across all of
(20:34):
your income. And that's not the case. Okay, tax brackets
are marginal. So there's the ten percent tax bracket, the
twelve percent tax bracket, the twenty two to twenty four,
the thirty two, the thirty seven. So a portion, if
you're in the thirty seven percent tax bracket, a portion
of your income is getting taxed at ten, a portion
of your income is getting taxed at twelve, at twenty
(20:55):
two and twenty four, and so on and so forth. Right,
And the spread of income in which that's getting taxed,
it's increased every you're similar to the standard deduction, there's
an inflation increase on the taxability of your money. Right,
So the top tax rate is still thirty seven percent.
And there are some serve taxes that high earners do have,
like the net investment income tax, which is a three
(21:17):
point eight percent tax in addition to your marginal tax rate.
Find your investment income right. And this is only for
higher earners, right, it's not for folks that you know
are living in poverty or you know earning fifty thousand
dollars a year. This is for folks that have investment
income and their high earners to wait for the high
erres to collect more revenue on high earners without you know,
(21:38):
basically hiring the top tax rate. Right, So the thirty
seven percent tax rate for single tax payers, it's for
income over six hundred and twenty six thousand, three hundred
and fifty dollars, and for married couples it's seven hundred
and fifty one thousand, six hundred dollars. Right, So between
those two numbers, there's only a one hundred and thirty
(21:58):
thousand dollars difference, but the difference is one person and
two people. So it's kind of a penalty to be
married if you're a higher earner because you're going to
have a higher tax bill. Right, They don't give you
a break on the highest tax rate if you're married.
It's actually a penalty to you. So something to pay
attention to their you know, this is all part of
tax planning, right. You know, decisions can be made in
(22:20):
terms of marriage if if you know, money is the
major objective for you as a couple, and it's something
to pay attention to because you could really get hit
with a larger tax bill if both of you are
high earners. We're going to take a quick break and
come back and talk about some more tax and trade
policies in the US. You're listening to Let's Talk Money.
I encourage all listeners to call on Moore back. It's
(22:42):
eight hundred talk WGY. That's eight hundred eighty two five
five nine four nine. Hi, you're listening to Let's Talk Money.
My name's Vincenzo Tesla. We're coming back from the break
(23:04):
and we're gonna go straight to the phones. We have Jim, Yeah, Manny.
Speaker 3 (23:11):
First of all, thanks for your time this morning. I
have I have a tax question and I'm gonna just
give you this scenario private quickly. So my wife and
I are looking to retire soon. All of our savings,
all of our retirement savings. For the most part, it's
going to be in an IRA or a four oh
(23:33):
one K. She does have a small pension, maybe about
fifteen thousand dollars a year. But I've got a brokerage
account that I've had for a long long time, Vanguard
Mutual Funds, and there's probably you know, there's several hundreds
(23:53):
of thousands of dollars of capital gains there that I'm
just sitting on, and i'd reading more about perhaps like
my first year of retirement or maybe even my second year.
You know, I don't take anything out of my IRA,
I don't take anything. I don't take my Social Security.
(24:13):
I keep deferring that out, and I start to sell
some of those mutual funds take the games because it
appears that there's like ninety six thousand dollars after my
standard deduction that I would actually be taxed at zero percent.
(24:35):
Have you heard of this or recommended this kind of
strategy for anybody?
Speaker 1 (24:40):
Or oh, yeah, for sure, for sure. So you know,
as a firm, we don't use mutual funds for one
of two reasons, right, we use ETFs and mutual fund
You don't use mutual funds because they have high expense ratios, right,
Because there's an active manager managing your mutual fund, right, and
that costs money. Right, So they're selling in and out
of positions within your mutual fund, and there's someone they're
(25:02):
paying to do that, right, So mutual funds tend to
have higher expense ratios than ets. On the flip side,
the positions are selling in and out of are generating
capital gains within themselves. So at the end of the year, Jim,
you're getting capital they call capital gain distributions, and you
have to report those on your tax return. And and
this is not if you sold your mutual one position,
you get these issued to you at the end of
(25:23):
the year. Either way, it doesn't matter, right, So you
have an uncontrollable amount of money coming into your taxable income, right.
So that's and I say this because that's one part
of your taxable income that you don't know what that's
going to look like at the end of the year, right,
And these mutual funds have deadlines, right that you have
to sell these positions by within the year or they'll
(25:46):
issue those capital gain distributions either way. So even if you,
let's say, sell on December fifteenth, but the deadline was
December tenth, they're still going to issue that capital gain
distribution for the end of the year, and you have
to pick up the capital gain that you sold that
you have to realize when you sold out of that position,
so you can get double wain meat essentially. So what
you're saying is correct. If you have I believe that
(26:08):
it's around that number too, Jim, it's abound ninety eighty
to ninety thousand. I don't know off the top of
my head, but if you have that in total taxable income,
you can have zero percent capital game tax. That's correct,
But the pension comes to the play too, right, and
then also monitoring how much that capital gain distribution is
going to be on the other positions that you don't
sell that year, right. So it's kind of complicated, and
(26:29):
it's something that I think you'd have to like really
analyze and do it a year end, and I'd probably
advise you to work with a professional on it if
you're not you know, that educated on you know, the
tax side of it, because it does get more complicated
than just that. But yes, that is a great strategy.
I have advised clients to do that, and we have
done you know, very in depth analysis and planning for
(26:51):
clients on that level. So yeah, that's a phenomenal strategy.
Definitely would recommend that. Yet, don't pull anything out of
the IRA, start exiting those mutual funds, maybe work with
an advisor, potentially invest those money into ets and get
them out of those high costs mutual funds that are
issuing those capital gain distributions at the end of the
year anyway that you're paying tax on. So definitely something
(27:11):
I've recommended multiple times of many clients and planned around that.
Speaker 3 (27:15):
Okay, so the topic of the mutual fund, So these
are Vanguard. So I'm in Vanguard mutual funds.
Speaker 1 (27:21):
Now.
Speaker 3 (27:21):
The problem that I have or is that you know,
I've been in them since I was thirty and now
I'm sixty, right, so I've got sizeable capital gains and
ETFs weren't available then. I mean, so for me to
get out of the mutual funds, and I totally understand
what you're talking about. Every year I see that they
they they whacked me with capital gains that I really
(27:42):
didn't see for I didn't wasn't me that sold them.
They did it, right, But you know, primarily Vanguard has
been low cost mutual funds as well, at least thirty
years ago they were, so Unfortunately time kind of went
on and I never had you know, every time I
would if I was to sell, you know, I would
(28:03):
have been paying capital gains and I was just like,
I ain't selling, right, I mean, just gonna keep holding
these things. But now now it comes to a point
in order me to convert them to an ETF, I'd
have to take a large capital gains hit to do that, right,
So that's why it sounds like maybe just bleeding it
off slowly might be the best answer. But I understand
(28:27):
that I don't know every year. It varies a little bit.
Last year, you know, there were twenty thousand of capital
gains this year of fifty thousand. You know, it's like
I don't control it, and I know what it is
because I see it issued at the end of the year.
Speaker 1 (28:44):
Yeah, exactly right. And that brings up an even better point. Right.
When I taught to clients about this, you're reluctant to
do it, right because you having to pay tax potentially
is a scary thing, like paying more tax than you
have to, right, But when they're issuing the capital gain
districts musions at the end of the year, you're paying
it anyway. Right. So what I tell my clients is
rip off the band aid, sell out of it. Figure
(29:05):
out how much you're comfortable paying to the I R
S and state though, right, like fign that number, work
with a professional and tell them that, right, and have
them exit those positions for you in efficient manner and
tax efficient manner. And if there is any tax do
from it. You're ripping. You're paying it year after year
anyway when they issue the capital gain distributions. Right, So
if you just get it out of the way, you know,
(29:26):
like I said, rip that mandate off and sell those
positions and get it over with. It's not something you
don't have to worry about anymore. It's not something you
have to think again, your vestments will be more efficient,
they'll be more tax efficient. And you know, mutual funds typically,
you know, they don't more often than not don't outperform
the S and P five hundred anyway, So you know,
you know, our philosophy is to just stay out of
(29:48):
mutual funds. And you know the advice I would give
you is work with work with a professional, rip off
that band aid, and do it in the most tax
efficient way possible.
Speaker 3 (29:56):
Okay, thanks for your time, have a good day.
Speaker 1 (29:59):
Thanks him. I encourage all listeners to call in at
eight hundred talk WGY. That's eight hundred and eight two five, five,
nine four nine. So just to dive a little bit
more deeper into the US economy, there is some big
news that came out this week regarding tariffs, right, and
you know, obviously Donald Trump is the president. Now he's
(30:20):
talked about and posting tariffs on you know, specific countries
mainly because of you know, trade imbalances, and he's trying
to kind of muscle these countries a little bit more
and kind of have them bring their companies and manufacturing
into the US and promote US jobs and things of
that nature. And obviously, you know, with Mexico, there are
some issues with drug trafficking and you know, Trump feels
(30:42):
that Mexico is not doing anything about it and they
should be. And we're you know, you know, getting the
negatives of the drug trafficking and that Mexico should pay
you know, because of this and and start doing something
about it. So, you know, effective in two days, there
will be tariffs implicated on Canada, Mexico, and China and ed,
why don't you talk a little bit further about those tariffs.
Speaker 2 (31:06):
Yeah, So for Canada and in Mexico, we're looking at
a twenty five percent tariff each and then while China
is going to start at only ten percent. So I mean,
he has said that, you know, he's open to adjusting these,
you know, I believe I even saw some news I
think Canada is going to be implementing a tariff of
(31:29):
their own on US goods, or at least plans too.
But it is certainly a way for you know, Trump to,
as you said, Vinnie, you know, kind of try and
muscle uh these other companies. And I think he really
is trying to reassert you know, America as the world superpower.
(31:51):
But the one big risk that these tariffs, you know,
have is is they are inflationary, and you know, a
lot of the aspect of them is passed through directly
to retail consumers unfortunately. I mean it's just what studies
have shown as far as tariffs go. I think it's
you know, almost seventy percent of the costs get passed
(32:12):
through to consumers, you know. And it's also certainly interesting
to see what industries are impacted the hardest. So you know,
that's kind of something that time will tell and we'll
see how these shakes out. But overall, I think the
Federal Reserve themselves are concerned about these tariffs, and so
(32:33):
are companies. I saw stat today that over one hundred
and sixty companies on earnings calls this year have mentioned tariffs.
That number is up drastically from you know, last year
where they may be mentioned in a handful. So companies
are concerned about them. The Federal Reserve is certainly concerned
(32:54):
about them. You know that they paused this week. That
was as expected. But one of their you know, big
citations for why to pause is, you know, they do
see some inflationary potential as a result of these these tariffs.
Speaker 1 (33:11):
Yeah, I mean for sure, you know, so anytime in
the short term, tariffs are going to be passed on
to the consumer, right, But you know, who knows what's
going to happen in the long term. Right. Trump is
doing this for a reason. He has a long term
goal planned to sort of force these companies or these
countries' hands and the companies within these countries to you know,
(33:33):
start to do things that benefit America. Right in the
short term, it's going to increase costs, and I don't
know what's going to happen in the long term, right,
But the idea is that you know, Mexico starts fixing
the issues of drug trafficking into the US and their
government starts doing something about that, and just like balancing
out the trade and balance we have with these countries.
(33:53):
So that's really what the goal is here. But in
the short term, there might it's obviously going to be inflationary, correct,
and who knows what's gonna happen in the long term,
But that's really the main goal. And hopefully, you know,
if these terrorists stay on, that is what happens, right,
these companies start bringing their manufacturing over to US, it
creates US jobs and you know, in turn lowers costs
(34:14):
of goods in the US. So hopefully we'll see what
happens there. But you know, we're talking earlier in the
show about China and how you know, there is obviously
tension between the US and China, but you know, that's
another risk like this is gonna it's it's heightening global
trade tensions for sure, between China and US. And I mean,
(34:36):
China is not gonna just put their head down and
you know, look the other way and just fold Canada
and Mexico, you know, may you know, they really don't
have as much leverage as China in terms of their
economy and their reliance on themselves as a nation. So
that's definitely a big risk. You know, ticking off China,
(34:56):
So just something to kind of monitor there and kind
of interested to see what happens moving forward. We're gonna
take a quick break. I encourage all listeners to call
when we come back at eight hundred Talk WGY. That's
eight hundred eight two five five nine four nine. You're
listening to Let's Talk Money, brought to you by Bouchet
(35:18):
Financial Group, where we help our clients prioritize their health
while we manage their wealth for life. Thank you. You're
listening to Let's Talk Money, brought to you by Bouchet
Financial Group. My name is Vincenzo Testa. I am encouraging
all listeners to call in at eight hundred talk WGY.
(35:38):
That's eight hundred eight two five five nine four nine.
So you know, like I told you guys before in
the show, I am a CPA and a CFP, but
I do have another license which is called ECA, and
it's what it means is equity compensation associate. Right, So
equity compensation is basically supplemental compensation and you receive from
(36:00):
your companies, usually public companies, when private companies do this too,
giving you ownership in the company that you're working for. Right,
and that could be through stock options, that could be
through RSUs, which are restricted stock units. It's basically the
company giving you the stock. Stock options are the company
allowing you to purchase the stock at a specific locked
in price. Right. And then there's espps right in employee
(36:24):
stock purchase Plans, which is the company giving you the
opportunity to buy the stock at ten to fifteen percent
discount potentially, right. So they have all of these forms
of equity compensation that companies will give to their employees, right,
and it kind of incentivizes the employees. Right, you're working
at this company. You not only you know, you know
(36:44):
you're working a collaborative team effort with all the people
you work with at this company, but now you own
the company essentially, so you kind of have some skin
in the game to increase the stock price. So if
the company does well on earnings calls, and you know,
moving forward year after year, you're going to get wealthier. Right,
So it gives employees some skin in the game, and
it gives them some motivation to work harder, you know,
(37:07):
for lack of a better term. So one of the
things that I do really deeply with clients at the firm,
and well, we're working with a lot of companies in
the area, you know, Regeneron, Amanti, all these companies in
the Albany area that are public on managing clients equity compensation. Right,
And there's a lot of reasons why it's so complex.
(37:28):
There's so many factors that go into play when managing
equity compensation and the tax ability and you know, aspects
of each type of equity compensation are different. Right. When
it comes to RSUs, when you get an RSU, there's
a vesting period, right, you might have to stay at
the company for three years before you're restricted stock units
(37:49):
vest and when they vest, they're all taxes ordinary income. Right.
And then if there's any gains on those RSUs and
you sell them, their capital gains, whether they're short term
or long term. So they're tax much differently than stock options. Right.
So stock options, you're not getting actual stock, you're getting
the opportunity to purchase the stock at a specific price. Right.
(38:11):
So let's say you worked at Apple, you and you
have stock options that the company issued you with an
exercise price of twenty dollars and the stock price is
one hundred, right, So they didn't invest until three years
after you receive them. But the stock price is now
one hundred, right, So if you exercise your stock options
and purchase Apple at twenty dollars, you now have eighty
dollars spread on each share that you have to pick
(38:33):
up as capital gains. So it does differ between which
equity comp you're receiving from the tax perspective, and it's
something that you have to monitor. And before I go
any further, we do have a caller route from Watervali. Hey,
good morning, Hey Ralph, how are you?
Speaker 5 (38:53):
I'm doing with it, but I'm good to splaining just
a couple just actually two quick questions, one being you
just talked about tariffs and bringing jobs back to the
United States. The jobs are actually now in Chine in
other countries because the labor is so much cheaper. So
now while we all want to bring them back, that
is also going to increase prices because the companies are
going to start to charge They're gonna have to pay
more for labor in the United States, which we all
(39:14):
deserve that and so those prices are gonna be pissed
on a consumer. Also, as far as I can, as
far as I think about it, what do you think
about that.
Speaker 1 (39:24):
Now? For sure? That definitely you know, that's definitely something
that could happen to right, And like I, like I said,
I don't know what the long term effects of this
are going to be. Obviously we all, you know, for
the sake of the US, we all hope they're positive
and increase the consumer's bottom line, right and good end
up being cheaper for sure, that's Ralph, That's a great point. Yeah,
definitely something that could occur as an effect of this
(39:46):
and something that we need to be monitored. Is scary,
right because you know, the fear of the unknown, right,
that's really what we're all feeling here with this. We
don't know what's gonna happen, and it's a really scary thing.
But I guess we will have to say.
Speaker 5 (40:01):
One of the two other questions, what is it an
ETF exactly? And I've heard another shows on this on
Sunday morning about insurance trust at l I T or
l I L t R something.
Speaker 1 (40:16):
Yeah, yeah, Life Trust Live Insurance Trust yeah yeah. Okay,
So so I'll let Ed as our portfolio analyst here
at the firm, and I'll let him describe exchange trade
funds to you.
Speaker 2 (40:34):
Yeah, so et I think extine trade fund. It's just
going to track an index, right, So, I mean while
the fund company is going to hold some of the
underlying investments, I mean it's essentially just like a mutual fund.
You know, most of them are going to be passive,
but there are a lot more tax efficient for the
(40:54):
fund family, which is why you get all the advantages.
You know, it requires them to do much less active
trading on their ends, but I mean for all intensive
purposes and for anyone listening, they're essentially just like a
mutual fund. They're just not going to pay out those
capital gain distributions and they are gonna tend to be
on the less expensive side.
Speaker 5 (41:16):
Now is that also an index fund?
Speaker 2 (41:21):
Yeah, so some of them are index funds. I mean
it's going to depend on ETF specifically, and they do
have actively managed ETFs now, which are you know, probably
more similar to a mutual fund than we'll kind of
be in between the price of a passive ETF and
a mutual fund.
Speaker 4 (41:42):
All right, thank you.
Speaker 5 (41:43):
How about the l I T or the life insurance
thing trust, I don't remember exactly what are you.
Speaker 1 (41:48):
Just curious to what it is? Ralph or give it
more specific question.
Speaker 5 (41:52):
Yeah, how do you get involved with it?
Speaker 1 (41:54):
Is that worth? Is that worth wild investment? Yeah? I
mean you know a life insurance try. I mean they're
obviously you know, a trust with life insurance in it. Right,
So basically you go to the state attorney and having
a discussion with them to see if it makes sense
for you to do this right. And there's two types
of life insurance trust. It's irrevocable right, which is a
trust that can't be revoked right by the person who
(42:17):
created it. And then there's revocable right, which can be altered.
The terms of it can be altered, but really the
purpose of it is to make sure life insurance proceeds
get to a beneficiary. Right. And then if you know
the individual who passed away had a pretty significant estate, right,
there could be a potential a state taxes. So having
a life insurance trust, I mean, and this that number
(42:39):
could be it has to be like your network has
to be like north of like twenty four million if
you're married, So just keep that in mind. But it
could help avoid a state taxes or reduce your state
tax liability if there is one already avoids probate, right,
so ons one passes away. You know, your assets have
to go through probate to pay off any creditors or
people that want to like you know kind of you know,
(43:01):
say you owe them money, So it has to go
to that probate court with the trust it does not.
So there's a lot of benefits to it, and I
think it's worth talking to with a state attorney and
determining if it's the right move for you. O.
Speaker 5 (43:14):
Thank you, thank you Jemen for your time. I'm listening
on Sunday morning a couple of different shows and there's
a lot of information. It's it's fun, ensorbable and sometimes Yeah.
Speaker 1 (43:23):
Always feel free to call in. Ralph, thanks for calling.
We do have another caller, Mike from Troy. Yeah, how
you're doing? Like the show real quick? I just have
a couple of quick Mike, you prefer target funds or
high yield diversified funds right now? In my work, Ira, Yeah,
(43:46):
so we so as a firm, we always recommend our
clients because we do look at client four one ks
and give guidance on investments right because we're not managing them,
so we do give our clients a guidance on investments.
So We're not big proponents of target date funds as
far as high yield index funds go. Let ed kind
of explain a little bit more about that.
Speaker 2 (44:08):
Yeah, So I mean I'll just touch a little bit
more on target date funds. I mean, I don't know
how familiar you are with them, but those are just
gonna change, you know, as time goes on. They're gonna
you know, scale back the risk just by using you know,
the ratio of equity to fixed income. So you know,
as time marches on, they're just going to increase the
allocation of fixed income in the account. But for most investors,
(44:29):
what I've seen is is it just leads to them
being you know, less risky, probably earlier than they they
would like or would be comfortable themselves. So you know,
you can you can just miss out on some of
those equity returns when you're you're definitely still more comfortable
taking that risk. So that's definitely why we like, uh,
you know, kind of a pool of you know, diversified
funds that you know, we put together and recommend for
(44:52):
our clients. And then on the high yield index fund,
can you give me a little bit more information, I mean,
is that just a a fixed income fund or you
know what type of high yield.
Speaker 4 (45:03):
It's an active high yield bond fund.
Speaker 2 (45:08):
Okay, yeah, I mean so high yield. Really you're just
to get that high yield compared to a normal bond fund,
you're gonna take a little bit more credit risk. So
you're not gonna be some investing in you know, investment
grade companies. You're gonna be looking more like double B
triple B rated companies right now. I don't I don't
think there's a ton of credit risk out there. I
(45:29):
think for the most part you'd be pretty stable. But
so you're gonna clip a higher yield in there. I
think it's good to maybe have a portion of your
fixed income allocation there. I definitely wouldn't put, you know,
your entire fixed income allocation into that fund, though I
would definitely leave some, you know, just on the intermediate
core side as well.
Speaker 1 (45:51):
Okay, thank you very much, thanks for calling in, Mike,
So before the break around for the phone calls in
rather talking about equity comps. So just want to quickly
touch you know, pass implications are different for each type
of equity compensation. You don't want to be overly concentrated
in the company you're working for right puts you a
(46:11):
lot of risk things go south. You might lose your job,
stock price might go down, your networks will go down,
could mess up your entire financial plan. So do a
lot of analysis for our clients in that regard when
it comes to equity comp If you do have any
equity comp and you're interested in getting some help, always
feel free to reach out. We're coming to the end
of the show. I appreciate you all listening in. I
(46:34):
can't promise Lea back by next week, but Steve will
probably be on. But you're listening to Let's Talk Money.
Brought to you by Bouchet Financial Group, where we help
our clients prioritize their health, where we manage their wealth
for life. Thank you.
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