Let's Talk Money

July 12th, 2025. 

Episode Transcript

Speaker 1 (00:01):
Good morning everyone. Thank you so much for joining me
on this lovely summer weekend. My name is Harmony Wagner.
I'm a wealth advisor here at Bouchet Financial Group. I'm
a Certified Financial Planner or CFP and also a Certified
Private Wealth Advisor or CPWA. It's a pleasure to be
here with you on this beautiful morning, and I hope
that you're having a relaxing weekend. Whatever you're doing don't

(00:23):
all about our listening audience. But for me, I find
that summer it can be such a busy time. It
feels that during these couple months of really nice weather
that we get here in the Northeast, that there are
so many parties and get togethers and things that we
want to fit in that it can become a really
busy time of year. And so I just wanted to
take this moment to say that I hope you're finding
a time to relax and get some rest this weekend.

(00:46):
It's always a good reminder to take that time to
restore your mental health, your physical health, and to do
that even in a busy season. I remember in college
reading a book about you know how important it is
to I think they use the term sharpen the saw
and thinking about how you know, if you're cutting wood
with a dull saw, even though you think I'm going

(01:08):
to be more efficient if I just keep on going
and don't stop to sharpen it, that you actually will
will spend more time and work much harder doing that.
So it's always a good reminder in our own lives
to take that time to sharpen the saw, and you'll
make yourself more efficient and better in other areas of
your life. So anyway, for the next hour, we're going
to be discussing all things financial, the markets, the economy,

(01:30):
financial planning. I'm gonna throw a little tax in there,
a little uncharacteristic for me, but we'll get to that.
It's it's a timely topic right now, and anything else
that you as listening audience want to discuss. I want
to remind everyone the phone lines are open. That number
is one eight hundred talk w g Y one eight
hundred eight two five, five nine four nine. And if

(01:53):
you are in a place where you you can't make
a phone call or you're more comfortable asking a question
in a written format, we also have an email inbox
that you can use, so that email address is ask
ask Bouche b as in boy oh U c h
e y at bouchet dot com. And if you'd like
to send a question via email, please feel free to
utilize that and I'll do my best to get to

(02:14):
whatever questions come in. Well, let's kick things off with
a market recap for the week. So markets at large
fell this week slightly, mostly because of Friday's trading session. Actually,
at the close of market on Thursday, we saw markets
hit a fresh all time high that was the eighth
all time high of this year. Now, in comparison, in

(02:35):
twenty twenty four, we actually saw fifty seven all time
highs reached. That was the fifth most of any year
in history. Of course, you know, we're all familiar with
the volatility that happened earlier this year, but we have
seen a market recovery since since the most depth of
the volatility back in April. And so for this week,
the s TOB five hundred fell about point three percent,

(02:56):
the Dow was down one percent, the Dad's Deck down
point one and the Russell two thousand down about point
six percent. But even with you know a little clouds
coming in towards the end of the week. We still
are seeing you know, strong performance for the year on
most of these major indexes, the sb five hundred up
six point four percent, NASDAC just a hair hire up

(03:16):
six point six percent for the year, the Dow up
at four point three and the Russell two thousand trailing
at zero point two percent, So we were seeing more
more strength in the markets. You know, we did see
a lot of terarf related headlines this past week, continuing
all the way through Friday, and it was honestly hard
to keep up with the barrage of announcements and different

(03:37):
things that were coming out because it just was such
such rapid fire. But markets at large really seem to
shrug off a lot of the talk. August first is
the new deadline for the promised tariff increases. It's been
extended a little further. And you know, one hypothesis is
that markets are expected to change a lot more, or
maybe the tariff should expected you to change a lot more,

(03:58):
i should say, between now and then. So you know,
we've seen that already, where you know, just what's announced
is not necessarily what's going to actually take effect, and
that's one possible reason why markets are not reacting very
strongly to the tarif announcements of the past week, because
we did see markets really putting up strong performance all
the way through Thursday, reaching a new all time high.

(04:20):
So it does seem at this point to be par
for the course that you know, tariff headlines come out,
but they're not necessarily as impactful to the markets as
they were back in April when we saw, you know,
more extreme volatility. In this uncertain world, the only certain
thing seems to be that the plans are going to change.
So you know, right now, it doesn't seem that investors
are putting much stock. I hope you appreciate that pun

(04:42):
into the headlines of the day and then and then
news breaks, so and it's interesting to watch how it's
all playing out and how the sentiment seems to have
changed in just a few short months. When we're looking
at stock valuations, stocks are not looking cheap right now.
The se five hundred valuations are higher than the long
term average. Now this doesn't always mean a correction is imminent,

(05:03):
a correction back to the average valuations, but you may
hear some analysts expressing concern in it, so it is
something to keep an eye on. However, when we look
back historically, it would seem that, you know, the power
that draws valuations back to the equilibrium point is relatively weak.
It's not something where we're going to see an immediate
correction in the markets just because valuations are high right down.

(05:26):
So something to keep an eye on, especially as you're
you know, interested in going to that level of attracting
the markets. But you know, from our perspective, it's not
something we're expecting it to correct back to the mean
in any you know, super super quick manner. Bond yields
climbed on Friday, and the yield on the ten year
Treasury note rose up to four point four to two percent.

(05:46):
That was up from four point three five percent on Thursday.
We also saw bitcoin touch a new high of over
one hundred and eighteen thousand on Friday before it did
cut back a little bit before our market closed, but
we saw that that high in the bitcoin. Economically, it
was a relatively quiet week. But do this coming Tuesday,

(06:07):
we'll see the June CPI report coming out, so there'll
be a lot of you know, things to glean from
that in terms of what the Fed may do. Right
We're seeing a lot of talk about when are they
going to cut rates, and because the economy has been
so strong, they may not feel this downward pressure that
they need to. So, you know, watching inflation making sure

(06:27):
it's still behaving as expected will be a key point
that I'm sure they're looking at and investors as well.
You know, I expect to see you know, investors keeping
a close eye on that. We also have a few
big banks kicking off the second quarter earning season on
Tuesday as well, so there'll be some big news coming
out on Tuesday as as we as we go forward here,
and you know, again just more indicators on what is

(06:49):
the current health of the economy. You know, it has
been in such a strong place for so long, so
we're always watching to see, you know, what's going on.
Is there anything that's pointing towards a change in trend
on economic front? Now what do we do now? You know,
with markets back to all time highs, you know, I
always like to boil it down to the portfolio guidance

(07:09):
and what it means for us average investors. One thing
that we're doing for our clients right now in their
portfolios is with markets hitting all time highs again, it's
a good time to refill cash for upcoming needs, especially
those who are taking regular distributions. If you're taking from
your portfolio monthly or quarterly, or even more frequently every

(07:31):
twice a month, and you may have drawn down some
of your cash during the volatility, and actually hopefully you did.
We wouldn't want you raising cash while the markets are down.
Our philosophy is to keep one to two years worth
of any known cash needs set aside, not invested in
the market, in a very conservative strategy. Now that does
it mean that the money's not working for you. We

(07:51):
use money market funds, so you're getting over four percent
on the money that's that's sitting there waiting to go out,
but it's not exposed to market volatility. And when you
look at some of the extreme that some of the
market risks that present themselves to folks who are living
off their portfolio, whether you're a retiree or just someone
who needs a little bit of supplemental income from the portfolio,

(08:12):
one of the major risks is, you know, not being
prepared for times of volatility and having having to sell
out positions that are at a loss to raise cash
for your needs when the positions are at a loss
you sell, you really realize that loss, and you erase
your opportunity to have it recover. And so that is
a big risk. And so when we know about cash

(08:34):
needs for our clients, if we know they're going to
be taking X dollars a month, or if we know
that they're going to need to take a larger withdrawal
maybe six twelve months down the road, we set that
aside for them and then when the markets are down,
we just let that ride. Right, we use the cash,
We're not refilling it because markets are down. We want
to leave the invested part of the portfolio to spring

(08:54):
back when the markets recover, and so we just live
off of that. Now that markets are back to all
time highs, you know, we're halfway through the year. Perhaps
our clients have only eighteen months left. If they started
with twenty four at the beginning of the year, maybe
they have only eighteen months left. It's a good time
to refill that and get that back up to our
target of you know, two years. Things to consider if

(09:14):
that's a strategy that you pursue, is you know, what
type of account that you're worthdrawing from. So if it's
an IRA, no trades are going to be taxable. You
can make trades within that IRA account without worrying about
realized gains, so it's not as much of an implication there,
but if it's a taxable account, you do want to
be aware of what gains you may be realizing and

(09:36):
your tax situation and how those are going to affect you.
If you realize a lot of gains at one point,
do you need to make an estimated tax payment? And
if you're working with a tax prepairer, he or she
might be able to help you with that, but it
is something to be aware of. You know, whenever you're
making trades in a taxable account, there's a potential for
current year tax obligations, so something to consider and that's

(09:57):
you know, how we analyze it as well. When we're
looking at it, we always try to way the tax
costs with the right investment steps and try to find
a happy medium to accomplish goals on on both sides
of that of a client's financial picture, other things to
consider is whether you foresee any changes to cash flow
and making sure that you're planning for those, particularly if

(10:18):
it's going to be increasing, but even if it's going
to be decreasing, or you maybe you're going to start
taking Social Security and you don't need to take as
much from your portfolio a year from now. Those are
all things that should go into it, so it's not
always cut and dry, you know, just have two years worth.
There's so many things that you want to be thinking about,
from the taxes to upcoming cash needs and making sure

(10:39):
that you know you're doing the right things for yourself
in your portfolio. You want to be conservative with money
you need in the short term, but not too conservative,
especially with the money that you aren't going to need
in the short term. So many many different factors to
think about. But with market sitting all time highs, especially
in iras, but you don't have any tax applications for
putting the money from an invested part of the portfolio

(11:01):
into a cash management strategy like a money market fund
or a short term bond or something like that, it's
a good time to do that. Capture the games and
make sure you're set up for the future success. Well,
we are a little more than halfway through the year
as well, which is shocking to think about, but it's
also a good time to take stock of your savings

(11:22):
and see if you're on track to meet the savings
schools that you had for the year. Maybe you started
out the year and you wanted to max out your
four oh one K, or you wanted to save into
a health savings account an HSA. There's a lot of
different things that maybe were part of your New Year's
resolutions way back when, so far back it's hard to
remember now, but it's a good time to check and

(11:42):
see how you're doing. Here are some of the limits
that you might want to be aware of if you
are trying to max out. So for twenty twenty five,
the four to oh one K limit is twenty three thousand,
five hundred a year for the under fifty crowd. For
those over fifty, you're able to save an additional seven thousand,
five hundred. And there actually are some additional ketchups allowed
if you're in a very specific age range between sixty

(12:05):
and sixty three, there's some additional ketchup amounts that are
allowed into retirement plans. Now, while they left out the
sixty four and older crowd, I really can't tell you,
but if you are in that magical range and you
had the ability and the available cash to save more
you can shelter some higher amounts of income in your
pre tax retirement plan if you're still working, So if

(12:27):
you plan to max out the year, you might want
to check in and see how you're doing. Are you
halfway there? Do you need to make any adjustments to
hit that goal before the end of the year. Much
easier to make those in July than it is in
November or December, So just a friendly reminder that it's
a good time to do that mid year health check
in for your financial health For HSA's the limit for

(12:48):
this year is four thy three hundred for a single
or a self covered plan, and it's eighty five hundred
and fifty for family, and for those fifty five or
older they can add an additional one thousand to those.
So the health savings accounts are great. We talk about
them a lot. If you are covered by a high
deductible health plan, you're eligible to save into those and

(13:08):
you get a tax benefit for saving, and every contribution
is tax deductible. The money's going to grow tax free,
and as long as it comes out for qualified medical expenses,
you will not pay tax in the distribution as well,
so it's a triple tax advantage when used correctly type
of vehicle, and you know, when you think about just
the cost of healthcare, it's something that for most people

(13:30):
they're going to be able to find a way to
use it. So it's a really powerful tool to shelter
some dollars from tax purposes and utilize it for your
future or your you know, your family's health needs as well.
For iras and roth irays, the contribution limits are the
same as last year, so seven thousand for under fifty,

(13:50):
eight thousand for those fifty and older, and that's combined
between the two, right, So you can't put eight thousand
into your traditional pre tax iray and eight thousand into
a ROTH. It got the eight thousand between the two,
so whether you do all into one or split some
combination between the two, eight thousand per person, and if
you're married, your spouse can do it as well. You
have to have earned income and there are thresholds on

(14:12):
the upper side as well where you may phase out
from being able to do so if your income is
too high. So it's worth looking into whether you as
an individual or family are actually eligible for it. But
if you are contributing to those and you're eligible and
you're planning to. Those are the limits, and again just
a reminder to make sure you're on track to meet
whatever goals you set out for yourself at the beginning
of the year. Right, These are all the maximum contribution amounts,

(14:33):
so you may have your own safety s goals for
the year for an amount that's within your reach. So
just making sure you're on track. We talk so much
with clients, of course, about the power of compounding and
getting these long term dollars into the market as early
as possible. You know, I've always seen the quote and
I may misquote it now I don't have it in
front of me, but that's quote about how the best
time to plant a tree was twenty years ago. The

(14:54):
second best time is today. This is the second. This
is a powerful concept for investors. Well, right, So I
do have people come to me and they're maybe they're fifty,
and they are, you know, feeling regret that they did
not save in their twenties or save as much as
they wanted to or wish they did. But you can
start today and it's really never too late, you know,

(15:15):
whether you're twenty, forty five, sixty, start saving today. Get
that compounding clock going now. You know, when we do
our financial planning for clients, we run plans out to
age ninety five, So even if you are sixty, you
still got thirty five years by our planning standards to
have that money grow. And you know, hopefully there's also
some left for your airs at the end of your life,
so it really can be long term money no matter

(15:37):
how old you are. So get that compounding going for
you now. Don't let another year go by. You know,
if you wanted to save this year, start now. Even
if you didn't start in January, start now, see as
much as you can get in there. If you wait,
you know, let this year pass by and then all
of a sudden you're trying next year, you just are
going to feel like you're playing catchup. So get that going,
even if it's not as much as you wanted to save.

(15:57):
Start saving now. Any of those ops that I mentioned
can be great tools, and they have their own benefits,
so it's worth doing some research, maybe talking to your
advisor or finding an advisor to help you determine, you know,
what's the best savings plan for you, how are you
going to meet your goals, and what's the best path
to you know, make your tax situation most optimal, your

(16:19):
retirement future most optimal. There's lots of different options out there. Well,
we're going to take a quick break right now, but
we'll be right back with more. Let's talk money on WGY.
Don't hi there. Thanks for staying with me through that break.
This is Harmony Wagner joining you on this lovely summer weekend.
I'm a wealth advisor here at Bouchet Financial Group, a
CFP and a CPWA, and it's my pleasure as always

(16:40):
to join you for an hour to talk about all
things financial, all the markets, the economy, financial planning, and
things that are beneficial things that you might want to
consider for your own personal finance. If you have a question,
oh that you want to ask, please feel free. The
fall lines are open. The number is one eight hundred
Talk to Ugy one eight hundred eight two five five

(17:03):
nine four nine. You also have the ability to send
a question via email. That email address is ask that's
ask Bouche b O U C h E Y at
Bouchet dot com. So you can type in your question
to ask Bouche at Bouche dot com and I will
do my best to get to it well. Something that
you may not know about me is that I actually

(17:24):
have my my degree in accounting, and when I was
first choosing a path in college, you know, I kind
of got pushed towards the accounting route, although I had
been planning more on a general business degree. But you know,
an advisor told me I should challenge myself a little
more take the accounting path, and of course, in that track,
most of my class beans were planning on setting for
their CPA. And whenever anybody asked me what I have

(17:45):
planned to do after college, my response was, you know,
absolutely not not taxes. As much respect as I have
for the profession, I really was not cut out for
or seeking the tax preparation side of things. Now I
feel very grateful that I landed in this field of
financial planning, so I get to do a lot of
the strategic help with taxes and tax strategies without having

(18:07):
to actually give tax advice or doing the actual tax preparation.
I can leave that to those with that skill set.
Now you're probably wondering why I'm telling you all this. Well,
you might have noticed if you've listened to you know,
me to hosting the show before, it's quite rare for
me to deep dive into a tax related topic, But
today I am going to do that, this time with

(18:28):
the passing of the One Big Beautiful Bill Act, which
you will probably start to see shortened a lot to
oh BBBA. It's only one week in the rear view.
It was signed on the fourth of July, and so
I felt it'd be a little remiss of me not
to mention it. We're having a lot of clients asking
about it. A lot of people are either excited and
or concerned or both about what the changes might bring

(18:48):
to them personally. So I do want to talk about
some of the things that we're seeing from the new
bill and how it's going to affect people, especially, you know,
just generally a few disclaimers before I do, though. First
of of course, your taxes are unique to you, so
any generic tax information should be reviewed by a tax
professional that's familiar with your situation before you take any

(19:09):
action on it. And secondly, this information is based on
our best understanding of the HR one version of this bill,
right it was just sided a week ago. As we've
seen in recent history, these interpretations are going to change
over time, most likely, and as we go forward, hopefully
the IRS will start to provide more concrete guidance on
how this new legislation should be applied. So some of

(19:30):
you may be familiar with a Secure Act past the
December of twenty nineteen, and then the Secure Act two
point zero past several years later. So those that first
one took effect in January first, twenty twenty. They had
some really major implications, especially for inherited iras and the
way they're withdrawn. But still, even with how important that was,
the official ruling on the real life applications of those

(19:50):
changes weren't finalized until last year to take effect this
year twenty twenty five. So almost five years later we
saw really the IRS come out and say the this
is exactly how you should act based on the legislation.
I say this because a lot of clients are wondering
what it's going to change up my tax situation, and
you know, how does this bill affect me? And of
course understandably so everyone wants to know, you know, what

(20:13):
do I need to do now to address any impacts
on me? But I just want to emphasize there are
still a lot of unknowns, a lot of question marks
when it comes to how this will all play out.
So some things we know so far. The brackets on
ordinary income, which were historically quite low, are going to continue.
They're now made permanent. There's also going to be an

(20:34):
extra jump for the ten and twelve percent brackets in
twenty twenty six. They're going to be They're expected to
receive an extra bonus inflation adjustment that year, so that'd
be a double inflation adjustment, so that would mean those
those brackets are higher, meaning that more of your income
is going to be taxed at those lower rates, the
ten and twelve percent, and even above that when we
start getting into the twenty two twenty four percent, those

(20:56):
are still historically very low tax rates when you look
back at, you know, the past, so generally a positive
thing that people are going to be paying less on
their ordinary income tax dollars, whether it's earned income, IRA withdrawals,
et cetera. The standard deduction has been addressed as well
in the Big Beautiful Bill. These higher levels have been

(21:17):
made permanent. There's also an additional standard deduction for the
taxpayers who are sixty five or older and or blind,
which they did receive before, so that's also locked in.
And there's also this enhanced senior deduction in place right now,
it's only set up for tax years twenty twenty five
through twenty twenty eight. Now I can get a lot

(21:38):
of questions about whether or not Social Security is going
to be taxable, et Ceterally for New York State residents.
Social Security benefits are not taxed at the state level,
so that's a nice bonus for New York State retirees,
but it is still taxed federally. Depending on your income thresholds.
You may pay nothing on Social Security, but you might

(21:58):
pay tax on fifty percent of your benefit and or
eighty five percent, kind of depending on where you fall
in the thresholds there. So there was some talk about
some relief for Social Security recipients them not having to
pay federal tax anymore. That was not addressed in the
bill specifically, meaning that there was nothing that repealed federal

(22:22):
income tax on Social Security. However, it seems to be
this idea that the enhanced senior deduction of six thousand
for those who are over sixty five who are below
a certain income threshold may offset any taxes paid on
Social Security benefits. So a little bit misleading to say
that Social Security is not taxable anymore. You know, folks

(22:45):
who are sixty two and aren't taking it, they are
not eligible for the enhanced Senior Deduction because they're not
sixty five, so they will not get the benefit. And
also if your income is higher than the thresholds, which
is seventy five thousand for a single taxpayer one hundred
and fifty for a married filing jointly taxpayer, then you
know you're not going to benefit from that either. So

(23:05):
there is some kind of way that they addressed it,
although it's not exactly a repealment of federal income tax
on Social Security, at least not from what we can
see from the bill now. So interesting to see. There
are some other things as well, which I'll talk about
a little bit more. We're coming down to the bottom
of the half hour here, so we'll be going to
a break shortly, but there are a few other things

(23:28):
to look at. But it is it is interesting to see,
you know, how the bill came out, some of the effects.
I think generally we're pretty happy that the ordinary income
brackets were extended. That will be a positive thing, especially
for those who before might have been feeling the crunch
on like the Roth conversion side and things like that.
We have a lot more flexibility now, so it is interesting. Well,

(23:49):
we're coming to the bottom of the half here, but
we'll be right back with more. Let's talk plenty on WGY,
brought you by Bouchet Financial Group, where we help our
clients prioritize their health, where we manage their wealth for life.
We'll be right back Hi there, Thanks for staying with

(24:38):
me through the news and thanks for joining me on
this lovely summer weekend morning. It's always a pleasure to
sit here with you and spend an hour talking about
financial topics from the markets and economy to financial planning,
and if you were listening through before the break, a
little bit of tax planning for those who might be
just joining us now. My name is Harmony Wagner. I'm
a wealth advisor here at Bushet Financial gre Group. I'm

(25:00):
a certified a financial planner and certified private wealth advisor,
and I've been with Steven the team for about nine
years now and I really enjoy what I do working
with clients and also when I get to to sit
here and talk to our radio audience today. Know we
have many loyal listeners who tune in every week and
you know, I'm sure some who might have just been
flipping the channels and found us the first time today.

(25:20):
So regardless, thank you for joining me, and I hope
you're getting something valuable from the conversation so far. If
you have a question that you'd like to ask, the
phone lines are open. You can call in at one
eight hundred talk WGY. That's one eight hundred eight two
five five, nine four nine. You can also ask questions
via email to our dedicated email address, which is ask Bouche.

(25:42):
That's ask b O U C h E Y at
bouchet dot com. So if you're more comfortable or in
a spot where you can't make a phone call, you
can write in through the email and I will do
my best to answer any questions that come in that
way as well. And I'm not known. I am going
to go to the phones and chat with Rick from
Sarah to morning. Rick, How are you.

Speaker 2 (26:02):
Great, harmony, How are you doing?

Speaker 1 (26:05):
I'm good? Thank you? What can I do for you today?

Speaker 2 (26:08):
Well, I was looking at my portfolio the other day
and it's done well last year or so, but I
see that I have almost no I'm all at MidCap
exposure at all and I'm pretty good at researching this stuff.
But when I looked into the ETFs for small caps
and mid caps, I see that there's so many different types.
There's one based on a two thousand index, one on

(26:31):
a six hundred or four hundred or Raffi index they
call it. So it was more complicated researching these and
than I thought, can you identify which type of a
small cap index for one or two funds that someone
should look into?

Speaker 1 (26:49):
Yeah, it's a great question. Are you looking into small
caps or mid caps? Are both? I may have misunderstood
probably both.

Speaker 2 (26:56):
I just have large cap in my portfolio and that too.

Speaker 1 (26:58):
Okay, okay, yeah, So there are of course many options,
as you know, and the small and mid cap space
is no different. You know. My general guidance to anyone
who's especially picking their own portfolio is to find something
as general as you can, meaning very well diversified, of course,
as you would expect most ETFs to be, but it

(27:19):
is worth looking into that you're comfortable with the number
of stocks that are held, and oftentimes something that just
tracks an index like the Rustle two thousand is a
great way to go if you're not really doing the
research on a particular niche or something like that that
that's a good way to go. You know, we oftentimes
look at Vanguard Schwab funds in terms of the ETF organizers.

(27:42):
You know, I don't have a specific ticker to recommend
to you without knowing more of the situation, but those
are really established institutions. They do a good job organizing
their funds. So you know, if you didn't have anything
else pulling you one way or the other, that might
be something I would I would look into in terms
of you know, what ETFs to pursue, But general, I
think keeping that a broad approach is the best instead

(28:04):
of trying to go to niche. Even when it comes
to you know, you can do mid cap growth, MidCap value,
same with the small caps, but oftentimes the more broad
blend kind of funds can can do the best. In
a self managed portfolio, you know, we often hold either
of those, uh, you know, market cap areas in a
small kind of tactical position. And especially with the mid caps,

(28:26):
it can be nice because the large caps, even even
US large caps, they're so large that they really are
global companies now, and so when you're trying to if
you're trying to invest more, you know, here in the
USA and rule out some of that global and overseas volatility.
The midcaps can be a nice way to do that strategically,
and we have used that in our portfolios over time.
But to kind of boil it down without knowing the

(28:48):
specifics of the situation, I would say, you know, I
personally would gravitate towards a Schwab or a Vanguard fund,
and I would go out. You know, it's just as
broad as possible, something like the Russell two thousand. It's good,
good to a place to start.

Speaker 2 (29:01):
Yeah, I guess I was thinking along the same lines.
Appreciate that. You know, you know what the Raffi Index is.
I see that listed on quite a few different funds. Oh,
you know, I it.

Speaker 1 (29:13):
Yeah, I've seen it, but I'm not, you know, so
well versed in it that, you know, I'm able to
give much on it. But I believe that it's more
of an expanded large cap fund from what I know.
So whereas the S and B five hundred owns the
five hundred largest companies in the US, the RAFFI I
believe holds the largest one thousand. There may also be

(29:34):
some other factors, though, so I don't know all the
details on what composes that, but I believe it's it's
it's a large cap to my knowledge.

Speaker 2 (29:40):
Okay, okay, Well, thanks so much for your converce.

Speaker 1 (29:44):
Yeah. Great, have a great weekend.

Speaker 2 (29:46):
Thanks, thanks you too.

Speaker 1 (29:50):
All Right, so before the break, we were talking about
the One Big Beautiful Bill Act passed just a little
over a week ago on July fourth. It's just someone
some of the things that we know now which may
be subject to change or maybe subject to further ruling,
I should say as we go forward here. Some of
the things we talked about already is that the ordinary

(30:10):
income tax brackets, which as I mentioned are historically low,
have been extended made permanent, as well as the higher
standard deduction amounts. Another thing that's going to, you know,
possibly affect people is the salts cap that state in
local taxes. And previously the cap on what you could
deduct was ten thousand, regardless of income, so any taxpayer

(30:31):
could do that. But now that cap has been raised
to forty thousand, which is subject to income thresholds, so
it's not going to apply to everyone. From what we
can tell now, looks like a married couple and or
you know, stickle tax payer with modified adjusted gross income
above five hundred thousand would have this higher salt cap
phased out, So if you're between five hundred thousand and

(30:55):
six hundred thousand modified adjusted gross income, you're going to
get a smaller portion of it. At six hundred thousand,
it just goes back to that ten thousand that it
was before, so a little bit more complex. But for
most people, you know you're below that five hundred thousand
just to gross income, that cap is now up to
forty thousand dollars of state and local taxes that you

(31:15):
can deduct, So that will be a big benefit for
those who were who were paying more than ten thousand
but weren't able to deduct it, that that'll be a
big change the itemized deduction limit for those in the
highest tax bracket that's the thirty seven percent, So you know,
it doesn't apply to most people, but it does seem
that there's going to be some limitations on itemized deductions

(31:36):
for those who are at that level. Something to be
aware of. Also, there's the provision that allows taxpayers to
deduct up to ten thousand of interest paid on new
car purchases for cars made in the USA, so that's
something that we did not see previously. That's instead devising
of course, you know cars made here on home turf.

(31:56):
And then the child tax credit has increased to two
thousand and two hundred from two thousand. So as a
parent of three young girls myself, this was a nice
one to see and we'll see that change as well. So,
like I said, you know before the break, this is
all still very new. We would expect the IRS to
give more rulings and more concrete guidance on any of

(32:16):
the question marks that are out there as we go
forward here, and it can take some time, man, I mean,
it can take years for them to totally get everything,
all the guidance out on different things. So that's what
we know so far from the version one, and it'll
be interesting to see how it plays out. But you know,
specific on the ordinary income side, I think that's generally

(32:39):
viewed positively for most people when we think about, you know,
what was expected before if the Tax Cuts and Jobs
Act from twenty seventeen had expired at the end of
this year, tax rates were going to go up pretty
considerably for for many people, and so a lot of
people felt kind of they were under the clock to
do some of these strategies, like roth conversions being a

(33:01):
big one, sometimes just even making portfolio changes, and that
seems to have been lifted that weight. We now have
more time to do some of these strategies that can
spread them out more years, which is really nice, specifically
when it comes to roth conversions. Right, So the thought
there is to pay tax at the lowest rates that

(33:21):
you can, whether for yourself as an individual or even
for your family when you think about some bigger heirs
inheriting the wealth, making sure that you're being as efficient
tax wise and using up the lower brackets as much
as possible as great and roth conversions are one way
to do that. So a couple weeks back, my colleagues
Sam Macy and I did a webinar on r m

(33:45):
D management that stands for required minimum distribution And for
those who don't know, if you have an IRA or
a four oh one K four three B any pre
tax retirement account where you got to benefit a tax
seduction for putting money into it, you turn RMDA, which
depending on your birth year, might be seventy three or
it might be seventy five. Once you turn that age,

(34:07):
you have to start withdrawing a certain amount from that
account every year and paying the ordinary income tax on it.
It star I thought as a small percentage, and it
goes up every year that you as you age, and
so there are things that you can do, especially if
you have a really large IRI four one K four
or three B where that's the primary asset in your
financial portfolio, it can become pretty impactful. If you wait

(34:32):
as long as you can, and then at seventy three
or seventy five you start taking from it. You know
it can be a big tax burden. You're paying ordinary
income tax on every dollar that comes out. So if
you wait and let it grow, that the percentage is
based off a higher amount, so now it's a bigger
number and potentially pushing you up into higher tax brackets. Whereas,
if you can take advantage of what we call the

(34:53):
gap years, which i'll talk about moret in just a moment,
you can do strategic withdrawals, whether just for your own
living expenses or for wroth conversions or for charitable giving.
If you really want to maximize the tax benefit of
it and you're already charitably inclined, there's a lot of
options that you have where you can manage these kind
of the future impact of RMDS now by being proactive

(35:17):
about it. And so I think now having this lower
ordinary income brackets, that gives more flexibility, especially in the
gap years, which would typically be from age fifty nine
and a half. The reason why it's fifty nine and
a half because that's the that's the age when the
IRS says you can withdraw from your iras without penalty,
without an early withdrawal penalty. So from that point where

(35:38):
you're able to access the IRA dollars or four oh
one K, four or three B, they're all similar. Actually
in a four to one K you may be able
to take out as early as fifty five if you
retire from that employer. But during that time and then
all the way up until you reach RMDH, that's when
you really have these gap years, which is a really
powerful time to utilize some of these stress So I

(36:00):
won't get into them all now that would take you know,
all of this this show in the next one to
talk about they could be so complex and there's so
many nuances to whether it's right for you, and you
know in your individual situation and your goals. But If
you do want to hear more, you can always go
to our website www. Dot Bouche dot com. Under the

(36:21):
insights page, we have all of our past webinars recorded.
We have blog posts from our advisors that come out,
you know, every week or two we're writing something and
that's going on, or that we're talking to clients about
commonly asked questions, it's strategies. So we try to keep
that insights page really updated with timely information, and so
you can always visit there as well if you want more,

(36:42):
want to hear more from us in our our team,
and you can watch that arm D webinar there too.
I think it's it's a popular one because almost everyone
you know is going to have to deal with ARMS
at some point in their life. We see most of
our clients come to us with at least some amount
in an IRA or a four oh one K, so
we don't see many people that don't have it at all.
And if you have it, then it's something you're going

(37:04):
to have to manage down the road, and so it
is it is worthwhile thinking, especially if you're nearing or
in those gap years now, which could be anywhere from
thirteen to fifteen years again, depending on your birth year.
Do you have some flexibility and some time to make
some do some strategies that are really potentially going to
impact you and your beneficiaries down the road. So it's
a powerful thing to do. We believe very strongly in

(37:26):
the proactive planning side, So go ahead and take a
look at that webinar if you'd like it. You can
always reach out to our office for more information as well.
We're going to go to a quick break here, but
we'll be right back with more. Let's talk money on WGY.
Don't go away. Thanks for staying with me through that
brief break. My name's Harmony Wagner. I'm a wealth advisor
at Bouchet Financial Group, a CFP and a CPWA, and
it's been great spending this hour with you. We still

(37:49):
have a few minutes left, so I thought we'd close
out the broadcast today by talking about estate planning. Before
I get into that, though, I just want to remind
everyone that there is still time. If you have a
question burning on your mind, you're probably not the only
one thinking it, so please call in and ask. The
phone number is one eight hundred Talk WGY one eight
hundred eight two five, five nine four nine, And you

(38:10):
can also send an email if you prefer to ask Bouchet.
That's ask b O U C H E Y at
Bouchet dot com. Well, as I mentioned before, I'd like
to talk about estate planning. I think listeners may be
surprised to learn just how involved we, as financial advisors
could be in that process. So you know, first things first,

(38:30):
we are not as state attorneys. We do not draft documents,
and we do not give legal advice. Only a license
attorney should be doing that job function. However, because estate
planning is so closely tied to financial assets and tax implications,
it's something that we're talking about with our clients quite frequently,
and we view ourselves as a partner with our clients
and their attorneys to guide the most productive and effective

(38:53):
estate planning process possible. Some clients don't know what they
need when it comes to estate planning, and so we
can help them start thinking about it and thinking about
the questions that you have to answer. Right, So you
think about inevitably you will either at some point pass
away or become incapacitated and later pass away, and you
want to make sure before either of those things happen

(39:14):
that you have addressed the important things about you know,
what's going to happen to your loved ones, what's going
to happen to your assets, what's going to happen to
your stuff, and what's going to happen to you in
the event that you were incapacitated and not able to
make those kind of decisions but still here. So those
are all really important things that in a state plan
will address important questions. And we often encourage our clients

(39:37):
who either don't have a will, don't have you know,
POAs or healthcare directives in place, to start thinking about that.
And we can of course refer to attorneys who can
actually provide those documents and walk them through that with them.
But when we look at even just the demographics, right,
forty percent of financial advisory clients want an advisor that
at least offers a state plan and guidance, especially about

(39:58):
beneficiary designation, tax strategies, and education on a state planning basics.
And so these conversations are really an important part of
wealth advisement and risk management, and so we prioritize these
discussions with clients. And I thought, you know, it's been
a while, so I talked about on the radio. I
think it'd be a good topic for people to be
thinking about and just to kind of hear how we

(40:19):
approach it. So, of course, the first thing we do
is we start learning about that client situation. We learned
about who are the important people in their life, what's
their vision for how their wealth is transferred. You know,
we typically would already know kind of their financial picture
and what accounts they have where, and we make sure
that benefit beneficiary designations are already set up. So that's
something going to be addressed even before we got to

(40:40):
the table to talk about estate planning. But it'd be
good to a good point to review it and say, hey,
if you're saying that you know your your children and
grandchildren of the most important people to you, well, this
is how your accounts are set up. Now maybe only
your spouse is the beneficiary and you've never named contingents.
That could be a good thing to do, right. We
talk a lot about per sturpees, which is a designation

(41:00):
where you say, if one of my desity the beneficiaries,
often it's a child, but doesn't have to be. Could
we often see it as siblings as well? You know,
if one of my beneficiaries predeceases me or for some
reason is you know, unable to claim these assets. Their
portion can go to their living children at that time
instead of you know, going to the other children or

(41:23):
other name beneficiaries. So ways to kind of protect you,
of course, yourself and your own wishes, the people that
you love and even down through the generations is a
really important thing. We make sure, of course that clients
have the existing of state documents and have the full
amount that you would need right. So many people do
have a will, although oftentimes it's been maybe ten, fifteen,
twenty years since they looked it over. A lot of

(41:45):
clients are in retirement and as we talk about a
state planning, they're thinking, well, actually, I think I did
mine well when my kids were young, so it's a
good time to update it. Also, I think it goes
without saying, but if things change, whether you get married,
get divorced, you know, you lose a spouse, or someone
in your life passes away that was part of that
estate plan, it's good to always keep it up to date,

(42:06):
even every couple of years, just to dust it off
and make sure that it still looks right for what
your desires are at that point in time, but making
sure that if you have just a will, that you're
also adding the right powers of attorney so that if
you've become incapacitated, someone can make your medical financial decisions
for you, someone that you trust and who knows what
decisions you would want made, as well as healthcare directives

(42:27):
and you know, prox season and advanced medical directives, things
like that that would really govern you know, what would
happen in certain circumstances. We also talk about trust, which
not everyone needs, but some folks do want to pursue
for a number of different reasons. Some people feel strongly
about avoiding probate, and so that can be a reason
to use trusts to help avoid that process. Some folks

(42:52):
are worried about asset protection in the case of long
term care expenses, and so there are trusts that may
or may not be the right fit to dress that concern.
Other folks might have a child or a beneficiary named
in their plan that they're not quite sure if that
person can quite handle the money. Maybe they're too young
at this point in time, or they've just not shown

(43:13):
that they can handle finances prudently. So a trust typically
it'd be called a spendthrift trust in that situation can
be a good way to say, you know, I care
about this person. I really want to leave them some
financial assets, but I want to make sure that it's
managed well and with their best interest in mind, even
above their own capability to do so. So that can
be a great you know option for a trust as well.

(43:36):
So these are conversations that we have with clients. You know, Also,
some folks are worried about estate taxes. Although the big
Beautiful build did increase the estate tax exemption, so it
is even higher now and it was high before anyway,
So not something that many people are facing, but there
certainly are some who would be in that threshold where
your state is going to be over you know, fifteen

(43:57):
million for a single or thirty million for America people,
and you want to maybe use trust planning to hide
some assets or I shouldn't say hide, but to protect
some assets from estate taxes by you know a number
of different things. So that is, you know, different ways
you might look at the trust strategies and different types
of trusts that could fit into your state plan. And

(44:20):
so there are there are things that can be quite complicated,
although it doesn't always need to be and it really
depends on your situation. That's kind of how we start
that conversation with clients. They get them thinking right. The
next step is for them to meet with an attorney.
We often will provide a net worth statement as part
of that conversation so they can go to that meeting saying,
here are my financial assets that I, you know, have

(44:41):
concerns about or want to address in my planning, and
then they work with that attorney. We can sometimes be
involved again sometimes be a part of those conversations, especially
if the client feels, hey, I just don't know what
I'm doing and I would like to have another person
there to help me ask the right questions and to
help me understand, maybe to help interpret things into you know,
layperson's terms, things like that, so we can be part

(45:01):
of that. But oftentimes they just go to their attorney,
they work things out, and then we circle back once
the estate planning process is done, and we say what
needs to get acted upon to make sure that this
is actually in place right. I think we've all heard
their celebrities where they wrote an estate plan and it
was never signed and so you know, they ended up
dying intestate, meaning they did not have a will even

(45:22):
though they had done one, they had just never actually
executed it. So we want to make sure that all
the steps for the proper estate plan execution are done
as well. Sometimes that might be beneficiary changes. Sometimes it
might be retitling assets into one spouse or the other,
or into a trust that was created as part of
the estate plan. So there's a lot of different things

(45:42):
that could be involved and making sure you did this
great work and you wrote a great estate plan and
you have it, but if you don't actually take the
steps to close the loop on it, it won't work
the way it's intended to. So that's part of what
we do as well as we look at the financial
plan that is really import and part of estate planning too.
And when we talk about that, I actually expand it

(46:03):
to the term legacy planning, because your state is what
happens when you're not here with us anymore. Legacy is
something that you can actually start during your lifetime, and
the estate planning leads into the legacy because as you're
having these thoughts about how do I transfer my wealth
successfully to the people that I love, that can be
something that you can do in your lifetime as well.

(46:24):
You know, we look a lot at making gifts during
your lifetime, what type of accounts to gift. There is
definitely some strategy on you know, if you're going to
be making a gift to your family, what what do
you want that gift to be. What's the most tax
advantageous place for it to come from? Thinking about roth
conversions as an estate planning tool, which I you know,
talked about a little earlier in the show. But there

(46:45):
are a lot of these things, and it is a
tough question because you know, when you're still here, your
first priority is to make sure that you're taking care
of yourself financially. Right. If you give your child a
really large gift, but then you impoverish yourself so much
that you have to move in with them, well maybe
it wasn't as much of a gift as you tended
it to be. So there is things that you want
to look at and say, how do I make sure
that I am set in your spouse if you have one,

(47:09):
that we are set for our lifetimes, but we also
can do some of the things that we want to
do now, and that might look like paying for a
family trip with your family, or you know, investing into
a five to twenty nine plan for a child or
grandchild's education, things that you can do now where not
only do you get to do that, but you get
to experience the benefit of it, And that is a

(47:30):
huge part of having your wealth the most impactful right
is not only that the money gets transferred and it
meets a need like education or buying a house or
you know, whatever it might be you fill in the blank,
but that you get to enjoy the impact of it
by seeing it during your lifetime. And so it is
just so important to have a financial advisor guiding you,

(47:50):
looking at your plan and helping you address all these concerns,
whether it's charitable, whether it's your family, whether it's just
that you want to minimize taxes paid. Overall, there are
so many ways that legacy planning, as this all encompassing thing,
can help you maximize the impact of your wealth, and
that really is such an important thing, you know, when

(48:10):
you think about it, Money in itself has no value.
It only has value in the sense that it can
increase the well being and of you and your loved ones,
and so making sure that you're using every dollar to
the fullest is such an important part of that. That's
why these conversations are so important. Right. We can guide
you to make sure that you have enough money for
your lifetime, but if you don't use it, well that's,

(48:33):
you know, a loss at the end of the day. Well,
thank you so much everyone for tuning in for today's show.
I enjoy spending the hour with you and I hope
you gain something valuable and interesting from today's discussion. Don't
forget to join us right here on WGY every Saturday
at ten and Sundays at eight am for more. Let's
Talk Money brought to you by Bouchet Financial Group, where
we help our clients prioritize their health or we manage

(48:53):
their wealth for life. Have a great weekend, everybody,