Let's Talk Money

September 28th, 2025.

Episode Transcript

Speaker 1 (00:14):
Good morning and everyone. My name is Martin Shields. I'm
the chief Wealth Advisor at Bouchet Financial Group, and I'm
going to be your host today for Let's Talk Money.
As always, it's great to be here to answer any
questions you may have regarding your financial planning or investment
management concerns, and I encourage.

Speaker 2 (00:32):
You call in with those questions. You can reach me at.

Speaker 1 (00:35):
Eight hundred eight two five five nine four nine. Again
that is eight hundred eight two five five nine four nine,
Or if you're too shy to call in, you can
email me at ask Bouchet at Bouchet dot com. That
is asked Bouchet at Bouchet dot com and Bouchet is

(00:56):
felled b O U C h E Y. So any
question you may have, I always say, there's no dummer
silly question except for the one you don't ask.

Speaker 2 (01:06):
So go ahead and do your fellow listener favor. They
may have the same question. Quite often we.

Speaker 1 (01:12):
See that, So give me a call or shoot me
an email, and I'd be more than happy to give
you some guidance. I hope that you're doing well on
this gorgeous blue bird day. I tell you, folks, it's
like living in southern California, every day is sunny.

Speaker 2 (01:27):
You know. We had a little rain, which we needed
this week, but as.

Speaker 1 (01:31):
I look at the forecast for this week and the
whole month of September, it's been nothing but gorgeous sunny days.
So I hope that you get out there to enjoy it.
Whatever activity is appealing to you, whatever it is, get
out there and enjoy it. Myself, I'm going to get
out sailing. We're members of the Saratoga Lake Sailing Club

(01:53):
and going out with a friend on a flying Scott
to do some racing, so we'll see how that goes.
I'm hoping to get some mountain biking in as well,
So again, I hope that you're able to enjoy whatever
you want. A lot to discuss today, the markets were
down a little bit for the week. The SP five
hundred was down less than half a percentage point, but

(02:16):
it's still up almost thirteen percent for the year, and
the Queues, which is one of our biggest holdings, was
down just over a half percentage point for the week,
but it is still up sixteen point six percent for
the year, so a little bit of a pullback there,
but we literally had had week after week just hitting

(02:37):
all time highs, and you know, it's as we've talked about,
you're going to have these pullbacks. This is minor as
we go into October, which starts this week. It's hard
to believe we're already going to be through September, but
as we go into October, it's important to appreciate October
is really one of the more volatile months from a

(02:58):
historical perspective, is actually thirty three percent more volatile than
the average of all other months. So it would not
be surprising to see more volatility right now. The market's
kind of price for a perfection, and we've talked about this,
you know, really what you have. I think it's kind
of interesting as you look at it. You have some

(03:20):
elements of weakness that you seeing in the labor market,
and certainly, you know, from a consumer perspective, things are
still good, but it's bifurcated. Right, So if those individuals
that are on the higher income earning part of the range,
and also they're more inclined to have stocks and more
inclined to own property, they're doing pretty well. They're spending

(03:43):
is really pushing the economy forward, whereas individuals more in
the lower income range, they're still struggling in part because
they're not seeing some of the waging increases they receive
let's say three or four years ago. And inflation is
still out there. It's not nine percent, but it's not
down to two percent either, and if anything, it's moving

(04:06):
a little bit higher versus kind of trending lower. So
those individuals are definitely getting kind of the pressure from
both sides. And you know, this market that keeps going higher,
a large part is being driven by the tech space,
right you see that consistently.

Speaker 2 (04:26):
You know, a lot of these tech companies.

Speaker 1 (04:29):
It's it's a little bit like you know the tech
and telecom boom.

Speaker 2 (04:34):
Of the nineties, where there's just a ton of money.

Speaker 1 (04:38):
I think it's going to be something around half a
trillion dollars of capital investment for twenty twenty five into
the AI space. And so you know, you got that
much money going in for investment, it's going to really
improve profitability of a lot of these tech companies. And
you know, you're also starting to see some of the

(04:59):
protoc ativity increases from AI as well. So both those
elements are driving a lot of the growth in the
stock market. And you know that high end element for
those individuals with the higher income earners, they're doing very
well and propelling the consumer spending going higher as well.
So you know, it's described as the k economy, where

(05:22):
you know, the top part is moving higher, the bottom.

Speaker 2 (05:25):
Part is struggling.

Speaker 1 (05:27):
And again, I just think it's important to appreciate that
after hitting twenty eight all time highs this year, in
a year that frankly people weren't expecting too much out
of the market, that you know, you have to be
prepared that there could be some volatility and don't let
that scare you. Right, You've got to have the right
time horizon, the right perspective to move that make sure

(05:49):
you're allocated properly. You know, we always say that when
the market's up around these all time highs, this is
a good time to assess do you have the right
amount of cash available? Are you allocated for your risk
tolerance appropriately? If you're moving into retirement, this is not
a bad time to scale back. Let's say you were
in an all equity portfolio or a growth portfolio, It's

(06:13):
not a bad time to go to what we call
growth and income, which is sixty forty that's in many
cases for many of our retirees, the allocation they're in.
It still provides growth with sixty percent in stocks, but
you have that forty percent in what we call bonds,
alternatives or cash that provides more of a cushion if

(06:33):
there's volatility, allows you to have more peace of mind.
So you know that may be the right approach. And
I always tell clients there's no rate or wrong answer
when it comes to your risk tolerance. It's very much
a personal decision. Now, don't get me wrong. When I'm
talking to younger individuals in their twenties or thirties and
they're putting money into our fore and K plan, even

(06:56):
if they're conservative with outside assets, really pushed them to
be more aggressive in that category. I mean, when you've
got a time horizon of twenty plus years, you really
want to be almost all inequities. There's really no reason
to you're just giving up that additional return. And as
I always give guidance to people who are putting money

(07:17):
into our form on K, when there's markt volatility and
the market is down by ten, fifteen to twenty percent,
you may look at your statement and be dismayed to
see it's down by that much. But we have to
appreciate is you're constantly putting money in to be buying
equities at that discount. So relatively speaking, if you're a
long term investor, you're young, and there's market volatility, that

(07:42):
volatility is actually beneficial for you because now you're buying
stocks at a discount. Whereas I always made the observation,
which was in the two thousands, where you know, the
price or earning ratio of the market was extremely high.
People were always very happy when they looked at their statements.
But if you were younger that met, you were buying

(08:03):
stocks at a very rich valuation and it took you
a while for those stocks to be profitable. So just
something to be aware of. And that's you know, again
for our perspective, one of the conversations we're always having
with our clients just making sure that they're allocated properly. Well. Again, folks,
if you had any questions, you can give me a call.

(08:24):
You can reach me at eight hundred eight two five
five nine four nine, or you can email me at
ask Bouchet at bouchet dot com and Bouche ispelled b
O U C H E y dot com. We have
an email that came at from came in from Tom.
It says, good morning, does the six thousand dollars senior

(08:46):
credit get limited for those of us who filed married
filed jointly. So what Tom is referring to is with
the One Big Beautiful Bill, there was an additional six
thousand dollars.

Speaker 2 (08:59):
Credit deduction that you get.

Speaker 1 (09:01):
It. It's not a credit, it's actually a deduction. And
you get this deduction whether you itemize your taxes or
you take the standard deduction, you get this. And there
is an income phase out. So if you're filing single,
that phase out is from seventy five thousand dollars all

(09:22):
the way to one hundred and seventy five thousand, so
it's a very long phase out. Most phase outs from
an income perspective are much short. They're usually ten or
twenty thousand dollars ranges. This goes all the way from
seventy five to one hundred and seventy five, so you know,
for most people they're going to probably get something from that.
And if you're married filed jointly, then it goes from

(09:45):
one fifty to two hundred and fifty thousand dollars. So
in both these cases, it's one hundred thousand dollars range
on that phase out for that deduction, and the only
thing you have to be is sixty five by the
end of this year in order to get that deduction.

Speaker 2 (10:02):
So make sure that you're aware of that. You know,
make sure you're talking.

Speaker 1 (10:06):
To your CPA, your accountant this year just to make
sure with the one big beautiful bill you're getting all
the potential potential UH reduction and taxes that you can
get that. This is a conversation we're having a lot
with our clients, is to making sure that they're aware
of anything that is relevant to them. And you know,

(10:27):
I always we talked about this about four years ago.
We put in a tax practice into our firm. It
was because individuals were requesting us to do some tax prep.
But the real value is really not tax prep. The
real value is doing tax projections. And we do this

(10:48):
quite a bit with our clients, which is, you know,
when you've got a lot of moving pieces of both
expenses and income, and you have some flexibility as to
how that income comes in, you want to be able
to do a projection for the upcoming year to make
sure everything, you're withholding their correct amount, and you're taking
advantage of.

Speaker 2 (11:08):
All the tax opportunities.

Speaker 1 (11:11):
And so again with our clients, I mean so many
of them were doing tax projections just to make sure
that again they're all set from a tax perspective. And
I will tell you it's been invaluable to add that
service for our clients. It just gives them peace of
mind that everything is going to be properly allocated and

(11:34):
withheld for taxes. And you know, I always say, I've
never been a client that is inclined to want to
pay more in taxes. Right, even if you are supportive
of the federal government, and you know, even if you
want to see a balanced budget, you still don't want
to pay more in taxes. You want to pay less
if possible. So that's a real value that we offer

(11:57):
to our clients to do those projections to identify ways
to lower that tax liability. And from my perspective, it's
such a value in something that we're really doing more
and more for our clients. Let's go on to a
different topic, but again, if you have any questions, you
can reach me at eight hundred eight two five, five,

(12:19):
nine four nine.

Speaker 2 (12:20):
One of the things I want to bring up.

Speaker 1 (12:22):
If you go to our website Bouchet dot com, there's
always a lot of great information. We have all of
our blogs and our webinars up there. And two of
my colleagues, John Malay and Dave Clark. John is our
CFO and chief operating officer. He's also an advisor, and
Dave Clark is our director of operations. They did a

(12:45):
great webinar on cybersecurity and I would highly encourage you
to watch it. It's only about thirty thirty five minutes
and they walk through all the different areas that we
see our clients and just in general and the industry
uh people uh, you know basically you know, you know,
having people trying to scam them, and you know, for

(13:07):
our firm, that's one of our top things we do
for our clients is protect their data, uh, and to
protect their assets and always make the analogy. You know.
We basically we have Charles Schwab as our custodian and
then we have.

Speaker 2 (13:20):
Our clients on one side. We're right in the middle.

Speaker 1 (13:22):
And what that means is if we see anything going
on with our clients accounts, you know, an email being
changed or our phone number, or any request right away.
We're on top of that checking, you know, with our clients,
and you know, if they have an issue where they
think their computer's been hacked or whatever, we're really one

(13:43):
of the first people they call, and you know, we
make sure that they're doing all the right things to
protect not only their accounts at Schwab, but also all
their other accounts. And I think what's very important is
to appreciate that, you know, even people who are younger.
You know, people think this is something that it's only
impacts older folks.

Speaker 2 (14:02):
It's not.

Speaker 1 (14:03):
We see individuals that are executives, they are in their fifties.
They can be impacted by these cybersecurity scams as well.
So you just have to be hyper aware of them.
And you know, one of the big elements is they
always kind of position it that it is something that
has to is urgent uh and it has to happen
right away.

Speaker 2 (14:22):
Uh.

Speaker 1 (14:23):
And if you don't, there's gonna be a real problem
with that. And what we always remind people is that
SWAB or any big institution will never be reaching out
to you, whether it's text, whether it's phone calls, whether
it is emails for information. UH. And if you're getting
a call that's coming in and you want to make

(14:43):
sure that it's uh. You know, if you if you're
saying there's a problem, what you do is you hang
up and you call you on the web site and
you call that company directly, right, that's the way to
do it, UH, to make sure that it's all, you know,
above board. You know, if you're getting that call coming
in from a company, you may deal with them.

Speaker 2 (15:05):
It could be a bank or whatever right away.

Speaker 1 (15:07):
You know, you never You've got to be hyper aware
that that is there's a good opportunity a situation where
that could be fraudulent, and what you really want to
be doing is hanging up on them and calling back
in to make sure everything is proper. So just always
that mindset. And again that webinar is just a great reminder.
They go through a lot of great things. So I

(15:28):
would encourage you to look at it. It's on our
website under insights. The other thing is we're having a
an event what we call Women in a Wealth event
for individuals that are interested in working with our firm.

Speaker 2 (15:43):
And this is going to be a great event.

Speaker 1 (15:46):
It's going to be held Wednesday, October twenty second, at
Duel at the Dunes which is at two fifty seven
Washington Ave in Albany, and it's going to be held
with two of the firms. So my colleague Harmony Wagoner
is going to be presenting, but Claire McCrae, who is
a state planning attorney with Lemony Greisler, will be presenting

(16:07):
and Leah Henderson, who's a CPA with TiAl Becker, is
going to be representing and basically going to be talking
about life transitions. Right, so whether you know you're starting
a new job, you're getting married, you lost a spouse,
you're caring for a parent, at your soul to business,
all these areas where you've got to transition in your life.

Speaker 2 (16:28):
What do you need to be aware of?

Speaker 1 (16:30):
And you know, I would say that many times when
a new client comes on, they're coming on because they're
going through a transition, right, They're going through one of
those transitions I described, and they need to get guidances
to how do they enter that new stage of their life.
So this will be a great seminar to go through

(16:52):
and be educated about those transitions in your life. Also
to get a feeling for, you know, working with our
firm or with Claire or with Leah. And you know,
again I always recommend that people one get educated. Our
best client is an educated client. We really try to

(17:12):
educate and communicate with our clients as much as possible,
and this would be a great opportunity to learn about
that over lunch. Just a reminder with our firm there
is we do have a minimum of a half million
dollars of investment assets and we will always help you out.
If you don't have that, well, if you need help,
call into our firm.

Speaker 2 (17:32):
We can help you out.

Speaker 1 (17:32):
But to come out as a client that we do
have that minimum just because of the amount of time
and effort we spend with our clients to make sure
that they're successful. But you can register for that webinar
and you know, bring a friend. It's right there's I'm
looking at our website. It's right up on top Women
in Wealth Seminar and you can just put your information

(17:55):
in and register for the event right there. Again, it's Wednesday,
October twenty second at noon to luncheon event at Duo
at the Dunes. So just if you're looking to get
educated or maybe you're going through one of these transitions
yourself and unique guidance.

Speaker 2 (18:12):
I would highly recommend it, you know.

Speaker 1 (18:15):
And the big element is we just we just went
and celebrated us our firm reaching one point five billion
dollars in assets. That happened this past month, and it's
a huge milestone for a firm. Right now, we're really
one of the largest independently owned arias in the Kappa region.
And to celebrate that, we went over to Manchester, Vermont

(18:38):
for a couple of days. And you know it, really
I've been with a firm now for more than thirteen years,
and the growth that we've seen, you know, is really
in part, in large part because just the great advice
that our team is able to impart on our clients
and that fiduciary approach that we take. That's it's just vital.

(19:01):
If you're looking to work with an advisor, you know,
that should be one of the first questions. You know,
how are they paid, do they act as a fiduciary?
Are they feel only? That's what our firm is feel only.
We don't sell any products, any insurance products, any annuities.
And again, you know, there are situations where our client
needs an annuity or they need an insurance product. So

(19:21):
we give them guidance and we connected with somebody that
can take care of that for them. But the important
element is they can feel comfortable that if we're going
to recommend that that insurance product, that annuity or anything else,
they can feel very comfortable that it is really what
they need and not that somebody's recommending it because they
get compensated for that, and that's that's important. I mean,

(19:43):
what you start to appreciate is in life, people's behavior
is they're motivated based on how they get compensated and
where that area of responsibility lies. So for us as
a fiduciary, our only thing is to make sure we
take care of our client's best interest. Right whatever we're doing,
the guidance that we're giving them, the time we're spending them. Uh,

(20:05):
the only lens that we look through for that relationship
is is this in the client's best interest and that,
to me, that's invaluable. And you know that type of behavior,
our interests in our client's interests line up. That is
it works really well. And that's why we've grown because
they refer their friends, their family members, their colleagues, because

(20:27):
they have that level of comfort working with us. And
what you realize is that you know, unfortunately that's not
always the case, right. You know, in some other areas
with wealth management, you know, people are compensated on different
products they can offer, even investments. And I talked about,
you know, a situation where I was like one of
the big financial cutodians that was looking to they're looking

(20:49):
to bring on a financial advisor. The compensation for this
advisor was about two to three pages long, and it
was all vary depending on how they're what they're selling,
uh to their clients. And you know, to me, it's
just mind boggling that that still exists out there, but
it does, and so that will drive that advisorius behavior

(21:11):
that they're going to you know, kind of recommend the
products that they're going to get paid the most on.
And it's you know, it's kind of a problem when
you know those products are also.

Speaker 2 (21:21):
The company's products. Right.

Speaker 1 (21:22):
So you know, if there's a Fidelity advisor and they're
recommending products, it's the Fidelity ETFs and mutual funds. And
it doesn't necessarily mean that those ets or mutual funds
are bad, but there could be better ones out there, right,
And that's where that conflict of interesting exists. The other
element is, you know, just even from an ownership perspective, right,

(21:43):
you know our you know, from our perspective, we've been
around for thirty five years.

Speaker 2 (21:48):
We're independently owned.

Speaker 1 (21:49):
I'm a partner and myself and my other shareholders and partners,
we that's all we want to do is make sure
that our client's best interests are taken care of. Whereas
with the publicly trade a company, we have to appreciate
is that CEO, the fiduciary responsibility that CEO has is
not to his clients. It is actually to the shareholders.

(22:10):
And you know, you would think that would line up right,
that they are going to take care of the shareholders
they want to take care of the clients, but it
doesn't always work that way, and there's many examples where
that is the case. And so it's just you know,
you have to appreciate what is driving people's behavior and
how are they compensated for the decisions, and that will
drive you know a great deal of how people act.

Speaker 2 (22:34):
And you know, I see it quite a bit.

Speaker 1 (22:37):
You know, I used to work in corporate finance and
it was you know, it was kind of eye opening
that sometimes executives were more senior executives than myself. We're
making decisions based on you know, what I thought was
not the best long term uh kind of value for
our investors, but perhaps even for themselves from us a

(23:00):
stock perspective. So you always just have to be aware
of how are people getting paid and you know what
does that mean for you as a client. So one
last thing before we go to break, just want to
bring up, you know, this concept of having a network statement.
It is something very important that I recommend everybody have.

(23:23):
And all that is is just you list out your assets,
you list out your liabilities, and then the difference between
two is that's your net worth. And you know, it's
just something we do for our clients that is very valuable.
When you can see very clearly all your assets listed
out and then you know, break that out with any

(23:43):
money you owe, any debt. It gives you a great
perspective of where you stand financially. So I would encourage
you to put that together. If you don't have one,
it will really help you give you a good picture
of where you stand. We're going to go to commercial break,
but come back and join us. You listen to let's
talk money brought to you by Bouchet Financial Group. Well,
we help our clients prioritize their health while we manage

(24:06):
their wealth for life. Welcome back, folks. For those of
you just joining us, my name is Martin Shields. I'm
your host today. Let's talk money. As always, it's great
to be here with you to answer any questions you
may have, and I encourage you to call in with
those questions. You can reach me at eight hundred eight
two five five nine four nine. Again that's eight hundred

(24:27):
eight two five five nine four nine, or you can
email me at ask Bouchet at Bouchet dot com. Let's
ask Bouche at Bouchet dot com. So let's talk about
something that just came out in the last couple weeks
with your contributions into your four and K, and in particular,

(24:48):
if you're a high income earner, so that what that
means is if you're earning more than one hundred and
forty five thousand dollars annually and you're fifty and older,
you have the ability to do what's called a catch
up contribution. For twenty twenty five, that amount is seven thousand,
five hundred. So this is if you max out your

(25:10):
standard EMPLOYEEE contribution and then if you're fifty and older,
you can make an additional contribution of seven thousand, five hundred.
For twenty twenty six, it's going to go up to
eight thousand dollars. And as we've talked about before with
the One Big Beautiful Bill, there's now what's called a
super ketchup. If you're between the ages of sixty and

(25:31):
sixty three, that amount is eleven two hundred and fifty
dollars instead of the seventy five hundred. So those ketchup
amounts again is if you max out your employee contribution,
you can put that amount in. Now, if you're making
more than one hundred and forty five thousand dollars, what
you're going to see is starting in January first, those

(25:52):
contributions will need to be made into a row account
on your fall and K plan. They cannot be made
pre tax starting at Jerry first, twenty twenty six again,
and that's if you make more than one hundred and
forty five thousand dollars annily. Now, if your plan does
not have a wroth, you're going to need to want

(26:13):
to get a wroth in there by that point so
you should confirm if you don't know if your plan
has a wroth or not, you should confirm that it
does and if not, make sure that your HR manager
or whoever coordinates that for your company gets that in place. Now,
most plans have a wroth component, now you know ten

(26:36):
fifteen years ago, no, but most plans do have a wroth.
You know, really, for I have said this for younger
income earners, that should be the bulk of their savings.
It should be going into a wroth, right, so you know,
what you really want to be doing is putting those
dollars into a wroth when you're younger and relatively speaking,
you've got a lower income than you will down the road.

(26:59):
So yes, you don't get the tax eduction, but those
dollars grow tax free. And then what you do is,
as you move up the income scale, you start to
transition to putting more dollars into a phone and k
pre tax. So now, because the problem is if your
plan does not have a wroth, then you will not
be able to.

Speaker 2 (27:19):
Make a ketchup contribution.

Speaker 1 (27:21):
So let me repeat that, if your plan does not
have a wroth, starting in January of twenty twenty six
and you make more than one hundred and forty five
thousand dollars, you'll be in violation with the IRS and
you won't be able to make a catchup contribution.

Speaker 2 (27:36):
So I would highly encourage you.

Speaker 1 (27:38):
If you're a business owner and you and or any
of your team members make more than that, then you
confirm that you have a WROTH account as part of
your phone K or if you're an employee, I would
confirm that as well, and make sure it gets put
in place by the end of this year so that
you're all set for twenty twenty. Now what I will

(28:01):
tell you, I get questions should I still put in
the catchup the amount, and the answer I would say
is yes. You know, for the most part, people have
too much in their traditional rays. Uh you know you
really would let Yeah, Ideally we'd like to have it
spread between a traditional IRA where it's pre tax dollars,
a ROTH IRA where it's post tax and gross tax free,

(28:24):
and even some dollars in a tax will account as well.
Having that spread it just allows you to access dollars
in the most tax efficient manner, and so just something
to be aware of as you're you know, kind of
saving for things and I do think in most cases
people don't have enough for the wrath. The large majority

(28:45):
of dollars they have is in a traditional ray. So yes,
you're not going to get the tax benefit to put
those dollars into that catchup amount, but I do still
think it's worth it, So I would recommend that you
continue to do that. And you know, in relatively speaking,
most of the dollaries even if you were putting your
standard employee contribution in pre tax, and then the employer

(29:10):
contributions are pre tax, so the majority of your dollars
are going to still go in in pre tax. But
it's worth it. You just have to be aware of
it as we start twenty twenty six. Now, the other
question I'm getting is with the federal government pretending potentially
shutting down this week, One, what are the odds of
that happening? And then two, you know, should there be

(29:32):
anything you'd be doing from a portfolio perspective. You know,
in general, as you look at the odds, they've increased
quite a bit over the last week or two. You know,
both the Democrats and Republicans and the administration are viewing
that they each have the stronger stand to perhaps have
the government shut down, that their constituents would be approving

(29:55):
of that, So we'll see what happens. You know, quite
often these situations go right up to the very end.
Something's negotiated and it's put in place. But let's face it,
we've had shut downs in the past. I think for
the most part, it really it just impacts mostly the
people who are uh, you know, actually in the government

(30:17):
and don't have essential jobs where they're going to continue working.
You know, they're the one impacted from the income perspective
for most of most of us, and in general, uh,
you know, from a market perspective. From an economic perspective,
the market more or less kind of shrugs these things off.
I'm not saying there can't be a little bit of
volatility on the day the actual government shuts down, but

(30:39):
you know, we've seen the government be shut down for
a month or so, and in general the market keeps,
you know, doing its thing, not being too concerned with it.
So you know, we'll be keeping an eye on it.

Speaker 2 (30:50):
But you know, from a.

Speaker 1 (30:51):
Portfolio perspective, because people ask us about that, we're we're
never going to manage a portfolio make changes based on
something like this, right because one it's hard to judge
the odds of it happening, and two it's certainly hard
to say it if there's going to be any impact
on the market, and it's just short term in nature.

(31:11):
So you think about it, if you to make any
change in anticipation of this and it doesn't happen, well,
now you know the market could continue moving higher, and
you've made an allocation change to your portfolio that you
need to change back, and you know, you really at
that point you're trying to time the market, and that
doesn't usually work so well. So you know, we always

(31:32):
say and when we're managing a portfolio, we want to
manage for the things that are the largest likelihood of happening, right,
and and it really will impact the market long term
versus something that could but it has a much lower
likelihood of that happening. The other question we get is, Okay,

(31:54):
if the markets at all time highs, is this still
a good time to get cash invested it? And you
know it really is. You look at historically, even when
you hit all time highs, it's still if you got
the right time horizon, you got the right allocation, is
still a good time to get cash invested. Now, one
of the things we do for clients that are just

(32:17):
nervous about doing that is we do dollar cost average.

Speaker 2 (32:21):
Meaning that let's say you just sold a business.

Speaker 1 (32:23):
You have a million dollars from the sale of that business,
and you're nervous about getting that money invested. You know,
we always give the guidance to clients that from a
statistical perspective, the best way to get those dollars invested
is to put it in all at once.

Speaker 2 (32:38):
Don't try to try the time the markets.

Speaker 1 (32:40):
You know, if you look at the data, the best
way to put it in that we get the most
return is to put it in at once. You know,
on average the market is going up more than it's
going down, So they don't risk it that you delay
in getting those dollars in. But now with that said,
many people have a mental hur hurdle to go ahead
and take that cash they just got from, you know,

(33:02):
selling the business where they've worked so hard to get it,
put it in the market and then see the market decline.

Speaker 2 (33:07):
Right. They just people have it.

Speaker 1 (33:09):
We have to appreciate in general, people have a much
larger version to losing money than they do to missing
out on an upside game that is that is human nature.
It's a it's a basically an aversion to risk and
to loss versus in a version to losing.

Speaker 2 (33:27):
Out on a game.

Speaker 1 (33:29):
So the idea of dollar cost averaging is that you
just spread those dollars to investing into the market over
a period of time. And what it does is allows
people to kind of get off the bench, right if
they've been sitting in cash for a while, it allows
them to kind of move from there. And you know,
we've been giving guidance to clients. You know, you had
the Federal Reserve reduced rates by twenty five basis points.

(33:51):
There is a reasonably reasonable likelihood that they're going to
continue to reduce rates. If you have money in cash,
whether it's in a money market account it's just straight cash,
or whether it's in a CD you know, you really
need to be looking to change that because you know
what we've been getting in a money market account of
four and a quarter percent foro and a half, which

(34:13):
has been you know, for many people they're okay with
that with their conservative part of their dollars, but you know,
as that declines, you're going to get less and less
and you know, you're not going to be at some
point perhaps keeping up with inflation. So you know, we
give the recommendation to either get that invested in a
diversified portfolio, or we give the recommendation to get it

(34:33):
invested into a bond allocation. Right, so you know, right now, bonds,
you know, longer dated bonds are still have a good yield,
and if you can lock in that yield for you know,
two years or five years or ten years, then as
rates go down, you're not concerned because you have locked
that rate in.

Speaker 2 (34:53):
And you know, we've.

Speaker 1 (34:54):
Talked about this before of the last couple of years,
when after the ten year US treasury hit five percent,
we were buying both bond funds and individual bonds for
our clients locking in those rates. So you know a
number of our clients have we bought a lot of
individual treasuries. We have you know, treasury ladders, meaning that

(35:15):
we had bonds that you know matured in two years
and in five years and seven years and ten years. Well,
you know, for those clients that we bought bonds that
US treasuries that were yielding you know, four point eight
four point nine to five percent, they've locked that rate
in right, So as the short term marketing market rates
go down, or CD rates go down, or rates on
your cash go down, those long dated bonds that they're

(35:39):
locked in, they're locked in for ten years and you're
getting five percent anally for really no risk, limited risk.
And oh, by the way, with US treasuries, you don't
pay state income tax, so it's kind of a win win.
And even now, I would recommend it if you've got
a lot of money mark in money markets or in
cash and you're not going to spend it in the

(36:02):
next you know, six months or a year or two,
I would still it's not a bad time to get
money invested in a diversity portfolio or to buy bonds
that are more long dated to lock in those rates.
Why you can, so we just give you that recommendation. Now,
one of the things we do is well, and this
is part of our bond or more conservative part of allocation,

(36:25):
we use hedged equity, which is just an ETF that
has exposure to the S and P five hundred, and
these funds come in different flavors, so they're issued every month.
So for each month there's one of these issues, and
there's a number of different companies firms that offer them.
First Trust is the one we frequently utilize, but there

(36:46):
are other ones out there, and they're basically what's called
the defined outcome ETF, meaning that for the next year.

Speaker 2 (36:53):
So let's say you.

Speaker 1 (36:53):
Bought the coming up let's say the October version, you
know what your protection is on the downside, and it
can vary that there's different flavors. Some are heads down
ten percent, some are heads down fifteen or twenty, and
so what that means is that for the most part
over the next year, you're not going to feel much
downdraft until the market is down greater than that hedge. Now,

(37:16):
the way that these these are done with option contracts,
so if the hedges down is a protection down ten percent,
and the market is down seven or eight, you might
be down one or two. So it's not as though
you're not going to be down at all during the
middle of the year. All it means is that if
the market's down twelve percent a year from now, that
that first full ten percent, you'll have no downdraft on

(37:39):
that you'll only be down to two percent. So it
can be a great way if you're a nervous nelly,
but you want to get exposure to the stock market,
but you don't want to have full exposure to get
use the hedge equity. Now we have to appreciate is
that the deeper the hedge, you know, if you get
ten percent or fifteen to twenty percent, the way that

(38:01):
they're paying for that is putting a camp on the
top side selling covered calls. So what that means is
if you've got a hedge of down protection down twenty percent,
well your upside is going to be capped at a
pretty tight range, probably you know, five or six percent
on the upside. Now, if your hedge is only ten
or fifteen, then that top side cap can be much higher,

(38:24):
can be ten, twelve, fifteen percent.

Speaker 2 (38:27):
And so again there's a lot of flavors.

Speaker 1 (38:30):
Each month there's a new one issued, and you can
have it for the cues, you can have.

Speaker 2 (38:35):
It for the S and P five hundred.

Speaker 1 (38:37):
There's a lot of different indices, so it can get
kind of complicated. The way we do it for our
clients is we'll put those in place primarily for the
kind of the bond or alternatives part of the portfolio.
There can be some clients will who are really nervous
knowledge but they want exposure to stocks that will utilize
this for and then as the market goes higher, we'll

(38:59):
rese set them. So let's say you buy one now
the market moves higher, and then let's say March the
market's up eight percent. You've hit that cap. There's no
more upside for you. We'll sell that ETF and buy
a new issue for the month of March, which resets
the floor right, so resets the hedge on that position,

(39:20):
and then also raises the cap higher. So it works
really well that we keep doing that to protect our
clients in that part of the portfolio.

Speaker 2 (39:30):
And then let's say it goes the other way.

Speaker 1 (39:31):
Let's say the market goes down by twenty percent, Well,
what we can do is we've got downside protection. Let's
say by ten or fifteen percent. We can sell that
position and so it's really going to be down much
less than the broader market, and we can turn around
and buy the broader market without the hedge. So it

(39:51):
can work well on either the upside or the downside.
But you know what you have to appreciate though, is
because we have clients to say, well, do you put
all my money into that head GTF?

Speaker 2 (40:02):
You know. Yeah, to appreciate is that you're capping out
the upside and that's.

Speaker 1 (40:05):
Important when you're talking about long term returns. So you
think about it. You know, the last couple of years
market was up twenty some percent, So if you were
in one of these hedged etfsh you were not up
twenty some percent. You were up, you know, only maybe
ten percent or twelve percent, which is good, but it's
not the full upbreadth of the broad market. And those

(40:28):
big years are very important from an overall return perspective. Right,
So uh, if the market returns on average nine or
ten percent, then uh, and you're missing out on those
big years. Guess what, You're not going to get nine
or ten percent analyzed return. So just important to remember. Well, folks,
we got about ten more minutes. If you have any questions,

(40:49):
you can give me a call. You can reach me
at eight hundred eight two five five nine four nine.
Again that's eight hundred eight two five five nine four nine,
or you can email me at Askbouche at bouchet dot com.
That's asked Bouche at bouchet dot com. You know, one
of the questions I get is I am really not

(41:12):
a morning person, but I usually have a lot of
energy in the morning. And I'll tell you if you
wake up and you're feeling kind of lethargic, or you're
sore from working out, or you have inflammation. One of
my go to things that I've been doing the last
couple of years is taking a cold shower in the morning.
That's and as a firm, we did a cold shower

(41:35):
challenge last year to talk about how people should get
out of their comfort zone. Right, so we quite often
people operate within their comfort zone, and you know that's
if you If you do that, you're not growing.

Speaker 2 (41:46):
As an individual.

Speaker 1 (41:47):
You've got to get out there and experience things, do
things that makes you feel uncomfortable, and that's how you grow.

Speaker 2 (41:52):
That's how you grow as an individual.

Speaker 1 (41:54):
And so we did this challenge for two weeks to
take a cold shower for two minutes, and so all
most of our colleagues did it. It was really impressive. But
a couple of other colleagues of myself just continue to
do it. And I don't do it all the time.
You know, I'll still take a hot shower in the
evening or just if I'm not feeling up to it.

(42:15):
I just take a hot shower. But I'm telling you,
just give it a shot.

Speaker 2 (42:18):
And this is what you do. You just you don't
put it on hot. You just put it on cold
and you go right in. That's that's all you do. Now.

Speaker 1 (42:25):
I'm bald, so I don't have to you know, wash
my hair doesn't take that long. So you know, if
you need to. You've got thick hair, you need to
wash it. You got turned it out hot after that, fine,
But just in general, walk right in two minutes in
the shower cold, and I will guarantee you that you're
going to feel that much better after doing it. You're
gonna have much more energy, You're going to feel mentally

(42:47):
more alive. And also inflammation, whether it's real, I'm not
sure if it's real or it's a placeball effect, you know.
I I definitely think for myself. I notice if I'm
sore from working out, it kind of goes away. So
give that a shot and see what happens. One of

(43:08):
the items I want to also talk about. We have
these questions regarding other outside investments. Right just talking with
a client about him investing in a real estate partnership
and some of the advantages of that, and we're big
believers in that. I always tell any of our small
business owners that where they really should be investing their dollars,
if they feel comfortable with it, is back in their business.

(43:29):
That's where they're going to make the most money. Is
to put that money back in the business and work
really hard. They know how to grow their business. They're
going to earn the greatest wealth by doing that. But
beyond that, you have to appreciate that as you look
at other outside investments, that there's things that you have
to kind of understand and that those things are going

(43:51):
to impact the type of return you're going to get. So,
for example, liquidity, if you're locking up your money for
a long period of time, whether it be five years
or ten years or plus. And this is one of
the things we talk about with annuities, right, which is
you're locking up your money.

Speaker 2 (44:06):
You better be getting paid more for that lack of liquidity. Right.

Speaker 1 (44:09):
So, you know, with some of these non publicly traded ruts,
you know you're locking up your money, there's no market
to be able to sell your stocks back into that's
liquid and so because of that, you better be getting
a higher rate of return Because of that, risk, right.
The other element is transparency. You know, with our portfolios
they're all publicly traded ETFs, you can see exactly what's

(44:32):
in the fees and everything.

Speaker 2 (44:34):
That transparency is very important.

Speaker 1 (44:36):
And also those ETFs they're completely liquid, right, you want
your cash. You know, we can sell not today because
it's Sunday, but we can sell on Monday and have
that money ready for you on Tuesday. That liquidity and
that transparency is important. If you don't have that transparency,
that you should also be getting paid more for your investment.

(44:56):
The other is understands fees, right, Fees over time eat
into returns, and so another reason we don't like annuities,
they tend to have higher fees that tend don't have
not to have transparency. But any investment that you're looking
at that you have to appreciate what those restrictions are.

(45:17):
Uh and so along those lines, you know you're going
to want to get paid more for that.

Speaker 2 (45:23):
So just just be aware of that as you're making
these decisions. You know.

Speaker 1 (45:26):
The other element, you know, we hear this with real
estate all the time as well. You know, if I
buy this property and rent it out, then I'm going
to be able to you know, earn more money on
it and just appreciate that. You know, we talked again
liquidity transparency, but also your labor, right, you have to
appreciate that if you're putting your your hours in there,
well again you should be getting paid.

Speaker 2 (45:47):
More for that. That is just uh, you know, the
fact that you want to get paid for your hours.
So it is important to remember.

Speaker 1 (45:55):
And you know again this is where for our clients
we come in as a personal CFO and and give
them guidance.

Speaker 2 (46:02):
Right.

Speaker 1 (46:02):
You know, they come to us with these different opportunities,
that these perspectuses and say hey, I've got this in
front of me. Should I should I do this? And
you know this could be true from everything from job
offers to buying businesses to investing in businesses, anything like that.
We get involved with our clients and give them insight,

(46:23):
and you know that's where it's fortunate also that we
work as a team because you know, I've got almost
twenty years of corporate finance experience. My colleague John Malay
worked also in areas where he was involved with a
lot of acquisitions and transactions.

Speaker 2 (46:38):
So you know, we get our full.

Speaker 1 (46:39):
Team involved with our tax people and whatever uh, to
give guidances to what you know, individuals should be doing
and thinking more from holistic perspective. Right, that's uh, you know,
don't get caught up kind of being narrow minded. Think
of it from a more holistic perspective. How does that
fit in your overall.

Speaker 2 (46:58):
Kind of financial picture.

Speaker 1 (46:59):
And it goes back to what I talked about earlier,
which is you know, having that network statement. So you know,
when we meet with our clients, especially those that have
very complex financial situations, we we ask them to you know,
to make sure they get us the updated values of
all those assets and any of their liabilities so that
we can have that picture updated. And what's great is

(47:21):
we'll take these snapshots for our clients and you know,
we can look at it over time and see the
growth of their you know, both their investments with us, uh,
their ability to pay down their debt over time, uh,
and then their ability to grow their other outside assets
and see that networth grow. And you know, also just
ability to borrow against that net worth. Right, you know,

(47:43):
whether it's with us using their investments as you know
a collateral or there are other outside assets for collateral
to borrow against. It is very helpful for a bank
that did both know your income but also to have
your overall assets broken out like that. It gives them
a great picture. And the other element, finally is from

(48:03):
a state planning perspective to have that. Well, folks, we
spend an hour together as always has been great.

Speaker 2 (48:08):
I hope you learn more.

Speaker 1 (48:10):
You're listening to Let's Talk Money, brought to you by
Bouchet Financeed Group. Well, we help our clients prioritize their
health while we manage their wealth for life. Take care
of yourself and take care of each other, folks,