Let's Talk Money

October 5th, 2025.

Episode Transcript

Speaker 1 (00:01):
Well, good morning, and thank you for joining us for
another edition of Let's Talk Money on ten WGY. I'm
your host, John Malay, and I'm glad you joined us
on this early October Sunday morning. I'm a certified public
accountant and I'm the chief operating officer, chief financial officer,
and a wealth advisor at Bouchet Financial Group. Again, I

(00:24):
want to thank you for taking time out of your
Sunday morning. But what a beautiful day out there. My
co host for today's show is Edward Wilhelm. Ed is
a portfolio analyst at the firm in a key member
of our investment committee. Good morning, Ed, Thank you for
joining us.

Speaker 2 (00:40):
Yeah, morning, John, it's good to be here.

Speaker 1 (00:42):
Good to have You're good to have you. You know,
we're in our trading room right now looking out and
it's pure blue skies in sunshine. Oother, just amazing day
hearing you know, eighties today, eighties tomorrow. So hopefully everybody
gets a chance to get out there, start their day
right now, listen to us and maybe having some coffee
whatever gets you going in the morning, and get out

(01:04):
there and enjoy this beautiful weather. You know, we got
some exciting news from one of our colleagues. Yesterday, Samantha
Macy let us know that she gave birth to her
second daughter. So congratulations to Samantha and Ryan. You know,
it's I will say, uh, you know, we have a
growing family at Bouchet Financial Group and you know, we

(01:26):
had a couple events, one of them this summer and
where we had all of our colleagues and their family
and it's just great to see what a growing, growing
team we have. And so congratulations to Samantha and Ryan.
And you know she shared some beautiful pictures, so you know,
congratulations there. You know, one of the one of the

(01:47):
things that Steven has really built into our firm is
about giving back to the community. And you know, ed
who's with me this morning, you know definitely uh falls
in line with that. So appreciate that. And I know
you have a big event this week you're participating in.
You want to share a little bit about that. Yeah,
thanks John.

Speaker 3 (02:05):
So next Thursday, we're going to be doing a event
at Harvey's in Saratoga. We're putting on a sort of raffle.
Right now, we're selling two hundred tickets and the winner
is gonna win ten thousand dollars. And we're going to
do the drawing at Harvey's next Thursday for the Giants
Eagles game. So watch the game, get some food, have

(02:25):
a couple of drinks, and then you know, ultimately giving
back to a you know, great charity for American Cancer
Society doing the real men wear pink.

Speaker 1 (02:34):
And I will say when when Ed says next Thursday,
it is this coming Thursday, you just want to correct, right, Yeah,
but it is the next Thursday we're going to have,
So I will just say it's it's you know, just
another example where Steve really has built into the culture
of giving back. Is a great event. The guys are
working hard to raise money for American Cancer Society, so,

(02:54):
you know, just a big part of our culture. And
it's great to see some of our colleagues coming up
with an event like this, creative event and raising some
money for a great cause. You know. One of these
I also I want to bring attention to is if
you go to our website Bouchet dot com b O
U C h e y dot com, you'll see up

(03:14):
in the upper right hand left hand corner of Women
in Wealth Seminar, our team is putting on an event
coming up in a few weeks called her legacy Navigating
Life's Transition. And again this is another initiative that Steve
very supportive of is Women in Wealth. So our very
own Harmony Wagner will be on a panel with two

(03:37):
other professionals, Claire McCrae from Lemrie Grisley Law Firm and
Leah Henderson from Teelbecker CPA. So a great event if
you're interested. You know, it talks about life's transitions and
you know it's a seminar during the day. Go onto
the website check it out. I would just say it's
just a really dynamic group of speakers speaking about you know,

(04:01):
from a women's women's perspectives, life transitions and financially, uh,
you know, from an investment management, from a you know,
from an estate planning and tax perspective. So great events.
So you know, highly encourage everyone to check that out. So,
you know, Ed and I are here this morning. We've
got some topics we want to you know, cover We're

(04:21):
going to talk about the market, you know, talk a
little about the ten year treasury. You know, we guys
we have rates changing. Everyone's like, well, how come my
mortgage isn't going down? So we'll talk a little about that,
talk about you know, this is a great you know
here we are market highs. What what should you be doing?
But we're here for you. So if you have questions, please,
you know, encourage listeners to call in. You can reach
us at eight hundred talk w GUI. That's eight hundred

(04:45):
eight two five five nine four nine. You know, we'll
jump right into the markets. And you know, ed while
you know here we are, what does Steve always say
when we hit market highs, what happens next? We continue
to make we make all time highs now? We do
know sometimes markets go down, and they certainly do. Is
equity investors one of these we always tell our clients

(05:05):
is any year you could have a ten to fifteen
percent drawback, right, that's an average year. But markets go
higher and higher and you can look at any charge
you want. Last fifty years, markets continued to make all
time highs now. Again, that doesn't mean that in any
given time periods you can't have some significant drawbacks, and
that does happen. But here we are, where at this

(05:27):
period where you know this week set you know, record
closes on Friday with the Dow and the S and
P five hundred, Nasdaq flirting with it earlier in the week.
Just a solid, solid week, you know, in all, SMP
was up a little over one percent, NASDAK up about
one point three percent, Dow was up one point one

(05:48):
and the Russell two thousand, you know, small cap index
up one point seventy two percent for the week. So all,
you know, solid solid across the week, and all in
the midst of a government shutdown, right, government shutdown on
October first, And you know, certainly with the government shutdown,
a lot of hyghbed, right, there's always like fear of okay,

(06:08):
you know, now the government's going to stop paying debt,
they're going to stop paying other things. That doesn't happen.
And traditionally, you know, from the market perspective, government shutdowns
really become a non issue. Yeah.

Speaker 3 (06:22):
Typically, I mean you see you know, very muted flat
returns during the shutdown and historically coming out of the shutdown,
you know, once that fear dissipates, market's return to moving.

Speaker 1 (06:32):
Higher, right, and this showed it this week, And that
doesn't mean that Listen, there's certainly government workers who are
considered non essential who are being impacted right now, and
certainly you know, nobody wants to see that happen, but
you know this is you know, we've got both sides
digging in their heels right now. How long this shutdown
will last? Who knows? One thing? We do know from

(06:55):
historically speaking, you know, the longest recent shutdown was thirty
four days, and that was back in twenty eighteen and
Donald Trump was president then. So you know, certainly this
could be a prolonged shutdown, and certainly there's more risk,
and I'll say especially right now, the FED has been

(07:17):
very clear, you know, there we got a data dependent FED.
We got two important meetings coming up, one October end
of the month and then one in December. And you know,
as we already saw last week, you know, we should
have gotten some jobs data on Friday, didn't get it.
And you know, as we as a FED has to
operate without you know, the data they want, you know,

(07:38):
that could cost some concern. So certainly, you know, we're
not you know, we're certainly not minimizing the potential impact.
But historically, right is that government shutdowns have not had
a big impact on the markets. Certainly, you know, well,
I think we're what five days into the shutdown right now,
we're not seeing any significant impact. Actually saw markets react

(08:00):
positively last week. But we are, we are early on,
and I will say they are digging in their heels.
You know, there's a number of issues uh being dealt
with and part of it, you know, certainly the subsidies
from the Affordable Care Act, the premium tax subsidies, and
a bunch of other issues. But you know this, this
will have to again, nobody has a crystal ball, absolutely

(08:23):
nobody does. So hopefully this will not last long. But again,
things that you know, mandatory programs are going to stay alive.
You know, if you're receiving SOLI security, you're going to
continue to get solid security. The government's going to continue
to pay interest payments on their debt.

Speaker 4 (08:36):
Uh.

Speaker 1 (08:36):
You know, we certainly could see some furloughs and some
expansion of that uh and and hopefully not you know,
I know, you know, if you have a business and
you rely on federal government contracts, it could be an
uncertain time. And certainly understand that. And I will say,
the longer this goes on, you know, the potential you know,
bigger impact. So but as of now, hey, you know,

(08:58):
markets react positive to a number of things, right so positive.
We you know, here we are wrapping up the third quarter, right,
we put a bow on September thirtieth, and we got
the S and P up fourteen percent, Nasdaq eighteen percent
year to day, dial Up almost ten percent year today,
and the Russell two thousand, you know, small caps eleven

(09:20):
percent year to day. You know that's phenomenal.

Speaker 4 (09:22):
Uh.

Speaker 1 (09:23):
You know, the ten year treasury wrapped up on Friday
with a yield about four point one two percent. So
strong markets this year, right, and you know what are
we seeing as we're as we're heading into the fourth quarter.
You know, we've certainly seen earnings there. We've also seen
a really healthy, strong consumer and there's a lot of
concern about that, a lot of you know, concern about optimism.

(09:44):
But ed we're seeing spending, you know, and we're seeing
consumer discretionary right, which certainly can be a bell weather. Hey,
if there's a lot of uncertainty, concern and fear consumers
aren't spending money.

Speaker 3 (09:57):
Yeah, and that consumer spending is really sort of a
double edge sore. You know, we want to see a healthy,
strong consumer, but not too healthy and strong where they're
spending and you know, continuing to drive inflation.

Speaker 2 (10:08):
So that's definitely some offense watching.

Speaker 1 (10:09):
Absolutely, and but but I will say, as you know,
we always say, you know, of our GDP, consumer spending
makes up seventy percent. It's a huge impact. And right now,
you know, and we're seeing it with consumer discretionary Consumers
are spending money, they're out there and uh, you know, so,
so that's good in the AI. I mean, the AI
spending is uh is living large, it's continuing, it's not

(10:33):
slowing down. And you know, we talk about bubbles, and
you know, there always is concern, right if something like
this is a technology bubble, it doesn't really have the
characteristics right now of a bubble. But AI spending is
fueling a lot of growth right now and a lot
of you know, our our feelings about where growth is
going to be in tech coming up. But there's there's

(10:55):
no slow down in spending on AI cap X.

Speaker 2 (10:58):
Yeah, no none at all.

Speaker 3 (10:59):
I mean last year, I think we had three hundred
and ninety billion this year, where.

Speaker 2 (11:04):
This year we're almost four hundred billion. Next year we're
looking at four hundred and fifty billion.

Speaker 3 (11:09):
So yeah, companies are confident in their growth expectations and
so are we, and.

Speaker 1 (11:14):
When you see that kind of cap x spending, it
ripples through right because it is not you know, you think, well,
where are they spending. They're spending this on infrastructure, right,
so they're constructing new facilities, they're putting in new energy facilities. Right,
So there's there's a lot of you know, a lot
of areas that are they're realizing this growth, you know
beyond right, we hear about the Navidia of the world,

(11:36):
right the chip makers. Well, it's not just a you know,
somebody in a vacuum building chips and nothing else is happening.
You know, there's major, major investment going in infrastructure. You
hear about these deals being announced. So so right now
is you know, we wrap up you know again the
third quarter. Markets are markets are certainly performing this year
and we're seeing you know, good GDP growth. GDP growth

(11:59):
the second quarter all almost four percent, you know, after
a little bit of contraction in the first quarter, but
seeing some great growth there. And again who's driving that
consumer is spending, no question. And also we're seeing you know,
large cap tech spending in a big way. So some
really positive things there. So overall markets are great, and

(12:20):
you know, you're hitting all time highs, and you know, certainly,
you know, is it time, I Will says, we as
we look at that is all time highs. You know,
that can strike fear to some people. They say, all right,
we're at all time highs. That means markets have to
come down. Well, you know that's not necessarily the case.
We just talked about that, and we'll talk a little
bit later about Okay, if you're an investor and you're

(12:41):
looking at your portfolio, what are the things you should
start to think about? Is now we're hitting all time highs.
But you know, we we certainly hitting all times high
does not mean automatically, hey things are now going to
go negative. It really means it's a time to pay attention,
pay attention to your portfolio. You know. One of the
things you know, and we want to talk about, and

(13:02):
you know, I get this question a lot, is Okay,
we've got the FED who met in September cut rates
by twenty five basis points, right, and now you know
we forget there were actually you know, there were also
three cuts last year, right, So you know, although this
was the first cut this year, they cut September, November

(13:23):
and December last year, so four cuts in the Fed
Fund rates total of one hundred and twenty five basis points,
and consumers are like, well, why aren't mortgage rates going down? Right?
You know what's happening, And so a lot of question
is okay, you know, we talk about the ten year treasury, right,
and so one of the things we got to remember

(13:44):
is that, you know, the Fed funds rates really affect
short term rates. You know, the ten year treasury really
is a different animal. We'll talk a little bit about
that of you know, why it's so important, but definitely
the ten year treasury is really used as benchmarkt finance.
It's used for so many things, so so many lending
rates are based on the tenure. It's a really really

(14:07):
important rate and where you know, it is not directly
tied to the Fed funds rate. Now I will say
the Fed fund you know, the direction of the Fed
Fund rates does have some influence, but it is not
like a short term borrowing rate that goes one for one.
And you know, starting with the basics, you know, you know,
we'll say sometimes you know, we talk and we talk

(14:29):
jargon and we just assume everybody knows what we're talking about.
You know, the basics. You know, what is the ten
year treasury? Right, Basically, it's just a ten year treasury.
You know, it's a bond issued by the US government
that pays investors interest over ten years. Right, So it's
it's backed by the full faith and credit of the
US government. So it's considered one of the safest investments

(14:50):
of the world. And you know, and many times that
the rate, the yield of the tenure Treasure is kind
of seen as a barometer of long term interest rates
across the and so you know, so we know, you know,
we've talked a lot, right, a lot of attention about
the Fed. When's the Fed gonna cut rates? You know,
should they have cut sooner? Well, we've saw rate cutting

(15:12):
in September, right, And so now it's like, well, okay,
do we automatically see a move in the ten year?
Do we if we see a cut in the FED funds,
do we automatically see a cut in the ten year?

Speaker 3 (15:22):
No, certainly not, I would say as to what you
were talking about, it's, you know, two other components are
going to be those inflation expectations and then growth expectations.
So just because the FED funds is moving one direction,
you know, if we think back to when we first
started cutting, you know, last fall in September, we got
a you know, fifty bits cut, and we saw a

(15:45):
ten year rise almost a full percent. In large part
of that was because, you know, the cut expectations for
the FED were so overblown that once we got those
cuts and they announced that they were going to pause,
we saw the ten year rise into that certainly an interesting.

Speaker 1 (16:00):
Dynamic, absolutely, and it's important to note, you know, so
you know the ten years, so short term rates are
definitely you know, they're tied, right, so fed, you know,
the FED cuts the FED funds rate, you see short
term saving rates you know, almost move lockstep. But the
ten year, right, it really comes down to supply and
demand and really expectations. Right, what's the expectations for inflation

(16:24):
and for economic growth? Right, So so if the economy
is strong and investors expect higher inflation, they expect higher
interest rates in the future, right, So what happens is
the ten year rate rises. Same thing with inflation. If
you're if you're expecting higher inflation, right, then the investors
is going to demand a higher return, right to preserve

(16:45):
their purchasing power. And so in short optimism and inflation
fears push rates up, and then fear and certainty push
rates down. Right, And so you know, how does that
connect to the FED funds rate? Well, again, the Fed
funds rate. You know the rate that we talk about
that hey, when the Fed's gonna meet and they're gonna
be meeting again in October, and we talked about the

(17:09):
rate that they touched. That's a FED funds rate. That's
a short term rate. And so you know when they
change the rate, that causes a short term yields to
rise almost immediately, right. But but as Ed just pointed out,
the ten year does not follow one for one. But
I will say they you know, the Fed sends the
short end of the curve, right, and I will say

(17:30):
the market sets the long end of the curve. And
that's important to note, right, So the Fed has a
lot you know, one of the levers they can pull,
right is the FED funds rate, And that really is
that's affecting the short term part of the curve. Right,
So short term yields, short term maturities which could be
you know, three months, six months, a year, two years,

(17:51):
but the longer end of the curve, right, that the
ten year treasury and the thirty is really really set
by market expectations. And so what's import st is a
lot of borrowing costs are tied to that ten year, right,
so mortgage rates heavily tied to that ten year. So again,
if the expectations is that inflation. So let's look at

(18:14):
last September, right, as ED said, Fed funds, they cut
the FED funds rate by fifty bases went so half
a percentage point, right, But at that point, right, expectations
were where's inflation going? Where is growth going? Right? And
so the concerns where inflation was going to increase, growth
was going to increase, And so investor says, you know, yeah,

(18:36):
we see the Fed is what they're doing, but we're
going to demand a premium, right, We're going to demand
a premium for that longer ten year treasury. And so
although short term rates went down, right, the long end
of the curve, the ten year went up, and so
ED relative you know, from September, which is where the

(18:56):
FED first started, they had their first rate cut, and
it was a big cut. It was a you know,
we'll call it a jumbo fifty basis point cut. They
cut in September. Then in November they cut twenty five
basis point, then December twenty five basis points. They took
twenty twenty five off as they were evaluating data, and
did the first cut in September to twenty five basis points.

(19:17):
So that's four cuts. That's one hundred and twenty five
basis points and one hundred and twenty five basis points
just is one in one quarter percent. Right. Again, sometimes
in finance we have to make up fancy terms. Basis
points is one of them, but basically one in one
quarter percent. The Fed funds rates went down, right, what

(19:37):
happened to the ten year during that time?

Speaker 3 (19:40):
Yeah, so the ten year is almost up twenty five
basis points around there since then a quarter of.

Speaker 1 (19:45):
Right, so clearly showing that, hey, there is not one
for one correlation and in fact we're situation where they
moved in different directions. So again, just want to, you know,
spend a little time talking about the as that becomes
a point is consumers or investors are looking you know, hey,
borrowing costs are not coming down, but what we see

(20:09):
are seeing, right is if you're parking cash in short
term savings, it's going down.

Speaker 2 (20:16):
Yeah, certainly we've we've definitely seen the shorter under the
curve fall in comparison, you know, especially seeing that in
like money market funds, those those ultra short term bond funds,
you know, rolling like three to six months treasure.

Speaker 1 (20:28):
And you know, you know, investors have been able, you know,
they've had a great opportunity to be honest with short
term savings because, hey, if you can park some of
your cash into a vehicle and you've been able to
do this the last you know, two years almost and
get five percent four and a half percent, boy, that's

(20:48):
not bad, right, you know. And so consumers have been
able to do that because of where interest rates have been.
But as the Fed is cutting rates, right, we're going
to see is your borrowing costs may not change and
is ed pointed out, actually increase, right, But what you're
going to be making on those short term savings vehicles

(21:10):
is going to go down and is going down. And
if you're sitting in those, you've experienced it, and so
you know, certainly just got to keep track of that.
So again, you know, inclosing on this, just that hey,
the ten year is kind of more the ten year
treasure more reflection of market expectations about growth, inflation, and
Fed policy, the Fed's actions on the Fed Funds rate.

(21:32):
They influence it, but they don't control it, right, and
you know, it is the biggest driver on borrowing costs.
It affects and that's why the ten year treasure is
often referred to as the benchmark rate. And so you know,
one question I do get as well, we have a
thirty year treasure. Why isn't the thirty year affecting mortgages
more than the ten year? You know? And the reality
is even though most you know, borrowers are getting thirty

(21:55):
year mortgages, they're not paying it off over thirty years.
They're either pre paying or refine. So you know, the
average payoff of a mortgage is really more than a
seven to ten year rate so range, so the ten
year really is more appropriate. So hopefully that you know, uh,
clears up some of the confusion, because I do know,

(22:17):
you know, there is you know, consume as investors, we
hear about we put so much uh, you know, talk
about the Fed funds and then you don't see it.
You know, you're sitting maybe in an adjustable rate mortgage
or other mortgage and you're like, well, why aren't I
feeling relief there? So hopefully that helps clarify that. And
you know, Ed and I are here this morning, and

(22:38):
we're certainly here to answer any questions you have. So
I encourage listeners. You can reach us at eight hundred
talk wg Y. That's eight hundred eight two five five
nine four nine. We're gonna be heading into a break shortly,
so we'll hold off on getting into our next segment
for then, but again, you know, wrapping up the markets

(23:00):
there and you know, covering a lot of good topics there.
When we come back, we'll we'll get into some more matters,
but you know, we are I can't believe we're halfway
through the show and we're going to be taking a break.
I want to thank you for tuning in with this morning.
Hope you are enjoying the show. Hope you're going to
rejoin us after the break. Again, we encourage listeners pick
up the phone and call us. You can reach us

(23:22):
at eight hundred talk WGY. That's eight hundred eight two
five five nine four nine. You can ask us a
question about investing, financial planning, any topic you have, We're
here to answer. So you're listening to Let's Talk Money,
brought to you by Bouchet Financial Group, where we help
our clients prioritize their health while we manage their wealth

(23:44):
for life. So thank you for tuning in with us
for the first part of the show. Hope you stick
with us, and again if you have questions, please call Well.
Good morning, and thank you for staying with us through
that commercial break. I'm John Malay and I'm your host
for this morning show. I'm joined by my colleague Ed Wilhelm. Ed,

(24:06):
how you doing doing good? Hanging in there? All right?
We got the first half of this show, and you know,
I had a big discussion about the ten year and
you know, I think we get a lot of questions
about that from clients, you know. Just wrapping up that segment,
you know, we talked a lot about the FED funds
rate and you know we have you know, two meetings

(24:27):
left this year and one in October, one December, and
you know, based on the September meeting and the dot
plot that came out of really the FOMC kind of
setting their expectations for rates over the next year or so.
Expectations are we may have another fifty basis points of

(24:49):
about half a point percentage point of cuts this year
and maybe another quarter percent next year. So we'll see
on that. But you know, ed and I are here.
We're here to answer any question you have, So please,
if you have questions, don't hesitate at all to reach
out at eight hundred talk WGY. That's eight hundred eight
two five five nine four nine, So give a you

(25:11):
know market update and certain you know markets here. We
are market all time highs across the board, and as
I mentioned in the very beginning, you know this can
cause concern for some investors are like, okay, we're at
market highs that there's only two things that can happen
is we make more market highs or we go down.
And and we know it can go in either direction,
as we always talk about, in an average year, you

(25:34):
could see a fourteen to fifteen percent draw down. And
that's just an average year, and a draw down is
just a decrease, right, So you're going from markets go
down ten fifteen percent. That's a normal year to have
that kind of draw down in partial recovery. But you know,
so we certainly think market highs are not a time

(25:54):
to panic or a time to sell, right, but really
a time to reassess, look at your portfolio. And you know,
there is a question we get a lot with our
clients of you know, is my portfolio out of balance?
How many times do I reassess and reallocate? And and
I know this is something that you spent a lot
of time doing working with clients, helping looking at their portfolios,
making sure they're allocated and approp you know, appropriate with

(26:17):
their risk tolerance. So you know, what do you think
about you know, here we are all time highs. I'm
an investor, what do I do?

Speaker 3 (26:24):
Yeah, I think you know the best place to start
is think about their short and intermediate cash needs. You know,
if you're taking distributions out of your account, you know,
if you're taking rm ds, you know, do you have
that cash set aside for this year maybe even next years?
And you know, think about raising that cash. You know,
we're still getting paid just a little above four percent
on money market funds, so not a bad place to

(26:46):
camp out and let that cash sit just in case
we do see that draw down or any volatility. You
want to have that cash on the sidelines. You want
to avoid selling equities when markets are down and then
the other thing you really want to take a look
at is going to be the ratio of you know,
your equity to your fixed income. You know, if your
risk tolerance in retirement is you know, sixty forty sixty

(27:07):
percent equities forty percent fixed income. We've seen some strong
market returns and equities, you know, fixed income has lagged.
So what that's going to do to a portfolio is
your equity allocation is going to grow. Now if we
see a draw down, that draw down might be more
than you would normally be able to stomach under that
sixty forty allocation. So it's it's it's looking at where

(27:28):
your allocation sits right now and thinking about, hey, do
I need to trim some equities. What's the best way
to do that, just to get down to your preferred
risk tolerance. So if you know, if you do see
a draw down, it's not going to cause you to make,
you know, maybe an emotional decision.

Speaker 1 (27:42):
Great, and Ed's got a lot more we can talk
about there, but we do have a caller. We have
Frank from Bird Hills. Frank, appreciate you listening us this
morning and how can we help you?

Speaker 5 (27:52):
Thanks guys for doing the show. Yes, everybody talks about
how the rep conversion helps you tax wise. I'm sixty
two years old. If I'm taking distributions from my IRA,
does that do the same thing when required minimum distributions

(28:13):
kick in? Do those distributions help to smooth out my
tax rates at seventy five?

Speaker 1 (28:22):
So, Frank, great, great question there, And I'm going to
unpack that because there's there's a lot there. So you know,
first talk, you know, required minimum distributions, right, So you
you get to a point and for a lot, it's
seventy three where the IRS says, hey, we've let you
have this money tax deferred, but we're not going to
let you have a tax deferred forever, right, we want

(28:44):
our taxes. And so you're required, you know, to take
what they call required minimum distribution. And there's actually an
IRS table that says, hey, if you're this age, here's
what the distribution is. But it's roughly in the four
percent range. Now, it does vary depending on your exact
day age. And so when you do that, right, you're
required to take that distribution out and it's considered ordinary

(29:07):
income and you get taxed on it. So you're correct
in one way that hey, by by not having to
take that i RA in one big, huge lump sum
and throwing you into the highest tax bracket there is right.
By doing you know, smaller required minimum distributions, you're spreading
that income over a number of years, right, which which

(29:29):
by itself, you know, may prevent you from going into
a higher tax bracket. But all that depends is entirely
on how big your i RA balance is, right, because
if you have a significant i RA, even an r
m D might be enough that pushes you into at

(29:50):
a high tax bracket. Right, And so it would really
have to look at your individual situation. So, but one
thing you're right with the r m D is you
are spreading that effect out now with a wroth conversion.
One of the big differences you are saying, Hey, whatever
whatever balance you convert. And I will say, at your age,
we still see clients doing wroth conversions. And I will say, like,

(30:14):
wroth conversions have become so popular.

Speaker 5 (30:17):
Yep, John, Can I stop you for one second? Sure
what I'm talking about. What I'm talking about is is
taking my distributions now? Is that the same as doing
a wroth conversion. If I'm taking thirty thousand dollars a year. Now,
is that the same as converting thirty thousand dollars? Is

(30:39):
that a zero some tax game?

Speaker 1 (30:42):
Okay, yeah, so good question, and I'll tell you why
it's not. Right. So, when you're taking that required minimum distribution, right,
what you're doing is you're taking those proceeds out of
your IRA, which is a tax deferred vehicle, right, and
you're putting that some where. You're either putting it into
another brokerage account, right, or saving something that is it grows,

(31:07):
you're gonna pay taxes on it. Right, where are rowth? Okay?
So whereas a so so? But the big difference is right,
So if you're converting it to a WROTH, right, what
the so? Right, what you're doing is you're putting into

(31:28):
account that all the future growth is going to be
tax free. And so that is the real benefit of
the wroth conversion. Right, is you're taking funds that are
pre tax right. And if you and if you just
take a distribution, well you've now put them into a
taxable account. Right. Again, I understand if you're saying you're

(31:48):
spending it all, right, But if you don't spend it
all and you're actually saving it, it is now in
a taxable account. Right, so any you're not gonna be
taxed on pulling the money, but on any any future
growth you're gonna be as on. Right. And so the
key with the WROTH is is you now that's tax
free money, right, so you put it into the wrath

(32:10):
it grows, right, and that that growth is tax free.
And so I would I would so again I would,
I would. So they're not the same, right, but I
but I would say, you know, and I'm not saying,
you know roth conversion makes sense for you. Again, it
is such an individual situation to evaluate, you know, whether

(32:31):
it makes sense or not.

Speaker 5 (32:34):
Okay, Thanks John, Thanks so yeah, thank.

Speaker 1 (32:37):
You appreciate you know, appreciate your calling, Frank, appreciate you
listening to the show. And again, encourage any other listeners
to call in with questions. You can reach Ed or
myself at eight hundred talk w g Y. That's eight
hundred eight two five five nine four nine, So you know,
prior to the call from Frank, and again I Frank,

(32:59):
I appreciate you listening, pre calling in. You know we're
talking about Okay, we're at market highs, you know, time
to to rebalance, look at our portfolio. And again Ed
talked to you know, really important part and you know,
I will say, clients decide to work with firms like
us for a number of reasons, and certainly you know,

(33:19):
investment management is first and foremost. And I will say,
you know, taking the emotion out of investing is really
really important, and you know, the having a professional and
you know it's an important part of our investment committee.
You know, our committee is evaluating investment alternatives every day.

(33:39):
And but another really important reason clients engage firms like
us is for financial planning and tax planning. And really
there's they're not separate buckets, right, So your financial planning,
if done appropriate, should investment should impact your investment strategy, right,
And really important part is through the financial planning process

(34:04):
anticipating what your cash needs are. So so Ed talked about, Hey,
as we're now seeing one, we're still seeing investors with
a lot of cash sitting on the sideline. And you
know a lot of times we get asked, is it
a good time? You know, here we are all time highs,
is it a good time to invest? And our belief is, yeah,

(34:25):
absolutely it is. Now it's about it's about matching your
time horizons. Right, so if you need that money in
a short term basis, you know, six months, twelve months, right,
you might want to put it in a vehicle like
Ed talked about, you know, very principal secured vehicles still
generating a DC yield. I'll tell you we're still doing
treasury ladders. Even though treasury yields are coming down. Still

(34:48):
is a great way to lock in rates. So certainly
a way, you know, time to look at portfolios and
you know, I will say, through the financial planning process
identifying cash needs. So that that's important too, is it?

Speaker 3 (35:01):
You?

Speaker 1 (35:01):
Maybe your tech sector, you look at your allocation. You've
got a certain allocation to equities really through the financial
planning and you can do this on your own if
you don't work with a professional. What needs do I
have If I'm plan on taking money out of the
portfolio in the next you know, twenty four months, I
should I should probably take some profits and put that
money into a vehicle that's more liquid and a lot

(35:24):
more we can talk about there. We have another caller, Matt.
I appreciate you listening to us this morning, and how
can we help you?

Speaker 4 (35:32):
Hello?

Speaker 1 (35:33):
Matt, how you doing good? Good.

Speaker 4 (35:36):
How you doing.

Speaker 1 (35:37):
We're doing great, doing great, appreciate you listening.

Speaker 4 (35:39):
This morning, I got a question, Hel I'm watching my
I have Amazon stock, and it just seems to keep
going down. And I said, you said record highs and everything,
but I don't know what's going on with Amazon as
of late.

Speaker 1 (35:53):
Well, you know, so I will say record highs. We
you know, talked overall with the market, right, and I
will say, you know, any and that's this is one
of the hard part about investing right in any individual stock, right,
can move based on a number of characteristics, and so
you know, and I will say Amazon is a stock

(36:14):
that that we like and have in our portfolio. But
you know, I will say, I don't know if you
want to provide any more color, but certainly I will
say markets are at all time high. You look at
you know, S and P, Nasdaq, But within any one
of those indexes, you're gonna have individual stocks, you know,
moving based on either their you know, characteristics of their

(36:34):
own financial situation or you know, other risks that they're facing.

Speaker 3 (36:39):
Yeah, so I mean, just on a broader perspective, right,
if we're thinking about Amazon, you know, one issue they've had,
you know, throughout all of this year as it ties
into you know why as Amazon maybe lagging the rest
of large cap meg tech. Their AWS cloud services just
haven't quite lived up to earnings expectations, you know, their
cloud revenue, that's a huge part of it.

Speaker 2 (37:00):
Same with their advertising revenue.

Speaker 3 (37:02):
But then also I mean in the shorter term they
had FTC settlement issue and then also a VP exited
the firm, So a little bit of leadership churn, you know,
those those smaller pieces are you know, items that analysts
will watch and can cause some shorter term volatility, but
I would say, on you know, a broader term perspective,

(37:23):
it's you know, some of those AWS expectations were so
high and you know earnings haven't quite lived up to that.

Speaker 4 (37:32):
Thank you for your time, appreciate it.

Speaker 1 (37:35):
Thank you for the question, Matt. Appreciate you tuning in
this morning. And you know that there highlights you know,
and we talk about it. You know, picking individual stocks
it's hard. I mean just gonna tell you it is
hard and and and that's why you know, primarily, you know,
we use exchange traded funds, which really you're investing in

(37:55):
a basket of stocks, you know, like one of our
you know, I'll say Stalwart Funds has been QQQ, which
has been a way of getting our technology exposure. Right.
So that's an ETF that holds the top one hundred
Nasdaq holdings, right, So tech heavy focus. But you can

(38:15):
have a year where you know, Navidia might be having
a bad year and broad Cooms having a great year, right,
And so what that does is you get that balance
because no question, holding an individual one individual stock is
going to give you more volatility. That's primarily why we
are ETF now are an ETF shop. Now, that doesn't

(38:35):
mean we won't hold individual equities, and we do from
time to time.

Speaker 2 (38:39):
Ed, yep, that's that's correct.

Speaker 3 (38:42):
That's definitely a great way to just add some you know,
extra returns on top of everything. If you if you're
confident in a couple of names, you know, you're confident
you can get the timing right, then you certainly can
add some juice to a portfolio.

Speaker 1 (38:54):
Great. So again appreciate Matt's question there, and certainly you
know brings out the example of you know why uh,
you know why investing in individual equities is is you know,
provides some more volatility. I will say you know as
an investor, is you're looking at your portfolio, certainly sometimes

(39:17):
you know ETF investing, it seems like, well, you know,
I've got a company that I really like and I
really want to take a flyer, and we certainly understand that,
and really, you know, encourage uh investors if they want
to do that, is maybe they set up a sandbox account. Right,
So maybe it's a smaller percentage of your portfolio because

(39:37):
you want that part of your portfolio that's just rock solid,
right that that that you're you just got a long
term strategy that you're you're letting it go. Doesn't mean
that you don't reassess it at point certain point times
and reallocate as necessary. But it's okay to have another
part of your portfolio where you're with, you know, in
a part that you're willing to risk and you're saying, hey,
I want to go after some high flyers. I want

(39:58):
I want to go after some individual stop I really
I enjoy that, I enjoy following companies. I want to
invest in companies that I know, Right, So there's certainly
nothing wrong with that. And certainly, you know, if you
were a fan of Davidia five years ago. You know,
you're sitting on a nice sum of money right now,
so certainly don't want to dissuade investors from from investing

(40:19):
in individual equities. I just think you have to really
look at your entire portfolio, understand the risk characteristics, and
understand that hey with with you know, you're going to
have more volatility with an individual stock. But if you're
willing to have that volatility and your time horizon matches
that that there's certainly nothing wrong you know with with

(40:42):
doing that. You know, Ed, you know, switching gears for
a minute, you know, I know, you know, AI has
been such the you know, hot word for oh several
years now, and you know there's several different ways of
you know, capturing some of the potential of an AI play.

(41:02):
And you know, certainly, you know, I mentioned Navidia. You know,
going to a chip maker certainly is one. But really,
you know, the AI boom is affecting more than just
chip makers, right There's there's many other types of sectors
and companies that are rising up with the AI cap
x spending And as Ed you know, Ed touted the
numbers earlier, I will say the capex spending is UH

(41:25):
is real. I mean, the companies are spending hundreds and
hundreds of billions of dollars in AI cap x and
it's not slowing down, it's continuing. So and I know,
you know, as uh, you know, if investors said, hey,
I wanna I want to in my sandbox, I want
to take a little bit more risk, I want to
AI play, you know, just kind of give some overall

(41:46):
themes of what, you know, what an investor might look
at there.

Speaker 3 (41:49):
Yeah, so, I mean, you know, of course you start
and looking at you know, mega tech, large cap tech.
You know, even outside of you know, mag seven or
Fang there are some great companies like like a Broad
or an IBM doing a lot of cool stuff in
quantum computing. But you know, as John mentioned, like, there
are a lot of areas outside of that core AI wave.

(42:10):
You know, great examples of that would be industrials or utilities.
You know, if you look at those two sectors both
up almost twenty percent year to date, and a lot
of that is you know, what are the requirements for
these megacap companies to reach the scalability that they want.

Speaker 1 (42:25):
So they're spending all.

Speaker 3 (42:26):
This CAPEX, well, this this capex isn't turning into revenues
automatically for those megacap companies. It is turning into revenues
for a lot of those industrials and utilities right off
the bat, the ones who are generating that infrastructure and
helping them get that build out for scalability. So I
think those two you know, sectors are great areas to
look at utilities industrials. But then also, I mean even

(42:49):
more specific, you know, some of the energy that's going
to be required to run these data facilities, so you know,
definitely some some smart picks in that area clean energy.
You know, I've seen some cool stuff in the nuclear
space as well. But then also i'd say just infrastructure
as a whole, you know, a nice ETF I like
to look through just some of the holdings, uh to

(43:10):
check out what's doing well, is pave p a ve
UH can just be a good insight onto you know,
some good infrastructure based companies.

Speaker 1 (43:19):
Well, yeah, it's a great feedback there. And again we
understand that, uh. You know, investors sometimes want to want
to go risk on with with part of their portfolio,
and there's ways of doing that in a diversified approaches. Certainly,
AI you know, I will say is here to stay
and the capex spending is uh, you know shows as

(43:42):
for real and it's going to continue. And you know
it's interesting and you know we we uh we talk
about you know, different parts of the portfolio and you know,
one of the one of the tools I like it,
you know, uh playing more and more with some of
the morning Star tools and in the morning Star style box,
and you know we talk about the different part of
the portfolio. Which but what's interesting, you know we talk

(44:03):
so much about large cap tech right and it is
no question been driving the market. And you know our
thesis still is hey for continued growth. It's going to
be a big part of driving success. But you know
it's interesting, you know, last three months, you know, you
look at this style box and basically it just shows

(44:23):
you you know, across large cap, mid cap, small and
value core growth, you know, small cap growth, you know,
basically you know, over last three months, you know outperforming
large cap growth. You know, over the last three months,
small cap growth up eight and a half percent versus

(44:43):
six and a half percent. So it is interesting, you know,
with with the current rate environment and rates coming down,
certainly seeing you know a pop in you know, small
cap growth.

Speaker 3 (44:55):
Yeah, I mean, one thing we know about small caps
is they love rate cuts. You know, they're much more
sensitive to the economic cycle. So you know, well, yes,
you know, we only seen you know, small amount of
rate cuts this year. The expectations for rate cuts have
grown so much over the last few months, and that's

(45:16):
really going to be the biggest driver for a lot
of those those small cap companies.

Speaker 1 (45:19):
Absolutely, And I will say though, as we look at
you know, looking backward right, look in the rear view
mirror is important. But also as we look forward, right,
where where do we see market growth coming from? You know, again,
I think going forward, we're seeing strong consumer We're seeing

(45:40):
you know, an environment that is set up for some
continued rate cuts, right, and we're seeing technology through the
continued AI boom. So so I will say, as we
look forward, I think our thesis still is large cap
tech is although small cap has has been a good
participant this year for sure, and especially you know, I

(46:00):
will say the last six months, right, you know, as
we look to the future right next to you know,
next twelve eighteen months, still look at the large tech tech,
large cap tech is going to be a driver perfect
well we are, you know, you know, if you're listening
and have any questions, you know, we're not quite through

(46:21):
with the show, but you can reach us at eight
hundred talk WGY. That's eight hundred eight two five five
nine four nine. I know we're getting close to the show,
but somebody might be able to sneak in there with
a quick question. So, Ed, as we I know you
are doing a little traveling this week, and I'm going
to be heading to Austin, Texas for a conference. So

(46:44):
you know, any one thing you've got in mind that
you want to be doing in Texas while you're there.

Speaker 3 (46:49):
Yeah, I'm going to try and do some tanning. You know,
definitely lost it on the back under the start of
fall here, so try and get a little color back
and then also might check out Torchies, Tacos little research
down there.

Speaker 1 (47:00):
Looks like a good spot. Nice. There we go, There
we go. Now, I will say, Ed, it's eighty degrees
out today, so I think if you want to get
a head start on that, you know, you could you
could head out here. You don't have the fly to
Texas for that.

Speaker 2 (47:11):
Yeah, maybe I'll just head up to the roof.

Speaker 1 (47:13):
Now, Well, you know. I want to thank you all
for tuning in with us today and I hope you
enjoyed this show. I know that Ed and I certainly did.
Hope you enjoy the rest of your weekend. Get out
there and enjoy this sunshine. You know, we know in
the Northeast that you know winter is coming, and but
we've got a couple of eighty degree plus days here

(47:35):
with complete sunshine. Get out there and enjoy it. Be
sure to tune in next weekend for some additional shows.
Also check out our website Bouchet dot com for great
content and information on a variety of investment in finance topics.
Certainly go there and check out that Women in Wealth,
Her Legacy Navigating Life's Transitions event. You can check that out. Well,

(47:59):
you've been listening to Let's Talk Money, brought to you
by Bouchet Financial Group, where we help our clients prioritize
their health while we manage their wealth for life. Again,
thank you for tuning in with this morning. Hope you
enjoy the rest of your Sunday and the week ahead.
Thank you