Let's Talk Money

October 12th, 2025.

Episode Transcript

Speaker 1 (00:00):
I appreciate you taking time out of your busy weekend
to tune into the show. I hope you enjoy it,
and I hope you enjoy the rest of your weekend.
I'm a certified public accountant. I'm the chief operating officer,
chief financial officer, and a wealth advisor at Bouchet. On
the answer group, again, I want to thank you for
taking time out of your day. I know you've got

(00:22):
a lot of options with your time, especially on a
beautiful Sunday morning. It's a you know, fall as arrived,
no question, we've got the nice cool mornings, but sunshine
during the day. Yesterday was just a phenomenal day. Today,
I think it's gonna be a little bit more mixed,
maybe a little bit of rain coming in, but hey,
we've had a phenomenal fall so far from a weather perspective,

(00:44):
so a little rain is not bad. So again, appreciate
you tuning in. You know, a lot to talk about
in the markets. You know, this is an active week
and we certainly saw the you know, the trade conflicts
arise again this week and certainly saw market reaction do
so we'll get into that in a big way. And
obviously I'm here for any questions you might have, you

(01:07):
can reach me at eight hundred talk WGY. That's eight
hundred eight two five five nine four nine. So we
had a busy week actually at the firm too. You know,
we had a number of some you know, charity fundraising events.
So I want to give a shout out to three
of my colleagues, Paalo La Pietra, Vincenzo Testo, and Ed Wilhelm.

(01:31):
They had an event for Real Men Wear Pink, so
they raised some money for cancer American Cancer Society. Very
successful event and it's just great to see those guys,
you know, really give back to the community. So it's
a successful event, had a great time and also raised
money for a great cause. And also last night, my

(01:54):
colleague Martin Shields, we attended an event for Kelly's Angels.
They had at a gala h and that's a you know,
nonprofit started by Mark muholland you might know Mark as
a you know is a News Channel thirteen anchor. Not
for profits started to really help children and families impacted

(02:14):
by cancer. So that was just a great event held
right here at the City Center in downtown Saratoga. Great attendance,
great cause, and I think they raised a lot of money,
so good to see that. So a lot of you know,
a lot of things going on. And I will say,
you know, Steve is really built into I will say,
one of our you know, core culture is giving back

(02:35):
to the communities that we live in and work in.
So I know all of our colleagues are proud of
that and and you know actively participate. So it's you know,
great to be a part of that, you know, as
a firm. We also have some upcoming events and you know,
if you go to our website Bouchet dot com, it's
b o U c h e y dot com. You know,

(02:58):
up in the upper left hand corner, you're going to
see two events being you know recognized. One is coming
up very soon. It's actually this week. It's a you know,
Women's in Wealth initiative. It's her legacy, which really goes
through transitions, you know, navigating through life's transition. So you know,
one of our superstars, Harmony Wagner, is going to be

(03:19):
leading that presentation, but also panelists from Claire McCrae who's
an attorney and Leah Henderson who is a CPA from
a tax perspective, So that event is October fifteenth, So
if you go to our website, you can see that
we're also having an event Planning with a Purpose that's
a little bit farther away, more mid November, but that's

(03:39):
an event that our firm will be hosting with Jim
Lebrue and a state planning attorney. So check out our website,
check out some of those events, some opportunities to you know,
to participate in events, get some you know, good information.
But also say check out, you know, the insights section
of our website. I we you know, we we certainly

(04:02):
you know, cover a lot of subject matter here on
the radio, but I'll say we post a lot of content.
Content's out there for anybody to go view. You know.
This week, you know, Ryan Bouchet, our chief investment officer,
will be conducting a webinar, kind of a market update webinar.
We do that every quarter. Ryan and Polo la Pietra

(04:23):
put on that webinar. Affort's conducted live. It'll be posted
up on our web, so check it out. Just some
great great information, uh and just you know, another way
of sharing. So again I appreciate you know, everyone tuning
in this morning and encourage if you listeners, if you
have questions, and I will say there's no question that's

(04:44):
you know, too basic. If you know, sometimes it's hard
you think, well, boy, you know, I hear this term
roth conversion or I hear this other term all the time.
Everybody must know what it means. But I really don't,
you know, don't hesitate, reach out. Call you can reach
me at eight hundred w g Y. That's eight hundred
and eight two five five nine four nine. So again,

(05:06):
appreciate you tuning in. We'll jump right into the market. So,
you know, we had a great start to the week,
you know, typical let's you know, we're busting through market highs.
And then Friday, you know, we just got you know,
root awakening that hey, the the tariff situation is still unsettled,

(05:26):
and had a little resurrection of that, and we saw,
you know, markets react. So President Trump put a post
about some potential China tariffs and you know, China made
some significant moves on rare earth minerals, which we'll talk
about in a break, but we saw, you know, markets
react and this was a you know, you know recall

(05:47):
of what happened back in April, right in the depths
of you know, the trade negotiations and information. We saw markets,
you know, not reacting on earnings or FED moves. We
saw major market moves on posts on social media from
the administration, and we got you know, another taste of

(06:10):
that on Friday. So markets, you know, significant sell off
on Friday wiped out a lot of the gains for
this quarter. And so you know, we saw the S
and P down to point four percent for the week.
Now for the year, the S and P is still
up almost eleven and a half percent, so but certainly

(06:30):
you know, a big give back this week. Same thing
with at Nasdaq gave up to two point five percent
this week, but I will say again year to date,
Nasdaq still up fifteen percent, so solid. Dow giving up
two point seven percent this week, still up almost seven

(06:50):
percent year to date. And then the Russell two thousand,
which is a small cap index, giving up three point
three percent this week. Again still up almost seven and
a half percent year to date. So across the board,
you know, saw sell off and no question, you know,
the backdrop is government shut down. You know, here we

(07:13):
are twelve days in and I would say no and
in eminent sight, and you know, the FED, who is
set to meet later on this month, now starting to
miss some of the key data, you know, inflation numbers
postponed until later in the month. So and then we
have you know, the the you know, the terariff situation

(07:37):
rear its head again. So and you know, so what happened?
What caused all this? You know China basically, you know,
as we're entering trade negotiations, like any negotiation, you know,
you got parties vying for leverage, and it certainly seems
that you know, as we I think the Trump administration,
I hoped they'd be heading into negotiations with China. You know,

(08:02):
President Trump plans at meeting and hope to have you know,
maybe solid footing there and you know, good relations. But
before the meeting, certainly, you know China, what they announced
is some more restrictions on rare earth elements. And you know,
it's interesting that you know, this is an area where

(08:23):
you know, China has dominance, there's no question, and they
they've got leverage and they certainly appear to be using
it here. You know, I've seen various numbers from sixty
to seventy percent of the global mining happening in China.
But more importantly, the refining and processing component is almost

(08:44):
ninety percent it comes out of China, so they have
a real significant hole there. And you know, these elements
are used for a number of things, including you know,
in defense items, you know, so jets and propulsion systems
and guided munich but also in you know, smartphones and chips,

(09:04):
so significant impact you know, acrossed not only defense areas
but also consumers. So, you know, a big move by
China to say they were going to put more restrictions
on the export of those items, and really a trade
negotiation is really what it is. And you know, President

(09:25):
Trump responded, you know, indicating that you know, we would
be one hundred percent tariff on Chinese goods starting November first,
also threatened some export controls and aircraft products, so you know,
certainly responding to the China move. And at the end
of the day, we're really you know, we're back to

(09:46):
where the kind of environment we saw back in April.
We know that these tariff situations have not been resolved
during the year, some of them has just been pushed
down the road, and so you know, again expect some
volatility and you know, and we certainly saw it in
the markets this week. I think, you know, the backdrop
of the government shut down, you know, certainly I think

(10:08):
adds an additional element to this. But I will say,
you know what we've you know what we've experienced. You know,
if you you if you panic back in April and
decided with all that, with all that volatility, that you
were going to pull out of the markets, you know,
you missed a thirty plus percent increase in recovery. And
so you know, these are times where nobody loves volatility,

(10:32):
but you know, as being in the equity markets, we
have to expect it. And you know, obviously everyone's question is,
you know, where is it going from here? And no
nobody has that answer, right, you know so well that
what we do know is these tears. You know, China
is a is a very important trading partner, and that's
on both sides, right you know, we're the US economy

(10:54):
is very important in China and vice versa, and there's
negotiating going on right now, leverage being used. We'll have
to see how that plays out. But I would certainly
say I think we should expect, you know, some choppiness
in the markets going forward, and just you know, be

(11:15):
ready for that volatility. And again, you know, we can
talk about a little bit later in the segment. You know, what,
what are the things you can do as an investor
right heading into that market? And there are things you
can do. One of them is not panic. One of
them is not you know, let the psychology of investing takeover,
where you have loss avoidance and you make moves that

(11:37):
you're going to regret, and you know, and I'll just go.
You know, you only have to look in the rear
view mirror back to April and say, my goodness, if
I had panicked and pulled everything and put it in cash,
you know, I would have missed that thirty percent recovery
I would have. It's good. It's hard, you know, one thing,
the easy part is taking money out of the market.

(11:59):
The harder part is deciding, you know, when to put
it in right, because it's we all wish we had
that crystal ball where we could say, oh, we know
exactly when markets are going to hit bottom and we
know when they're going to recover. But to the best
of my knowledge, you know, nobody has that crystal ball.
So again, so so uh, you know, this week markets

(12:21):
showed that they're still going to react to the tariff
narrative and you know, trying to be a big partner
has it has a huge impact. So you know, we
saw you know, quite frankly, Friday was a worst day
that the Nasdaq and S and P five hundred have
seen since April. Right, so we're we we saw some

(12:42):
significant volatility, uh there, and as we head into next week,
you know, we'll see what happens on the trade front, right,
so certainly, you know, we know this is not a
resolved issue, so there's certainly certainly could be some continued volatility.
So in the market showed to this week. So you know,
I encourage listeners you can reach out and call me.

(13:05):
You can get me at eight hundred talk wg Y
that's eight hundred eight two five five nine four nine.
You know, we have FED meeting coming up just in
a few weeks October twenty eight, twenty nine, so they
meet rate at the end of October, and you know,
as we head into this, you know, the data is

(13:27):
still showing, you know, although there is concern and I'm
sure this uh you know, the tariff situation reigniting, will
you know, create some additional concern. But the reality is
that you know, the consumer is still spending and that's
showing in the data, that's showing in discretionary items. And

(13:51):
you know, the consumers makes up a huge part of
our GDP, almost seventy percent, so typically we as we
have a healthy consumer. You know, balance sheets are still healthy.
Now we you know, if you look at some of
the loan data, certainly you're seeing some degradation, uh in
terms of you know, delinquencies and some but nothing earth shattering,

(14:13):
so you know, but certainly showing signs right that that
the consumer uh may be weakening a little bit, but
they're still spending. And you know, it's hard with all
the data, right because you're trying to interpret all this
data and you know, are some items being accelerated, our
purchases being accelerated because of concerns of tariffs. So there's

(14:35):
a lot of uh, you know, a lot of impacts,
a lot of things that could be impacting how the
consumer and why the consumer is spending money. But but
the fact is they are. And you know, labor has
shown some weakening. But you know, what we haven't seen
is that cliff. We haven't fallen off a cliff where

(14:55):
we've had significant layoffs. You know, unemployment rates still and
that you know, four point three percent still, you know,
a solid number. But we are seeing, you know, slow
down of hiring. And I'll just tell you, you know,
anecdotally just talking to business owners. You know, I hear that, right,
you know, there is a little bit of uncertainty and
kind of a slow down. You know, certainly talk to

(15:17):
some business owners who have contracts that are tied to
federal funding. So and I will say, they seem to
not be a concern that they won't get paid, but
what it does is it does stretch out, you know,
when they will get paid. I think the belief is that,
you know, this government shutdown will be resolved. Typically, you know,

(15:42):
we see government shutdowns, we see negotiation. You know, the
last shutdown was under Trump first time, you know, back
in twenty eighteen, it was thirty four days shutdown. You know,
here we are twelve days in. I would say no
significant progress us right now, but but typically right so

(16:02):
all mandatory programs are gett continues, so nobody has to
worry about Social Security. You know, the interest on the
debt is being paid. But you know you will see
you know, the non essential workers, uh impacted, and then
you see an expansion of that in the workforce. And
also you know, federal government contracts, you know, you can
see some impacts. So as that those that happens on

(16:24):
top of everything else, you know, you certainly you know,
could see some slow down in in labor even further, so,
you know, FED is going to be meeting in October.
Expectations still are that, you know, we could see one
to two interest rate cuts and so this year. So

(16:45):
they meet in October, end of October, and then again
early in December. So uh, you know, we could see
a you know, twenty five basis point, which is a
quarter interest quarter point reduction in each of those meetings.
But again, you know, this FED has shown, you know,
we're very very data dependent. So now we're starting to

(17:07):
see you know, some weakening data on the labor side.
Inflation still holding up, but now we're seeing an interruption
of data, right, and so it'll be interesting to see
how this very data dependent FED reacts to that. You know,
do they take a pause in October and say, you
know something where the data we saw is still is

(17:29):
you know, we're concerned about and we're we're but we
don't have feel we have enough to make a cut
and kick that can down to the December meeting, and
so it'd be interesting. You know, markets have kind of
priced in right now twenty five basis point reduction, so
you know, markets not might not you know, react well
to that. So again we won't know for sure, but

(17:53):
October twenty eight, twenty ninth, not that far away, and
we'll certainly see and we'll hear you know, some FED
speak between now and then to just kind of get
a sense. But the shutdown and the lack of data
certainly can can have some impacts on that. So again,
encourage listeners to reach out with questions. You can get

(18:14):
me at eight hundred talk wg Y. That's eight hundred
eight two five five nine four nine. And again you know,
I you know, we talked on the radio. We have
our show on both Saturday and Sunday, but also put
a great lot you know, I mentioned our website, a
lot of great content out there, So I just highly
encourage listeners to check out our website if you have

(18:38):
you know, if you have subject matter you want to
look at, whether it's related to the One Big Beautiful
Bill or some estate planning, just some great content out there.
So you know, market as we talked about markets not
reacting well, and you know, as we one of the
things we talk a lot about this show is you know,

(19:01):
Wroth conversions and if you have you know, if you've
been thinking about a Wroth conversion and you're you're not
quite sure, you know, volatility can be your friend here,
and so you may want to you know, in between
now on the end of the year, we may see
some continued volatility, you know what you know, what we

(19:22):
do know is in a normal year, you know, from
from the peak, from the top of the market to
the trough, you know, we can see fifteen percent draw down.
So we know, uh, you know, the there's a lot
of tariff information that still needs to be resolved, right,
and so we know that there's still some uncertainty, right,

(19:43):
and so we could have some volatility. And so you know,
remember with a you know, a Wroth conversion, right, you're
converting funds that are in a tax deferred vehicle in
your IRA right and converting it to a wroth account
and you pay taxes at that time. And I know
we've talked a lot about that on the show now

(20:03):
the reason some volatility may present a good opportunity to that.
And I'm going to oversimplify it and just say, you
know what, if you had a single stock holding in
your IRA, and let's just say it's Microsoft, I'll just
make that up. And then you know, if you see
a twenty percent drop in Microsoft stock, and I'm not

(20:26):
saying we're going to see that, but i'd say, if
you see volatility, right, if you're thinking of a Wroth
conversion anyways down, you know, when you see that volatility,
when you see that drop, that's an excellent time to
execute on that Wroth conversion, right, because let's say that
Microsoft stock is worth you know, one hundred thousand dollars,

(20:48):
and then it drops twenty percent and outs down and
worth eighty thousand. If you convert that into your wroth, right,
that eighty thousand the value of that stock at the
time you do that conversion is what you're going to
be taxed on, right, So eighty thousand instead of it
being one hundred where it might be right now, right,
so you're going to be taxed on that lower amount.

(21:09):
And now you've also locked in is any growth, right,
So let's say you do that conversion. Let's just I'm
going to make up a date. You do that on
November first, and let's say by next February that eighty
thousand is now worth one hundred and twenty. Well, guess
what that whole increase? So one, you only got taxed

(21:30):
right on that lower amount, right, the value of the
stock when you converted it to a wroth. Right, So
you locked in that amount that you're paying taxes on.
But now all that growth, that growth recovered, right, it
was just a market dip and then came back up
and continued up. Right, All that market increase is now

(21:50):
tax free in your wroth, right, And so think about that.
You've taken exposure, you had the dip in the market,
you then did the conversion at that point, and then
you've locked in the amount that you're going to be
taxed on. And then most importantly, right now, any growth
from that amount is now in your tax free wroth.

(22:14):
And so again this you know, you have to look
at a wroth conversion really from many different lenses, right,
and this wouldn't be the only lens to look at
it in. But if you've evaluated it and you you
think it makes sense, maybe you're just holding back. You know,
nobody likes you know, one of the things the realities

(22:36):
we do know with a Wroth conversion, you have to
now pay tax on that money, right, that tax deferred money,
you have to pay tax. Nobody likes to pay taxes.
So sometimes that does cause individuals to delay, right, And
so what we see is, hey, if you're on the fence,
if it makes sense for a lot of reasons, you know,
then this can be, you know, a great time to

(22:58):
do it when you now see a dip in the market,
a good time to execute our strategy. But you just
want to have all your ducks in a row, right.
You want to do the analysis, You want to lay
it out. You don't want to wait till there's a
dip before you first start evaluating it, because guess what,
you might have that market recovery before it happens. So
we are coming up to the halfway point of the show,

(23:19):
and we're going to be taking a commercial break. I
want to thank you for tuning in with us today.
I hope you are enjoying the show, and I hope
you rejoin us after the break again. I encourage listeners
call in with questions you can reach me at eight
hundred Talk WGY. That's eight hundred eight two five five
nine four nine. You are listening to Let's Talk Money,
brought to you by Bouchet Financier Group. Again, thank you

(23:42):
for tuning in for the first half of the show,
and I hope you rejoin us after the break. 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 a certified public accountant and
I'm the firm's chief operating officer, chief financial officer, and
a wealth advisor. So again, thank you for taking time

(24:04):
out of your Sunday morning. Hope you're enjoying the show.
Hope you're enjoying your morning, uh, either whether that's sitting
around the house getting started with a cup of coffee
or out driving somewhere or doing yard work. So hope
you're joining the day and appreciate you tuning into the show.
You know, first half of the show, we really you know,
talked about markets, and you know, as we discussed, uh,

(24:28):
markets were hitting all time highs and then we had
a resurgence of the tariff situation with China and markets
responded negatively, and we saw sell off on Friday. And
as we head into this week, you know, we'll see
you have to see whether you know how that dialogue

(24:48):
goes and whether you know whether things calm down. So
we'll we'll have to keep our eyes on the market there.
But we do know the tariff situation, uh as we
as we EXPERI in April, right, it's not a one
and done is going to be continued back and forth.
And so I would say, is it an equity investor,
you know, expect a little bit of volatility, don't panic, right,

(25:14):
remember what your time horizon is. And uh, you know,
don't don't overreact to the headlines because I will say
it can be overwhelming. If you sit there and you know,
read every headline, you watch everything, you know, it can
a lot of doom and gloom. I mean, let's face it.
Media has to sell and what sells is uh, you know,

(25:36):
doom and gloom. And that's just a reality. And it
doesn't mean don't be concerned and don't put your head
on you know, under a rock, but it is there.
There are moves you can make understanding your horizon. So
but certainly overreacting is is not the right right call,
you know, one of things I want to touch on certainly. Uh,
you know, we're seeing at it both a national and

(25:58):
really local level. It can solid nation on the banking side.
You know, it's interesting since you know, two thousand and
five there were roughly you know, nine thousand banks ensured
by the FDICE. That's almost cut in half down to
five thousand, you know, undercurrent data. So you know, consolidation

(26:20):
is alive and well in the banking space. You know,
we see that at a national level. We've also seen it,
you know, local locally, we saw recently Boston Spaw National
Bank and National Bank of Kuksak merging and you know,
they put out a nice press release discussing why, you know,
why they're merging and why they think it's beneficial for

(26:43):
their consumers and stockholders. But we're also seeing you know,
at a national level, you know, really mid size firms.
You know, this week it was the fifth Third Bank
had a big merger, going to make them almost two
hundred billion in assets. It's interesting at a you know,
at a national level, you know, we're seeing part of

(27:05):
what's driving it is really about you know, tapping into
local deposit bases, right. So one thing in the banking world,
you know, and this is a way over simplification, but
the way banks make money, right, it's the spread between
what they earn is income on loans. Right. So if
you have an auto loan or other type of loan, right,

(27:27):
the interest you're paying to the bank, that's their income
and their expense, right, is the interest that they're paying
on deposits or other borrowing right. And so what banks
like is, especially in a rate environment where we have
rates going down, right, they want sticky deposits. They want
deposits that aren't going to just flee for the highest rate.

(27:49):
And what we saw over the last you know, two years,
really is a lot of you know, you might have
heard of a bank like Ally really like no bricks
and mortar, but they're paying a high savings rate, so
you had deposits flood to them. But what you're going
to see with that type of relationship is once consumers

(28:10):
can get better rates, right, that money's gonna flow just
as quickly as it went in. So we'll get back
to that in a minute. We have a caller on
the phone, Robert from ANSWERDA, and Robert appreciate you tuning
in this morning and how can I help you?

Speaker 2 (28:23):
Well, good morning. Just to a question. I'm a client
in the firms, very happy with it, but I have
a question regarding a younger people, would you advise them?
And I think I know the answer to this, but
I'd like to have your opinion when they're investing in
neither their four oh one ks and iras. To me,
it would seem like makes sense. And I wish I

(28:44):
had this advice when I was younger, to go with
the raw option the younger you are. What's your take
on that?

Speaker 1 (28:53):
Yeah, Robert, that is a great question. And the regret
that you just expressed is a lot of us have
that right. You know, when we started, Oh listen, I'm
I'm I'm no spring chicken here. When I started working,
you know, I graduated from RPI in nineteen eighty seven.
When I first started working, there was no wrath component

(29:13):
to a four to oh one K. And so I
one hundred percent agree with you. And you know, typically
when when individuals start working, you know they're they're not
in the highest tax bracket, right, So what you're giving
up is you're not getting a pre tax contribution, right.
So traditional IRA or traditional four oh one k. You

(29:37):
know that's that's reducing the amount of your taxable income.
But we know that's not tax free money. It's going
to grow tax deferred. But as as a lot of
us know, now we're retiring with you know, large pre
tax balances, and what happens is IRS says, hey, there's
something called r mds, and you know, we let you
accumulate this money, but we're not going to let you

(29:58):
hold it forever. So we're going to forced you to
start taking out and you're going to be taxed at
ordinary income on all that. And so I agree that
it's great advice for anyone, and I will just say
it's not it's never too late. Right, So even if
you're in your fifties and you have a wroth conversion,
a wroth option to your four oh one K right,

(30:23):
use it diversify your investments as you go into retirement.
But clearly, you know, Robert, to your point, somebody starting
out young sock it away into into the wroth because one,
you know, you get the full contribution limit that you
get with a four oh one K right is opposed

(30:43):
to the low contribution limit for a wroth IRA. So
You're right, you're going to miss out on some tax
break up front, right, but typically you know that those
are in the lower income components of your life. Right,
And even if it's not, I will just argue that

(31:04):
if I am in my twenties and thirties, even forties,
do I think there's a chance that the tax rates
might increase in the next thirty years? Right? I think
there's a chance. And I'm not a doom and gloom
guy who says, well, we're going to be looking at
eighty percent tax rates, but it just seems logical, right.
You know, we're running at a deficit. You know, it's

(31:27):
more important than ever that we start to cut into that.
One of the options, one of the levers that our
government has, is increase in tax rates over the long haul.
So Robert, I think that's great advice and something I
give to my children. And you know, a lot of times,
you know, clients of the firm ask us to meet
with their children, whether it's through Zoom or they come

(31:49):
in for a meeting. Really, you know, starting your life working,
think about it. And I know, like parents, I will
just say with my own children, it's sometimes different coming
from a professional rather than your mom or your dad. Right,
it's like dad, okay, you know, but if it's coming.

Speaker 2 (32:05):
From your parents, don't know anything, so.

Speaker 1 (32:08):
That's right, that's right. It's funny how that changes, right,
you know, yeah, base based on the children's age, right.
I think there's a time where we know everything that
we know nothing and then they come back and figure out, wow,
you know, dad knew some things. But uh, Robert, that's
that's great advice, and that that's certainly the advice I
would give is sock as much because it's tax free money. Right,

(32:29):
Your wrath is going to grow all the appreciation and
when you go pull it out, it's totally tax free.
So I would definitely uh recommend giving up some of
the upfront tax advantage for that back end tax advantage,
which is going to be uh you know, much more significant.
Did that answer your question?

Speaker 2 (32:49):
Hit on it? You just hit on something that that
I thought of. Is the longer the timeline all of
those games truly are tax free?

Speaker 1 (32:57):
Then, oh exactly. Think of the power of compounding, and
if we had that wroth available to us when we
were first starting, that's the that's the power, right is
you're you're you know putting money into that tax free bucket.
And uh, you're right, the power of compounding over a

(33:19):
thirty year working career, it can be significant and what
and what what you know, what a advantage you get
at that point where you have a totally tax free bucket.

Speaker 2 (33:34):
Well, thank you very much.

Speaker 1 (33:36):
Yep, thank Robert, thank you for tuning in. I really
appreciate the question. And and you know that's a it's
a great question. And uh, you know, I will say
you know more and more, Uh four oh one K
plans have a wroth component. And you know, actually there
were some changes made so starting next year, you know,

(33:57):
I think hopefully we'll see even more four one K
plans it because rules were changed that if high earners
and there's a definition of high earners, you know, based
on the four oh one K plan, their excess contribution, right,
so you remember there's a there's a contribution limit and

(34:18):
if you're over a certain age, you can make excess
catch up contributions. Those now catch up contributions have to
be made through a wrath part of the four to
one K. Now that's not for everybody, that's for individuals
deemed as highly compensated under the individual four one K plan,

(34:39):
So great question there. Appreciate that call, Robert, and we
are going to take a quick commercial break, so please
stay tuned and we'll be right back with Let's Talk
Money on eight ten WGY. Well, thank you for staying
with me through that very quick commercial break. I'm John
Malay and I'm your host for this morning show. I'm
a certified public accountant and I'm the firm's chief financial officer,

(35:03):
chief operating officer, and a wealth advisor. Appreciate you tuning
in this morning. Hopefully you're having a great start to year.
Sunday morning, I heard through the break that Troy is
having their Chowderfest. I will say I've participated in that,
So if you're in the area, I would say get
to downtown Troy today. It's a lot going on in

(35:25):
the city. I'll say, if you haven't been down in
Troy in a while, you'll see a lot of changes happening.
But also the Chowderfest a great time, good time for
the whole family, some great chowder and just a great, nice,
walkable city. So head down there for sure. So before
I got that great call from Robert, I was you know,
you're really talking about what we're seeing in the banking

(35:46):
sector right now, and it's consolidation, right and you know,
I mentioned the local merger that work we saw between
Boston spa National Bank and the National Bank of Kaksaki.
But at the national level level, we're really seeing you know,
some of the regional banks that are still very large institutions,
over one hundred billion dollar institutions, and they're merging, you know, really,

(36:08):
and part of the move is about securing what I'm
going to call sticky deposits, right, and so, which has
become really really important for bank profitability. And I was
talking about, Hey, at a very simplistic level, right, the
way banks make money, it's the spread between what they
receive on loans and what they pay on deposits. And

(36:30):
what happens with I'll say non sticky money, and I'll say,
this is what we recommend to some of our clients, right,
is is that if you're going to have some money
in savings, you know, you want to find the best
rate you can have. Right. Well, what banks see is that,
you know, not all deposits are the same, right you
you know, and so banks are seeking banks that have

(36:52):
deposits that maybe through strong relationships. It may be also
the geography that they're in, right, that they have bank
consumers who you know, because of that relationship, maybe because
of the where the local branch network is, and maybe
that they like to still use branches. Uh, you know,

(37:13):
we say branches are dead, but I'll tell you every
time I walk into a branch it seems to be
of any bank. It seems to be very crowded. So
banks uh cove it those deposits where you know, the
clients aren't going to move that deposit just based on
getting a little bit better interest rate with another bank,

(37:34):
right and so, and that has a big impact on
bottom line. There's no question, right if you're if you're
we're an environment right now right where you know rates
are going down. Right, So on a loan side, sometimes
banks have locked in rates. It's a fixed rates, but
maybe there could be variable rates. So they may have

(37:55):
their income go down. But let's face it, their their costs, right,
they certainly want their their cost to go down. And
they may you know, as the FED is reducing rates,
they may reduce deposit costs more aggressively. Right, and but
there's a catch twenty two, Right, they want to lower

(38:16):
their rates that they're paying on deposits, but not in
a fashion and that's going to cause those deposits to flee,
right because then a bank is going to be, well,
I need some liquidity, So they're gonna have to borrow,
right if they can, if they don't have the deposits
to fund fund their lending needs. So we're certainly you know,
it's interesting, so that local kind of bay connection is

(38:38):
becoming coveted by really the large regional who say, you know,
we we what we want is we want that consumer
who is not going to just shift a deposit around
to get a little bit better interest rate. And I
will say, we did see, and we saw it with
our clients, you know. And again you say, as a consumer,

(39:00):
that's a good thing. That's what you want is to
go get the highest interest rate. I would just say,
as a consumer of anything, you just have to weigh, right,
if you have a banking relationship and there's things beyond
just that interest rate you're getting from that relationship, which
could be maybe you are a heavy branch user in
or maybe you're you know, maybe you borrow money and
you've got a great relationship and they've been there for

(39:22):
you and you continue to have you know, lending needs,
so certainly a lot of a lot of things that
can influence a relationship. But what we did see as
as interest rates we're going higher and higher, and the
rates paid on savings accounts. Right, sometimes you saw these
national really players who had no bricks and mortar, no

(39:42):
branch network, but they're paying super high rates something that
maybe you weren't getting anywhere near with your local bank.
So we saw, you know, we saw a flood of
those deposits going to those those national players and then certainly,
you know, as those rates come down, you're going to
see them flee. And so from a bank perspective, you know,
it's just interesting we're seeing, you know, at the you know,

(40:04):
at the large regional lender level, we're seeing consolidation, and
part of it is to go after those you know, deposits,
those relationships that are that are more solid, that are
more sticky. So, uh, just keep an eye on that,
and uh, you know, as a consumer, we always say, uh,
diversify right and certainly make sure from an FDIC perspective,

(40:26):
you're fine. But also, you know, what we're also seeing
is we still see a lot of consumers with funds
in short term savings, vehicles, and as we've talked about
and continue to talk about, you know, as the FED
continues to cut rates, and we certainly are in a

(40:46):
rate cutting cycle, the yield that you're gonna get on
those deposits, it's going to continue to go down. So
it's still it's not too late. It is worth looking
at some options. Like you know, we typically would use
a treasury ladder right where you might be locking in rates.
But again, and this kind of gets to the point of, Okay,

(41:07):
if we're heading into some volatility, you know, what are
some things you know we should be doing. You know,
one of them is looking at your cash needs, right,
make sure you've got your emergency fund, If there's money
that you need to be taking out of your portfolio,
making sure you have that set aside. And again, what

(41:27):
we're seeing is on a conservative basis, you know, we're
seeing individuals sometimes coming with five years worth of cash needs,
you know, sitting in short term savings, and from my
point of view, that that's excessive, right, And what you're
doing is you're giving up you're giving up yield really
for that for that over sense of security and you know,

(41:52):
I think it's you know, we look at as you know,
typical market recovery. You know that eighteen months from a
down market and so certainly having two years worth of
cash needs and liquid vehicles. But if you've got beyond that,
you know, certainly I understand if you're saying this is
money that from a from a portfolio allocation, you don't
want to take risks. But still, you know, it's still

(42:14):
not too late. You know, certainly treasury yields have come down,
but there's still you know, still opportunity to lock in
treasury yields beyond what's going to happen with your short
term money. Right cause what we do know is the
Fed cuts the short term rate, you're going to see
that corresponding reduction in your short term savings rate. So

(42:35):
certainly look at that. So again, encourage listeners to reach out.
You can reach me at eight hundred talk WGY. That's
eight hundred eight two five five nine four nine. You know,
one of the things that we're I'm going to say,
unfortunately having more and more conversation with clients, and you
probably here if you listen to the radio routinely, you

(42:57):
may hear it being sprinkled into some of the radio shows.
Is really you know, cybersecurity in fraud prevention. You know,
we did a webinar not too long ago. It is
out there on our website Bouchet dot com under our
Insight section, and I'll just say it is. The threat

(43:17):
is increasing and it's getting more sophisticated, so just be careful.
And the cell phone that most of us have and
hang on to in our hands all the time is
a gateway between emails and our cell phone. They're just
it's huge gateways for these fraudsters. And I will tell

(43:38):
you sometimes we think, oh, you know, I'm too I'm
too smart for this. You know, I won't fall victim
to that scheme. I'm just going to tell you just
have to get rid of that thought because we've I've
had very intelligent people who just because you know, maybe
they had, you know, something going on with their account,
a trade going on, real stuff with their account, and

(44:00):
then this reach out through a text message from their
financial institution and it seems the timing seems perfect. I'm
in the middle of doing this transaction and then all
of a sudden you start giving your credentials and next
thing you know it, you fall in victim to a
frauds game and now that fraudster has ConTroll of your account,

(44:23):
right so just you know again, our purpose that really
mentioning here is really just about increasing awareness that know that, listen,
your financial institution most likely is not going to be
be reaching out to you on your cell phone or
through a text, and if they did, don't follow links

(44:44):
that are included in that text, because what they do
is they create a website that looks exactly like your
financial institution's website, but it's a fraudulent site and they're
trying to get you to put in your login information.
They may even call you ask you for you your
two factor authentication or ask you for your password. I'll

(45:05):
just say if you get a text like that, and
typically they're trying to create some sense of urgency, so
they may say, hey, your account's been hacked. We need
to act quickly and we need your information. I know.
You know that gets your energy going and you feel
like you need to do something right then, and that's
what happens. They create this sense of urgency. But what

(45:27):
you do is if it's a phone call, just end
that call right away and then call your financial institution
back at a known number, right, So go to their website,
go to an account statement, or if you already know
their number, go there and call. I will tell you,
you know, and sometimes these frousters tell you you can

(45:48):
only get to them through this special number. You can't
get through any other number. I will say, the exact
opposite is true, is that all these financial institutions are
the gateway, but just by calling in they'll get you
to a fraud lines. Right. They're not hiding those fraud
departments from you as a consumer. So just be careful
because you know, you work hard for your savings, for

(46:09):
your money, and to see it, you know, fall victim
or something like that, it's just you know, certainly you
know tragic when you see it, and certainly something with
our clients we try to help them avoid, you know,
at all costs. So again I'll get off my soapbox
there just say, you know, just be cautious. So you know,

(46:29):
we are coming up near the end of the show,
and I really want to appreciate you for tuning in
for today. Hope you enjoyed the show. I know I
certainly did. Hope you enjoy the rest of your weekend
and have an amazing week ahead. Be sure to tune
in next weekend. We have Saturday show at ten a m.

(46:51):
And Sunday at eight. Also check out our website www
dot Bouche dot com, b O U, C H e
y dot com for great content information on a variety
of investment and finance topics. You have been listening to
Let's Talk Money, brought to you by Bouchet Financial Group,

(47:13):
where we help our clients prioritize their health while we
manage their wealth for life. Again, thank you so much
for tuning in. I hope you enjoyed the show. Enjoy
the rest of this Sunday. Get out there, get to
the Troy Chowderfest, enjoy some great chowder and some great
weather while we still have it here in the Northeast. Again,

(47:34):
thank you very much for tuning in.