Let's Talk Money

October 19th, 2025.

Episode Transcript

Speaker 1 (00:00):
Good morning and everyone. My name is Martin Shields. I'm
the chief wealth visor at Bouchet Finandrew. I'm gonna be
your host today for Let's Talk Money. It's great to
be here with you on this stunning Sunday morning. Well
I've said it before, but I think fall now is
my favorite time of year, especially if we have weather
like this. I mean, it is spectacular. You know, it

(00:23):
gets a little chilly in the evening for a great
sleeping weather, and you know, it's nice and dry, none
of the bugs are out, and you know, as much
sun as you can get, and it feels like we've
flip flopped. If you remember, all through the spring and
the winter, it was every weekend we had rain and
it just listened to the weather forecast. It sounds like

(00:44):
we're going at rain tomorrow. But this weekend has been
nothing but sun. So hopefully you're gonna get out there
and really enjoy it, whatever that may be. My son,
Hayden is in from college. She's a sophomore at Saint
Lawrence and it's great to have them in the house.
And when he's in town, it's all about activities. So
we've got the list going. We've played basketball, we went golfing,

(01:09):
road biking, mountain biking, and today it's sailing. So we're
getting out there to enjoy it, and I hope that
you do as well. But we're here to talk about finances,
aren't we, and financial planning, So if you have any questions,
feel free to give me a call. You can reach
me at one eight hundred eight two five five nine

(01:29):
four nine. Again that's eight hundred eight two five five
nine four nine. Or if you're just too shy to
call in, which you shouldn't be, but if you are,
you can email me at ask Bouche at Bouchet dot com.
That is asked Bouche at Bouchet dot dot com and

(01:50):
Bouchet is spelled b O U c h e Y. So,
as I always say, there's no dumb or silly question
except for the one you don't ask, and you may
be doing your fellow listener a favor by asking that question.
I'm like I had that same question. I'm so glad
that somebody called in with it. So whatever question you
may have, financial planning related, investment related, anything financed. As

(02:13):
we said before, we're our client's personal CFO, so we
always encourage them to reach out to us if they
have something, if it's finance related at all, give us
a call and we can give you a guidance. So
don't be afraid or shy, just call me or email
me and I can give you some guidance. So in
the markets this week a little bit choppy up and down.

(02:35):
We did end up positive for the week with the
s ANDP of just slightly in same thing with the cues.
For the year to date, the SMP five hundred is
up thirteen point three percent and the cues are up
just over eighteen percent. So we're all of the all
time highs that we hit a week or two ago.

(02:55):
But you know, all things consider still looking very good.
You know, as we see earnings come in, they continue
to be strong. The banks reported earnings this week, a
number of the big ones, including Goldman and JP Morgan
and nothing but great earnings. They're earning money in every

(03:15):
part of their business, whether it be trading, whether it
be the wealth management, whether it be lending, whether it
be the mergers and acquisition part. Every part of their
business is doing really well. And it's important to appreciate that,
you know, in order to have a strong economy and
strong markets, you need your finance area to do well,

(03:36):
and so to see those banks do well, that's a
good thing. That's a real positive sign for the markets
and the economy. And we've talked about this before that
at the end of the day, what you need for
the markets to move higher is increased profits and cash flow.
It's that simple. Both currently where they coming in relative

(03:59):
to where they were expected to come in, and what
are they projecting or forecasting for the next six to
twelve months. So if you can continue this trend of
increased profits across most of those sectors, you're going to
see this market move higher. And that's a good thing.
And you know, one of the headlines that's out there

(04:20):
these days is are we in a bubble? Right? Have
stocks moved up too quickly? And is the possibility that
that bubble could burst and you see a market decline.
So let's talk about that for a little bit. I think,
you know, first and foremost, when they talk about this
market bubble, they're talking about valuations, right, So what are

(04:40):
you paying for earnings of those companies? And it's it's
basically you view it in the way of price to
earnings ratio. Right pe, and right now, the price to
earnings ratio is a little bit higher than the average
historical average, right, So it's for the S and P

(05:00):
five hundred, it's up in the PE of around twenty
two to twenty four, depends on exactly what you're talking
about with earnings, so a little bit above where it
would normally be, but relative to when we talk about
a bubble, everybody's referring back to nineteen ninety nine and
the tech and telecom bubble quite a bit below those valuations, right,

(05:24):
And I think that's important that things are a little
bit frothy, but really a lot of that valuation. When
we talk about where does it exist within the market,
it is almost entirely within the tech sector, and it
is almost entirely, you know, within companies in the AI space.
So it's not when you look at broadly speaking, if

(05:45):
you look across the S and P five hundred and
those five hundred companies, the majority of those companies are
actually undervalued. That is the case. The majority of them
are undervalued for their earnings from historical perspective. It's really
just in the tech space and in the AI space

(06:07):
where you have those valuations that are above average, and
this is where this unknown exists, right and in this regard,
it's no different than the tech and telecomb over the nineties.
You know, you don't know exactly how much productivity increases
you're going to get with these companies. You don't know
exactly what the revenue is going to pan out to be,

(06:29):
but expectations are high and a big element of this
is not only what is it going to be, but
the timing of those productivity improvements and that increased profitability.
But as of right now, there's just a tremendous amount
of capital going into those companies and they're earning a
tremendous amount of money. I mean, that's the thing to

(06:50):
appreciate is the amount of money these big tech companies
have both on their balance sheet from you know, their
earnings from their cash flow from their business, and their
profit margins are just it's hard to articulate how tremendous
they are. And that's a big difference between where we

(07:11):
are now versus nineteen ninety nine and two thousand, when
we were at a market peak and a bubble. You know,
even there you did have companies like Cisco and Qualcomm
that were you know, doing quite well from a revenue perspective,
but nowhere near as good as these companies as far
as cash on the balance sheet, as far as profitability,

(07:34):
and also those companies when we really got into that
bubble piece, which was the late nineteen it was basically
nineteen ninety nine. I remember it was Christmas season and
just seeing some of the stocks of nineteen ninety nine
going through the roof, and in that situation, you had
valuations that were just crazy. It was, you know, you're

(07:55):
paying some something like one hundred times earnings for those companies,
whereas again you know, companies like Navidia and Apple and
Amazon and Meta, you're paying good multiples for those earnings,
but nowhere near what you paid back then. And so
that's a big element when you look at this that

(08:17):
valuations are high, but from a real bubble perspective, they're
not nearly as high as they were back then. The
other element is you just look at the money going
into this space. I still feel like we're early in
this cycle. So you think about this with a tech
and telecom boom, It was basically started in nineteen ninety

(08:37):
four around there, in ninety three ninety four and nineteen
ninety six is when Greenspan came out and talked about
irrational exuberance. So the market was a little bit high
back even at that point, but it went on for
another four to five years. So in that regard, you know,
I still think we're we've got room to run in

(08:58):
this market. Now, don't give it wrong. It doesn't mean
that if the market continues at a very rapid pace
that we couldn't get ourselves into a bubble. That is
a real possibility. So but you know, I think it's
always important to remember what is your time horizon? Do
you have the right allocation for where you are in

(09:18):
your life? Are you rebalancing back to target That's an
important one, right, So let's say you have a decent
amount of tech in your portfolio. Are you occasionally rebalancing
back to what your target element should be for that
so capturing some of those gains, And that's certainly easier
to do in a retirement account where you don't have
any tax impact. It's a little bit more difficult to do,

(09:42):
or more challenging if it's in a taxable count, but
it still makes sense. It's like trimming and your bushes
or your trees and your yard. You know, you still
want to hold those positions. You still think they're going
to do well, but you want to manage that risk,
and it just depends on how much of those positions
you have. You know. The other element with this is

(10:02):
just making sure that if you need cash in the
next two years, hey, this is a great time to
free up some cash and sell some positions and have
that cash readily available. You know, we always say that
if you need cash in the next one or two years,
there's nothing wrong with pulling it out of the market
and having it there, just for peace of mind. Again,

(10:23):
it's not as though you're saying that the market's not
going to move higher. If you really thought that, you'd
be selling most of your securities. But you know, you
just having that cash available. It's about prudent management doing
the right things. But to get caught up in the headlines,
I mean, you think about this, I mean, how long
have they been saying, these expert forecasters that we were

(10:46):
either in a recession or going to be going into recession.
I mean that was starting from twenty twenty two, twenty
twenty three, twenty twenty four, you know, so you know
they could easily get it, so I would not get
caught up in the headlines that we're in a bubble.
I think it's what's more important is understanding your own

(11:10):
personal situation and how you allocated for where you are now.
One of the areas that if you look at areas
that are concerning with the markets, one of the areas that,
to me, as I look at it, I recall from
the nineteen nineties is a little bit challenging. So during
that time period, I was in telecom and I worked

(11:33):
in corporate finance in telecom, and I remember going to meetings.
I had got promoted up through this company, win Star Communications,
and I was at this meeting where it was mostly
executives from around the company, and a large part of
the conversation was about buying bandwidth. So this is basically,
you know, we talked about bandwidth, You're talking about running

(11:54):
data over different networks, You're talking about buying that from
other companies. And it was a situation where it was
kind of circular. They were going to be buying from us,
we were going to be buying from them. You know,
we were going to be our equipment manufacturer was going
to be buying capacity from us, and they're gonna be
selling us equipment and financing it for us. And I was,

(12:15):
you know, relatively speaking, a younger individual who was twenty
nine or thirty, so I had less than ten years
of business experience. But I remember that little voice in
my head that you know, from my business training, saying,
this doesn't seem to be a good business model. And
sure enough, it wasn't, and it wasn't just our company,
but that was the what was occurring back in the timeframe.

(12:36):
And there's a little bit of that now where we
have all these big UH tech companies and AI companies
investing in each other UH and buying services from each other.
And I think that part if you talked about where
is it a little bit concerning, is what does that
look like as we move forward? You know, I think
the big element with this is as they're talking about

(12:56):
these investments, they're talking about many years. Right. This is
not all occurring in twenty twenty five or twenty twenty six,
but it's occurring over a long time period. But you know,
these are things that you know, we look at from
an investment perspective as you know, potential rent flags, right,
and you've got to be aware of them. You know.
The other ones that we saw is that, you know,

(13:19):
there was a bankruptcy that came out with an auto
parts dealer. It's called First Brand Group, really big company.
They had a lot of well known brands and they
basically became overleveraged. They were borrowing too much money. And
the challenge is they were borrowing a lot of it
from private loaners. You know, it's private credit, and this

(13:42):
is a new space that's really popped up and become
very popular in the last five plus years, and so
they're not going through banks. They're going through private companies
to borrow this, and there's less restrictions on that. And
you know, the fact that matters though they were really
it's not clear, but they were maybe committing fraud. What
I mean by that is there's certain ratios that were

(14:03):
supposed to be held with their loans and they exceeded
those ratios. So that's problematic. Right, You've broken covenants that
were supposed to exist, and now you've got itself a problem.
And when you're over leveraged like that, if things don't
go well and they have some issues with tariffs, you're
going to run into trouble, and that's exactly what happened.

(14:23):
So again, these are areas that we're watching and looking
at and seeing how widespread they are. Jamie Diamond, who's
the CEO of JP Morgan Chase, came out and said,
you know, if you see one cockroach, there's usually more.
And so you know, again, I think it's just important
to be aware of and as I talked to you
about making sure that your own personal situation, your own

(14:47):
portfolio reflects where you are in your life and the
risk that's appropriate for you. That's the most important thing
you to do versus getting caught up in the emotions
of the headlines. And you know, there's a saying in
our business that is people lose more by preparing for
a bear market than the actual bear market itself. And

(15:08):
all that means is if you're constantly of this mindset
that you know something bad is going to happen. And
you know, we've talked about this, whether it's the last
hundred years or the last fifteen years, there was always
a situation that you could be needing to buckle down
for right, you could be needed to get more conservative,
and if you did that, you missed out on a

(15:29):
lot of gains, and so it's always the situation, which
is you've got to ask yourself, you know, are you
a long term investor for those dollars? And if the
answer is yes, uh, then you don't want to get
caught up in the headlines because it's really just going
to work against him. Let's move on to a different topic,
but before we do again, if you have any questions,

(15:50):
you can reach me at eight hundred eight two five
five nine four nine. Again it's eight hundred eight two
five five nine four nine, or you can email me
at ask Bouche at bouche dot com. That's ask Bouche
at bouche dot com and it's b O U C

(16:10):
h e Y dot com. So let's move on. You know,
I always like to refer people back to our website,
Bouche dot com and for a number of reasons. One,
if you want to learn about our firm and our team.
Lots of great information there. But we put out weekly
blogs that are always on a lot of interesting topics,

(16:31):
and pretty much every month we have a webinar on
a topic and uh, you know this month, uh, this
we always have. At the end of the quarter, we
do an investment Outlook and are my colleague Ryan Bouschet,
who's our chief investment officer, and Paul la Petro, who's
our portfolio strategists, are both also advisors, did a great

(16:53):
job in that webinar kind of talking about the markets
in the economy, and I would encourage you to look
at that really gives our clients a good perspective. And
that's that's one of the things we talk about with
prospective clients is to us, the importance of good communication. Right.
You know, if you're any relationship, I don't care what

(17:15):
it is, communication is key. And the better off you're
at you are at communicating and for us educating our clients,
you know, the better off that relationship is. And we
always say an educated client is our best client. You know,
what does it mean to be a good long term investor?
How can we educate you in that regard? And you know,

(17:37):
some of our clients are very sophisticated investors and they
really want to know the details. Other of our clients,
even though they may be very successful financially, they just
want to kind of know at a very high level
what's going on. So we always say at whatever level
is appropriate for you, we want to educate you in
that regard, so again I would encourage you to watch

(17:58):
that webinar. It's only about a half an hour, so
not that long, but they give a lot of great information.
The other thing I just want to highlight to you
is that we have two educational seminars coming up, one
this Wednesday, and this is going to be a great one.
It's basically about life transitions and it's in our Women

(18:19):
and Wealth Program. Harmony Wagner, who's one of our seeior advisors,
is going to be on a panel with Claire McCrae
who's a state planning attorney, and Leah Henderson who's a CPA,
and they're basically going to be highlighting different transitions that
you see in your life. So whether it's retirement, whether
it's starting a new business, whether it's divorce, whether it's death,

(18:43):
these different transitions that can be very impactful from a
financial perspective. They're going to spend time and go through
what you need to be aware of, both from Harmony
from a broader planning or investment perspective for Claire, from
a legal perspective, and then from from a tax perspective,
and our colleague Katie Buck, who's another All Star, will

(19:06):
be moderating it. So it's this Wednesday, October twenty second,
is at Duel at the Dunes. I don't think I've
ever been there, but I looked at the pictures. It
looks very nice, which is in Albany, and it's from
eleven thirty to one thirty. There's a lunch there as well,
so you know, if this is of interest to you,

(19:27):
you know, also you know, if you're interested in learning
more about working with our firm or with Claire or
with Leah, I would encourage you to attend. And then
we have another educational seminar as well that's coming up
on Wednesday, November twelfth. It's at the Hotel Brookmere. So
now this is the new hotel that they used to

(19:49):
be Longfellows, so just off of the North Way and
completely redid it, you know, really nicely done. And we're
gonna be putting on thisational session with Jim Lebrue who's
in a state planning attorney, and in this one we'll
be talking a little bit more from an investment perspective
of what you need to know to minimize taxes with

(20:12):
your investments. You know what you need to be aware
of with with a portfolio with some of the headlines
that we see, how do you provide income for yourself
in retirement? And then Jim will be talking about some
of the key things you need to be aware of
from a state planning perspective, like do you need to trust?
So again, this one is Wednesday, November twelfth. It's at

(20:33):
the Hotel Brookmere in Sarah Tugs Springs. This is an
evening one. It begins at five point thirty and you
know it'll be some ordures and then you know about
it about an hour long presentation and with a Q
and a so again, this would be a great thing
if you're interested to learn more about working with our firm,
what does that mean and getting some insight from a

(20:56):
financial planning perspective. Great event to attend and all so
with Jim they're talking about estate planning, uh, you know,
real giving some great guidance. So just you know, put
that on your calendar and feel free to register if
this is something that's of interest to you. But let's
move on. But before we do again, if you have
any questions, you can reach me at eight hundred eight

(21:19):
two five five nine four nine or email me at
Askbouche at bouchet dot com. You know, one of the
things that I want to talk about real quickly is,
you know, we see this quite often when people move
in the retirement they feel like they have to change
up things in particularly where they live. Right And there

(21:41):
was an article I read. It was in the Wall
Street Journal. It's great article. I think it captures this
really well, which is so often and we see this
that you know, they move for a particular reason, but
they hadn't really thought it out well. And this is
where we always tell our clients when we're having conversations
about them if they're thinking about moving, is hey, why
do you go and live there for six months, rent

(22:04):
a place there and see how it is and really
think about what is the real reasons that you're making
that move, Because quite often people make that move and
they're like, it's not exactly what I was hoping. And
you know, I see this sometimes where people move out
of New York State because of taxes and they move
down to let's say Tennessee or another state that has

(22:26):
very little in the way of taxes, but they have
no family there, they have no friends there, so they're
really moving in retirement where it's a little bit isolating
to begin with, and they're moving there just for purely
financial reasons. And you know, listen, we all want to
pay less than taxes, and if there's a way to
do that, that's great. But to pick up and move

(22:47):
your life when you're going into retirement, it's if you
have all your friends and family here in New York State,
that may not make sense. So you know, again, just
be very cautious before you jump into this concept of
having to move. You know, it's the old saying grass
is greener. You know, you may think it's going to

(23:09):
be better. You may think that it's the right move
and you know everything's going to be that much better,
especially if you think moving out of the north because
it's cold and down to the south. But like everything
in life, it's trade offs, right, So it may be warmer,
it may be sunnier, but then you have to deal
with a really hot summer, right, you know, have you

(23:31):
thought about that exactly? And you know it's just one
of those things where, like anything in life, before you
make any dramatic changes, try to step into a little
bit and feel it out and say, hey, you know,
is this the best thing for us or maybe we
should stay put and you know, just kind of see
where things move. You know, I think taking anything when

(23:53):
it comes to a big decision like that slowly, and
in particular in retirement, because again you're kind of isolated
in retirement, right, You're not going to be uh, you know,
connected to a company where you're going to be having
French friends and everything. So you've got to be aware
of that. Well, come back in jonas folks, as we
continue our discussion and we take your question. You'll listen

(24:13):
to Let's Talk Money, brought to you by a Bouchet
Financi Group. Well, we help our clients prioritize our health. Well,
we manage their wealth for life. Folks, come back and
join us as we continue our discussion. Welcome back, folks.
For those of you who just joining us, my name
is Martin Shields. I'm the chief well divisor at Bruchet
Financi Group and i'm your host day for Let's Talk Money.

(24:36):
As always, it's great to be here with you to
answer any questions you may have regarding your financial planning
or investment management concerns, and I encourage you to call
in with those questions. You can reach me at eight
hundred eight two five five nine four nine. Again that's
eight hundred eight two five five nine four nine. Whatever

(24:58):
you may have on your mind, from financial plan I
need to tax, to estate planning, to insurance to investments,
whatever that may be, give me a call and I
can give you some guidance, or you can email me
that ask Bouchet at bouchet dot com. That's ask Bouchet
at Bouche dot com and Bouchet is spelled b O
U c h e y dot com. We do have

(25:21):
an email has come in from one of our listeners
from Steve. He says, I'm looking for an ETF that
can use as a money market account. Do you know
such an ETF with an ultra short bond value fund
remain fairly stable. So this is a great question, actually,

(25:41):
because the challenge that we're going to we're starting to
face already and we're going to continue to face, is
as the Federal Reserve starts to cut continues to cut
interest rates, those short term rates that are associated with
CDs with some ultrashort bond funds, with money market funds,
they're going to drop quite quickly. Right, those are the

(26:04):
rates that will almost immediately drop as the Federal Reserve
starts to excuse me, lower rates. So you have to
be aware of that when you when you buy these now,
it doesn't mean that they still can be good for you. Right.
You want liquidity, you want some income, and you know
you want your money readily available. They'll sell it, you know, today,

(26:25):
to have available tomorrow and not have to worry about volatility. Right.
So with a money market, you know, if you put
one dollar in UH ninety nine point ninety nine nine
percent of time you get one dollar out plus your
interest earned. It was one period of time in two
thousand and nine when the it was a one or

(26:45):
two money markets that broke the buck, and what that
means is they were selling for less than the actual dollar. Now,
that occurred for just a couple of days and then
that was rectified. But in general, you get very very
little risk when you talk about these funds. So you know,
the one that we utilize UH as far as the
money marker fund is s w V x X again

(27:07):
that's s w V is in Victor x X and
that's offered through Charles Schwab. You know, yield around four percent. Uh.
You know, great fund, low expenses, so if you wanted
a money markert fund, you could use that. Most financial
c stodiums, whether it be Vanguard and Fidelity, have you
know a similar one. Uh. If you want more of

(27:28):
a short term bond fund, two good ones are v
U s B. That's v U s B that's a
Vanguard one, and that yields around four point three percent,
and the expense ratio is very low with that ten
basis points one tenth of a percent. Uh, and the

(27:51):
average maturity is less than a year, so very short
term uh securities. So again v USB is another good one.
And then j P st JP Morgan fund that's j
P s T also a good short term bond fund. UH.
That yields around four point two percent. A little bit

(28:13):
more expensive at eighteen basis points, but those are all
good options, UH, if you want to have a short
term fund to grab some yeal with. Now the thing
you have to appreciate though, is again, if we're starting
to see rates decline, you're gonna you're yield from that,
it's going to decline real quickly. So UH, you know,

(28:34):
one thing I would say to you is that in general,
this is not a bad time to start. Uh. You know,
hopefully you've done it before, which we did with our clients.
But uh, you know, still consider buying farther out on
the maturity curve, the yield curve with bonds and locking
in some of those rates. Right so you know it,

(28:57):
rates tenure did drop a little but this week, but
you know, if you can lock in close to four
percent on a ten year US Treasury or in a
corporate bond, you might be able to get a little
bit more and lock that in. That's probably what you
want to be doing, because if we go into an
environment of declining rates, you want to make sure that

(29:18):
you know this yield that you can get right now
you're going to continue to get over time. And that's
the advantage of by buying farther out on that ye'll
curve or longer maturities is that you lock in that yield.
You don't have to worry about rates dropping. So I
would you know, probably be aware of trying to minimize,

(29:40):
you know, how much you have in real short term investments.
And you know the reason having short term is more
from a liquity perspective versus an investment perspective, so something
to be aware of, and you know, just making sure
that you don't have too much in those short term
funds that you know, we've seen this with prospective clients
come in, they you know, load it up bond CDs

(30:01):
back when you can get you know, four and a
half five percent plus and now they're maturing and they've
got to make decisions with those. So again just kind
of kind of be aware of what the risks are
with those. It just you know, just do your edu,
do your learning and research on that. Let's go on.

(30:22):
You know, I wanted to talk about four one k's
and something a few things in particular with those. So
we talked about this and highlight this for you in
past weeks that starting in January first of next year,
twenty twenty six, that if you're a high income earner,
that means that based on a risk and i RS

(30:44):
you're earning more than one hundred and forty five thousand
dollars annually, that your catch up contribution, So that if
you are fifty and older, your catch up contribution UH
is now going to have to put into a wrath. Right,
And so's a couple of things that's important here. One
is you have to make sure your plan has a
WROTH option. If they don't have a WROTH option, you

(31:07):
will not be able to put in a catchup contribution.
So confirm that they do have that ketchup option, and
then you know that going forward, your seventy five hundred dollars,
which is the ketchup amount for twenty twenty five twenty
twenty six, that's going to go into a WROTH. And
we talked about this as well. If you're between age
sixty and sixty three, that catchup amount is now eleven

(31:31):
two hundred and fifty dollars that will also have to
go into a ROTH, So you know you need to
be aware of that. Now. One of the other things
that I want to highlight is something called a mega
backdoor roth. So a backdoor wroth is simply when you
earn too much that you're in the income phase out
to do a WROTH contribution that if you don't have

(31:55):
any outside iras. And that's kind of important because the
way this actually sets up that if you don't have
any outside irays and you're over that phase out, you
can make a contribution that is not tax deductible. So
a contribution straight up into an IRA and then you
can convert it into a ROTH. You could do that
the next day. That's called a backdoor rough, and it's

(32:16):
a great way to fund a WROTH if you're up
over those income phase outs. But another option is if
you're in a full and K plan and you maximize
your employee contribution, that you can also if your plan allows,
and many of them do, you can put in additional
funds that are post tax, right, so you're not getting

(32:38):
the tax deduction, and it's not officially a WROTH contribution.
It's a post tax contribution into your falling K. Now,
the amount that you can put in is forty six thousand,
five hundred, so that brings you up to seventy thousand dollars. Now,
way you have to appreciate is if your company is
doing a safe harbor contribution or if they're doing profit sharing,

(33:00):
that is going to reduce that amount, right, So this
is that kind of that area that they can companies
can do profit sharing and safe harbor with that brings
you up to seventy thousand dollars. But if they're not
doing that or if they're not maxing that amount out
then you can go ahead and put in a post
tax contribution of forty six thousand dollars annually and then

(33:23):
you can convert it into a wroth. So it is
incredibly valuable. So you think about this, you're above the
income phase outs, you maybe you have an outside IRA,
so you can't do a backdoor wroth that you can
put in forty six thousand dollars. In addition is post
tax contributions into a four one K and then you

(33:43):
can convert it into a wroth. It is really powerful.
So I would highly recommend that you look at this.
If you're you know again you're not you're above the
income phase outs for a wroth contribution, UH, and you
don't you're not able to do a backdoor wroth this
and you have a full and K plan. This is
a great way to put money into a wroth. And again,

(34:07):
if you think about it, if you put it into
forty six thousand dollars those that's really going to add
up over time. So something to consider, UH as you're
looking to determine ways to save money and what's what's
the most effective way to do it? Well, let's move on.
But again before I do, if you have any questions,
you can reach me at eight hundred eight two five

(34:29):
five nine four nine. Again that's eight hundred eight two
five five nine four nine, or you can email me
at ask Bouche at bouchet dot com and that's b
O U C h e Y. One thing I want
to highlight for you is, you know, just you hear
this situation where we have good consumer spending, but also

(34:53):
there's people who are struggling. And what you have going
on here is what's called the you know, defined as
a k econ right, So individuals that are in the
lower income brackets, those individuals are struggling in part because
much of their income goes to pay for just basic needs,
so whether it's you know, food or housing. With inflation

(35:16):
which is not at nine percent, but it's still at
around three percent, so it's still out there. You know,
everybody sees this, right, is that prices are continued to
move up, not at the rate they were, but they're
still moving higher. And if you're in a lower income level,
you know, I think you know, back three or four
years ago during COVID, everybody got their stimulus checks, people

(35:39):
were getting raises. Well, now those raises really aren't happening
as much, and so you're seeing situations where your income's flapped,
but your expenses keep going up, whereas on the higher
income levels in general, you're still seeing more raises and
job opportunities in those categories. Plus, those individuals are more

(36:01):
likely to be owning their own home, which has increased
in value, and they could be taking home like and
the line of credits off of those the house. Uh.
And also they're more likely to have money invested in
the markets, in which case the markets have continued to
go up. And you know that you we see that difference.

(36:21):
That is really what's driving consumer spending, is that those
upper income brackets whereas those lower income brackets, uh, you
know are really continued to struggle. So just if you
hear that term, uh, that you kind of understand what's
what's going on. You know, you know, as we look
at it. You know, one of the things that we

(36:42):
look at is you know, loan delinquencies. Uh, they are higher, right, Uh,
they are higher now they are mostly higher in that
lower income bracket. But that's something we'll keep an eye
on to see if it starts to move up into
the upper income brackets. But uh, you just see this
real divergence between those two groups. One of the questions

(37:04):
we get quite a bit is, you know, what about
the federal government shut down? Is this something that we
should be concerned about? And you can see, you know,
we're two weeks into it. The market really has not
reacted much at all to that. But I will tell
you that, you know, at some point it could, right,
I mean, what's probably going to happen here is that

(37:25):
you know, I think both sides feel like they have
the justification to not give in and to hold off
until they get more of their demands met. But you know,
at some point, you know, these people who are continue
to work, you know, these federal government employees, many of
them are furloughed, they're not working, but many of them

(37:46):
who are essential are working and they're not getting paid.
So at some point they'll start not showing up for work.
This is what happened in twenty eighteen, and in particular
where this really you know, impacts people, uh is with
air travel, right, whether it's TSA agents, whether it's uh,

(38:08):
you know, people working at the airport. You know, at
some point that when those people are not getting paid,
they're not going to be showing up as much and
it's really going to be causing problems in particular, and
I hope it's not. But you know, as we get
into November, and you know, we're at the how they
crunch time, So you know, when people ask me what

(38:29):
you know, I think if we get to that point,
you're gonna probably see one, you know, them negotiating to
get this taken care of, but two you're probably gonna
see some market volatility at that point. Uh. Again from
our perspective, Uh, you know, that's more of an investing opportunity. Uh.
That is not something to be overly concerned about, but

(38:51):
it's something to be aware with and that's probably gonna
you know, allow these two parties to come together to
negotiate to resolve this issue. Let's move on to another topic,
but again before I do, if you have any questions,
you can reach me at eight hundred eight two five
five nine four nine. That is eight hundred eight two

(39:11):
five five nine four nine, or you can email me
at ask Bouchet at Bouchet dot com and Bouchet spelled
b O U c h e Y. You know, one
of the things I want to talk about is, you know,
a lot of times with our clients, they've been very
successful in letting us manage their portfolio. We have something

(39:32):
called the Capitol Flows page that they see. We have
a portal that our clients can look at that basically
takes all the information from Charles Schwab and it you knows,
much more user friendly. They can look at it by account,
they can look at it inaggregate, and it really gives
them a good snapshot as to where they stand. And
I love the Capitol Flows page, especially for clients that

(39:54):
have been on for a long time, because you can
see the principal amount that you've put in or money
as you've taken out, and you can see the value
of your portfolio. So it gives you a really good
illustration as to what's occurred over time. And what's amazing is,
you know, to see clients have been on with us
for ten, fifteen, twenty years, that they have this mountain
of blue because they've let us do our job, and

(40:15):
then you know, the rest is all it's all gain.
The principal mount in some cases is negative. That is
literally the case they've taken out so much that the
actual principle amount they've put in is a negative amount,
and then you know, from there we may have been
able to grow the portfolio to a mountain of blue

(40:37):
and you know that. That's why I think it's so
important to have, you know, if you're working with an advisor,
to have you know a good view as to what's
going on in the portfolio, how you're allocated, what is
the performance. You know, where do you stand with your
principal amount versus your actual portfolio. So again, if you
don't have that, that's something you're really missing and I

(40:59):
think our clients really benefit from having that. We're going
to go to the phone lines. We have John from
Delmar Johnny you there.

Speaker 2 (41:05):
Yes, I am, and thanks for your time. Again. In
the shows that you guys do, I listen to them often.
I just I don't want to get into a huge
amount of detail, but I just want to ask your
opinion on this. So the scenario is I'm going to
retire next year. I'm most likely going to take a
lump sum pension amount, just because I'm a believer that

(41:31):
I can do better than that. Plus I don't have
to worry if I pass away. You know, it's already
already there. But I also have a and my wife
has a small, very small pension. So really on day
one of me retiring, we're not going to have any income.
I'm planning on holding off until I'm seventy to get

(41:53):
Social Security. But over the years I've I've had a
brokerage account that just has got you know, maybe a
million and a half of games in it. Just so,
I was actually reading an article that said, I can
I could take almost two hundred thousand dollars of games

(42:14):
out of that if I don't have any other income
and I don't pay any federal tax on that at all.
So I was thinking of just you know, and I've
most of my assets are all inequities, so a way
to kind of get up, lessen my load a little
bit on equities, not have to pay any tax whatsoever,

(42:37):
and just you know, my lump sum would therefore have
more time to grow without me touching it. And eventually
I know I'm going to have to do some a
roth conversion at times, but I think I have I'll
have over eight to ten years to do that before
I'm required, right, because they should do the ross. You
don't have R and D s right, Well, if you'd.

Speaker 1 (42:59):
Have to do it all your I rays that you know,
if you have any iras, you have it and hold you.

Speaker 2 (43:05):
Now I'm sixty two, sixty.

Speaker 1 (43:10):
Two, yeah, so you would be uh seventy five when
your R and d's kick in.

Speaker 2 (43:15):
Yeah. Yeah, so I view I got third. I've got
a number of years to do a ross, maybe a
little bit every year. But this, it's just this concept
of taking my brokerage account and just liquidating some of
my capital gains and not paying any taxes. I was
always worried about. Now I've got a huge tax base

(43:35):
there that I'm going to owe. But it seems like
if I just sell and you know, reduce my portfolio
that way, I'm not going to pay any capital gains tax.
I guess you don't. You don't pay capital gains if
you're married filing singly up to like I think those
numbers like one hundred and ninety five thousand or something.

Speaker 1 (43:55):
Yeah, it's actually ninety four thousand. If you're married finally jointly,
it's ninety four thousand. So if you're you know.

Speaker 2 (44:03):
Marry, really it's only ninety four thousand.

Speaker 1 (44:05):
Ninety four thousand. Yeah, So otherwise you became fifteen percent. Yeah, yeah,
I mean, you know, the only thing I would say
to you, John, which is, you know, if you can
keep yourself under that amount and do it, fantastic, that's awesome.
But you know, at the end of the day, the
goal here is to live your life, not try to
just minimize your taxes. I mean, you want to try
to do both, but you I want to make sure

(44:27):
you live your life right. And you know, if you
pay gains on it, it's fifteen percent, which is still
fifteen percent, but it's a lot less than ordinary income,
which is what you would be getting taxed on it
for distributions from your IRA. So I would highly encourage you,
you know, first to you know, have a plan how
much do you need to live on and what's your

(44:48):
cash flow needs and where's that going to come from,
you know, including social Security and whatnot, and then see
if you can do it to keep it below that.
But don't don't you know, you know, I don't forego
doing the thing you want to do because you want
they zero percent Catholic gains on that. That's not what
it's all about, right, What's all about is enjoying your
life while you have your health.

Speaker 2 (45:08):
Sure understand understands that. Okay, thanks for your thoughts. I
appreciate it.

Speaker 1 (45:13):
Yeah, no problem, all right, you take care now, yep,
I like yep. No great questions from John. And you know,
this is why it goes back to what I talked
about earlier, which is whether it's moving or whether it's
making decisions. Make sure your decisions are based on what
is best for you, your spouse, your life. Because you know,

(45:33):
our tagline is health wealth for life, and health comes
first because as long as you have your health in
your a reasonably good financial position, you've got everything. You've
got everything. Because you know this as well. You see
people that have had health issues that came up. It
changes everything real quickly. Doesn't matter how much money you have, uh,
you know your their life's much different. And you know,

(45:57):
we always most of what I'm usually telling clients is
to spend more money. I always tell them if they're
gonna spend too much, I will let them know. I
will make sure that they're not doing that. But too
often people just get in this mindset of you know,
trying to minimize you know, taxes or you know, trying
to save as much money. And I always tell them, listen,

(46:17):
if you don't spend it, somebody else will. They will.
And whether it's your kids or a charity, or a
niece or a nephew, Uh, they're not going to appreciate
all the hard work and effort that uh, you know,
you put into getting those dollars there. And that's why
as a firm, we always, you know, think about this
as generational wealth for our clients. You know, we're always
giving guidance not just to our clients, but to their kids,

(46:40):
to their grandkids, because you know, we want to make
sure that those generations are well prepared, that they're doing
the right things. And if you start early, uh, you know,
you that's you get that mindset I see with my kids.
You know, you get into the mindset of saving and
being aware of their spending. Uh. You know, they'll do well.
But you also want to make sure that if they're
going to be receiving assets from you, that they don't

(47:01):
blow through them, right because you've worked too hard. But again,
you know, make sure that you you have that plan
in place. I think it's an important thing. I am
assuming John sounds like a very well organized guy. Probably
get in place, but I will tell you, having you know,
well thought out plan, whether it be a state plan,
insurance plan, cash flow plan for retirement. That's a huge

(47:22):
part of what we do for our clients and meeting
with them annually to give them guidance and say, hey,
this is where you stand. You know, you know if
you need if you're gonna be looking to buy a
new car or maybe a boat or something, you know
you're in a good spot to do that. So having
that perspective just freeze them up. And you've got to
have that plan in place to make sure that you're

(47:45):
in a good spot and that you're going to be
prepared for retirement in the cashflow needs. Well, folks, it's
been great to spend this hour here with you. As always,
I hope you'll learned a lot. I love giving you
some insights you're listening to Let's Talk Money, brought to
you by a Bouchet Financial Group, where we help our
clients prioritize their health while we manage their wealth for life. Folks,

(48:06):
take care of yourself and take care of each other.