Episode Transcript
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Speaker 1 (00:00):
Good morning everyone. My name is Martin Shields. I'm the
chief Wealth Advisor at Bruchet Financial Group and it's great
to be here with you on this another stunning Sunday morning.
It's just every it seems like every day here we
have gorgeous sunny weather and uh, you know, it's great
to be able to be here with you to answer
(00:21):
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 one eight
hundred eight two five five nine four nine. That's eight
hundred eight two five five nine four nine, Or if
you're too shy for calling in, you can email me
(00:43):
at ask Bouche at Bouchet dot com. That's ask Bouche
at Bouchet dot com and Bouchet is spelled b O
U c.
Speaker 2 (00:54):
H e y.
Speaker 1 (00:56):
So any question you may have regarding your financial planning
or investment management concerns and we can chat. And as
I always say, there's no dumber silly question except for
the one you don't ask, and you may be doing
your fellow listener or favor by asking that question. Well,
I hope that you're doing well, that you're enjoying your weekend.
I headed down to the Hudson Valley yesterday with Buddy.
(01:18):
We did some road biking on the Empire Trail. So
for those of you who don't know, it's really pretty amazing.
The Empire Trail is a off road paved, mostly paved
trail that goes for biking, walking, or whatever. It goes
from New York City all the way north to Albany,
(01:40):
and then it continues north up to the Canadian border,
and then it also goes from Albany all the way
over to Buffalo along the Erie Canal. Now, there are
some parts that you're on the road, and you gotta
be careful obviously in those situations if you're walking and
riding whatever, but a lot of it is paved and
(02:01):
it's so well done, and you know, I think that's
a great asset that we have. And of course, you know,
the Hudson Valley is just gorgeous, especially this time of year.
And we rode from Kinderhook, which is a cute little
town if.
Speaker 2 (02:14):
You've never been there, really.
Speaker 1 (02:16):
Cute little town, to Hudson, which is also a little town,
but boy, it's booming. You can tell an awful lot
of money has been going in there, certainly since COVID,
but I think even more so, and just talking to
some of the folks that live around there and they
just talk about the changes that have occurred over the
last fifteen years and really quite amazing. So I mean
(02:38):
that's where I think we're fortunate upstate New York. You know,
I always say this, having moved back here thirteen years ago.
People get down on themselves that about you know, the
Capital region, and you know, maybe it's not as good
as other areas, and yeah, I mean every place has
this pros and cons and shortcomings and strengths. But all
things considered, we have an amazing area here.
Speaker 2 (02:59):
I mean about this.
Speaker 1 (03:00):
We have the Berkshears, we have the Green Mountains, we
have they ad a RODECKX, we have the Hudson Valley,
the Finger Lakes, Great Lakes, all this within three hours
drive and including you know, access to Boston and New
York City and Montreal.
Speaker 2 (03:15):
It just doesn't get much better than that.
Speaker 1 (03:17):
I for myself, having grown up in Binghamton and went
to Saint Bonaventure University and then was down in Virginia
for many years in d c which which was great,
loved it, but to move back and upstate and to
be in this area which I now call home, just
really appreciate it.
Speaker 2 (03:35):
So I can I hope that you had a great.
Speaker 1 (03:37):
Day yesterday and that you're gonna get out there today
and enjoy this great weather. But again, whatever questions you
may have, you can reach me at eight hundred eight
two five five nine four nine, or you can email
me and ask Bouchet at Bouchet dot com. That's b
O U C H E. Y. So we have an
(03:58):
awful lot to talk about today. Markets have hit all
time highs again right as we talk about you hear
this concerns over an asset bubble, and I'll talk about
that a little bit more. But you hear those concerns,
and in some respects they're warranted. I would say that
it's not as though there's not some reasonable elements of
(04:19):
concern out there when we talk about stock prices and
some of the things going on with the economy. But
with that said, you know, there's a lot of great
elements going on with the economy and it's reflected right
now in the stock market. So you had the market
hitting all time highs the S and P five hundred,
it was up fifteen point five percent year to date.
(04:43):
The queues triple ques, which are big investors in which
is basically a NASDAC up twenty point seventy one percent.
So what was the driver behind that strength. Well, first
element that existed that was really positive is.
Speaker 2 (04:59):
The Inflame data.
Speaker 1 (05:00):
It came in a little bit below expectations and that
helps to propel the idea that the Federal Reserve will
be cutting rates at their next meeting. I think right
now the expectations are at least two more rate cuts
this year. And as we've talked about, as the Federal
Reserve cuts rates, what does that do? It stimulates businesses
(05:22):
and individuals to be able to take loans out at
lower interest rate levels. It also helps from a valuation perspective, Right,
So if I'm evaluating a stock and the cash flow
and the profits from that stock, one of the things
that helps me determine the value of that company is
the current interest rate level. And the lower the interest rate,
(05:43):
then valuations can be higher. As the way that valuations work,
and so as that rate goes lower, stocks can be
actually have a higher valuation. It actually works from a
financial perspective, so that certainly is helping to propel this
market higher. The other thing, and I've talked about it before,
(06:04):
is earnings. Earnings continue to be very strong. This week,
Caterpillar came out with earnings and beat expectations. And I've
also talked about the importance of what were the earnings
but relative to what the expectations were, right, So we
have a situation where earnings are good, but they could
(06:25):
be below expectations. In some of these cases where it's
a really fast growing company, even if they just miss
earnings just slightly, a company can get really hit really hard.
But in this situation where earnings came above expectations, and
also the forecast, that's another big element. What is the
(06:46):
forecast for corporate profits and cash flow that was above
expectations as well. And in Caterpillar's case, a lot of
this has been being driven by basic construction for manifest
action facilities and for data centers. So you know, we
talk about the importance of AI and the investment in
(07:08):
the AI and all those billions of dollars going in there.
You know, you're seeing it in earnings from Caterpillar, but
really the strength and earnance was across the board. A
lot of different sectors in areas have been benefit benefiting
and doing well and and that will continue to move
this market higher. If you have that strength in earnings
(07:28):
UH and cash flow, this market will continue to move higher.
Speaker 2 (07:31):
Uh. So you know, this is what we're always looking at.
Speaker 1 (07:34):
What uh is the economic data, but what also is
coming in for corporations and you have kind of this
positive outlook that still exists. So you know, we talk
about is there a market bubble? And that's you know,
a theme that is out there. We have that question
from clients. And I wrote a blog on this recently.
Speaker 2 (07:55):
UH.
Speaker 1 (07:55):
You can access this on my blog. It's called peace
of Mind Economics, and this is where I share thoughts
on kind of a wide range of areas. And I
got a question the other day why peace of mind economics?
And to me, I'm an economist from training, and I
like that they see this idea of equilibrium in life. Right,
(08:19):
So peace of mind to me, whether it's you meditate
or whether you prey, you try to live a life
where there's balance.
Speaker 2 (08:26):
Right.
Speaker 1 (08:26):
Everything in life is balance and moderation, and having that
from a mental perspective is so important. Well, guess what
economics is about equilibrium as well, And there's many different
elements of that. You know, the most basic one is
supply and demand curves, where you have an equilibrium between
the amount of supply and demand. But even from an
(08:47):
investment perspective, there's this idea of moderation, right, having the
right allocation for you and how much do you say
versus how much do you spend? All that, if you
have a life that you kind of feel there's an
element of fulfillment, then there is that equilibrium between a
lot of things that you do in your life. I
(09:08):
use the concept it's called yinging and yang. It's basically
something from Asia where in life, you know, quite often
in the West we view things in a very contrast
of good or bad, black or white. But the reality
is most things in life there's a lot of gray, right,
or it's a mixture of that black and white. And
(09:29):
you know that's where again from You know, as you operate,
you try to find that equilibrium. And so for me,
when you look at both peace of mind and finances
or economics, you try to balance to two of those, right,
how so often people view finances and peace of mind separately, well,
(09:51):
the fact of the matter is, you know, if you're
married or you have a family, you know that finances
can cause a lot of stress and you have to
have the right balance as far as how do you
use money in your life, you have to have to
have a right perspectives. So to me having a blog
with that title, this is what I talk about, is
how do we incorporate money and finances in our life
(10:13):
to make us successful from a personal perspective and with
our families and our relationships. But with this blog again,
the blog is Peace of Mind Economics, and you can
also kind of see what I'm talking about through LinkedIn.
I post a lot on LinkedIn as well. But answer
the question are.
Speaker 2 (10:31):
We in a bubble?
Speaker 1 (10:32):
And you know, I would say I bring this back
to when I was working in telecom in the nineties
and in nineteen ninety six, I switched into a new company,
got a promotion. I was very excited about it, but
I was a little concerned because the company was a
startup telecom company. We were launching services across the country
(10:53):
and the company wasn't making money. And at this time,
Alan Greenspan came out and said that we were the
market was showing irrational exuberance, right, there was too much
froth in the markets. And so this was a publicly
traded company. So I was a little concerned leaving a
company that was making a lot of money to go
to a startup, but decided to do it. I was
(11:15):
young and didn't have any real responsibilities financially, and it
was amazing. It was phenomenal. And so that was in
nineteen ninety six. So throughout that time, the market continued
to go higher. The stock market went higher, but also
the economy was strong. This company, Windstar Communications, did really
well through that time, and I was promoted up through
the ranks during that time, and then in two thousand,
(11:39):
I was one of the top finance people in their
international division.
Speaker 2 (11:43):
And it was also amazing.
Speaker 1 (11:45):
We're doing joint ventures around the world, and I was
traveling to all these different countries. But I remember having
a meeting with a lot of the executives from different
parts of the company, and they were all talking about
buying services from other telecom providers and equipment providers, and
it was kind of this quid pro quote where you're
(12:05):
going to buy a lot of bandwid from each other.
And also that the telecom equipment providers were financing all
that all those purchases, and it seemed to be this
circular element where I was like, this does not seem
like a good business model to be successful. And you know,
I was only twenty nine years old, so I was
(12:26):
maybe second guessing my knowledge versus some of these more
senior executives, but I had that voice in the back
of my head saying that, and you know, it turned
out to be right. So unfortunately, whin Star Communications went
to bankruptcy, as did many of those telecom providers at
that point, and the economy went into a recession, not
(12:48):
too deep until we hit nine to eleven, and then
it went deeper and the stock market declined for two
and a half years from there. So, you know, if
you remember, if you were alive and working in the nineties,
it was a great time in the nineties, but that
drop and that bubble burst was was painful by all means.
But you know, so my question is is it more
(13:08):
like nineteen ninety six, where there's an element of irrational
exuberance but the market contained to move higher, or is
it more like two thousand, where things were very frothy
and the market declined dramatically from there. And all I
would say is, as I look at the data, you know,
I think there's some areas of concern. So you know, certainly,
(13:30):
you know when you look at you know, companies going
around and investing, all these AI companies investing in each
other and buying services from each other, and there's an
element of financing some of the equipment purchases as well.
You have that circular element that existed in the two thousands.
(13:50):
And then the other things you look at, you know,
from evaluation perspective, things are you know, fairly highly valued.
So from a price to earnings ratio, as you look forward,
the PE ratio is around twenty two, and you know
historically it's more around nineteen, so we're above average in that,
which is a little bit disconcerning. And then also you know,
(14:14):
from a loan and banking perspective, you had situations like
First Brands Group, which was a automotive parts supplier and
it went in bankruptcy, and when you start digging down
into it, there was elements of fraud or of not
being completely transparent in how they were using those dollars.
(14:36):
And one of the things that we have going on
these days is a large private credit market, right, So
you have a situation where there's a lot of banks
lending money, but there's also money being lent from the
private markets, so you know that element. JP Morgan's CEO,
Jamie Diamond stated, you know, where there's one cockroach, there's
usually more. And what that means is simply, you know,
(14:58):
if you have a company that's acting in this way
where there's an element of fraud, there's probably other companies
out there that are have they're highly leveraged, they have
a lot of debt, and so the ways that they're
operating their business can be problematic. So you know, you
kind of put all that together. There are certainly some concerns,
(15:18):
and including the labor markets, right. You know, there's you
start to see fewer job openings, you start to see
unemployment tick up. You know, you don't see any major layoffs.
That's the one thing you don't see in the labor markets.
So you have some of these elements of concerned, but
also then you've got to look at the elements of strength.
Speaker 2 (15:38):
Right.
Speaker 1 (15:38):
I just talked to you about earnings continue to go up,
and that's one of the things I highlight my blog
which is, you know, as this market has done well
over the last fifteen years, it is almost entirely because
earnings have done so well. You know, companies are just
more productive. There's an element with certainly D S and P.
Five hundred that many of those companies are technology companies
(16:01):
and those margins for those technology companies are that much higher.
So that is absolutely the case. And you know, the
balance sheets that many of these companies have, they just
tremendous amount of cash flow, tremendous amount of cash on
the balance sheets. And also when you look at from
a financial perspective, a lot of the banks and finance
(16:22):
companies are doing really well, and there's a lot of
mergers and acquisitions, a lot of IPOs, a lot of
training that's been successful. Usually when you know finance companies
are doing well, and they haven't done that well over
the last three or four years, but when they're doing well,
that's a good sign for the economy. So my basic
observation of this, which is one anybody that comes out
(16:45):
and says absolutely we are either in or out of
a bubble situation, you can't trust them because nobody has
that insight. People like to think or act like they do,
but they don't. But you can say, hey, you know,
as I look at this, this is in general how
I'm feeling, and I'm probably more in the camp that
this market has more.
Speaker 2 (17:09):
Areas to move higher.
Speaker 1 (17:10):
I do feel like we're still we have a lot
of momentum out there, and in general, from an earning's
perspective and an economic perspective, we have an opportunity to
move higher. Now, could we get ourselves more into a
bubble situation? Absolutely?
Speaker 2 (17:25):
Right?
Speaker 1 (17:25):
So then then the question becomes, well, what should you
be doing as an investor? And I think it's a
few things. One is, if you're getting closer to retirement
or you're kind of a life change situation, it's not
a bad situation right now to reassess how you're allocated.
You know, should you reduce the amount of risk that
you have in your portfolio? That is a very reasonable
(17:47):
question to ask at any point, and in particular, if
you're getting close to retirement, maybe you were in an
eighty twenty, this could be a good time to go
to a sixty forty. When the markets are hitting all
time highs, it's tough mentally to make that change because
they're doing so well, but it's not a bad idea
to make that change. Then the next thing is do
you have any cash flow needs over the next couple
(18:10):
of years? Right, if you need cash flow in the
next year or two, this is not a bad.
Speaker 2 (18:15):
Time to freed up. Even if you have to pay
some taxes.
Speaker 1 (18:17):
That's you know, you're paying taxes because you've done well
from a financial and an investment perspective, So pay the
taxes and have the cash available. And then the third
element it just just good kind of fundamental portfolio management,
which is to rebalance. And all that means is you
should have some element of a target of what your
allocation is. Right, So are you a sixty forty seventy, thirty,
(18:41):
eighty twenty, So that just means how much do you
have in stocks versus bonds, versus alternatives? And you should
rebalance back to those targets. That's just you know, good
portfolio management. So if you go through and you do
those things, I think you're going to find that even
if they're is you know a bubble and we're in it,
(19:02):
that you're.
Speaker 2 (19:03):
Going to be okay. You know.
Speaker 1 (19:04):
The last element I would leave with you with is
just making sure you're diversified, right. You know, we're big
believers in technology. We have a lot of allocations to
all those AI companies and our clients have benefited dramatically.
But we do have allocations to companies that have good dividends.
We do have allocations to hedge dequity positions that would
(19:26):
do well in a downturn. We have allocations to positions
that provide more income versus upside with the market, more
value based type of holding.
Speaker 2 (19:38):
So having that element.
Speaker 1 (19:39):
Diversification is also so important that you've got to look
at your portfolio and say, hey, how am I allocated?
And if you're working with an advisor, you should either
know this or you could have a conversation with them
to get your guidance. We're going to go to commercial break,
but come back and join us as we continue our discussion.
Welcome back, folks, for there's just joint ask. My name
(20:02):
is Martin Shields of the chief Wealth Advisor at Bruchet
Finance Group, and I'm.
Speaker 2 (20:05):
Your host to day for Let's Talk money.
Speaker 1 (20:07):
If you have any questions regarding your functional planning, invest
of management, your estate planning, your tax planning, whatever, if
it's finance related, let's have a conversation about it. You
can reach me at eight hundred eight two five five
nine four nine. Again, that's eight hundred eight two five
five nine four nine, or you can email me at
(20:29):
ask Bouche at bouchet dot com. That's b O U
C h e y dot com. One of the things
I want to talk about, uh, is that we get
a lot of questions regarding this is the senior tax
deduction that's out there now. So that amount is six
thousand dollars and you can take that tax deduction regardless
(20:52):
if you either itemize.
Speaker 2 (20:53):
Or you take the standard deduction. Right.
Speaker 1 (20:55):
So this is a really nice addition that's been part
of the One Big Beauty Bill. Somebody called it the
O the O Triple B Bill. And you know the
thing you have to remember though, is there is an
income phase out. So what that means is if you're
earn more than these amounts, then you will not get
(21:16):
that deduction. So for an individual, it's between seventy five
and one hundred and seventy five thousand dollars and for
a married couple final jointly is from one hundred and
fifty thousand to two hundred and fifty thousand dollars of
modified at.
Speaker 2 (21:31):
Justic gross income.
Speaker 1 (21:32):
Now, the one thing I want to highlight here is
you know, you can also be looking forward and say, hey,
what income should I take in these years to get
that versus what should I hold off? And it's so
for right now, it's only going to be in place
from twenty twenty five through twenty twenty eight and then
it expires. Now it could certainly be continued after that,
(21:54):
but you just have to be aware that's that's right
now the years that you're had that available to you.
And what I would tell you is a couple of things.
Let's say, let's talk about social security. In this situation,
you might want to hold off on taking your solid security.
Let's say if you're sixty five, to the extent if
that taking that security is going to bump you up
(22:16):
into that higher amount and you're going to get phased
out of this deduction.
Speaker 2 (22:20):
Right.
Speaker 1 (22:20):
The other thing to remember, of course, with social security
is every year you wait, you get an eight percent
increase in your benefit amount. So there's reason for that
to wait. But also in this situation, by delaying, you'll
continue to get that deduction. The other element may be
if you're planning to do a Wroth conversion, that might
(22:43):
be another reason why you might want to wait until
you know you get through this situation. Now, with all
of our clients, we do tax projections then when they're
looking at making these decisions. So I think it's important
that whether it's with your advisor or with your tax prepared,
that you do a projection to kind of make sure
where you stand with everything and if it's worthwhile, because
(23:04):
it could still maybe be worthwhile depending on your situation. Right,
So you've got to be able to look at that
and make that determination and then from there after you
have all that information, then go ahead and.
Speaker 2 (23:16):
See if you want to do it.
Speaker 1 (23:17):
Well, folks, we're going to go to commercial break, but
come back and join us as we continue to take
your questions. You're listening to Let's Talk Money, brought to
you by Bruchet Financial Group.
Speaker 2 (23:26):
Well, we help our.
Speaker 1 (23:26):
Clients prioritize their health while we manage their wealth for life.
Come back and join us and get your questions ready
and you can either email me or call me with
those questions. Welcome back, folks. For those of you who
just joining us, my name is Martin Shields. I'm your
host today for Let's Talk Money. I'm the chief Wealth
Advisor here at Bruchet Financi Group, and as always, it's
(23:47):
great to be here with you on this gorgeous Sunday morning.
I hope that either you're doing something now fun now,
maybe you're just to enjoying a coffee and relaxing, but
I hope you do get out to enjoy this gorgeous day.
But if you have any questions, you can reach me
at eight hundred eight two five five nine four nine.
(24:08):
That's eight hundred eight two five five nine four nine,
or you can email me at ask Bouchet at Bouche
dot com. That's asked Bouche at Bouche dot com. And
Bouchet is well b O U C H E Y.
So whatever questions you may have, got a lot of
things to discuss today. We talked about the markets hitting
(24:29):
all time highs and just it's so important that you
don't get caught up in the emotions that you can
have when you see headlines.
Speaker 2 (24:37):
Are we in an asset bubble?
Speaker 1 (24:39):
And as I mentioned before the break, it doesn't mean
that you can't be doing things. Just to make sure
that if we are that you're well prepared, but you know,
it's certainly a situation where you've got a situation like
AI that is, you know, basically once in a lifetime
type of industrial breakthrough and it will at some point
(25:00):
propel profits and productivity across all areas. I know our
firm as well, will we start We're starting to use
it more in our business. And you know, no different
than the nineties. There's some fits and starts. It doesn't
always line up to what your expectations are, but it
will get there. It will absolutely get there. So you know,
(25:22):
just making sure that you're doing all the right things.
And it just stresses to me the importance of working
with an advisor who's a fiduciary who can incorporate your
investments with your financial planning, right. The two go hand
in hand. And I always say this to clients that
just met with some clients and they're going to reduce
their allocation, just different situations going in their life.
Speaker 2 (25:44):
They're getting close to retirement.
Speaker 1 (25:46):
You know, he's now without a job, and it just
fit for them and it gave him peace of mind.
So that's where working with an advisor is so important.
You know, so often I do see individuals that come
in prospective clients and whether they're working with an advisor
maybe who's not a fiduciary, who's not knowledgeable, who doesn't
have a great team behind them, or they're doing themselves.
(26:08):
They don't have a good idea as to what the
return should be for the amount of risk they're taking on, right,
And that's a big element. You know, I hear people
talk to me about the return. Well you're like, okay, well,
how is that return relative to the other benchmarks in
that asset class?
Speaker 2 (26:25):
How is that return relative to how you're allocated? Right?
How much risk are you taking on? Uh?
Speaker 1 (26:31):
That's going to determine what is an appropriate return over
a certain time period. And so often they don't know
the answer to that, which is fine, Right. This is
there's a lot of complexity to our financial situations these days,
and you know, having that guidance really gives you that
peace of mind.
Speaker 2 (26:49):
So it's so important to have it.
Speaker 1 (26:52):
And you know, it's interesting because so much of what
we do, as I mentioned before, it's you know, based
on emotion or psychology, and there's so many biases we have, right,
And I love this part of economics and finances understanding
those biases. And you know, I always say, even as advisors,
we still have some of those biases. We're maybe more
(27:13):
aware of them and try to minimize their impact on
what we're doing, but they still exist. So, for example,
confirmation bias, what does that mean? That means when you
are trying to make a decision, you tend to find
things that support your thought process, right, and instead of
(27:34):
maybe looking for articles and information that would show that
maybe you're you're not right, maybe you're wrong, right, we
tend to look at things to support our ideas. And
that's that confirmation bias. And you know that's that's pretty
natural and normal. But when you are making a decision
or you want to understand how how you should be invested,
(27:56):
you know, understanding what the con article are idea is
to what you're doing is important. Another bias that exists
is hindsight bias. This is a great one, right, this
is the Monday morning quarterback type of bias. You know,
we look back at something, you know, we look back
at the tech boom.
Speaker 2 (28:16):
And bubble of the nineteen nineties.
Speaker 1 (28:18):
You look at it like, of course there was going
to be that you're in a bubble of course, you
know you should have been, you know, getting out of technology,
but when you're in the middle of that, it can
be much more difficult. Right to what I've talked about
early in the show. Are we more in nineteen ninety
six where there's you know, frothiness or you know this
concept of irrational exuberance where the market goes higher for
(28:41):
the four years? Are we more in two thousands, where
you know more at the end of those boom days?
Speaker 2 (28:49):
You know.
Speaker 1 (28:49):
Another bias is over confidence bias, right, you know, quite
often you know this isn't always true. Sometimes I find
individuals that don't have enough confidence selves. But you see
it with people who are just overconfident in their ability
to uh predict what is actually going to happen.
Speaker 2 (29:08):
Right.
Speaker 1 (29:08):
They think they can know exactly what's going to happen,
and uh, you know, they could be wrong. Uh, And
that's that's very common, and they make decisions with that
absolute nature in mind.
Speaker 2 (29:19):
Right. And this is what I said, which is what
you want.
Speaker 1 (29:21):
To do is make decisions that would you'd be you'd
feel comfortable with and if you're wrong, right, and you
have to ask that yourself, that question if I'm wrong
on this, uh, and you know the opposite happens.
Speaker 2 (29:34):
How am I okay with that? Is it? I'm I
okay with it?
Speaker 1 (29:37):
Or I do?
Speaker 2 (29:37):
I have a real problem with that, both from a
financial perspective or mental perspective. Uh.
Speaker 1 (29:42):
So all these biases are important. And again for me,
you know, it's you the intersection. I talked about this
with my blog, but the intersection of emotion and psychology
with finance and economics. I don't think we as individuals
spend enough time thinking about that, right.
Speaker 2 (30:00):
Uh.
Speaker 1 (30:00):
You know I always say money is not there just
to build this huge pile up right.
Speaker 2 (30:07):
Uh.
Speaker 1 (30:07):
You know you have those dollars, you have those investments,
you have that uh that net worth to help you
live a life that is the most fulfilling for you
and your family. And you've got to have that mindset
to be successful. Well again, folks, do you have any questions?
You can email me or you can give me a
call uh eight two five five nine four nine, or
(30:29):
email me at Askbouchet at Bouchet dot com.
Speaker 2 (30:33):
We have a question here from Steve.
Speaker 1 (30:35):
Uh do you have any opinion on the Vanguard Utilities
Fund VPU? So well one most any Vanguard fund we
like Uh, you know, Uh, it could be true with
a lot of funds these days, but very low cost. Uh,
it's around I think this is nine basis points for
the Vanguard Utility Fund, and it's done very well year
(30:57):
to date. Now the question is has a run too
far too fast? And you know, I think from a
valuation perspective, it is above its long time long term
price or earnings ratio. It has a yield dividend yield
of two point sixty five percent. Then there's a couple
of reasons why it's doing well. The first and foremost is.
Speaker 2 (31:19):
Because of AI.
Speaker 1 (31:21):
You know, when you look at what is going to
be required for all these data centers, the one thing
I hear clearly when I talk to people at National
Grid or in the energy space is we do not
have anywhere close to enough electricity, enough energy to power
these data centers. That's how much energy they take. And
you know, there's no good plans out there that are
(31:43):
going to have it available the next one two through
four five years. I mean even in just most situations,
we're talking about five to ten years before there's new
power generation coming on to handle this. So if you're
a utilities you know this is a good thing for
you as far as your profitability. So I only think that,
you know, the run up in this space is warranted,
(32:05):
and I do think that there's probably room to run
more over the long term. Now short term you can
have some volatility. The other reason why this has done
well is as the Federal Reserve cuts rates. Having a
yield of two point six five percent, which is probably
a full one hundred basis points or one percent over
the dividend yield for the SP five hundred. Having that
(32:27):
yield is very beneficial, right individuals investors are going to
be looking for higher yielding investments and so certainly VPU
offers that.
Speaker 2 (32:37):
So yes, I like it.
Speaker 1 (32:39):
I think it's a great way to get exposure to
the utilities sector. And I do think long term utilities
are going to do quite well. It's really just in
a space that is set up to do well. All right,
let's move on to another topic. But again, if you
have any questions, you could reach me at eight hundred
eight two five five four nine eight hundred eight two
(33:01):
five nine four nine. So one of the questions that
we get is I have a family member who is
starting a business, could be a son or a daughter,
could be a niece or a nephew, cousin, brother, sister,
whatever the case might be. They want me to help
them and invest should I do this? And it's definitely
(33:23):
one of those situations where you know you can tell
they really want to help them out. It's important to them.
But you've got to have a lot of guidelines and
parameters in place if you're.
Speaker 2 (33:33):
Going to do this.
Speaker 1 (33:35):
And that's where I think again, with our clients, becomes
very valuable for us to have these discussions to make
sure as they approach this one, before they make a
decision yes or no, they have fully thought through all
the risks and opportunities because I think you know, when
you start talking about a new business opportunity, it can
be exciting, right, So you kind of get caught up
(33:56):
in that excitement, But is this really a good idea
for you to be doing. So here's a few things
to consider as you're if you're looking at this one,
understand what is it? What happens if there's a complete failure?
Speaker 2 (34:08):
Right?
Speaker 1 (34:08):
What if it happens if you get none of your
money back? You've given them some money, you know, how
are you going to be with that? Is it going
to impact your relationship, so appreciate and understand that. Two
also protect against liability, right, So you have your investment
amount making sure that there's no way that you could
be liable in case something happens with that business that
they're going to come back and actually sue you.
Speaker 2 (34:30):
Right.
Speaker 1 (34:30):
That's even another step from a risk perspective that you
have to consider.
Speaker 2 (34:35):
Uh. Three, understand what does success look like? Uh? And
how do you make that happen? Right?
Speaker 1 (34:41):
So this is where you know, you you have to
be able to, you know, have that conversation with the
individual asking, you know, what are things that are non negotiable, right,
yet it has to happen in these ways and that
what if what does success look like for you and
for them?
Speaker 2 (34:58):
So you're both on the same page in that regard.
Speaker 1 (35:02):
In general, what I would tell you is try to
minimize capital outlines. You know, that's it's really any way
to start a business and make it cash flow positive
from the very beginning is a very important thing to do.
So try to do that if possible. And then really
in many ways, you know, have legal documents that are
(35:22):
set up for whether you're lending the money and or
if there's an equity investment. You know, having those legal
documents it protects you and them, right, That's that's important.
So you know, at the end of the day, it's
it's business right, and you've got to make sure that
you approach it from the business perspective, be very transparent
and upfront with them as you enter that and you know,
(35:46):
I think that it can be successful, but you have
to go into those decisions really understanding all the risk
and opportunities and having all those protections in place. And
again this is with our clients. We're their personnel. See
if right, this is the guidance we're giving them when
they've got these decisions coming up front and they have
to make, you know, a well thought out and decision
(36:10):
and execute on it. Well, folks, we're gonna go to
commercial break, but come back and join us as continue
to take your questions.
Speaker 2 (36:16):
Welcome back, everybody.
Speaker 1 (36:18):
That's a great opportunity that the talked about if you
are looking for basically some what would be to work
with a firm like ours. It's a great event to
attends at the Hotel Brookemere, which is the brand new
place used to be Longfellows right off the North Way.
I went and toward a great staff there, great food.
(36:39):
You know it's going to be a great venue, a
lot of great items that will be discussing from a
planning perspective. And then Jim Lebrue of Rowlands and Lebrue.
You know, he's very knowledgeable estate planning attorney. Great he's
just a great way of presenting ideas that they're you know,
you can understand that's not always easy to do with
(37:02):
with the state planning ideas. So I think whether you're
looking to know what, hey, what does it mean to
work with Bouchet or what is it even he guidance
from a financial I'm sorry, in a state planning perspective,
I would encourage you to attend. This year we had
I'm sorry, this past week we had an event we
call a Woman in Wealth event, and you know, it
(37:22):
was kind of nostalgic or there was some emotion to
the extent that you know, this is something we've been
doing for three or four years.
Speaker 2 (37:30):
It's very important to.
Speaker 1 (37:31):
Steve this concept of women in wealth and it was
in part started with our colleague Nicole Goebel. She was
very important in getting this started. And if you know,
if you have been listening to the show. She passed
away in January, so to have this event kind of
in her honor was great, but it was it was emotional,
but just so much.
Speaker 2 (37:52):
Great content that was covered.
Speaker 1 (37:54):
My colleague Harmony Wagner and Katie Buck were presenting and
Katie was the moderate. And again I just to be
able to share this with individuals and that information really valuable.
So again I would highly encourage you to register if
you're either looking to see what it means to work
with our firm and get some ideas from a planning perspective,
(38:16):
or if you need help with your estate planning and
you can access that rate on our website. One of
the things I want to talk about is this concept
of trying to avoid estate taxes with state taxes within
New York State, right, because we talk about from a
federal perspective, we're going to be up to almost fourteen
(38:38):
million dollars per person in twenty twenty six, that's the
exclusion amount, right, So we're talking twenty eight million dollars
from a federal perspective for a state taxes for a couple.
And you know, also you could be gifting at the
amount of nineteen thousand dollars per year. So when you're
at those levels, most people are not concerned or they
(39:01):
won't be impacted by federal estate taxes. But New York
State is different. The amount is about seven point one percent,
and if you're up above one hundred and five percent,
so you have more than one hundred and five percent
of that se point once or about seven point six percent,
then you it's called the cliff, meaning that the estate
(39:22):
tax goes back to dollar one, right, So it's not
as though the just the amount over that threshold gets taxed. No,
if you're up over one hundred five percent of that amount,
everything back to dollar one gets taxed from the state
tax perspective for New York State.
Speaker 2 (39:40):
So it is so important.
Speaker 1 (39:43):
That you kind of look at that because here's the
other thing that's different between New York State and federal
estate taxes. With federal, that exclusion amount can be transferred
back and forth. So what that means is it doesn't
matter how assets are titled. That twenty eight million dollars
per couple. Again, it could be all in one spouse's name,
(40:04):
and that would apply. That exclusion amount would apply to
the couple, whereas with New York state tax. That's not
the case. That exclusion amount does not transfer between spouses,
So you have to make sure that your assets are
titled in a way that each of you is getting
an amount. If you're concerned about that threshold of seven
million dollars, you've got to make sure that your title properly,
(40:27):
that you have that broken out equally.
Speaker 2 (40:29):
And this is what I tell.
Speaker 1 (40:31):
Individuals two, because sometimes they're not close right now.
Speaker 2 (40:35):
You know that maybe they have.
Speaker 1 (40:38):
Seven or eight million dollars, so they have a lot
of money relatively speaking, but they're not close to that amount.
But we have to appreciate, let's say you're in your
fifties or even early sixties, the likelihood of you having
more than that amount over time, if your protfolio is
well vested and invested, and depending on how much you spend,
it's a good chance. So to start to plan earlier
(41:01):
rather than wait later is important.
Speaker 2 (41:03):
Because here's the other thing.
Speaker 1 (41:04):
There is a three year look back on any gifts
made in New York State and the individual's death. So
if you gift money now and you die within three years,
those dollars get pulled back into your estate, right So
it doesn't mean that you even if you have, you know,
(41:25):
parents that are getting older that you shouldn't be gifting,
but it does mean that there is the possibility it
gets pulled back if they pass away within three years.
So again just the importance and so much from a
financial perspective, is to do planning. Get the planning going
before it happens, right. I don't care if it's retirement planning, planning,
(41:46):
to sell a business, a state planning.
Speaker 2 (41:49):
You got to do it before it happens.
Speaker 1 (41:50):
And that's where it's tough because a lot of these
things just not they don't always see overly urgent until
there is something happening. But you want to be prepared,
you want to minimize taxes. You've got to be out
in front on this to make sure you have everything
in place. Well, we're going to go to the email.
We have an email from Joseph. He says, Hi, Marty,
we've been thinking about opening a donor advice fund at
(42:13):
Schwab where we have all of our accounts. Could you
talk some about this, the pros and cons of any
things like effect on taxes. Do we get to determine
how much the highly appreciated stock goes into the fund?
Does the fund, immediately sell the stock. Do we have
to add money yearly or donate every year? When is
it worth or not worth opening one? Any helpful insight
(42:36):
you can share. Should we be talking to someone like
your Firmer Schwab before opening or should we be able
to find enough information online to decide to do it?
Great question, Joe, Really it is. And you know the
first element with this is you've got to have charitable interest,
right and it sounds like Joe does. And then it
comes down to what is your ideas and strategy? So
(42:56):
where we use this a lot? Let me talk about
a strategy where it's very beneficial. You have highly appreciated stock,
especially individual stock, and then rather than donate in cash
where you may or may not get a deduction depending
on if you use in standardized deductions, you can use it.
You can take multiple years. Let's say you take you
donate ten thousand dollars a year, you take fifty thousand dollars,
(43:19):
you combine it into one year. You're going to go
ahead and make that donation in this year, and you're
going to make it with highly appreciated stock. So you're
going to put all that stock into let's say the
SWAB donor advised Fund. Now to you a couple of
your questions, Yes, they're going to you're gonna have to
sell those stocks and you're going to have a menu
(43:39):
of items.
Speaker 2 (43:40):
That you can be invested in.
Speaker 1 (43:42):
But now the importantnineus with this is you now have
moved a highly appreciated stock position that you would to
pay capital gains on. You've moved that in there, removed
that tax liability, and then you're going to probably be
able to take deduction for that full amount, even if
you only currently you know, normally use the standard deduction.
(44:03):
And that's the idea of bunching these contributions into one year. Now,
of course you need to have the cash flow to
be able to do that, and that you may or
may not have that. Now, in general, the fees are
fairly low, WHICHWAB it's about sixty basis points. And the
reason they charge that is they do confirm everything that
(44:24):
exists as far as we make those contributions, right, so
you know it's they're going to charge money as they
confirm that when you're making a donation that it is
a five zero one C three organization. But now the
nice thing with a donor advised fund is you can
have it invested and there's no requirement that you either
(44:45):
continue to contribute in.
Speaker 2 (44:47):
Any given year.
Speaker 1 (44:48):
You can make it one and done, and there's no
requirement they actually make a distribution from it either. So
that's really nice. So our family has a donor advice fund.
And what's great is we kind of use it, you know,
from a family values perspective, meaning that you know, we
talk about it with our three teenagers about where we
might want to donate to, and we get them involved
(45:10):
with that, and then we go ahead and maybe volunteer
at those charities. For those of you who know, I've
just on the board of the Ron McDonald House and
the Regional Food Bank, So we donate to those organizations,
we go volunteer in those organizations, and frankly, you know,
this will be a fund that exists for when we're
not here. It can get passed on to them as well.
(45:34):
And that tax deferred nature exists, there's no tax consequence
when it gets transferred over. So again, if you have
charrible interest, if you contribute you know a size of
all amounts.
Speaker 2 (45:47):
I think it's a great idea.
Speaker 1 (45:49):
It really can be very beneficial and it's much better
than in general. Then certainly if you're thinking much bigger
than starting a foundation, which there's a lot more red tape, expenses, requirements,
tax filings for that versus what you would have otherwise.
Speaker 2 (46:08):
Well, folks, it's been a great hour with you. I
hope you'll learn a lot.
Speaker 1 (46:12):
I always love being here to answer your questions and
give your guidance as to what you should be doing
in your.
Speaker 2 (46:16):
Own personal situation.
Speaker 1 (46:18):
You're listening to Let's Talk Money, brought to you by
Bouchet Financial Group. Well, we help our clients prioritize their
health while we manage their wealth for life. Folks, take
care of yourself, take care of each other, and get
out there and enjoy this gorgeous fall day.
Good morning everyone. My name is Martin Shields. I'm the
chief Wealth Advisor at Bruchet Financial Group and it's great
to be here with you on this another stunning Sunday morning.
It's just every it seems like every day here we
have gorgeous sunny weather and uh, you know, it's great
to be able to be here with you to answer
(00:21):
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 one eight
hundred eight two five five nine four nine. That's eight
hundred eight two five five nine four nine, Or if
you're too shy for calling in, you can email me
(00:43):
at ask Bouche at Bouchet dot com. That's ask Bouche
at Bouchet dot com and Bouchet is spelled b O
U c.
Speaker 2 (00:54):
H e y.
Speaker 1 (00:56):
So any question you may have regarding your financial planning
or investment management concerns and we can chat. And as
I always say, there's no dumber silly question except for
the one you don't ask, and you may be doing
your fellow listener or favor by asking that question. Well,
I hope that you're doing well, that you're enjoying your weekend.
I headed down to the Hudson Valley yesterday with Buddy.
(01:18):
We did some road biking on the Empire Trail. So
for those of you who don't know, it's really pretty amazing.
The Empire Trail is a off road paved, mostly paved
trail that goes for biking, walking, or whatever. It goes
from New York City all the way north to Albany,
(01:40):
and then it continues north up to the Canadian border,
and then it also goes from Albany all the way
over to Buffalo along the Erie Canal. Now, there are
some parts that you're on the road, and you gotta
be careful obviously in those situations if you're walking and
riding whatever, but a lot of it is paved and
(02:01):
it's so well done, and you know, I think that's
a great asset that we have. And of course, you know,
the Hudson Valley is just gorgeous, especially this time of year.
And we rode from Kinderhook, which is a cute little
town if.
Speaker 2 (02:14):
You've never been there, really.
Speaker 1 (02:16):
Cute little town, to Hudson, which is also a little town,
but boy, it's booming. You can tell an awful lot
of money has been going in there, certainly since COVID,
but I think even more so, and just talking to
some of the folks that live around there and they
just talk about the changes that have occurred over the
last fifteen years and really quite amazing. So I mean
(02:38):
that's where I think we're fortunate upstate New York. You know,
I always say this, having moved back here thirteen years ago.
People get down on themselves that about you know, the
Capital region, and you know, maybe it's not as good
as other areas, and yeah, I mean every place has
this pros and cons and shortcomings and strengths. But all
things considered, we have an amazing area here.
Speaker 2 (02:59):
I mean about this.
Speaker 1 (03:00):
We have the Berkshears, we have the Green Mountains, we
have they ad a RODECKX, we have the Hudson Valley,
the Finger Lakes, Great Lakes, all this within three hours
drive and including you know, access to Boston and New
York City and Montreal.
Speaker 2 (03:15):
It just doesn't get much better than that.
Speaker 1 (03:17):
I for myself, having grown up in Binghamton and went
to Saint Bonaventure University and then was down in Virginia
for many years in d c which which was great,
loved it, but to move back and upstate and to
be in this area which I now call home, just
really appreciate it.
Speaker 2 (03:35):
So I can I hope that you had a great.
Speaker 1 (03:37):
Day yesterday and that you're gonna get out there today
and enjoy this great weather. But again, whatever questions you
may have, you can reach me at eight hundred eight
two five five nine four nine, or you can email
me and ask Bouchet at Bouchet dot com. That's b
O U C H E. Y. So we have an
(03:58):
awful lot to talk about today. Markets have hit all
time highs again right as we talk about you hear
this concerns over an asset bubble, and I'll talk about
that a little bit more. But you hear those concerns,
and in some respects they're warranted. I would say that
it's not as though there's not some reasonable elements of
(04:19):
concern out there when we talk about stock prices and
some of the things going on with the economy. But
with that said, you know, there's a lot of great
elements going on with the economy and it's reflected right
now in the stock market. So you had the market
hitting all time highs the S and P five hundred,
it was up fifteen point five percent year to date.
(04:43):
The queues triple ques, which are big investors in which
is basically a NASDAC up twenty point seventy one percent.
So what was the driver behind that strength. Well, first
element that existed that was really positive is.
Speaker 2 (04:59):
The Inflame data.
Speaker 1 (05:00):
It came in a little bit below expectations and that
helps to propel the idea that the Federal Reserve will
be cutting rates at their next meeting. I think right
now the expectations are at least two more rate cuts
this year. And as we've talked about, as the Federal
Reserve cuts rates, what does that do? It stimulates businesses
(05:22):
and individuals to be able to take loans out at
lower interest rate levels. It also helps from a valuation perspective, Right,
So if I'm evaluating a stock and the cash flow
and the profits from that stock, one of the things
that helps me determine the value of that company is
the current interest rate level. And the lower the interest rate,
(05:43):
then valuations can be higher. As the way that valuations work,
and so as that rate goes lower, stocks can be
actually have a higher valuation. It actually works from a
financial perspective, so that certainly is helping to propel this
market higher. The other thing, and I've talked about it before,
(06:04):
is earnings. Earnings continue to be very strong. This week,
Caterpillar came out with earnings and beat expectations. And I've
also talked about the importance of what were the earnings
but relative to what the expectations were, right, So we
have a situation where earnings are good, but they could
(06:25):
be below expectations. In some of these cases where it's
a really fast growing company, even if they just miss
earnings just slightly, a company can get really hit really hard.
But in this situation where earnings came above expectations, and
also the forecast, that's another big element. What is the
(06:46):
forecast for corporate profits and cash flow that was above
expectations as well. And in Caterpillar's case, a lot of
this has been being driven by basic construction for manifest
action facilities and for data centers. So you know, we
talk about the importance of AI and the investment in
(07:08):
the AI and all those billions of dollars going in there.
You know, you're seeing it in earnings from Caterpillar, but
really the strength and earnance was across the board. A
lot of different sectors in areas have been benefit benefiting
and doing well and and that will continue to move
this market higher. If you have that strength in earnings
(07:28):
UH and cash flow, this market will continue to move higher.
Speaker 2 (07:31):
Uh. So you know, this is what we're always looking at.
Speaker 1 (07:34):
What uh is the economic data, but what also is
coming in for corporations and you have kind of this
positive outlook that still exists. So you know, we talk
about is there a market bubble? And that's you know,
a theme that is out there. We have that question
from clients. And I wrote a blog on this recently.
Speaker 2 (07:55):
UH.
Speaker 1 (07:55):
You can access this on my blog. It's called peace
of Mind Economics, and this is where I share thoughts
on kind of a wide range of areas. And I
got a question the other day why peace of mind economics?
And to me, I'm an economist from training, and I
like that they see this idea of equilibrium in life. Right,
(08:19):
So peace of mind to me, whether it's you meditate
or whether you prey, you try to live a life
where there's balance.
Speaker 2 (08:26):
Right.
Speaker 1 (08:26):
Everything in life is balance and moderation, and having that
from a mental perspective is so important. Well, guess what
economics is about equilibrium as well, And there's many different
elements of that. You know, the most basic one is
supply and demand curves, where you have an equilibrium between
the amount of supply and demand. But even from an
(08:47):
investment perspective, there's this idea of moderation, right, having the
right allocation for you and how much do you say
versus how much do you spend? All that, if you
have a life that you kind of feel there's an
element of fulfillment, then there is that equilibrium between a
lot of things that you do in your life. I
(09:08):
use the concept it's called yinging and yang. It's basically
something from Asia where in life, you know, quite often
in the West we view things in a very contrast
of good or bad, black or white. But the reality
is most things in life there's a lot of gray, right,
or it's a mixture of that black and white. And
(09:29):
you know that's where again from You know, as you operate,
you try to find that equilibrium. And so for me,
when you look at both peace of mind and finances
or economics, you try to balance to two of those, right,
how so often people view finances and peace of mind separately, well,
(09:51):
the fact of the matter is, you know, if you're
married or you have a family, you know that finances
can cause a lot of stress and you have to
have the right balance as far as how do you
use money in your life, you have to have to
have a right perspectives. So to me having a blog
with that title, this is what I talk about, is
how do we incorporate money and finances in our life
(10:13):
to make us successful from a personal perspective and with
our families and our relationships. But with this blog again,
the blog is Peace of Mind Economics, and you can
also kind of see what I'm talking about through LinkedIn.
I post a lot on LinkedIn as well. But answer
the question are.
Speaker 2 (10:31):
We in a bubble?
Speaker 1 (10:32):
And you know, I would say I bring this back
to when I was working in telecom in the nineties
and in nineteen ninety six, I switched into a new company,
got a promotion. I was very excited about it, but
I was a little concerned because the company was a
startup telecom company. We were launching services across the country
(10:53):
and the company wasn't making money. And at this time,
Alan Greenspan came out and said that we were the
market was showing irrational exuberance, right, there was too much
froth in the markets. And so this was a publicly
traded company. So I was a little concerned leaving a
company that was making a lot of money to go
to a startup, but decided to do it. I was
(11:15):
young and didn't have any real responsibilities financially, and it
was amazing. It was phenomenal. And so that was in
nineteen ninety six. So throughout that time, the market continued
to go higher. The stock market went higher, but also
the economy was strong. This company, Windstar Communications, did really
well through that time, and I was promoted up through
the ranks during that time, and then in two thousand,
(11:39):
I was one of the top finance people in their
international division.
Speaker 2 (11:43):
And it was also amazing.
Speaker 1 (11:45):
We're doing joint ventures around the world, and I was
traveling to all these different countries. But I remember having
a meeting with a lot of the executives from different
parts of the company, and they were all talking about
buying services from other telecom providers and equipment providers, and
it was kind of this quid pro quote where you're
(12:05):
going to buy a lot of bandwid from each other.
And also that the telecom equipment providers were financing all
that all those purchases, and it seemed to be this
circular element where I was like, this does not seem
like a good business model to be successful. And you know,
I was only twenty nine years old, so I was
(12:26):
maybe second guessing my knowledge versus some of these more
senior executives, but I had that voice in the back
of my head saying that, and you know, it turned
out to be right. So unfortunately, whin Star Communications went
to bankruptcy, as did many of those telecom providers at
that point, and the economy went into a recession, not
(12:48):
too deep until we hit nine to eleven, and then
it went deeper and the stock market declined for two
and a half years from there. So, you know, if
you remember, if you were alive and working in the nineties,
it was a great time in the nineties, but that
drop and that bubble burst was was painful by all means.
But you know, so my question is is it more
(13:08):
like nineteen ninety six, where there's an element of irrational
exuberance but the market contained to move higher, or is
it more like two thousand, where things were very frothy
and the market declined dramatically from there. And all I
would say is, as I look at the data, you know,
I think there's some areas of concern. So you know, certainly,
(13:30):
you know when you look at you know, companies going
around and investing, all these AI companies investing in each
other and buying services from each other, and there's an
element of financing some of the equipment purchases as well.
You have that circular element that existed in the two thousands.
(13:50):
And then the other things you look at, you know,
from evaluation perspective, things are you know, fairly highly valued.
So from a price to earnings ratio, as you look forward,
the PE ratio is around twenty two, and you know
historically it's more around nineteen, so we're above average in that,
which is a little bit disconcerning. And then also you know,
(14:14):
from a loan and banking perspective, you had situations like
First Brands Group, which was a automotive parts supplier and
it went in bankruptcy, and when you start digging down
into it, there was elements of fraud or of not
being completely transparent in how they were using those dollars.
(14:36):
And one of the things that we have going on
these days is a large private credit market, right, So
you have a situation where there's a lot of banks
lending money, but there's also money being lent from the
private markets, so you know that element. JP Morgan's CEO,
Jamie Diamond stated, you know, where there's one cockroach, there's
usually more. And what that means is simply, you know,
(14:58):
if you have a company that's acting in this way
where there's an element of fraud, there's probably other companies
out there that are have they're highly leveraged, they have
a lot of debt, and so the ways that they're
operating their business can be problematic. So you know, you
kind of put all that together. There are certainly some concerns,
(15:18):
and including the labor markets, right. You know, there's you
start to see fewer job openings, you start to see
unemployment tick up. You know, you don't see any major layoffs.
That's the one thing you don't see in the labor markets.
So you have some of these elements of concerned, but
also then you've got to look at the elements of strength.
Speaker 2 (15:38):
Right.
Speaker 1 (15:38):
I just talked to you about earnings continue to go up,
and that's one of the things I highlight my blog
which is, you know, as this market has done well
over the last fifteen years, it is almost entirely because
earnings have done so well. You know, companies are just
more productive. There's an element with certainly D S and P.
Five hundred that many of those companies are technology companies
(16:01):
and those margins for those technology companies are that much higher.
So that is absolutely the case. And you know, the
balance sheets that many of these companies have, they just
tremendous amount of cash flow, tremendous amount of cash on
the balance sheets. And also when you look at from
a financial perspective, a lot of the banks and finance
(16:22):
companies are doing really well, and there's a lot of
mergers and acquisitions, a lot of IPOs, a lot of
training that's been successful. Usually when you know finance companies
are doing well, and they haven't done that well over
the last three or four years, but when they're doing well,
that's a good sign for the economy. So my basic
observation of this, which is one anybody that comes out
(16:45):
and says absolutely we are either in or out of
a bubble situation, you can't trust them because nobody has
that insight. People like to think or act like they do,
but they don't. But you can say, hey, you know,
as I look at this, this is in general how
I'm feeling, and I'm probably more in the camp that
this market has more.
Speaker 2 (17:09):
Areas to move higher.
Speaker 1 (17:10):
I do feel like we're still we have a lot
of momentum out there, and in general, from an earning's
perspective and an economic perspective, we have an opportunity to
move higher. Now, could we get ourselves more into a
bubble situation? Absolutely?
Speaker 2 (17:25):
Right?
Speaker 1 (17:25):
So then then the question becomes, well, what should you
be doing as an investor? And I think it's a
few things. One is, if you're getting closer to retirement
or you're kind of a life change situation, it's not
a bad situation right now to reassess how you're allocated.
You know, should you reduce the amount of risk that
you have in your portfolio? That is a very reasonable
(17:47):
question to ask at any point, and in particular, if
you're getting close to retirement, maybe you were in an
eighty twenty, this could be a good time to go
to a sixty forty. When the markets are hitting all
time highs, it's tough mentally to make that change because
they're doing so well, but it's not a bad idea
to make that change. Then the next thing is do
you have any cash flow needs over the next couple
(18:10):
of years? Right, if you need cash flow in the
next year or two, this is not a bad.
Speaker 2 (18:15):
Time to freed up. Even if you have to pay
some taxes.
Speaker 1 (18:17):
That's you know, you're paying taxes because you've done well
from a financial and an investment perspective, So pay the
taxes and have the cash available. And then the third
element it just just good kind of fundamental portfolio management,
which is to rebalance. And all that means is you
should have some element of a target of what your
allocation is. Right, So are you a sixty forty seventy, thirty,
(18:41):
eighty twenty, So that just means how much do you
have in stocks versus bonds, versus alternatives? And you should
rebalance back to those targets. That's just you know, good
portfolio management. So if you go through and you do
those things, I think you're going to find that even
if they're is you know a bubble and we're in it,
(19:02):
that you're.
Speaker 2 (19:03):
Going to be okay. You know.
Speaker 1 (19:04):
The last element I would leave with you with is
just making sure you're diversified, right. You know, we're big
believers in technology. We have a lot of allocations to
all those AI companies and our clients have benefited dramatically.
But we do have allocations to companies that have good dividends.
We do have allocations to hedge dequity positions that would
(19:26):
do well in a downturn. We have allocations to positions
that provide more income versus upside with the market, more
value based type of holding.
Speaker 2 (19:38):
So having that element.
Speaker 1 (19:39):
Diversification is also so important that you've got to look
at your portfolio and say, hey, how am I allocated?
And if you're working with an advisor, you should either
know this or you could have a conversation with them
to get your guidance. We're going to go to commercial break,
but come back and join us as we continue our discussion.
Welcome back, folks, for there's just joint ask. My name
(20:02):
is Martin Shields of the chief Wealth Advisor at Bruchet
Finance Group, and I'm.
Speaker 2 (20:05):
Your host to day for Let's Talk money.
Speaker 1 (20:07):
If you have any questions regarding your functional planning, invest
of management, your estate planning, your tax planning, whatever, if
it's finance related, let's have a conversation about it. You
can reach me at eight hundred eight two five five
nine four nine. Again, that's eight hundred eight two five
five nine four nine, or you can email me at
(20:29):
ask Bouche at bouchet dot com. That's b O U
C h e y dot com. One of the things
I want to talk about, uh, is that we get
a lot of questions regarding this is the senior tax
deduction that's out there now. So that amount is six
thousand dollars and you can take that tax deduction regardless
(20:52):
if you either itemize.
Speaker 2 (20:53):
Or you take the standard deduction. Right.
Speaker 1 (20:55):
So this is a really nice addition that's been part
of the One Big Beauty Bill. Somebody called it the
O the O Triple B Bill. And you know the
thing you have to remember though, is there is an
income phase out. So what that means is if you're
earn more than these amounts, then you will not get
(21:16):
that deduction. So for an individual, it's between seventy five
and one hundred and seventy five thousand dollars and for
a married couple final jointly is from one hundred and
fifty thousand to two hundred and fifty thousand dollars of
modified at.
Speaker 2 (21:31):
Justic gross income.
Speaker 1 (21:32):
Now, the one thing I want to highlight here is
you know, you can also be looking forward and say, hey,
what income should I take in these years to get
that versus what should I hold off? And it's so
for right now, it's only going to be in place
from twenty twenty five through twenty twenty eight and then
it expires. Now it could certainly be continued after that,
(21:54):
but you just have to be aware that's that's right
now the years that you're had that available to you.
And what I would tell you is a couple of things.
Let's say, let's talk about social security. In this situation,
you might want to hold off on taking your solid security.
Let's say if you're sixty five, to the extent if
that taking that security is going to bump you up
(22:16):
into that higher amount and you're going to get phased
out of this deduction.
Speaker 2 (22:20):
Right.
Speaker 1 (22:20):
The other thing to remember, of course, with social security
is every year you wait, you get an eight percent
increase in your benefit amount. So there's reason for that
to wait. But also in this situation, by delaying, you'll
continue to get that deduction. The other element may be
if you're planning to do a Wroth conversion, that might
(22:43):
be another reason why you might want to wait until
you know you get through this situation. Now, with all
of our clients, we do tax projections then when they're
looking at making these decisions. So I think it's important
that whether it's with your advisor or with your tax prepared,
that you do a projection to kind of make sure
where you stand with everything and if it's worthwhile, because
(23:04):
it could still maybe be worthwhile depending on your situation. Right,
So you've got to be able to look at that
and make that determination and then from there after you
have all that information, then go ahead and.
Speaker 2 (23:16):
See if you want to do it.
Speaker 1 (23:17):
Well, folks, we're going to go to commercial break, but
come back and join us as we continue to take
your questions. You're listening to Let's Talk Money, brought to
you by Bruchet Financial Group.
Speaker 2 (23:26):
Well, we help our.
Speaker 1 (23:26):
Clients prioritize their health while we manage their wealth for life.
Come back and join us and get your questions ready
and you can either email me or call me with
those questions. Welcome back, folks. For those of you who
just joining us, my name is Martin Shields. I'm your
host today for Let's Talk Money. I'm the chief Wealth
Advisor here at Bruchet Financi Group, and as always, it's
(23:47):
great to be here with you on this gorgeous Sunday morning.
I hope that either you're doing something now fun now,
maybe you're just to enjoying a coffee and relaxing, but
I hope you do get out to enjoy this gorgeous day.
But if you have any questions, you can reach me
at eight hundred eight two five five nine four nine.
(24:08):
That's eight hundred eight two five five nine four nine,
or you can email me at ask Bouchet at Bouche
dot com. That's asked Bouche at Bouche dot com. And
Bouchet is well b O U C H E Y.
So whatever questions you may have, got a lot of
things to discuss today. We talked about the markets hitting
(24:29):
all time highs and just it's so important that you
don't get caught up in the emotions that you can
have when you see headlines.
Speaker 2 (24:37):
Are we in an asset bubble?
Speaker 1 (24:39):
And as I mentioned before the break, it doesn't mean
that you can't be doing things. Just to make sure
that if we are that you're well prepared, but you know,
it's certainly a situation where you've got a situation like
AI that is, you know, basically once in a lifetime
type of industrial breakthrough and it will at some point
(25:00):
propel profits and productivity across all areas. I know our
firm as well, will we start We're starting to use
it more in our business. And you know, no different
than the nineties. There's some fits and starts. It doesn't
always line up to what your expectations are, but it
will get there. It will absolutely get there. So you know,
(25:22):
just making sure that you're doing all the right things.
And it just stresses to me the importance of working
with an advisor who's a fiduciary who can incorporate your
investments with your financial planning, right. The two go hand
in hand. And I always say this to clients that
just met with some clients and they're going to reduce
their allocation, just different situations going in their life.
Speaker 2 (25:44):
They're getting close to retirement.
Speaker 1 (25:46):
You know, he's now without a job, and it just
fit for them and it gave him peace of mind.
So that's where working with an advisor is so important.
You know, so often I do see individuals that come
in prospective clients and whether they're working with an advisor
maybe who's not a fiduciary, who's not knowledgeable, who doesn't
have a great team behind them, or they're doing themselves.
(26:08):
They don't have a good idea as to what the
return should be for the amount of risk they're taking on, right,
And that's a big element. You know, I hear people
talk to me about the return. Well you're like, okay, well,
how is that return relative to the other benchmarks in
that asset class?
Speaker 2 (26:25):
How is that return relative to how you're allocated? Right?
How much risk are you taking on? Uh?
Speaker 1 (26:31):
That's going to determine what is an appropriate return over
a certain time period. And so often they don't know
the answer to that, which is fine, Right. This is
there's a lot of complexity to our financial situations these days,
and you know, having that guidance really gives you that
peace of mind.
Speaker 2 (26:49):
So it's so important to have it.
Speaker 1 (26:52):
And you know, it's interesting because so much of what
we do, as I mentioned before, it's you know, based
on emotion or psychology, and there's so many biases we have, right,
And I love this part of economics and finances understanding
those biases. And you know, I always say, even as advisors,
we still have some of those biases. We're maybe more
(27:13):
aware of them and try to minimize their impact on
what we're doing, but they still exist. So, for example,
confirmation bias, what does that mean? That means when you
are trying to make a decision, you tend to find
things that support your thought process, right, and instead of
(27:34):
maybe looking for articles and information that would show that
maybe you're you're not right, maybe you're wrong, right, we
tend to look at things to support our ideas. And
that's that confirmation bias. And you know that's that's pretty
natural and normal. But when you are making a decision
or you want to understand how how you should be invested,
(27:56):
you know, understanding what the con article are idea is
to what you're doing is important. Another bias that exists
is hindsight bias. This is a great one, right, this
is the Monday morning quarterback type of bias. You know,
we look back at something, you know, we look back
at the tech boom.
Speaker 2 (28:16):
And bubble of the nineteen nineties.
Speaker 1 (28:18):
You look at it like, of course there was going
to be that you're in a bubble of course, you
know you should have been, you know, getting out of technology,
but when you're in the middle of that, it can
be much more difficult. Right to what I've talked about
early in the show. Are we more in nineteen ninety
six where there's you know, frothiness or you know this
concept of irrational exuberance where the market goes higher for
(28:41):
the four years? Are we more in two thousands, where
you know more at the end of those boom days?
Speaker 2 (28:49):
You know.
Speaker 1 (28:49):
Another bias is over confidence bias, right, you know, quite
often you know this isn't always true. Sometimes I find
individuals that don't have enough confidence selves. But you see
it with people who are just overconfident in their ability
to uh predict what is actually going to happen.
Speaker 2 (29:08):
Right.
Speaker 1 (29:08):
They think they can know exactly what's going to happen,
and uh, you know, they could be wrong. Uh, And
that's that's very common, and they make decisions with that
absolute nature in mind.
Speaker 2 (29:19):
Right. And this is what I said, which is what
you want.
Speaker 1 (29:21):
To do is make decisions that would you'd be you'd
feel comfortable with and if you're wrong, right, and you
have to ask that yourself, that question if I'm wrong
on this, uh, and you know the opposite happens.
Speaker 2 (29:34):
How am I okay with that? Is it? I'm I
okay with it?
Speaker 1 (29:37):
Or I do?
Speaker 2 (29:37):
I have a real problem with that, both from a
financial perspective or mental perspective. Uh.
Speaker 1 (29:42):
So all these biases are important. And again for me,
you know, it's you the intersection. I talked about this
with my blog, but the intersection of emotion and psychology
with finance and economics. I don't think we as individuals
spend enough time thinking about that, right.
Speaker 2 (30:00):
Uh.
Speaker 1 (30:00):
You know I always say money is not there just
to build this huge pile up right.
Speaker 2 (30:07):
Uh.
Speaker 1 (30:07):
You know you have those dollars, you have those investments,
you have that uh that net worth to help you
live a life that is the most fulfilling for you
and your family. And you've got to have that mindset
to be successful. Well again, folks, do you have any questions?
You can email me or you can give me a
call uh eight two five five nine four nine, or
(30:29):
email me at Askbouchet at Bouchet dot com.
Speaker 2 (30:33):
We have a question here from Steve.
Speaker 1 (30:35):
Uh do you have any opinion on the Vanguard Utilities
Fund VPU? So well one most any Vanguard fund we
like Uh, you know, Uh, it could be true with
a lot of funds these days, but very low cost. Uh,
it's around I think this is nine basis points for
the Vanguard Utility Fund, and it's done very well year
(30:57):
to date. Now the question is has a run too
far too fast? And you know, I think from a
valuation perspective, it is above its long time long term
price or earnings ratio. It has a yield dividend yield
of two point sixty five percent. Then there's a couple
of reasons why it's doing well. The first and foremost is.
Speaker 2 (31:19):
Because of AI.
Speaker 1 (31:21):
You know, when you look at what is going to
be required for all these data centers, the one thing
I hear clearly when I talk to people at National
Grid or in the energy space is we do not
have anywhere close to enough electricity, enough energy to power
these data centers. That's how much energy they take. And
you know, there's no good plans out there that are
(31:43):
going to have it available the next one two through
four five years. I mean even in just most situations,
we're talking about five to ten years before there's new
power generation coming on to handle this. So if you're
a utilities you know this is a good thing for
you as far as your profitability. So I only think that,
you know, the run up in this space is warranted,
(32:05):
and I do think that there's probably room to run
more over the long term. Now short term you can
have some volatility. The other reason why this has done
well is as the Federal Reserve cuts rates. Having a
yield of two point six five percent, which is probably
a full one hundred basis points or one percent over
the dividend yield for the SP five hundred. Having that
(32:27):
yield is very beneficial, right individuals investors are going to
be looking for higher yielding investments and so certainly VPU
offers that.
Speaker 2 (32:37):
So yes, I like it.
Speaker 1 (32:39):
I think it's a great way to get exposure to
the utilities sector. And I do think long term utilities
are going to do quite well. It's really just in
a space that is set up to do well. All right,
let's move on to another topic. But again, if you
have any questions, you could reach me at eight hundred
eight two five five four nine eight hundred eight two
(33:01):
five nine four nine. So one of the questions that
we get is I have a family member who is
starting a business, could be a son or a daughter,
could be a niece or a nephew, cousin, brother, sister,
whatever the case might be. They want me to help
them and invest should I do this? And it's definitely
(33:23):
one of those situations where you know you can tell
they really want to help them out. It's important to them.
But you've got to have a lot of guidelines and
parameters in place if you're.
Speaker 2 (33:33):
Going to do this.
Speaker 1 (33:35):
And that's where I think again, with our clients, becomes
very valuable for us to have these discussions to make
sure as they approach this one, before they make a
decision yes or no, they have fully thought through all
the risks and opportunities because I think you know, when
you start talking about a new business opportunity, it can
be exciting, right, So you kind of get caught up
(33:56):
in that excitement, But is this really a good idea
for you to be doing. So here's a few things
to consider as you're if you're looking at this one,
understand what is it? What happens if there's a complete failure?
Speaker 2 (34:08):
Right?
Speaker 1 (34:08):
What if it happens if you get none of your
money back? You've given them some money, you know, how
are you going to be with that? Is it going
to impact your relationship, so appreciate and understand that. Two
also protect against liability, right, So you have your investment
amount making sure that there's no way that you could
be liable in case something happens with that business that
they're going to come back and actually sue you.
Speaker 2 (34:30):
Right.
Speaker 1 (34:30):
That's even another step from a risk perspective that you
have to consider.
Speaker 2 (34:35):
Uh. Three, understand what does success look like? Uh? And
how do you make that happen? Right?
Speaker 1 (34:41):
So this is where you know, you you have to
be able to, you know, have that conversation with the
individual asking, you know, what are things that are non negotiable, right,
yet it has to happen in these ways and that
what if what does success look like for you and
for them?
Speaker 2 (34:58):
So you're both on the same page in that regard.
Speaker 1 (35:02):
In general, what I would tell you is try to
minimize capital outlines. You know, that's it's really any way
to start a business and make it cash flow positive
from the very beginning is a very important thing to do.
So try to do that if possible. And then really
in many ways, you know, have legal documents that are
(35:22):
set up for whether you're lending the money and or
if there's an equity investment. You know, having those legal
documents it protects you and them, right, That's that's important.
So you know, at the end of the day, it's
it's business right, and you've got to make sure that
you approach it from the business perspective, be very transparent
and upfront with them as you enter that and you know,
(35:46):
I think that it can be successful, but you have
to go into those decisions really understanding all the risk
and opportunities and having all those protections in place. And
again this is with our clients. We're their personnel. See
if right, this is the guidance we're giving them when
they've got these decisions coming up front and they have
to make, you know, a well thought out and decision
(36:10):
and execute on it. Well, folks, we're gonna go to
commercial break, but come back and join us as continue
to take your questions.
Speaker 2 (36:16):
Welcome back, everybody.
Speaker 1 (36:18):
That's a great opportunity that the talked about if you
are looking for basically some what would be to work
with a firm like ours. It's a great event to
attends at the Hotel Brookemere, which is the brand new
place used to be Longfellows right off the North Way.
I went and toward a great staff there, great food.
(36:39):
You know it's going to be a great venue, a
lot of great items that will be discussing from a
planning perspective. And then Jim Lebrue of Rowlands and Lebrue.
You know, he's very knowledgeable estate planning attorney. Great he's
just a great way of presenting ideas that they're you know,
you can understand that's not always easy to do with
(37:02):
with the state planning ideas. So I think whether you're
looking to know what, hey, what does it mean to
work with Bouchet or what is it even he guidance
from a financial I'm sorry, in a state planning perspective,
I would encourage you to attend. This year we had
I'm sorry, this past week we had an event we
call a Woman in Wealth event, and you know, it
(37:22):
was kind of nostalgic or there was some emotion to
the extent that you know, this is something we've been
doing for three or four years.
Speaker 2 (37:30):
It's very important to.
Speaker 1 (37:31):
Steve this concept of women in wealth and it was
in part started with our colleague Nicole Goebel. She was
very important in getting this started. And if you know,
if you have been listening to the show. She passed
away in January, so to have this event kind of
in her honor was great, but it was it was emotional,
but just so much.
Speaker 2 (37:52):
Great content that was covered.
Speaker 1 (37:54):
My colleague Harmony Wagner and Katie Buck were presenting and
Katie was the moderate. And again I just to be
able to share this with individuals and that information really valuable.
So again I would highly encourage you to register if
you're either looking to see what it means to work
with our firm and get some ideas from a planning perspective,
(38:16):
or if you need help with your estate planning and
you can access that rate on our website. One of
the things I want to talk about is this concept
of trying to avoid estate taxes with state taxes within
New York State, right, because we talk about from a
federal perspective, we're going to be up to almost fourteen
(38:38):
million dollars per person in twenty twenty six, that's the
exclusion amount, right, So we're talking twenty eight million dollars
from a federal perspective for a state taxes for a couple.
And you know, also you could be gifting at the
amount of nineteen thousand dollars per year. So when you're
at those levels, most people are not concerned or they
(39:01):
won't be impacted by federal estate taxes. But New York
State is different. The amount is about seven point one percent,
and if you're up above one hundred and five percent,
so you have more than one hundred and five percent
of that se point once or about seven point six percent,
then you it's called the cliff, meaning that the estate
(39:22):
tax goes back to dollar one, right, So it's not
as though the just the amount over that threshold gets taxed. No,
if you're up over one hundred five percent of that amount,
everything back to dollar one gets taxed from the state
tax perspective for New York State.
Speaker 2 (39:40):
So it is so important.
Speaker 1 (39:43):
That you kind of look at that because here's the
other thing that's different between New York State and federal
estate taxes. With federal, that exclusion amount can be transferred
back and forth. So what that means is it doesn't
matter how assets are titled. That twenty eight million dollars
per couple. Again, it could be all in one spouse's name,
(40:04):
and that would apply. That exclusion amount would apply to
the couple, whereas with New York state tax. That's not
the case. That exclusion amount does not transfer between spouses,
So you have to make sure that your assets are
titled in a way that each of you is getting
an amount. If you're concerned about that threshold of seven
million dollars, you've got to make sure that your title properly,
(40:27):
that you have that broken out equally.
Speaker 2 (40:29):
And this is what I tell.
Speaker 1 (40:31):
Individuals two, because sometimes they're not close right now.
Speaker 2 (40:35):
You know that maybe they have.
Speaker 1 (40:38):
Seven or eight million dollars, so they have a lot
of money relatively speaking, but they're not close to that amount.
But we have to appreciate, let's say you're in your
fifties or even early sixties, the likelihood of you having
more than that amount over time, if your protfolio is
well vested and invested, and depending on how much you spend,
it's a good chance. So to start to plan earlier
(41:01):
rather than wait later is important.
Speaker 2 (41:03):
Because here's the other thing.
Speaker 1 (41:04):
There is a three year look back on any gifts
made in New York State and the individual's death. So
if you gift money now and you die within three years,
those dollars get pulled back into your estate, right So
it doesn't mean that you even if you have, you know,
(41:25):
parents that are getting older that you shouldn't be gifting,
but it does mean that there is the possibility it
gets pulled back if they pass away within three years.
So again just the importance and so much from a
financial perspective, is to do planning. Get the planning going
before it happens, right. I don't care if it's retirement planning, planning,
(41:46):
to sell a business, a state planning.
Speaker 2 (41:49):
You got to do it before it happens.
Speaker 1 (41:50):
And that's where it's tough because a lot of these
things just not they don't always see overly urgent until
there is something happening. But you want to be prepared,
you want to minimize taxes. You've got to be out
in front on this to make sure you have everything
in place. Well, we're going to go to the email.
We have an email from Joseph. He says, Hi, Marty,
we've been thinking about opening a donor advice fund at
(42:13):
Schwab where we have all of our accounts. Could you
talk some about this, the pros and cons of any
things like effect on taxes. Do we get to determine
how much the highly appreciated stock goes into the fund?
Does the fund, immediately sell the stock. Do we have
to add money yearly or donate every year? When is
it worth or not worth opening one? Any helpful insight
(42:36):
you can share. Should we be talking to someone like
your Firmer Schwab before opening or should we be able
to find enough information online to decide to do it?
Great question, Joe, Really it is. And you know the
first element with this is you've got to have charitable interest,
right and it sounds like Joe does. And then it
comes down to what is your ideas and strategy? So
(42:56):
where we use this a lot? Let me talk about
a strategy where it's very beneficial. You have highly appreciated stock,
especially individual stock, and then rather than donate in cash
where you may or may not get a deduction depending
on if you use in standardized deductions, you can use it.
You can take multiple years. Let's say you take you
donate ten thousand dollars a year, you take fifty thousand dollars,
(43:19):
you combine it into one year. You're going to go
ahead and make that donation in this year, and you're
going to make it with highly appreciated stock. So you're
going to put all that stock into let's say the
SWAB donor advised Fund. Now to you a couple of
your questions, Yes, they're going to you're gonna have to
sell those stocks and you're going to have a menu
(43:39):
of items.
Speaker 2 (43:40):
That you can be invested in.
Speaker 1 (43:42):
But now the importantnineus with this is you now have
moved a highly appreciated stock position that you would to
pay capital gains on. You've moved that in there, removed
that tax liability, and then you're going to probably be
able to take deduction for that full amount, even if
you only currently you know, normally use the standard deduction.
(44:03):
And that's the idea of bunching these contributions into one year. Now,
of course you need to have the cash flow to
be able to do that, and that you may or
may not have that. Now, in general, the fees are
fairly low, WHICHWAB it's about sixty basis points. And the
reason they charge that is they do confirm everything that
(44:24):
exists as far as we make those contributions, right, so
you know it's they're going to charge money as they
confirm that when you're making a donation that it is
a five zero one C three organization. But now the
nice thing with a donor advised fund is you can
have it invested and there's no requirement that you either
(44:45):
continue to contribute in.
Speaker 2 (44:47):
Any given year.
Speaker 1 (44:48):
You can make it one and done, and there's no
requirement they actually make a distribution from it either. So
that's really nice. So our family has a donor advice fund.
And what's great is we kind of use it, you know,
from a family values perspective, meaning that you know, we
talk about it with our three teenagers about where we
might want to donate to, and we get them involved
(45:10):
with that, and then we go ahead and maybe volunteer
at those charities. For those of you who know, I've
just on the board of the Ron McDonald House and
the Regional Food Bank, So we donate to those organizations,
we go volunteer in those organizations, and frankly, you know,
this will be a fund that exists for when we're
not here. It can get passed on to them as well.
(45:34):
And that tax deferred nature exists, there's no tax consequence
when it gets transferred over. So again, if you have
charrible interest, if you contribute you know a size of
all amounts.
Speaker 2 (45:47):
I think it's a great idea.
Speaker 1 (45:49):
It really can be very beneficial and it's much better
than in general. Then certainly if you're thinking much bigger
than starting a foundation, which there's a lot more red tape, expenses, requirements,
tax filings for that versus what you would have otherwise.
Speaker 2 (46:08):
Well, folks, it's been a great hour with you. I
hope you'll learn a lot.
Speaker 1 (46:12):
I always love being here to answer your questions and
give your guidance as to what you should be doing
in your.
Speaker 2 (46:16):
Own personal situation.
Speaker 1 (46:18):
You're listening to Let's Talk Money, brought to you by
Bouchet Financial Group. Well, we help our clients prioritize their
health while we manage their wealth for life. Folks, take
care of yourself, take care of each other, and get
out there and enjoy this gorgeous fall day.
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