Lets Talk Money

November 30th, 2025.

Episode Transcript

Speaker 1 (00:00):
Good morning, folks. My name is Martin Shields. I'm the
chief Wealth Advisor at Bruchet Financial Group and I'm your host, Dave.
Let's talk money. As always, is great to be here
with you to answer any questions you may have regard
to your financial planning or investment manager concerns, and as always,
I encourage you to either call in or email me
with your questions. You can reach me at eight hundred

(00:21):
eight two five five nine four nine. Again that is
eight hundred eight two five five nine four nine, Or
if you're too shy to call in, you can shoot
me an email at ask Boucht at Bruche dot com.
That's ask Bouchet at Bruche dot com and Bouchet spelled
b o u c a e y. So give me

(00:46):
a call at any point till what second here folks,
till As always, as questions, you can reach me at
eight hundred eight two five five nine four nine, or
you can shoot me an email at ask Bouchet at
Bouchet dot com. So a lot to discuss this week.
Good week in the markets, even though it was a

(01:08):
shortened trading week, it was a good week in the market.
So we'll discuss that. A number of finds plenty topics
that I want to discuss, including talking about money and marriage.
It is the top three number reasons that people get divorced.
And I could say myself twenty two years of marriage.

(01:28):
I call it twenty two years of marriage school that
it's always a challenge, right and every client I work
with as a couple, there's always a discussion about money,
and they're not always easy discussions. So we'll highlight that,
talk a little bit about housing affordability, what's driving that,
what are some solutions for that. We'll talk about college

(01:51):
and spending for college and ways to view it. That's
always an important one for many listeners. Will also discuss
some tax savings that you can utilize by the end
of the year, and we'll discuss the new Trump accounts,
if they're a good approach or not. So again, a
lot of things to discuss. If you have any questions,

(02:12):
you can email me at ask Bouchet at Bouchet dot
com or you can give me a call at eight
hundred eight two five five nine four nine. So let's
first talk about the markets in general. As you look
at the major industries, they were up almost five percent
for the week, they're a little bit off their all
time highs. And you know tomorrow is December first, so

(02:36):
we're going to be moving into December. December tends to
be a good month for the market. There's what you
may have heard is the Santa Claus rally, and a
lot of this will be driven this couple of elements.
One is what does the Federal Reserve do when they
meet this month. Right now, the market is showing about
an eighty nine percent chance that the Federal Reserve will

(02:59):
cut rates by a quarter percentage point. And you know,
as we've talked about, I think right now, if they
cut it that quarter percentage point, we're in what's called
the neutral rate, and the neutral rate is where there's
no there's neither either the where the current interest rate is.
It's neither stimulating the economy, meaning that it's too low

(03:21):
that it's actually increasing economic growth, nor is it holding
economic growth back, meaning it's too high, and so people
are delaying either purchases or making decisions. I think right
now we're very close, but if they cut it that
next quarter percentage point, we'd be right there what's called
the neutral rate, and I think that's the right place

(03:42):
to be. You know, I think that would lower mortgage
rates enough that would stimulate more buying, and I think
it would help in general as companies are barring to
make acquisitions and do different things. So the other thing
too that this now is as money market rates and

(04:04):
CDs start to move below four percent, that people are
more inclined to get that money invested in a well managed,
broadly diversified portfolio. So to me, what that says is
when the money marker rate is up over four percent
to five percent, where it was over the last couple

(04:25):
of years, then people might be more inclined to keep
higher amounts of cash in those funds because their perspective
on this is if they can earn five percent on
cash and really take on no risk, they're willing to
have more money in that type of allocation. But as
that amount, that yield moves closer to three and a

(04:47):
half percent, and if inflation is actually around three percent,
then they start, you know, evaluating that and making that decision.
And it's interesting because you know, these are all kind
of what were called micro decisions, microeconomic decisions that investors make,
but I can see it play out in real time.

(05:08):
As we're having more and more of our clients saying, hey,
I've got X amount in a money market account. Can
we go ahead and get this invested? And I always
tell them if you're a long term investor, meaning that
your time horizon is you know, five years plus on
those those dollars, then it's a good time to get
it invested. And if you need that cash within the

(05:30):
next one to two years, I always tell them, listen,
keep that very liquid. Even though the amount that you're
earning on it has declined, you want to keep it
very liquid because you know, in general, we're pretty bullish
on the markets in the economy, but we don't know.
You could have something that changes it very quickly. So again,
it really depends on what your kind of mindset is

(05:52):
for that money. But I'm starting to see a change,
and I think that's going to be a big thing
what happens with a FED when they meet in December.
The other thing is just you know, do we continue
to see this growth and profit and also what is
the outlook for twenty twenty six. Right now, most companies
it's pretty optimistic. We've talked about the AI trade and

(06:12):
really driving so much of the profitability in particular with
the big companies. But you know, we would say, you know,
our own company, we utilize AI in different ways from
an operational perspective, and it makes us more efficient. So
I think we're not alone in that regard. And you know,
I alwould tell investors this, As companies invest in AI

(06:34):
and their productivity improves and then their profitability, well that's
a good thing. That's going to be beneficial for you
as an investor. And again I think that we're seeing that,
we're going to continue to see that. So I would
be surprised between now and then the year that we
hit all time highs. That could very well happen. So

(06:55):
we'll see how this plays out. But in general, you know,
from an economic perspective, from an interest rate perspective, from
an earnings perspective, things continue to line up very well.
You know, we have some interesting elements from a labor
from the labor markets, but in general, there's nothing that's
overly disconcerning from the label markets. I think there's a

(07:16):
lot of factors that are like i'll call call them
cross currents. So you know, you have things like immigration
where we were literally adding you know, half a million
a million people a year into the economy. Now that's
flat of anything. It's going down, right, So that does
skew the labor markets in different ways. We have more

(07:37):
and more baby boomers retiring. That's going to skew the
labor markets in different ways. We have more situations of
AI you know, you see that individuals that are coming
out of college. It's it's harder to get a job
these days. So you have a lot of cross currents
in the labor markets. But broadly speaking, the labor markets

(07:58):
remain pretty strong, and that's an important element to the
strength of the economy and the markets. Let's go on
and talk about some of these financial planning topics that
I discussed, and again, if you have any questions, you
can reach me at eight hundred eight two five five
nine four nine, or you can email me at Askbouchet

(08:19):
at Bouchet dot com. We have an email that has
come in. It's Some'm Steve. It says, I am retired,
I'm seventy five, and I'm concerned about future inflation. About
forty five percent of asks are on fixed income. Half
of that is inflation protected. So I assumed that he
means tips. What else can I do for inflation protection? Well, Steve,

(08:41):
you know, I'll tell you one of the best things
you can do for inflation protection is stocks. Stocks can
do very well in a higher inflationary environment. You know
what what happens in that situation is companies are able
to raise profits in a substantial way. And we saw
this over the last four years, right, this is some

(09:01):
of the higher inflationary environment that we've seen in decades.
And yet it's been a great time for stocks because
companies have been able to raise prices higher than their
costs have been going up, so overall their profits have increased.
So I would I like the idea of having tips

(09:22):
in there, you have that in place. I like the
idea of you know, in general, we locked into longer
dated bonds when the yield on the ten year was
at five percent, which you know, that's that's great as well.
And you know, I don't know if you need to
be overly concerned about inflation. I think if anything, you

(09:43):
could see deflation, right and all that. I don't say deflation,
but let's say low inflation, because you're going to have
these productivity improvements that occur from AI and I think
that's going to keep prices down if anything. So as
I look at the future, I'm not over the concern
about inflation. And but if you are, then I think

(10:05):
you're doing all the right things. You have it in tips,
and I would also have an allocation your allocation to equities.
I think equities can do quite well in that environment. Again, folks,
if you have any questions, give me a call. You
could reach me at eight hundred eight two five five
nine four nine, or you can email me at ask

(10:26):
Bouchet at Bouche dot com and spelled b o U
dh ey dot com. Let's go to that discussion on
money and marriage. And if you listen to the show,
you know that I post quite a bit on LinkedIn,
So you can go to my profile on LinkedIn. You
just put in Martin Shields and with Bruche, you know,

(10:47):
come up. And you know I do quite a bit
of posting on topics, both economics, investing, and financial planning there.
And then I also have a blog called Peace of
Mind Economics and I do post a pretty grect on
that as well, And in this case just have a
new posts on money and marriage. I think it's just
so important to have these discussions. If you're in I

(11:10):
say marriage, but you could be a long term relationship, right,
you could have a dedicated partner, and you know, you've
got to have these discussions. It's so important. As I mentioned,
financial matters are the top three one of the top
three reasons individuals split up are going a divorce, right,
So you've got to have something in place that is
going to make it successful in that relationship. And really

(11:33):
the best time to start having that discussion is before
you get married, right, have that discussion. Be very open
and transparent with one another. I think that is That's
something that I've learned to be a better communicator with
my wife is just knowing that as these issues come up,
I got let's just start talking about it right away.

(11:53):
Let's be open with our emotions. And that's the big element, folks.
Is one of the first posts elements I have in
sart of the guidelines for this in my blog is
it's more money is more than just money, right, it
is all the emotions that exist everything from how were
you raised? From a financial perspective, how do you spend money?

(12:15):
How do you save money? And you know I was
gonna ask you that my wife and I we vary
in that, right. She really she really enjoys spending money.
I mean seriously, she when she goes shopping, she actually
enjoys it. This is something she appreciates doing. For me,
shopping is only a necessity. Right, it's when I have
to you know, my clothes that starting to get warn

(12:37):
I have to go buy something. Okay, I'm gonna do this.
I just do not like shopping. I get no value
add from shopping. So different perspective in that regard. And
you know, I was raised you know, two teachers for kids,
not a lot of money, so I was very We're
raised very fruitally, so you know, always thinking about saving.

(12:58):
So again we my wife and I have this really
open discussion is to what are our priorities as a family, uh,
and how do we go about them? For us, one
of the more important things we do is doing things
as a family that that is very important to us,
in particularly traveling, So we always make that a priority
when we budget. But again I try, I think being

(13:18):
open that all the psychological and emotional elements that come
with a relationship, you have to be open to what
those look like. The next is, you know, when you
before you go into that marriage, that long term partnership,
you've got to really talk about what are the main
goals that you have parameters. You know, where do you

(13:39):
want to be living? You know, both of you going
to be working? You know, do you want to have kids?
What does that look like? You know what kind of
cars you're going to be driving? These basic things. It's
good to make sure you're on the same page, right,
And it's good that when you go into that relationship
that you're again you're transparent is to you know, are
you coming in with any debt? Right? What are your

(13:59):
situations that you're coming into that relationship together. The other
thing that I see that's important it's what's called spending creep.
So you know, for most couples as they get married,
they're maybe in a little bit of a lower level
as far as their income, and that over time, their
income if they're successful, tends to move higher. That's pretty common,

(14:22):
and you have to be careful that as that happened,
that your spending creep doesn't go above what your income
increases are right, And I do see this whereas people
start making more money, they really start spending a lot
more money, like too much additional money. And I think
it's important to have those discussions with each other, is that, hey,

(14:43):
if we're getting these raises, what does this look like,
how we're going to spend this money? And really, you know,
for most of many ways, taking I say, anywhere from
ten to thirty percent of that and spending and putting
that way in savings, whether it's savings for college for
your kids, whether it's retirement savings, whether it's savings for
you know, a future purchase or something. You really have

(15:06):
to take a lot of that money that you're getting
in that raise and then saving it. The other one
that I have is you know, having net aversions of
reserve fund. And so we talk about this. This is
so important for individuals, but I'd say it's almost even
more important when you get married that you have a family,
that you have anywhere from three to six months worth

(15:27):
of cash flow and you have it just set aside
in savings and you don't think about it. Right that
money is there. It's there to backstop. It's something that
comes up, whether you know, you need a new roof,
you need a new furnace, whatever the case may be.
I would really encourage you to make sure you have
that in place, make sure you're in agreement as to
what expenses go into that category, and that when you

(15:50):
you utilize it, that you you know very quickly fill
that back up. I tell you that just removes a
whole bunch of stress when you have those unexpected you know,
expenses come through and you need to find money to
cover that. Having three to six months where the cash
flow is important. Now, you know, if one of you

(16:11):
has a risk of your job or you're starting a business,
I'd have even nine to twelve months. Right. The three
to six months is you know, more of a standard level,
but if there's a situation where there's some uncertainty in
your job or anything like that, try to have even more.
Nine to twelve months might be the appropriate number for you.
The other elements that I have in my guidelines what

(16:33):
is hiring an investment fiduciary wealth advisor. And the reason
I say that is I see this a lot in
the work we do with our clients, which is there
can be you know, conflict as to you know, how
much should they save and how much can they spend?
And when we come in and we give them guidance,
we're that voice of reason with the expertise and background
that we have to be able to really set that

(16:56):
roadmap for them and remove that kind of argument point exist.
And once we kind of put that out there and say, hey,
this is where you need to be, this is where
you need to be saving, this is where you can
be spending. These are type of investments, these type of accounts.
That element of taking that discussion of point away from
them as a couple just really helps to set their

(17:17):
mind and ease and it is amazing to see it happen.
I always say when clients come on, they're not quite
sure what it means to work with our firm and
work with a fiduciary, and I tell them it will
take up about a year, and you know, it will
take a process of getting your investments in place and
getting your plan in place, and you know, kind of
having these discussions, and then a year from now, when

(17:38):
we're getting together we're meeting again, you'll be like, Wow,
this is exactly what I was looking for, and now
I understand exactly how this sets up. So again, I
do think that as far as being successful from a
marriage or a partnership perspective, and we're removing some of
that stress it is to have a fiduciary wealth advisor

(18:00):
to work with. The other elements are having a household budget.
I think that is incredibly important. I always say it
doesn't have to be down to every line item. It
could be very high level, just some buckets that you
have an idea as to where you're spending your money.
So I think what that does is it just gives
you some parameters to you're all in the same page

(18:21):
as to how that's going to look. And if you
go about that, you're like, Okay, you know we're above
our bucket level, so we need to adjust that. And
again it really helps smooth out some of the stresses
that can exist. The other element that I have there
is that you have a just a monthly discussion about finances,

(18:42):
just to make sure that everybody's on the same page.
We kind of know of any upcoming larger expenses. If
you're going to do any work on the house or
a car needs to be replaced, then again you're on
that same page. I always say, you know, do it
in a timeframe. Whether it's not a lot of stress,
which can be difficult to find, but you know, try

(19:02):
to carve that time away. Uh, you know, maybe go
out get a tea or coffee and have that discussion.
Definitely don't do it while you're drinking. Remove that element
from there, because you know, things can be more emotional
if that is the case. And I just think that
could be a very good way to be successful with

(19:22):
having those the financial discussions. And then finally, I think
one of the important elements is just appreciating that mistakes
will happen. It is just it is part and parcel
with life. Mistakes will happen either as a couple of
you overspend or as an individually overspend. And you know
that's just a good way to you know, not beat
yourself up, but go back and commit to uh, you know,

(19:46):
staying within that budget. And that's that's important. Oh. One
last item, and I think this is very important, is
that in general, having a joint account for your expenses, uh,
you know, where most of your expenses will be covered,
whether it's credit card or cable or different monthly expenses.
Having that set so you can both look at it
and see where you stand from a cash flow perspective.

(20:09):
But I also think it's important to have individual accounts
and credit cards where you both agree upon that you
can spend a certain amount a month and that you
don't need to get you know, your spouse's approval, or
you know that you can kind of do it on
your own side, whatever you want to spend it on,
along within the agreed upon monthly amount. And I also
think that's incredibly important. I think it's you know, again,

(20:32):
what's a priority for you, It might not be a
priority for your spouse. And if you can spend some
of these dollars and you know something that's important to
you without any judgment from your spouse, I think that
can be very valuable. Now you have to be it's
very important that you stay within those parameters right, that
you don't spend too much where you're not don't have

(20:52):
the financial means to do that. So hopefully these are helpful. Again,
this is on my blog Peace of Mind Economics. There's
other blog that I have out there that we'll talk
about after the break, but again I usually post every
couple of weeks, so please go and check it out.
If you have any questions, folks, you can give me
a call. You can reach me at eight hundred eight

(21:13):
two five five nine four nine. Again it's eight hundred
eight two, five, five, nine, four nine. Let's go and
talk into this other topic. I was reading this article
about college and as you listen, you know, my wife
and I we have three keeenagers early twenty some. My
daughter's going to be graduated from Universities of Vermont. She's

(21:34):
a psychology and clical science major and she ran d
one track there. My son is at Saint Lawrence. He's
an economics and finance major. And there's a lot of
club sports soccer, hockey, and skiing. And then our youngest
is graduating from Saratoga this year, and we'll be looking
at college. And so we're right in the thick of this,

(21:56):
and I just want to highlight a couple of things.
One is, again, this has to be a business decision, right.
I know, it's very easy again to get caught up
in the emotions. You know, your teenager wants to go
to a particular school, and if they're successful in getting
into that school. Uh. You know, many people are inclined
to spend a lot of money even if they don't

(22:16):
have it, take on loans and all of what's tight
is absolutely think about this as a business decision, meaning
that if you have the means and uh, this is
you know, a school where they're going to go to,
they're going to be very successful in that major. And
if they're spending extra money that they're going to come
out with a degree where in that category. Uh, you know,

(22:38):
whatever that degree is, they're gonna be able to make
more money and all it would give you an example
is that you know, if you're going to go and
you want to be a teacher or you you know,
something where that maybe the incomes a little bit lower,
that you really think about going to a school where
the economics work a little bit better. Right, Whereas you're
going to go you want to work at McKenzie as
a consultant, Well, hey, you can spend a little bit

(22:59):
more for that undergrad because you know that's going to
play out that way. Now. The important thing to remember,
though is just because you think that's what you want
to do doesn't mean that the reality is that's what
you're going to want to do where you graduate. Right.
I've seen this many times where you know, some somebody
goes to college, you know things, they want to work
at Wall Street and then they go down and they

(23:20):
work there for a year two and they're like, I
don't really like this, and they spend a lot of
money on their undergrad So again I just would always
tell you one, try to stay within your means in
every way possible. Being frugal and smart about that expense
can really save you a lot of headache. But to
you know, think about it along the lines of, hey,

(23:40):
what is appropriate for the degree and the job that
I could get afterwards? You know, how does that work best?
Because it's going to be important for the rest of
their life. Well, folks, we're gonna go to a commercial break,
but come back and join us. You're listening to Let's
Talk Money, brought to you by a Bruchet Financial Group. Well,
we help our clients prioritize their health while we manage
their wealth for life. Come back, folks, as we take

(24:02):
your questions. Welcome back, folks. For those of you who
are just joining us, my name is Martin Shields. I'm
the chief Wealth Advisor at Bouchet Finance Group and as always,
it's great to be your host Let's Talk money, and
it's great to take any questions you may have. You
can give me a call at eight hundred eight two
five five nine four nine. Again that's eight hundred eight

(24:25):
two five five nine four nine, or you can shoot
me an email at ask Bouchet at bouchet dot com.
Let's ask Bouchet at Bouchet dot com and Bouchet spelled
b O U d h e y dot com. So
whatever it is, I always say, there's no Dummer silly
question except for the one you don't ask. And you

(24:46):
may be doing your fellow listener a favor by asking
that question that they have as well, So go ahead
and give me a call or shoot me an email.
Let's see here. So I'm looking out the window. It's
got some snow this morning. You know, the weather forecast
just said three to six inches of snow coming on Tuesday.
If you know, I'm really a hot weather person. I

(25:09):
love the heat, but you know, moved back into upstate
New York thirteen years ago and I've embraced the cold.
So I love the snow as well. Much rather have
once we move in December, you know, let's let's embrace it.
Let's have the snow and the cold. Now. If you've listened,
you know that in the last six years, I've had
an ice rink in our front yard, and this year
we made the decision not to do it. My son,

(25:31):
who's the main skater, is going to be off of
college and a lot of work. It is a lot
of work. A lot of fun, but a lot of work.
So we made that decision not to do the rink.
We'll see how that goes. But you know again, there's
so many other great outdoor activities that you can do.
And I'll tell you I went to the Alpine Shop

(25:52):
with my son. He needed a new pair of gloves
and I went there. Jack and Kathy are the owners.
And if you've never been there, this is up in
startup I skid More. It's the Alpine Sports Shop. I'm
telling you you've got to go check it out. It literally,
you walk in there, you feel like you're in Switzerland.
It's just always this great environment, such great service, and
they have a fire going there. It just if you

(26:14):
go and see it, you'll see exactly what I'm talking about.
But as I say, it's always about the gear. If
you have the right gear and you know it's going
to cost you some money but it'll last for a while,
go ahead and spend the money. Get the right gear,
and then you can go in any conditions and you'll
be warm as can be. And you know, I'm a
big downhill skier, so I'd love to do that and

(26:36):
we'll get out skating different places still even without the
rink in the front yard, but one of the two
of the activities that say to put that out there
for individuals there you know they're a little reluctant to
get out there. And maybe downhill ski which I get,
but crosscunchy skiing is a great activity, it really is.
There's so many places you don't need to do anything
too over the top. We'll be one of my favorite

(26:57):
places in the Lapland Lake or by Sagondaga, but that's
could be a little bit more challenging, but it could
be also very nice. But there's just so many other
places to go out across country ski, so I would
encourage you to do that or just go snowshoe right.
You know, it's in the wintertime. It's a great time
to go out and hike and you don't have to
worry about ticks and crowds and the mud. You know,

(27:21):
a nice snow base that you can go out with,
whether it's just hiking boots or whether it's with snowshoes.
So I would encourage to do that. It's just a
great way to kind of go out, clear your mind,
enjoy mother nature, and it's good for you physically. So
go out and do that. Let's move on to some
additional topics again. If you have any questions, you can

(27:42):
reach me at eight hundred eight two five five nine
four nine, or you can email me and ask Bouchet
Bouchet dot com. So one of the questions that we
get is with the new Trump accounts, should they be
contributing to the new Trump accounts? Now, you can't establish
them until twenty six, but a couple of things to

(28:03):
be aware of. So if you have a little one
that was born from January first, twenty twenty five, all
the way, this is gonna be good until twelve thirty one,
twenty twenty eight, and you open a Trump account, they'll
get one thousand dollars from the government into that account.
So along those lines, you know, if you just have
a little baby and that's the case, then you should

(28:24):
absolutely be opening a Trump account and get your thousand dollars. Right.
There's no reason not to, right, but to put moneys
in there. Really, it's interesting. I'm not sure why they
sit it up like this, but it really kind of
sets up like a traditional IRA for your kid, where
you don't get a tax break to put the money in.
It grows tax deferred. It actually will move into an

(28:45):
IRA in their name, but when that money comes out,
it's gonna be taxes ordinary income. So again, if you've
listened to the show, you know that I don't really
like the concept of putting post tax dollars into an IRA.
So you think about this. You're going to put dollars
in so there's no tax benefit from doing that. They're
going to grow tax deferred, which is nice, but when

(29:08):
those dollars come out, now you're going to be taxed
at ordinary income. So the alternative to that is you
can open and you know, just a custodial brokerage account
for your kid or grandkid, and now you know, yes,
there could be some income being produced, but you can
minimize that income from that tax account. And then down
the road, if there's growth in that account and you

(29:30):
sell positions, well, now that gain is going to be
taxed as long term capital gains, so more in the
fifteen percent range versus ordinary income. So really I'd much
rather have the capital gain tax at fifteen percent than
ordinary income. The other element, and we've talked about this,
is now for the rest of their life they're going

(29:51):
to have irais to have a mix of post tax dollars,
which is the constribution that you're putting in there, and
tax it for growth, and so they're always going to
need to keep track of that. And every distribution when
they retire is going to be a combination of post
tax dollars in where they won't pay taxes on it,
and growth or tax free money. And so you think

(30:14):
about that, every distribution for the rest of their life,
they're going to have to track that weighted average because
it's going to be a weighted average of those dollars. Again,
I just don't think it's worth it, but I do
think it's worth it to get two thousand dollars if
you had a little one born or recently. We're going
to go to the emails. We have one from Tom.

(30:36):
It says, I'm sixty and I'm going to retire in
five years. I'm trying to figure out what the best
asset allocation is for my portfolio. Can you give me
some guidance on that. I will be taking distributions from
this portfolio. So this great question one that you know,
when we have clients come in and they're going in retirement,
we're quite often having the discussion on what's an appropriate

(30:58):
asset allocation for them. So what I would say is,
in general, most of our retirees are in a sixty
forty allocation. That's sixty percent in stocks and forty percent
in bonds, cash and alternatives. Now, we like the idea
of having some alternatives in the portfolio. And the alternatives

(31:19):
I always say is I'll kind of a catch all
bucket for assets that are somewhere between stocks and bonds
as far as risk and return right so on. You know,
from most bonds, the way we approach it, it's about
capital preservation and income. We don't take a lot of
risk with our bonds. We'd rather take that risk in
the stock portfolio. But the alternatives, it's a little bit.

(31:42):
It's a hybrid between. We use things called it like
hedged equity that provides a hedge on the downside and
then caps on the upside. So it's called the defined
outcome ETF that you know, for any giving year, what
in general the performance is going to be on the downside,
even if the mark it goes down or on the
upside of the market railies, you know in general what

(32:04):
your performance is going to be. And again from a
risk and return perspective, it's somewhere between a stock and
a bond. So it's a nice addition to the portfolio.
The other one of the other ones we utilize it
is called the a cover call fund. It's an ETF
that has stocks in there, so it is a stock
fund just like that has de equity. It has the
SP five hundred in there, but this fund sells cover calls,

(32:28):
and a cover call is simply you're selling another investor
the option to be able to buy the stock in
your portfolio, and they're giving you a yield of around
eight or nine percent, So you think about that. That's
really good. You're getting a yield of eight or nine percent.
And the only downside is if the market tears up
higher like it has over the last couple of years.

(32:50):
So if the market's up to twenty three percent, guess
what that outside investor is going to want to exercise
that option and they're going to take They're going to
buy the stock from you out of your portfolio. And
so what happens with that fund is to get caps out.
If the market's up twenty three percent, it's going to
get capped out somewhere around fourteen or fifteen percent. So

(33:10):
you're not going to get the same upside with this
fund as you would with stocks, but it has much
better downside protection for two reasons. One is the positions
in that fund tend to be a little bit more defensive,
so they're going to do well in an economic downturn.
They're more like a Procter and Gamble, they're more like

(33:31):
a Walmart. They're going to do better in an economic downturn.
Plus you add on that the eight or nine percent
yield plus any dividend yields, So that's that fund could
do quite well. To give you an idea, in twenty
twenty two, when stocks were down twenty three percent and
bonds were down around eighteen or nine eighteen percent, this
fund was actually up was actually positive for the year. Now,

(33:54):
you know, again that's not a given that's always going
to act like that, but it is a nice mix
between the stocks in the bonds. But Tom, to answer
your question, I think the sixty forty allocation is probably
the appropriate allocation. For you. And I think an important
element of that is if you're going to be taking distributions,
we carve out two years worth of distributions and we

(34:17):
put it in a more conservative fund and as I say,
up to two years, because it does get drawn down
over time as we take those distributions out. But what
it does is gives our client's peace of mind that, hey,
even if there's market volatility, even if it lasts for
a while, you're not gonna have to worry about that
because we have your allocation set up to be able
to provide those distributions in any type of market environment.

(34:39):
And what happens is we replenish that fund through either
income from stocks or bonds, dividend income from stocks or
interest income from bonds, and then when the markets are
kind of close to all time highs, we replenish that fund.
So it's a good approach that allows you to get
the growth from your stocks and income from your bonds,

(35:00):
but now have to worry about how those distributions are
going to occur. And again for our clients, it takes
that worry away. Our firm is responsible for the mechanics
behind the scenes and making sure that fun is replenished.
And again this is where that peace of mind comes
in for our clients working with us. Now, we do
have some clients that are eighty twenty. They're in our
growth allocation in they're retired, and we always say that's

(35:22):
fine too, especially because we're carving out the two years
with the distributions. You can be eighty twenty. Now you
have to be comfortable with that volatility. There's going to
be obviously increase volatility if you're eighty twenty, but as
long as you're okay with that, over time, stocks will
return actually better than bonds, and so you can actually

(35:44):
have actually take more money from a portfolio that's more
of an eighty twenty over the long run. And that's
what we always tell clients. You have to appreciate most clients.
In this case with Tom, he's going to be retiring
in his sixties. You've got if you're in good health
and you're married, one of you you is there's about
a seventy five percent chance that one of you is
going to live to be in your mid nineties, and

(36:05):
so you know you've got to plan for that. So
you talking about thirty plus years with inflation, Uh, you
know we always use an inflation factor of around three
point two five percent. And also there's gonna be one
time expenses. I always say, you know, clients may think
they have everything kind of mapped out for their expenses,
but you probably don't. And so you know, having that

(36:27):
in place is very important to cover those one time expenses.
And that's why again you need growth in your portfolio
to capture those thirty years of distributions. Now we do
in our planning. We do adjust a clients spending down
when they are in the mid seventies because they start
slowing down a little bit, and then in their mid

(36:49):
eighties we'll pull back even a little bit more. So,
even though we have that inflation factor of three point
twenty five percent, we do make some adjustments. As individuals
get older, they're just not spending as much. But you know,
having that all in place again, that's where that planning
process comes into what is the asset allocation. The two

(37:09):
are very important to make sure you're in the right
spot now when you're young. You know, if you're in
your twenties or thirties, all things considered, you should be
pretty much in all equity, certainly in your retirement accounts
you should be in all equity. And you know, even
for accounts that you you know, maybe using for a
future house purchase, you know you should at least have

(37:32):
sixty percent in stocks. So you know, even having that
right allocation is extremely important. Let's go on to a
few other topics. But again, if you have any questions,
feel free to give me a call. You can reach
me at eight hundred eight two five five nine four nine,
or you can email me at ask Bouchet at Bouchet

(37:54):
dot com. We have another email that's come in. It's
from Jane. She says, my estate plans were done more
than ten years ago. Should I be getting new ones?
And what documents should I have in there? That's a
great question, Jane. What I would tell you is this,
which is, if you haven't updated and have your escape
plan reviewed and it's been ten years, you probably should

(38:17):
be going back to your attorney or if you have
to meet a new attorney to have them reviewed. You know,
in a ten year period, for many people, there's a
number of changes that may have occurred in their life,
and it's always good to make sure that your beneficiaries
and your life insurance and the contingent beneficiaries on your
life insurance and your time and accounts, and if you

(38:38):
have TODs transfers on death on appropriate accounts, they have
those updated. So I would encourage you to go and
have that conversation. I mean, as far as what type
of documents, it depends. In general, for most people, there's
four main documents you need to have. You need to
have a will to just describe what's going to happen
to any assets that don't have a TOD. You don't

(38:59):
have a beneficiary, do you need to have a will
in place. You need to have a durable power of
attorney both healthcare and financial right. You need to have
somebody who can make decisions if you're incapacitated or you
need something done your finances. And then you need a
healthcare proxy, right, And that's just a document that says, hey,

(39:22):
if I have health issues, this is what I want done,
and these are things I don't want to have done,
and then that healthcare power attorney is the one that
will enforce that document, right. So I think it's important
to have all those in place. Make sure you have
a conversation with the individuals that are going to fill
those roles that you know exactly, they know who they are,

(39:42):
that everybody kind of is aware of that. With my family,
three siblings, which have different roles that we're going to
play for my mom now my dad's past. But it's
important to have that discussion so there's no confusion. You
will also have in your will an executor who is
somebody who will kind of shepherd that will through make
sure everything's done properly. Again, that's it's always always important

(40:06):
to make sure that person knows that they're going to
be the executor of your estate, just so there's no surprises.
And you know, I just think I always say, you know,
it had thinking ahead and getting some of this stuff done,
you know with my dad before it passed. But all
of it take care of, uh you know. The only
thing is they didn't had picked out their uh his casket,

(40:29):
so that he had to pick out his casket. But
everything else was done and it really is you know,
it's kind of be kind of morbid, but it's actually
a good idea to make sure you've got that all done,
to make sure you're in your spouse or on the
same page. What does the ceremony look like? You know,
my dad had all his readings and the music and
everything lined up. And what was great is about for
me as the son like I, you know, I could

(40:51):
recognize and it resonated with me that my dad would
have selected that, that music and those readings. You know,
it really kind of felt like my dad, who would
have you know, selected those? So I think it's a
great thing to do that. And also, you know, even
when it comes down to particular artwork or you know,
if there's any furniture or just different personal items, making

(41:13):
sure that it goes to maybe a grandchild that had
an interest in that. You know, I would outline all
that stuff in your will so that there's no confusion.
Let's move on to a new topic. But again, if
you have any questions, you can reach me at eight
hundred eight two five five nine four nine, or you
can email me at ask Bouchet at Bouchet dot com.

(41:34):
That's asked Bouchet at Bouchet dot com. We do have
another question that came in from Terry. It says I
have a number of high card debt as well as
student loans and a mortgage in a car mortgage. I
want to go ahead and try to pay down these
loans give me some guidance that it's the best approach

(41:55):
to do this. So well, Terry, you're not alone, you know,
we have, you know a lot of folks that have
a number of elements of debt that are out there
and they've got to make decisions. And you know, I
would say first and foremost is those credit cards. My
guess is that you probably are paying very high interest
rates on those credit cards, and it is going to
be best to pay to those down as quickly as

(42:17):
you can. And you know, even you know, try to
that way. I make that your focus. You know, probably
you're paying fifteen to twenty percent. The next place that
we look is student debt. Now I don't know, it
depends on the interest rate, but you probably that's going
to be the next highest level of where you're spending

(42:37):
as far as interest, and so I make that a priority.
Then you know, where do you stand with your mortgage? Now,
many times with mortgages these days, some people have some
pretty low mortgages. I know myself we're below three percent.
So it depends on what you bought and then refinance. Now,
as rates go lower, you might want to look to refinance.

(42:59):
You could be in a situation where you can do that,
So that's something to consider. But and then finally with
the car you know, I would there's probably not much
you could do with that, you know, depends on where
you are with your interest rate, but you're probably you know,
at a set rate, and if you if I'm looking

(43:19):
to help prioritize some of these for you, that's probably
the last one I would look at. You know, I
always tell clients that if you can get a car
loan under five percent, which is where a lot of
them are now these days, then it's not a bad
time to finance. I am not a big believer in

(43:39):
you know, I like the idea of financing. I think
it could be good if it's the right interest rate,
and I think you have to kind of evaluate where
you stand. I also think, you know, using cash can
be a good approach as well. Uh, just depends on
you know, what that interest rate is going to be,
so you know, you've got to look at that and
make kind of run the numbers on at But that

(44:00):
can be a good approach. Well, folks, let's go on
to our last topic for the day. But if you
have any questions, you can reach me at eight hundred
eight two five five nine four nine. Again, that's eight
hundred eight two five five nine four nine. Or you
can email me with a question at ask Bouchet at
Bouchet dot com. We have another question that's come in

(44:23):
email from David. Could you give an example of a
defined outcome ETF and a cover call fund from Vanguard Fidelity.
Great question, So I'm gonna say vanguarder Fidelity doesn't have either.
Who we use for our define outcome ETF is First Trust.
First Trust is a great fun family. They're out the Midwest. Uh,

(44:45):
you know, just great folks that we work with that
really dig with us. It's educating us, is to you know,
both the funds and even practice management. So a great
partner of ours. But First Trust is one that I
would look at. You know, there's all these different flavors.
So you know with these defined outcome ETFs, they come
out every month, they're issued every month, and really what

(45:06):
that is is the options that are set up for
that fund are good for a year. They're year year
long options. So you know, here we're going to go
into December. There's gonna be a December fund that comes
out that will have the set floor and the cap
on that. And there's different levels, right, there's one that
has a ten percent floor, this one that has a
fifteen percent floor, the one that has a twenty percent floor. Now,

(45:30):
appreciate that deeper the floor. If you're gonna get twenty
percent protection the downside, that cap on the top side,
it's going to be very tight. It's going to be
around five percent. So you know, you don't get something
without giving up something else. So, but they're a great
way to add into your Portfolio's funny because as we
talk about this with clients, I've had to say, well,

(45:50):
can I put all my money into that? And I said, no,
you don't want to do that because you're going to
give up a lot on the upside. Right in those
years where the market rallies and the market's up twenty
plus percent, which can happen. Uh, you know, we could
be three years in a row. We may be in
that category. You're going to give up on that. So
you don't want to have all your money. But again
for us, we primarily take assets that would be in

(46:12):
our fixed income bucket and we put them in there
now for the cover call option. Uh you know that
is uh, the one we utilize as Jefpi's a Chap
Morgan one. There's a lot of different flavors with that. Again,
now most there's a lot of other cover call phones
out there. Jeffy is probably the biggest, and you know

(46:34):
it really is a good one. So, uh, you know,
I would look at that. But you could get a
cover call that's on the again I said more kind
of defensive consumer stable type of positions. But you know
you can get one, and you can get one in
any for you know, for the Nasdaq or for small
cap or any different index you want. You could get

(46:56):
a covered call writing strategy on that. So and I
think these have been great to make great additions to
our portfolios. So you might want to look them at
for your portfolio and see how it goes. Again, it
helps increase the rate of return on the portfolio without
adding an awful lot in the way of risk. And

(47:16):
I think that give you valuable Well, folks, it's been
a great hour to be here with you. I hope
you'll learned a little bit more. It's always great to
be here to give you some guidance and answer your
questions you're listening to. Let's talk money brought to you
by Bruchet financi Group. Well, we help our clients prioritize
their health while we manage their wealth for life. Folks,
is we're going into the holiday season, Please go out there,

(47:38):
take care of those that need help, and as I
always say, take care of yourself mentally and physically. So important.