Let's Talk Money

July 18th, 2026.

Episode Transcript

Speaker 1 (00:00):
And good morning. Thank you for joining Let's Talk Money
on news radio wg Y. I'm going to be your
host for today's show. My name is Paulo La Pietro.
I'm one of the wealth advisors along with the director
of Portfolio Strategy certified financial Planner, sitting in for the
one and only Stephen Bouche, who's taking a very well
deserved break. But folks, thankfully, I do have my colleague

(00:23):
with me, my fellow Paison, Vincenzo Testa, Certified Financial Planner
c P A E C. I yes, he has all
those letters. Vinnie, how are we doing this morning?

Speaker 2 (00:33):
Good? How you doing? We encourage all listeners to call
in a eight hundred talk w g Y. That's eight
hundred eight two five, five, nine four nine. We also
take questions by email at ask Bouche b O U
c h G Y at e O U C h
g Y dot com.

Speaker 1 (00:46):
Thanks for having me, Paul, Yeah, of course, Vinny. Pleasure
to have you on. And it's always interesting to have
Vinnie on because a lot of times I have Edward Wilhelm,
who's one of the senior portfolio traders here in vin
You know Ed and I work very closely together on
the investments. But having Vinion is great because folks, today,
we're gonna have an interesting and unique show, and as

(01:08):
already pointed out, we definitely encourage you to call in
with any questions you may have. But it's unique in
the sense we're going to have the intersection of investments
in tax and I think in these markets and the
strategies that we deploy for our clients that is very
timely and very informative. So hopefully you will get a

(01:29):
great show out of your weekend. Again, we always appreciate
you spending your Saturday morning with us at ten am,
whether you're in the car watching the British Open, which
I did just see a little bit before I hopped
on today's show, Ryan Fox. I think shot eight under today. Wow.
I wish I could do that at you know, Sarahtoga
State Park, but I surely can't. I'm about a ten handicap.

(01:52):
We also got Sarahtoga Racetrack open. Town is buzzing and
I was wondering, I'm like, you know, seems a little
extra crowd. And I forgot Dave Matthews in town as well,
So Sarahtoga is definitely full and bustling. Restaurants are full,
people are walking around. Hopefully the weather cooperates. I did
just hear the weather right before the show started. They

(02:12):
said some showers and thunderstorms this afternoon, but we shall
see fingers crossed. Then he got any plans for this weekend?

Speaker 2 (02:20):
Nope, nothing in particular. I'm gonna, well, I'm gonna head
up to Saratoga tonight, but my girlfriend's mother's birthday party.
But besides that, nothing worth mentioning.

Speaker 1 (02:32):
Thenny headed north to the Twins. Maybe I'll see you
later tonight. That sounds like a plan. So, folks, we
got a lot of stuff that happened in markets this week,
so I'm gonna do a quick recap. But what we saw,
you know, kind of some of the catalysts of what
was causing that, and I'll kind of give some macro
view ed in myself. We had our economic update on

(02:52):
Wednesday where we kind of just gave the overview of
last quarter and what's to come. So I could certainly
touch base a little bit on that, and then obviously
Vinnie's going to want to be, you know, discussing some
some tax strategies and investment strategies. Maybe some Trump accounts.
I know those have been popular. Vin and Vinnie's been,
you know, kind of really on the forefront of bringing

(03:12):
news about that. He actually was quoted in a financial
uh magazine about it. So definitely Vinnie want will want
to share some on that. But again one last time
before I hop into it. Phone lines are going to
be opened all throughout today's show. That's one eight hundred
talk WGY that is one eight hundred eight to five
five nine four nine. So the old adage that you

(03:36):
would always hear right before we get into summers, and
they talked about it on Wall Street all the time
is selling may and go away, And that's just really
to say, you know, you take the summer off, the
markets are pretty calm. But that really hasn't been the case.
It was kind of one of my headlines that I
put in our quarterly letter to our clients that the

(03:57):
selling may and go away just not fit in the summer.
I mean, we just got a lot of things going
on in markets. Obviously, we still have a geopolitical event
going on in the Middle East and we're seeing what
that is doing to oil prices, and then we're just
seeing some volatility in some markets. So let's get into that,
and let's see a quick recap of the major indices
for this week. This week, we had the SMP five

(04:22):
hundred down one point three five percent, the Dow Jones
Industrial Average down one point one eight percent, and then
the tech heavy NASDAK down two point one seven percent.
So definitely saw some volatility this week, continue to be
fueled by some tech and some AI, and I want
to get into that, but let's not forget what the

(04:43):
year to date numbers are as well. We had the
Dow Jones Industrial Average up about seven point eight percent,
SMP five hundred up eight point seventy five percent, and
then the tech heavy NASDACK up just about ten percent.
It's actually nine point eight five percent. So while we're
seeing volatility led by technology this week, technology continues to

(05:05):
be the leader year to date, and that just really
has to do with the concentration that we've been seeing
in this AI trade. You know, I know this has
been developing for a few years now, but really just
feels like it's coming even to more and more into
portion this year alone, especially when we're looking at durable
earnings profitability, where we are trying to follow the money
that has been concentrated within the AI trade. And that's

(05:28):
been one of the overarching themes that I talked about
in our economic update was just really how much of
this AI related industry performance is put into the s
and P five hundred and it's these numbers are actually
quite staggering. So when you look at the AI trade,
this is essentially five sectors that break down the AI trade.

(05:49):
You have the hyperscalers, which are the big data center companies.
You get the semiconductors which are the chips play. You
have hardware, which is you know, all the hardware that
goes into you know, the data sign the connectivity, you know,
the data grids, all of that, and then you have
power and software. And those five sectors make up over
fifty two percent of the SMP five hundred performance. Now

(06:14):
that might seem a little bit similar that that's gonna
put us on the time machine and we're going to
go back to twenty twenty two and twenty twenty three
more later twenty twenty two and twenty twenty three, where
we talked about the concentration and the Magnificent seven. Remember that,
I mean, nobody really talks about the mag seven anymore
because this has been such an AI related trade. But
that used to be the huge story twenty three even

(06:37):
into twenty four was the MAG seven dominated the US markets.
It dominated the SMP five hundred, dominated the Nasdaq. And
the reason why that was is because the earnings was there,
the profitability growth is there, and that's exactly what we're
seeing in this AI trade. So yes, you know, being
fifty two percent of the AI making up the S

(06:58):
and P five hundreds performance, that's a high concentration. But
then we also look at the you know, the AI
related industry earnings growth, and we see double digit earnings
growth across the board over all five sectors. And when
I say double digit, I'm not talking about eleven percent
or even twelve percent or fifteen percent on the lowest end.

(07:19):
I'm looking at software right now. This is quarter over
quarter earnings growth of twenty one point four percent, and
in as high as hardware twenty eight percent. That is
real earnings growth. So that is where the justification is.
Where you see this AI concentration, it's because the money

(07:39):
is here. This isn't the dot com bubble, this isn't
ninety nine, This is in two thousand where you slap
dot com at the end of your company's name, and
then all of a sudden you go public and your
shares are going to go five x just because you're
saying you're a dot com company. That's not the case
at all. There's real durable earnings within these companies. But nonetheless,

(07:59):
we we've been seeing some volatility over the last few weeks,
and it's tough to say exactly what's causing some of
the pullback that we're seeing within AI related stocks. But
you know, a lot of times my eyes continue to
draw back to the Facebook slash Meta story that we
got about three weeks ago, where Meta announced that it's
actually selling some of his excess capacity and excess compute

(08:23):
to other companies. And you might think, oh, well, that's
a good idea. I mean, with how much CAPEX money
that a lot of these big blue chip companies are spending,
they should find alternative ways to raise revenue. But the
you know, the challenge here and the problem here is
when that news hit the street, it sparked concerns of

(08:45):
are we starting to see the overbuild? Right? So if
we go back to all of the worry and anks
and the correlations between where we are now in markets
versus you know, the two thousands, the dot com bubble. Again,
a large problem was not only a lot of these
companies that didn't have their earnings and weren't justified to

(09:07):
be running up you know, two hundred, three hundred and
four hundred percent, but the other challenge during that time
was was the overbuild. It was all these telecom companies
let laying billions of dollars of fiber optics to make
sure that they are going to be the pioneers and
the industry leaders for decades to come. They overbuilt, they overspent,

(09:28):
and that really put a lot of these companies under
financial pressure. And that's what some of the concerns are there.
When when Meta came out and said, hey, we're going
to start, you know, selling some of our excess compu
in our AI related model Compu, the market started to worry, Okay,
are we in and overbuild? And I think and personally
and where we're following the data and where we're looking

(09:51):
at earnings, that seems like an overreaction one hundred percent.
We haven't seen any other company. We haven't seen Oracle
we have and seeing you know, Microsoft, we haven't seen Amazon, Google, Core, Weed,
any of the other big hyper scales, and none of
them have mentioned selling XS compute. So we think that
this is definitely a little bit of an overreaction and

(10:14):
frankly on the flip side of it and buying opportunity
within the AI related space, whether it's hardware in infrastructure,
which we have exposure to that in our portfolios, or
if it's a double down on memory and chips, which
I know I've talked time and time again on our
exposure within the memory trade, which is sk Heinex and
Samsung and Micron and sand disk, and we hold that

(10:36):
within the ETF d R A M, or just you
know regular chip exposure, which is across the whole entire
you know, semiconductor space. It's essentially the Philadelphia Semiconductor ETF,
but we hold it in the ETF SMH. So you know,
right now, those valuations are starting to look very attractive.

(10:57):
You know, when we went through the first two quarter
of this year and we saw you know, such strong performance,
including it being up over one hundred percent, valuations started
to look a little frothy. Again, the money was there,
but valuations started to look a little frothy. And with
this correction that we've seen over the last say three
weeks or so, valuations are coming much more favorably in

(11:19):
lined and again for the second half of this year,
those valuations are looking very attractive. So something that obviously
as an investment committee here at Bouchet, which is made
up of myself and four other individuals, that is what
we're looking at on a daily basis, discussing on a
weekly basis and running financial models, you know, day in

(11:40):
and day out, to see exactly where we get comfortable
on those valuation entry points and making sure that we're
maximizing on that exposure within our portfolios. Something else that
you know, I like to talk about definitely during the
economic update that we had on Wednesday, which again if
you're interested on viewing and seeing at an I present

(12:00):
on that that is on our website that is Bouche
dot com, that's b o Ucchey dot com. You could
certainly find that recording of the webinar there. But the
other thing which was really always at the center of
our investment thesis was this AI buildout right, you know,
it's it's Oracle, Microsoft, Meta, Amazon, Google, Core, WEEP. Those

(12:22):
are the major hyperscalers and looking in quarter in and
quarter out on how much money that they are committing
year over year on this infrastructure build out for AI.
And the reason why it was so important for us
is because this is real capital committed into the economy.
And right now, as of last quarter, future least commitments

(12:43):
for twenty twenty seven are toppling eight hundred and fifty
billion dollars. That's just for twenty twenty seven alone. And
again it's super super important as we trade at these
higher valuations and we are going on our third year
double digital returns within the S and P five hundred,
that you need to have the justification for these higher prices.

(13:07):
And when you're committing this much money into the economy,
you're going to see continued flows into investments. That is
real fuel in the tank to continue to perpetuate this
market forward. So until we see any sort of meaningful
retraction within this CAPEX number within these data centers, again,
we think that there's a lot of gas left in

(13:28):
this AI trade. And something else that I talked about before,
maybe Vinnie could pull in, we could start talking about
some more tax things. But something else I found very interesting.
I spent some time talking about on the economic update
is where we stand on AI adoption. So, you know,
everybody loves to talk about AI from an investment standpoint.

(13:51):
Everybody is familiar with the large language models, you know, Chat,
GBT or Gemini Claude, whatever the case may be. Everybody
at this stage, unless you know you're very anti technology,
you know these large language models. So there's just the
assumption that every company has been utilizing it and transforming

(14:13):
it and you know, finding such you know, more efficient
processes and so on and so forth. But the fact
of the matter is is we pulled some data and
we actually use some data source by Bank of America
on this, but it looks at all of the sectors
across the US economy, and it looks at how much,

(14:36):
you know, what percentage of firms are actually using AI
applications within their business. And as you could expect, it's
pretty widespread, right, I mean each sector. For instance, I'm
looking at the top, here's information technology all the way
at the bottom is Accommodation's food services essentially service industry
industry within the United States. It's wide ranging. So at

(15:00):
the top end we're only seeing forty two percent of
publicly traded companies utilizing AI applications, and then at the
bottom end we're only seeing eight percent. So in total,
when we survey across the whole US economy, only twenty
one percent of publicly traded companies within the United States

(15:20):
are using AI applications within their business. And what my
point is here is we're still in the early innings.
I know the market always is looking forward, so obviously
a lot of this is being priced in. But when
we see only twenty one percent of US companies utilizing
AI applications to US, especially to the Investment Committee, it

(15:44):
starts to show the evolution of this AI trade because
so far we've been so focused on you know, the
infrastructure and the chips and the build out right, which
is the beginning, but eventually we're going to see the
transition into software again. Software has been underwater for the
last cheez I want to say, twelve fourteen months as

(16:07):
the focus again has been on chips and infrastructure. But
software is going to come back into favor when we
see more publicly traded companies utilizing AI and seeing it
trans transform their businesses. That is going to be direct
dollars in the pockets of software. We're going to see
the resurgence in software. Now, I can't tell you when

(16:28):
that is, but i'll tell you as the market always
moves before, you're going to see the headline on Bloomberg
or CNBC or Fox Business, whatever the case may be,
but we are. That's exactly what we're looking on right now.
It's just forward guidance within these software companies and obviously
just closing out Q two, heading into Q three, we're
going to get a sneak peek on exactly what those
software earnings look like. But that's starting to look like

(16:51):
the evolution potentially in our door into a more concentrated
play within the software space. So just did a quick
little recap on our thoughts on what's going on in
the markets. And I've been having Vinnie on the sidelines
here for a minute, so I apologize about that and
any when we're talking right before today's show, I know

(17:12):
you know something that's been important, Like I said, you've
been quoted and you know, I think it was Wire
Magazine on your views on Trump account. So I was
wondering if you could spend a few minutes and kind
of give us an update there.

Speaker 2 (17:25):
Yeah, I was quoted in market Watch. It's called It's
which is a financial website for business news owned by
the Dow Jones. Regarding Trump accounts, so, for those of
you who don't know, Trump accounts are retirement accounts for
children that were just put in the place in July fourth,
and if you had a child that was born between
January first, twenty twenty five December thirty first, twenty twenty eight,

(17:45):
you actually get a free one thousand dollars for your
child if you open up a Trump account, and you
can open up a Trump account by downloading the app
called Trump Accounts, and you can make contributions to the account.
Like I said, if you had a child born between
those dates, you get a three thousand dollars from the
US Treasury. And what the Trump account is, it's really
a way to get money into a retirement account for

(18:07):
your children, your grandchildren, and your nieces, your nephews whoever
child before the age of eighteen into a retirement account
before they are working, which is not something that has
been available before. And again we encourage all listeners to
call in at eight hundred talk WGY that's eight hundred
five five nine nine follow you there.

Speaker 1 (18:31):
Yep, yep, Vinnie, I'm here. I think you might be. Yeah, yeah,
you're just having a little bit of a mic problem,
so I could kind of take back over as you
figured that out. But Vinnie was bringing up a great
point on the Trump accounts. I mean, it's really first
of its kind, and it's been a great, you know,
funding vehicle in a great way to kick off your

(18:52):
child's you know, investment future. And there's a lot of
flexibility that comes with the accounts. And I'll let Vinnie's
back Okay, perfect, As Vinnie, I I was about to say,
you're the you're the foremost expert here, so I'd rather
not have to to kind of give an overview. Go ahead, Yep. Yeah.

Speaker 2 (19:07):
Like I said, we encourage all listeners to call on
an eight hundred talk WGY eight hundred and eight two
five five nine four nine. But like I said, the
Trump accounts are retirement accounts for children. You're able to
put in five thousand dollars per child, and that's a
combination three people can't put in five thousand dollars, has
to be accumulative five thousand dollars and what the account

(19:28):
is basically for two out in the Financial World as Sorry,
I'm having Mike problems again.

Speaker 1 (19:37):
Nope, well, folks, isn't that the beautiful thing. I just
spent the first half of the show talking about AI
and technology and then here we are having some technical difficulties.

Speaker 2 (19:47):
That's always non deductible IRA. Sorry about that, folks, non
aductible IRA, and the account grows up until age eighteen,
and then the child takes it over age eighteen, and
that that point, if you did your due diligence and
made those contributions, they could have in a retirement account
with maybe even two hundred thousand dollars in a non

(20:08):
inductible IRA, and all of the contributions are not taxable
if distributed, but the growth would be taxable. So really
the strategy to execute here and work with the financial
professional before doing this, or if you know you're really
up to speed on you know, retirement accounts or finance
in general, you might be able to do it on
your own. But do a roth conversion at age team

(20:29):
for the child and you pay the taxes out of
the balance and guess what they have you one hundred
and fifty one hundred and fifty thousand, hundred thousand and
fifty thousand in a row Ira at age eighteen, and
those of you who know about investing, when you have
time horizon of forty years, it grows pretty quick. But Paul,
I'm having my trouble, so I'll give it back to
you for it.

Speaker 3 (20:49):
For right now.

Speaker 1 (20:50):
Yeah, thank you, Vitte And again, as Vittie pointed out,
so it's a great way to start saving for your
child's you know future and whether it's education expenses or
you know, first home, whatever the case may be. But
there's actually a lot of flexibility longer down the line
as well. So you know, he was talking about what

(21:11):
roth conversions look like, you know, from there, and just
great ways to just start, you know, putting money away
for your child and get that kickstart of three thousand
dollars and having the flexibility longer down the road for
more complex ways. And then you know, so, folks, we're
coming up to the first half of the show is

(21:33):
going to be completed in the second half. You know,
I really wanted to talk about some of the you know,
oil shocks that we're seeing, what that means for CPI.
You know, you know, Vidy kind of want to talk
about some roth conversions and more detail, which is great,
and I could kind of rope that in with our
direct indexing platforms and how we're just really utilizing the
intersection of tax and investments because really that's what's most important.

(21:57):
So we're gonna have a lot of great information on
the second half of the show. Again, we're gonna really
encourage you to give us a call at one a
hundred eight two five five nine four nine. But you're
listening to Let's Talk Money, brought to you by the
Bouchet Financial Group, where we help our clients prioritize their
health while we manage their wealth for life. Stick with
us through the news and we'll be right back. Hello

(22:17):
and welcome back. Thank you for sticking with us through
the news. My name is Paulo la Pietra. I'm going
to be the host of today's show. I am one
of the wealth advisors along with the director of Portfolio
Strategy here at the Bouchet Financial Group, Certified Financial Planner,
and I am joined by my colleague Vincenzo Testa, who
is also a CFP and ACPA and ECA and folks,

(22:41):
we are here to answer any questions that you may have.
The phone lines are going to be open all through
the second half of the show that number one eight
hundred talk WGY That is one eight hundred eight two five,
five nine four nine. In the first half of the show,
we kind of just did a market recap of what happened,
you know, last week. We saw some volatility in the

(23:02):
Nasdaq and the SMP and the Dow Jones, but definitely
led by the Nasdaq. Seem continued a little bit of
a shake up within the technology trade kind of led
by AI. Then it just broke down where earnings are,
where we're seeing earnings growth and that concentration still remains
within the AI trade and supported by the Capax outlook, right,

(23:24):
you know, talked about the sixth largest data center spending
eight hundred and fifty billion dollars in twenty twenty seven,
and then the super low AI adoption, which you know,
again across the whole sector, all sectors within the United
States were only about twenty one percent, so obviously going
to see that number increase in you know, obviously forecasts
are going to show higher profitability to grow from there.

(23:45):
So definitely some catalysts to bring us, you know, in
the for the second half of this year into some
stronger returns. But one other thing I quickly wanted to
talk about from a market perspective before you know, we
transitioned to some more tax you know subjects, is just
what we're dealing with inflation in oil right because we're

(24:06):
feeling it every single day. All of us are rather
listening to the car right now, or you're out this morning,
or you're out yesterday, or some point this week you
sat at a gas station and geez, I mean you
talk about you know, some of the days, you know,
we're dealing with three seventy a gallon, and then it
dropped back down to three dollars. But now we're having
a resurgence within the Middle East and ongoing attacks, and

(24:27):
we're seeing oil climb up again. So let's talk about
what that is meant for CPI and what that means historically.
And we actually got a good glimpse on this. We
got June CPI's number. So I know we're in July,
but remember this, you know, we have to close out
the month and then we get the data. So we
did get June's CPI inflation numbers earlier this month, and

(24:49):
it came in at three point five percent. So obviously
well above the fed's target of two percent, but it
actually was the biggest drop in inflation since we've seen
go going all the way back to twenty twenty. And
that big drop was all fueled by, you know, the
massive drop that we saw in oil. When Trump announced

(25:09):
that we had the resolution and you know what was
thought to be the resolution that we saw within Iran
and that the Straight of horn Moose was open again,
we saw oil prices plummet and they dropped all the
way down to about sixty nine seventy dollars a barrow.
But with the resurgence of attacks and strikes within Iran

(25:31):
and the Straight of horn Moose essentially thought to be
closed at this point for oil travel, we're seeing oil
prices go back up to eighty two dollars a barrow.
So obviously that is going to re spark research all
of the you know, great progress that we saw last
month and you know, CPI coming down and oil prices
coming down. So something that I wanted to in something

(25:54):
I did highlight in our economic update is historically, what
does it mean when we see such a large spike
in oil prices? And what I did was I pulled
a data set that looks at four different time periods
going all the way back to the nineteen eighties, of
what the SMP five hundred does over the next year

(26:15):
at following a two day oil surge of twenty percent
or greater. So this goes back to April seventh and
nineteen eighty six, nineteen ninety one, nineteen ninety eight, two
thousand and three, two thousand and eight, twenty sixteen, twenty
twenty and of course now so we're looking at eight
periods and on average, after we see oil prices surge

(26:37):
twenty percent or greater, the average return of the SMP
five hundred is twenty four percent. I don't I was
just as surprised when I saw that data because obviously,
higher inflationary prices puts, you know, pressure on the US consumer.
US consumer has pressure on them they spend less. If
they spend less, that is a direct result of a

(26:58):
GDP hit within our economy. But the data shows that
one year subsequent, you know, outlook, after a twenty percent
surgeon oil prices, the average SMP five hundred return is
twenty four percent. And where we stand now since we
saw that initial surge back on March six, to twenty
of this year, you know, we're only up about eleven

(27:20):
percent on the SMP five hundred, So that again looking
at an historical basis, shows that we still probably have
another thirteen percent of gas less than the left in
the tank, no pun intended for the rest of this year.
So we couple that looking at valuations and earnings growth
within AI at that historical standpoint, what that means with energy,
there's a lot of data that supports that the second

(27:42):
half of this year should and will remain, you know,
pretty strong. The outlook look very good. So Vinnie, when
you know, we're kind of sunset, and I don't know
if you wanted to add something else on the Trump
accounts just because I know you were dealing with some
my problems, but I know we also were talking about
just in general, right, you know how advisors, you know,

(28:03):
add value because you know, it's so often people think,
you know, when they're thinking about do I need an advisor,
they just think, you know, hey, my advisor is just
going to put me in an investment portfolio. But obviously,
especially with what we do here at Bouchet managing almost
two billion dollars at this point, we add so much
more value. Even though investment management is always top of

(28:24):
mind and most important, we add so much more value
And I don't know if you want to share, you know,
kind of some insight on that.

Speaker 2 (28:31):
Yeah, again, we encourage all listeners to call in at
eight hundred talk WGY. That's eight hundred eight two five
five nine four nine. And I think advisors add value
in a lot of ways.

Speaker 1 (28:44):
You know.

Speaker 2 (28:44):
Obviously investment management is like the core of it all, right,
but the things in the industry has changed so much.
You know, advisors are doing so much other things. And
financial planning, you know, can be easy in some regards.
Sometimes people aren't that up to speed on it. But
you know we're here and we're obviously experts of financial planning.

(29:04):
But tax planning ob obviously is huge. And just like
in general, you bring clarity on topics, right, I mean,
you have to know your strengths in life. You know,
I'm not a doctor, problem is not a lawyer, you know,
we don't you know, when when we need health services,
we go to a doctor, and we need law services,
we go to a lawyer. And when you need financial help,

(29:27):
then it's a good idea to reach out to a
financial planner or financial advisor. And right on queue we
have Peter from Nikiyuna. Hey, how you doing, Victoria?

Speaker 3 (29:39):
I was I was wondering if you could just slow
down a second and differentiate again the five twenty nine
versus the Trump on the tax the tax issue. One
is tax deferred, one is not. If I'm getting it correct.

Speaker 2 (29:53):
Yeah, so they're much different. So the five two nine
plan is really geared towards cop college savings. And when
you make contributions to A five times in New York,
if you're married, you'll get a deduction on your New
York state tax or turned off up to ten thousand dollars.
And there's no limit to how much you can put
in the five to two nine, But you want to
be careful because you don't want to lock up too

(30:15):
much money in the five to two nine and have
you know overwhelming amount left over after tuition's paid for. Right,
there's ways to and it grows tax free if you
spend it unqualified education expenses, so that one's really geared
more towards college savings. There's a couple of loopholes out
there that can help you get it out penalty free.
You can move into a raw IRA if it's open

(30:37):
for fifteen years in total. The Trump account itself is
more of a retirement account. It's not geared towards education savings,
so the contributions you make are after tax, right, So
the money grows tax deferred, the growth on it grows
tax deferred, not the contribution, but you don't get a
tax deduction at all, federal or state for the contribution

(31:00):
to the plan. And then when it grows, the money
gets taken out and the growth on it is taxed
at ordinary income. So it's a retirement account just like
your FOAR one K, but it's not completely tax deferred.
Its after tax, and it's not a raw either. The
growth is not tax free, so just the growth it's what.

(31:20):
It's the same thing as a non deductible IRA, which
is an IRA that you can contribute to. If you
are over the income limit to contribute to iras rowth
are traditional or you've maxed out your WROTH or traditional IRA,
you start to make contributions to a non inductile IRA,
which is really not a great account when you think
about it, because the growth is taxed at ordinary income

(31:43):
and if in the grand scheme of things, anybody as well.
Just put your money into a taxable account where you
can get long term capital gain rates and qualified dividend
rates which are much lower than ordinary income rates. But
if you use the Roth conversion strategy, then you put
your child in a really great position to have tax
free growth over thirty five forty year period up until retirement.

(32:06):
And if you did the mass, you know that account
could grow really exponentially because of the time that you're
in the market. So it makes sense.

Speaker 3 (32:15):
So yes, so to me as a contribution, it's not
tax deductible, but during the collection years, the income is
deferred until such time that it's pulled.

Speaker 2 (32:29):
That's correct. So the strategy I recommend the client, and
it's kind of complicated, is to do a conversion at
age eighteen to a row of the entire account balance,
or maybe you do it when they're eighteen nineteen twenty
over a three year period, pay the tax out of
the account, and then you have all that money in
the rows for the child. You know, obviously the child
owns it. The risk is, you know, do you trust

(32:49):
the child to not spend it before retirement age? But
it is a great tool if all things align.

Speaker 3 (32:58):
So when you converted from a from a trump to
a rock. The income coming out is taxed at at
at at the beneficiaries at ordinary rate.

Speaker 2 (33:10):
Well that's where it gets tricky, right, So if you're
still claiming the child as a dependent.

Speaker 3 (33:17):
Right no, I mean beyond that.

Speaker 2 (33:20):
Uh yeah, so if you're not claiming the yeah yeah,
well even then, if your son or daughter is claiming
them as dependent, it would tax it at basically the
parents rate, which is called the kitty tax. Okay, but
after they were done claiming, I got pending. Okay, thanks,

(33:46):
thank you, I appreciate it. Yeah, yeah, absolutely. There's the
call in at eight hundred talk w g Y. That's
eight hundred eight two five, five, nine four nine. Before
Peter called in, I was going into how advisors add
value you and you know, clarity is huge behavioral coaching, right,
one of the main things, and I think one of
the most important things we do as advisors is when

(34:08):
things go south and people kind of panic, you know psychologically,
when the market goes down. What do people want to do?
They want to go to cash or sell when that's
the worst thing you could do, and we're there to
be kind of that liaison and say, hey, take a second,
let's think about this, and you will reap the benefits

(34:30):
if you avoid doing that. I think that's one of
the major things that we do and really important things.
You know, obviously, making clients money is huge, but you
know that's the same state that's saving clients money, right,
and that's the same thing as uh making clients money
in a way tax efficiency right, the way you invest
your money. You know, whether it's the funds you use,

(34:53):
or you know where you're putting your assets in which account,
whether it's the roth IRA, traditional IRA, taxable account, charitable plan,
equity compensation planning. Advisors do all of this for you, right,
and planning around your taxes and being tax efficient is
huge if you for every dollar you save in taxes
is more money that you could earn in your portfolio.

(35:15):
So if we're saving you taxes, that's making your money.
And then guess what you're making money on money you saved.
So it's really uh these things that especially our firm.
I think our firm differentiates a lot from other firms.
You know, we're a small boot boot not small. We're
managing two billion dollars. We're a boutique firm in the
Albany area, Saratoga area, and you know, we're close with

(35:36):
the community. We have some great talent here. You know,
we have three CPAs you know, all of our advisors cfps.
We have some other designations as well. We have the
expertise to be able to do this right. You know,
Polo is an economist, he's an investment guy, but he
pulls me into meetings when clients need tax help and
vice versa. So we have the expertise that not a
lot of other firms have. And I think, you know, we

(35:59):
provide our clients value and the utmost value that we
possibly can. So that's my that's my speel.

Speaker 1 (36:07):
Yeah, I mean, Vinnie, I think it's a great point,
especially on the last point right where you know, you're
a great advisor with a whole wealth of knowledge across
the whole entire financial planning spectrum. But you know, obviously
you have huge shrinks in tax you know, and obviously
being the director of portfolios here more concentrated in investments

(36:28):
and having that ensemble practice really brings the most amount
of value to our clients. Right, Because I've been I
don't know where the time went, but I'm coming up
on my eighth year here at Bouchet. It's a team
second to none, and I've really enjoyed, you know, my time,
you know here, and as we continue to grow, just
seeing the evolution of the services that we provide to

(36:50):
our clients. But before my time here, I spent about
three years at Morgan Stanley and again it was good experience,
great company. But when you look at Morgan Stanley, you know,
you might have an advisor that works for a Merrill Lynch,
Morgan Stanley, Fidelity, whatever the case may be, something that's
attached to a wirehouse, and you think, well, if I
work with this advisor, I got all of Morgan Stanley
behind this advisor to help me. And that's not the case.

(37:14):
You know, when you interact with an advisor like that,
you usually have a team of one and maybe they
have a client service person or maybe two advisors. But
here at Bouchet, you engage your whole entire team, twenty
two professionals, and you know you might have a relations
relationship head like myself or Vinnie or Harmony or Sam Marty, Ryan,
John Steve, whatever the case may be. But at any

(37:35):
single time, you know, we're also bringing in other members
of our team because we're so diversified in our strengths
and that's what makes us overall a great fit for
any type of client in any type of situation. You know,
we didn't just niche ourselves into a specific Hey we
just do small businesses, or we just work with doctors,
or you know, we just do professional athletes, which that

(37:58):
would be cool. I would love to manage some Las
Vegas Raiders money. But nonetheless, we have expertise that goes
all across the you know, the financial planning spectrum, and
I think that's super super important when we talk about
what the value we could bring to our clients. And
something else that he was kind of touching base on

(38:18):
a little bit too, was you know, Steve has famously
said this time and time again for the last thirty
five years, one of the most important things that we
do and get paid for is to take the emotions
out of investing. Don't kid yourself. I'll also be the
first one to admit it. Investing can be an emotional business, right.

(38:40):
You know, when you see the SMP five hundred contract.
I've seen this time and time again. You know, talking
about a client that wants to get you know, some
money invested here, get more aggressive when the market pulls
back twenty percent, and then all of a sudden, we
have the S and P five hundred and bear market
territory and call that client. I'm like, okay, mister and
missus Smith, are we ready to go from a sixty
forty to eighty twenty? We ready to take advantage of

(39:02):
all of the discounts that we're seeing in the markets
right now? Well, I don't you know, Pollo this time around?
The headline? Yeah, of course, the headlines are bad and
that's why the market's down. But when there's blood in
the streets, that's where the opportunity presents itself to make
sure that you could have the correct application moving forward
to create the wealth that you've been looking for. Those

(39:24):
are the real opportunities, and that's what Vinie was pointing out.
That's where we bring so much expertise for our clients.
Whether it's investment times, you know, talking about opportunities, or
you know tax planning that Vinnie does with clients. You
know where there's opportunities here that we really need to
bring the focus. That's where we bring so much expertise.

(39:45):
Now we're coming up in the last ten minutes and
again would love to take a call for for the
last ten minutes that numbers one eight hundred talk WGY
one eight hundred eighty two five five nine four nine.
But we could also talk about some tax strategies and
maybe and we could split this up like perfect, Yeah,
we got Ron from Queensberry. Ron, how are we doing

(40:06):
this morning? Ron?

Speaker 2 (40:08):
Let me guess you have a queen's accent?

Speaker 4 (40:11):
Yeah, yeah, I do.

Speaker 3 (40:13):
Yeah, I do, you know, I.

Speaker 1 (40:17):
Do.

Speaker 4 (40:17):
I promise any I wouldn't call again, but I uh,
I just I'm listening to the comments that you're that
Vinny's making and regarding services that you provide. But one
thing you left out, Vinny, is is the assistance that
you provide two like the family of the of your

(40:40):
clients that you also provide, uh, you know, help regarding
their kind of investments even though they don't meet the
thresholds of becoming an actual client themselves. But uh is

(41:01):
it the over the years, uh, you have been extremely helpful.
You and Ed have been extremely helpful in helping me,
like design a portfolio, uh for for my daughter. So
I wanted to just make sure that everybody knew that
you also provide a whole scope of other your help

(41:26):
two clients for there, the people that they care about.

Speaker 2 (41:33):
Ron, thank you for calling it. I appreciate that so much.
So Ron's one of our clients, and you know Bohelm
moves on the investment team and I have given his
daughter recommendations for her employer retirement plan. And you know,
we do help our clients' kids, you know, whenever they ask,
it's you know, we never rarely ever turned down help.

(41:54):
So appreciate that. Ron means a lot and just shows
shows you what we do with the firm here.

Speaker 1 (42:02):
Yeah, no, Ron, pick you so much for that call.

Speaker 4 (42:05):
You're very welcome.

Speaker 1 (42:06):
Take you guys. Yeah, I have a great weekend. And again, folks,
we do have a quick you know, a few minutes.
If you want to squeeze one last call in again,
that's one a hundred talk wgy that's one one hundred
eight two five, five four nine. And if not, Vinnie,
let's split this last few minutes into two separate segments.
So just quickly, I want to talk about something that
we continue to do on the investment side of the

(42:28):
equation for taxable accounts, and that's called direct indexing. Again,
we traditionally use exchange traded funds within our portfolios ETFs.
That's a singular investment that makes up hundreds of hundreds
of different companies that could give us exposure to anywhere
that we would like within the markets, but on the
taxable side of the equations. A lot of times, if
it makes sense, we like to do what's called direct indexing,

(42:49):
which is the same exact exposure that we get in
our ETF models, but instead of holding onto the ETF,
we're actually buying the individual stocks that make up that ETF.
Why that's so important is something that's called tax loss harvesting,
where you could sell the investment harvest that loss, either
write off on your tax return that your end up
to three thousand dollars, or offset any current or future

(43:11):
gains within the taxable side of your portfolio. It's super important.
And what's even more important is a time frame like
we're seeing right now. I talked about earlier on the show.
We have the S and P five hundred. Year to date,
it's up eight point seven four percent, but right now,
one hundred and seventy two companies out of the SMP
five hundred right now are actually negative. So if you

(43:32):
held on to Spy, which is one of the largest
ETFs that give you exposure to SMP five hundred, you
just be up eight point seventy four percent. You have
no opportunity to tax loss harvest. But if you're doing
direct indexing with Bouchet Financial Group, not only would you
be up eight point seven four percent, but we would
also be tax loss harvesting on one hundred and seventy
two companies that are negative on the year. So it's

(43:54):
a great investment strategy in both up markets and down
markets to make sure that you're maximizing on stock exposure
sure and maximizing on tax exposure, which obviously is going
to put a massive smile on Vincenzo's face, right if
I go to him, I'm like, hey, your client, Xyz,
we have the taxable account we harvested, you know, seventy
thousand dollars worth of losses even though the market's up

(44:15):
ten percent. My man Vining is going to be happy.
So that's a great strategy. And I don't know, Vinny,
if you want to do a very quick segment maybe
on roth conversions.

Speaker 2 (44:24):
Yeah, I mean, roth conversions are another tax planning tool
that we use for all of our clients. Not all
of them, but for a lot of them. They could
save clients millions of dollars hundreds of thousands of dollars
if done the right way for a multitude of reasons.
So for those of you who don't know, ross conversion
is moving money out of a tax deferred retirement account
into a roth IRA and doing it in a timely

(44:47):
fashion and strategic fashion is very important. The best time
to do it is obviously in your low income years,
so you're not in higher tax brackets. When the money
comes out when the market takes a dip, it's also
a great time to do it. So if all these
things align and you're able to do a roll conversion,
it's good too. But also early in your life it's
good to do it as well, even if you are

(45:08):
in a higher tax bracket and you're not doing a
low income year. The time in the market that you
have in a tax free environment for the growth, it's
really beneficial. But just in general, when you have a
really high balance in your IRA or tax the for
a retirement account, it's not a great thing because when

(45:30):
you get to requirement own distribution age, which is aged
seventy three for some folks and seventy five for other folks.
The IRS forces you to take money out of that IRA,
and as you get older and older, the amount the
percentage that they force you to take out increases, and
it could push you into a higher tax bracket. It
could increase your Medicare premiums. It creates a lot of

(45:53):
issues for folks. And then when you pass away, your
beneficiaries have to liquidate that account within ten years, which
is a real issue if the amount is significant. Let's
say you leave over a four million dollar IRA and
you leave it over, maybe you have one child and
they're a high earner, and they have to liquidate four
million dollars and even more because it's going to grow

(46:15):
during that ten year span in ten years, and they're
getting taxed the highest tax bracket. It's really a significant
issue that a lot of people face, and doing ROTH
conversions gets money into the roth IRA and kind of
eliminates you could eliminate your arm these for some clients
who do eliminate them, limiting up taking their Medicare premiums
and then remove the issue of the ten year rule

(46:38):
when it comes to liquidation for the beneficiaries. But today
it was a great show. It's Sarahtoga Summer the tracks
going today. Appreciate everyone listening in. I appreciate all the
callers and Apollo does as well. Please listen to us
tomorrow at eight a m. Don't recall who is doing
the show, but there will be someone there same channel

(47:01):
you are listening to. Let's Talk Money brought to you
by Bouchet Financier Group, where we help our clients prioritize
our health, what we manage our wealth for life. Thank you,