Hi, you're listening to Let's Talk Money. My name is Vincenzo Testa. I'm one of the wealth advisors here at the firm. I'm a certified public account and a certified financial planner. Primarily what I do here at the firm is financial planning and tax planning for our clients. Apologize. And I also have my colleague Ed Wilhelm who has joining me today. He's our trader and portfolio analysts. Ed, if you want to go ahead and introduce yourself.
Hi, everyone, Nice to see the sun out today. But as Ben he said, on the portfolio analysts and trader, so a little bit more on the operations and research side of the firm. Thanks Ed, so, Ed and I are gonna be doing the show today and we're gonna be, you know, given our colleague and a colleague Steve Bouchet and Knight, well deserved break and we encourage any listeners to call in at eight hundred talk wg
Y. That's eight hundred eighty two five five nine four nine. So. I attended a presentation this week on Wednesday, one of our vendors, First Trust, and they had, you know, had us all over to cafe apprecio, and they had this motivational speaker speak in front of us while we ate dinner. His name was David Rutherford, and I just felt it was really interesting and pertinent to bring up, you know, the presentation. He so, he's a marine, and he was the performance coach for Mookie Bets,
who's on the Dodgers Los Angeles Dodgers now baseball team. And prior to that, he was on the Boss and Red Sox. So he was a performance coach for Mookie Bets. He was a marine. So this guy has really been through it all. And really what the presentation consisted of is you know people's you know, subject when they're subjected to fear, and how they react to it, right, And I just found it really interesting and the presentation he put on with all of the stuff this guy has been through.
I mean he was a marine. I mean you can imagine what he's been through, you know, over overseas in the Middle East, and you know he served obviously, and when he spoke about fear, and you know, when fear hits you, you know how you handle it is you know,
really the only way to overcome it. And I just found it really interesting listening to this guy, it gives you some perspective, Like when when you think you have all of these problems in life, when you listen to someone who you know has you know, exponential amount more, you know, really gives you some perspective on that. So it was really interesting to hear. But I'll let Ed kind of give us a market update and Ed go ahead. Yeah, No, it was definitely good week for the Marcus s and
p up a little over one percent on the week. We did see some short lived volatility s and p up five percent on the month and up over almost six percent on the year, you know, and the seas across the board this week closing out at or close to all time highs. Definitely still seeing large caps outperform and that's really no surprise. That's been consistent with what we've seen, i mean really since two thousand, but especially over the course
of the last few years. And that's still concentrated in growth across across the board, but specifically those megacaps, you know, being the Magnificent Magnificent seven or fang And probably the biggest focus of the week was on Nvidia earnings. There's definitely a lot of anticipation leading up to that, we did see a sell off heading in and that is probably just people taking offits, you know, heading into earnings. You know, you get a little bit of uncertainty
and you know you're going to have a large move in either direction. Uh So, you know, based on your risk levels of comfortability, you know, definitely can be smart to take profits leading into something like that. However, if you did take profits, you're definitely sad to see. You know, Nvidia crushed earnings. You know, they blew out results. They added two hundred and seventy seven billion in market cap. That's a that's a one day record, and that's just, you know, honestly hard to fathom.
You know, what two hundred and seventy seven billion really even looks like. But they came out with earnings for share of five dollars and sixteen cents, beating estimates by fifty two cents. Revenue came out at twenty two billion, uh beating estimates by almost two billion, and that's two hundred and sixty five percent growth year over year. You know, in video really is the telltale
story of what a growth stock looks like. You know, the the rates that they have been showing and continued to deliver on to a degree has just been crazy, you know, looking at a breakdown of some of the revenues. Data center revenues up for the fourth quarter a record over four hundred and nine percent year over year, and then as well, gaming revenue was up fifty six percent year over year, and then their visualization side was up one
hundred and five percent year over year. You know, and video has been a great story as far as just the focus on AI that we've seen. And they've only ever missed to the downside three times on earnings, you know, they've been they've been very consistent and now they're up you know, sixty four almost sixty four per year today, So definitely, you know, one
of the top performers, and especially in the megacap space. And just looking at some Wall Street price targets after earnings, and these do tend to jump around a lot, so you know, definitely not an end all, be all priced target. But Key Bank coming in on top, they said a price target of one one hundred, a little bit lower. Looking at HSBC coming out at eight hundred and eighty Golden Sachs eight seventy five JP Morgan eight
hundred and fifties. So, you know, a lot of people are still confident, and I think it does speak to the legs that this market still has in it. You know, it's reassuring to see these strong earnings and kind of pointing towards a definitely a strong stock market. As we've continued to see. Outside of Nvidia, we did see a little bit of a slight
breath expansion. You know, energy having a really good month up you know, a little over seven and a half percent, and then healthcare as well saw a strong month at you know, over five percent along with energy and industrials. So not quite that you know, tacking communications driven months, you know, compared to what we've seen the rest of the year, but it's nice to see a little breast expansion and overall markets still doing very well this
year. Yeah, thanks, Ed. So artificial intelligence is really leading the charge, and we're in the really early stages of what artificial intelligence is and what I think it could become eventually. And for those who don't know, artificial intelligence is basically machines, computers, things of that nature that have capabilities that the human mind has as well. Right, so, you know, computers just getting extreme intelligent, being able to do things you know, that
the human mind can do on their own. You know, computers have been able to do that in the past, right, I mean, if you if you know chat GPT, if any of you are familiar with that, you could it's difficult to explain on the service, but you could pretty much
type anything into this website. You could say, you know, write me a you know, uh, farewell letter to you know, my grandmother, and it'll in five seconds, it'll manufacture a letter and it'll be better than you know, written, better than you could have wrote on your own, right, And it's it's just pretty amazing how far technology has come. And that's really you know, the caveat behind you know, why the market is
surging and the video itself. The company, you know, they're a chip maker, right, so with this artificial intelligence on the rise, we're gonna need more computer chips. In the video, you know, is obviously one of the number one manufacturers of semiconductor computer chips. And that's really why we're seeing such a surge in that company's market value. And you know, really why you know they're on the upswing and you know the SMPS at all time
highs and NASDAC is at all time highs. So AI is really leading the charge with that, and it's pretty amazing to see. It's pretty amazing to see. So, like I said, I'm gonna certify public accountant, and what I do for clients at the firm is there's some clients, you know, we'll do their taxes for them, selects few, and I'll do tax planning for clients as well. So there's a couple changes from twenty twenty three
to twenty twenty four that I wanted to talk about. So when it comes to your individual retirement account or your rath ira, your traditional IRA and your roth IRA, you're still able to contribute to that for twenty twenty three by the tax deadline before you file your tax return, so April fifteenth would be
the contribution deadline. And for twenty twenty three, the total amount with the CAT up to seventy five hundred, so it would be sixty five hundred if you're under the age of fifty and seventy five hundred if you're over the age
of fifty. And in twenty twenty four, that's increasing the contribution limit under the age of fifty will be seven thousand, and over the age of fifty will be eight thousand, So you could actually make a twenty twenty three contribution in twenty twenty four contribution before April fifteenth, right extly, so there's a
fifteen month window in which you can make contributions for any given year. Because there's obviously income limits for roth IRA contributions and traditional IRA contributions, you have to have earned income, and they give the IRS gives tax payers until the deadline to make contributions to those accounts because obviously not it's not always clear or you know, evident, how much someone may earn right before the end of the year. You know, if it's December thirty first, you might have
a big bonus check. You know, you don't know if that's going to put you over the limit. So they give until the tax deadline to make contributions for the prior year. The other thing I wanted to mention is the four to one K contributions are increasing to twenty three thousand dollars for those under the age of fifty and then seventy five hundred for those over the age of fifty with the catchup, so a total of thirty thousand, five hundred.
So if you're someone who has a fixed amount coming out of your paycheck every week and contributing to your four oh one K or employer a retirement plan, you might want to adjust your four h one K contributions weekly just to kind of make up for this increase in the contribution limit. The other thing to pay attention to is your withholding. Because you're withholding you to be adjusted. Right if last year you file your tax returney, you had this huge tax
bill and you're like, what the heck? You know I worked all year, they took all this money out of my paycheck, you know, you might want to adjust your tax withholding so you don't get into that issue, right, because it's going to help you avoid penalties, it's going to help you avoid interest on the money owed when you fillow your tax turn the next year. So just something to be aware of and you know, kind of get ahead of the game and kind of just protect yourself in that regard.
And if you're changing jobs right in twenty twenty four, if you, let's say midyear, you're gonna go from one job to the next, you don't want to over contribute to your retirement plan. Right, you might, you know, start a new plan and maybe you've already maxed out your four oh one K, but your new job doesn't know that. Your new employer doesn't
know that. So if you're not paying attention, if this is not something that you're you know, watching closely, you could start contributing to a new four oh one K plan and then next thing you know, you did fifty thousand dollars in contributions this year between the two because your new employer didn't realize that you had already maxed out your plan at your prior employer. The other thing to pay attention to is excess Social Security withholdings. Right, so Social
Security tax is paid up until a certain salary. I think it's around one hundred and forty nine thousand now, so they tax you on Social Security tax up until that amount. And the same thing with the employer retirement plan.
When you move jobs, your new employer doesn't know that you've already paid this much solid security tax on your prior prior employers salary, so they're gonna withhold even though you maybe you earned two undred thousand altogether, they're gonna withhold on that two hundred thousand because they don't know how much you withheld on the prior at the prior employer. But we're gonna take a quick break. My name
is Vincenzo Tesla. You're listening to Let's Talk Money, brought to you by Bouchet Financial Group, where we help our clients prioritize their health while we manage their wealth for life. You were listening to Let's Talk Money. My name is Vincenzo Tesla. I'm when the wealth advisors here at the firm and I'm joined by my colleague Edward Wilhelm. We encourage any listeners to call in at eight hundred talk WGY. That's eight hundred eight two five five nine four nine.
I was just going over some quick tax items, but I'm gonna flip back to investing and get ed back in the mix. So something I think that's really prevalent right now. It's something that we referred to as FOMO, right and that's the fear of missing out, and it's in the air.
It's in the air right now with companies like Navidia. You know, they went up sixteen percent this week and one day after the earnings closed and the video has been a company that has grown exponentially over the past five years or so. I mean, this was a company that wasn't talked about five years ago. I mean it was talked about, but it's now it's in the realm of the facebooks of the world, the Tesla's, the Apples, the Amazons. It's now earned that respect. And you know, this week was
it was really significant. The earnings call was extremely significant for the stock market as a whole. It kind of drove things that drove the market as a whole this week. And like I said, I was talking about earlieralking about artificial intelligence. They're they're, you know, a chip maker, computer chip maker, and they're demand for computer chips is gonna just continue to keep on increasing, and the VideA is gonna you know, reap the benefits of that
as a company, and the market value continues to increase. It's just amazing what we're seeing here. But the thing with the video is, you know, I brought up the fear of missing out when these companies take off like this. You know, you know, people find themselves Hey, you know, hey, I want to get I want to be a part of that. I want to you know, kind of reap the benefits of that. So Ed talk a little bit about FOMO for me and how that applies to
investigate. Yeah, thanks, Vinnie. Uh. You know, Warren Buffett as a great quote, and it's that just two things move the market, and that's either fear or greed. I think it definitely holds true, you know, especially in you know, behavioral based finance. But I think we have seen you know, fomo. I essentially equate that to agreed a little bit, and it sounds worse than it is, but you know, yeah, when you have you know, markets performing so well and you know,
definitely, at least in the short term, lack of that volatility. You know, everyone is focused on that, you know, sort of total return metric and really if you haven't been in or overweight the you know, megacap uh tech, you know specifically that mag seven, you're you're you're underperforming on that total return side, and it's definitely important, you know, as investors
that everyone kind of stayed disciplined. You know, you're they're really strong companies and you know, I think they can be expected to keep performing well. It's hard to see a bullsh market where tech in these megacaps aren't leading the charge but diffying you know, trend following and momentum here has definitely been been
rewarded. But I think that fear of missing out can sometimes you know, really bite investors when you do, you know, post nvideo earnings, you know, if you're getting in here at the top, you know, right as a lot of other people who have been in are potentially profit taking, you know, you could see your position take a hit initially, and sometimes that can then compound depending on you know, the rest of the markets kind
of momentum. So it's definitely always good to be cautious, but you know, encourage investors to you know, look for any dips and take advantage of them, especially with just how focused markets are on economic data right now. And ultimately I do think that that is the underlying factor here and and what's really going to continue to you know sway markets in either direction is you know, these monthly economic data releases on inflation. Yeah, thanks, I appreciate
that. Yeah, FOMO can really bite you, you know if you're not doing the correct analysis right. So the video is one single company, right, the video takes a dip and maybe they go down five percent ten percent next week, and you know, folks might want to buy in then, right, maybe if they're a little bit more careful. Some people buy in
when they're at all time highs, when it's at all time high. But some folks, and you know, it takes five percent ten percent that they want to get in, and that's the point they want to get in.
But when you're investing in single companies, you know you want to do it's a very detailed analysis, right term, the value of company if they're undervalued, if they're overvalued, and just buying when everyone's rushing in might not be the best move, right, you know, when it comes to buying the market as a whole, Right, if you're buying a diverse portfolio, if you're buying you know, an ETF with you know, hundreds of companies within it, you know this doesn't really apply, right. You know, if
there's something called systematic risk, there's something called unsystematic risk. Right. Unsystematic risk is the risk that one single company holds. Right, if you invest in Chipotle years ago, I remember they had to equal I breakout and they're let us the stock took a hit. Okay, you invest in Boeing you know, one of their planes, you know, crashes, the stock's going to take a hit. So if you're investing and you have all your eggs
in one basket in one company, you're subject to that unsystematic risk. But when you diversify your portfolio and have hundreds of companies, you only have one risk. That's systematic risk, and that's market risk. Right, the stock market goes up and down, something happens, you know, the Ukraine Russia war, the market takes a hit temporarily, but that's the only You've eliminated
unsystematic risk by diversifying. That's really important. You want to limit your risk when it comes to long term investing, especially with the money that you're going to use for retirement, money that you have set aside for goals down the road. Gonna want to diversify your portfolio, right, And if you you know, taking risks is okay. If you're the type of person who wants to buy individual stocks, that's great, but I would not recommend you do
so with you know, your nest egg, your retirement account. You're ira just kind of be weary of that. And the rule of thumb is not to have five to ten more more than five to ten percent of your net worth in one company, right, and that'll kind of protect you. So ed Inflation obviously has been a hot topic over the past year or two. So where are we with inflation and data that has come in recently. Yeah, so this month we definitely saw a hot print, right, So when
you hear a hot print, you know that that points to inflation. It means the economy is running hot. So you know, this month we got data for January. We saw core inflation, which has been the Federal Reserves preferred metric to look at, increase zero point four percent month over months consensus, so you know, what analysts were expecting was only zero point three percent and a different point one percent may sound small, but when we're looking at
this data that that is a relatively large difference. And then year over year, we saw an increase of three point nine percent, where consensus was only three point seven percent. You know, another couple of metrics, Uh, we saw a CPI which is the consumers price index, and that was up three point one percent year over year, and then PPI, which is a producer's price index, was up two point six year over year, both coming in above consensus. So we saw this hot data come in, you know,
and now we're potentially looking at a reacceleration of inflation. You know, it's definitely too early to tell. At the end of the day. This is you know, just one month of data. What we're seeing in uptick. You know, nothing moves in a straight line, so you know very well next month we can see this comeback down. But it is definitely giving caution to a reacceleration of inflation, which is definitely not what the FED wants
to see. The FED did release their their minutes from their January meeting. There were some notes in there about inflation stalling, and I believe that I have to cut I have to cut you off. So we're coming to a commercial break. ED will continue on inflation when we get back. But you were listening to Let's Talk Money brought to you by Bouchet Financial Group, where we help our clients prioritize their health while we manage their wealth for life.
Thank you. You were listening to Let's Talk Money, brought to you by Bouchet Financial Group. My name is Vincenzo Tessa. I'm one of the wealth advisors at the firm. I'm a CPA and CFP. Please feel free to call in at eight hundred talk w g Y. That's eight hundred eight two five five nine four nine. I'm joined by my colleague Ed Wilhelm, the portfolio analysts at the firm, and Ed was just going on about inflation,
and I'll let him continue. He was speaking about before the break. Yeah, so I was just running over you know, some of the data we had, it came in hot, you know, above inflation or above expectations, you know, pointing to a strong economy. But January FMC minute have come out, so it's just the notes on their January meeting what kind of gives us a insight to what they're thinking. And there were some notes in there about inflation stalling, which did you know, trigger some volatility in the
markets this week definitely overshadowed by nvidious strong earnings. It is important to know that just just because you know we have inflation or off a hot print, it doesn't necessarily mean, you know, bad news for stocks. You know, stocks can certainly perform well and inflationary regime. We do have some more economic data coming next week, the most important being we get GDP growth rates on Wednesday at eight thirty am and then we get core PCE on Thursday at
eight thirty am. So definitely two important days and they'll kind of give more insight to the economy and you know how hot inflation may or may not be be running, but you know, definitely made a lot of progress and the said is still hoping to cut this year, but definitely all eyes on data is still moving forward after a hot print and the last things I wants to see as a reinflation and continued uptick here. Thanks, Ed, appreciate that.
So the economy itself is pretty strong, right and in the current rally, you know, there might still be some gas in the tank. And you know, tech is really leading the charge and we're talking about that earlier when it comes to artificial intelligence and how that's really you know, shaping the market and leading it into where it is. Ed, can you go in a little bit about where the economy is right now? Yeah, the the
economy is certainly strong. You know, I still hear a lot of news on a potential recession, but to me, it really does not feel like we're on the precepss of recession. You know, unemployment is at three point seven percent. And overall there's a lot of cash still on consumer balance sheets as well as corporate balance sheets. So overall, the economy is in a good place and I think it would take a pretty serious catalyst to knock that
off. I think Nvidia did a great job of showing us that there is still room to run left in this in this market, and if it continues, you know, it's definitely still going to be the megacaps and tech communications that are leading the way there. Yeah, thanks Ed, thank you.
And there's this new concept in investing in this new technology, and it's called direct indexing, right, and it's basically, you know, instead of buying one ETF right and only having the ability to buy and sell that ETF, and that ETF or exchange trade of fund or mutual fund has hundreds of physicians and hundreds of companies. Right, you're diversifying your portfolio, but it only
looked at as a whole. Right, all of those companies are within the fund, and you know when you sell it, the gain or loss that you might take is only subject to all of those companies as a whole. And then we have direct indexing, which is you know, basically still diversity buying your portfolio. But if you have one thousand dollars, let's just say, you know, you have ten dollars going into this company, ten dollars
going into that company. So you're basically it's basically like you're buying a diversified fund, but you have the ability to buy and sell each company at you know, whatever gain and law, like, whatever gain and loss that company has within that diverse portfolio. So it's sort of it sort of gives the ability to do things like tax plan, right, and let ed go into how you know we're going to be rolling that out at the firm and how
that's going to affect our clients. Yeah, so you know direct indexing. Really quick, d we have we have date, we have Dave on the line. Come morning, guys, Thank you for your service. A Hi, Dave, are you good? How are you good? What can we help you with? Steve talks about sandbox money whatever your funds. Would you comment on a specific fund or no, it's just a specific stock or fund.
It's an ETF with Vanguard. Okay, so, well, a sandbox account is going to be an account that it's not gonna be your nest egg, right, it's gonna be some money you set aside to sort of play with, right your hence the name sandbox account. So are you asking for your sandbox account a specific fund? And correct? This specific fund is d g T. It's a high tech seems like it's performing well, I'm just
thinking about doing it. What is your comment on that? Fun Yeah, I mean v GT is a technology fund rate and it's is it equal weight and can go into a little bit more a little bit yeah, So, I mean when we're thinking about tech, you know, definitely a great place to be overweight, you know, as Vinny said it, you know, definitely shouldn't be your entire portfolio. But v g T is nice because you
get exposure to that entire sector. And as well with Vanguard, uh, you know, all of their funds for the most part on the passive side are a very low expense ratio. So you know, that's definitely important to think about when you're looking at ETFs or any sort of managed product. Is the fee you're paying there? But yeah, ultimately I think v g T is, uh, you know, a good way to get exposure into that that tech sector at a at a low cost. We definitely use very similar
funds within our portfolio. Okay, thank you, no, bron, thanks Dave. All right, so we're just talking about direct indexing before Dave called in, and I was talking about how you know, we're gonna be rolling out at Bouchet Financial Group and how it's going to affect our clients, and I'll let Ed just continue on about that. Yeah, so director indexing really is awesome. You know, it's kind of the next big thing in finances. As Benny said, you know, it just allows access to those underlying
stocks without having to you know, buy him in a basket. And typically this has been done through just the replication of a standard index, you know, the Russell one thousand, the Russell two thousand, or you know, like the S and P five hundred most commonly. But it's actually you know, evolving along with technology, and a lot of this is credit to the capabilities with AI and application of them. But now it's developing into what's kind
of called custom indexing. So rather than just replicating that S and P five hundred, using the underlying stocks, you're able to tailor it a little bit, so whether that's you know, maybe eest concerns you don't want to invest in a certain sector. Uh. You know, maybe you are employed somewhere where you get stock options and you have a concentration in one stock and you
know, high exposure risk to one sector. This can kind of let you dial back that area directly while still owning the underlying securities and taking advantage from a tax perspective. So, you know, we're partnering with a great company. O'Shaughnessy. The programs called Canvas, and they we really had a high level of due diligence, you know, looking at different partners. You know, our entire investment committee set in on you know seven eight uh different kind
of meetings and went through them. But they what they're able to do is take the portfolios we currently run for clients, our models, and then create
our own kind of custom index. Uh. So it's going to replicate and track like our portfolio, but instead of owning you know, our mix of ETF, it is going to buy underlying securities that track the same way, and then that lets you take advantage of them from a tax perspective, you know, looking at tax soasce harvesting opportunities daily and there's a lot of maths being done here. In the background. You know, it's hard for me to even wrap my head around, you know, some of the stuff and
the scale that they're able to do this on. But it's really exciting stuff. And just the level of customization you can get here is awesome. Yeah, I mean to make it really cut and dry, you know, just give you an example. Prior to this, you're buying a fund, right, and that fund might have a gain in your taxable account. Right, there's nothing you could do, right, you have you have to sell the
fund and take the game. Now you have the fund, but each individual position, so one position might be up, you know, twenty percent, and one position might be down twenty percent. So if you have an influx of income coming and maybe you sold the business, maybe you sold your rental real estate, you could offset those capital gains now with this direct indexing and still be diversified and still have a diversified portfolio and have your hand in multiple
positions. Right, it's really amazing technology. And you know, when we dig deeper, and when it comes to tax planning, rate tax panning is really really huge for clients. I mean, you could save yourself, you know, a boatload of money if you're planning around your taxes in the correct manner. So ED, you know, Treasury US Treasury bonds right, risk free asset. We're issued by the United States Government, guaranteed by the United
States Government, basically a risk free asset. You know, yields have been fluctuating a bit, and you know, we have the ten year US Treasury yield at you know, four point three three percent, you know, and that's really huge, you know, so basically you could lock in your money for ten years basically risk free pretty much if you don't sell before that ten year maturity date and get four point three three percent on that money. You
know, bonds are really getting more attractive. They had been more attractive lately, and you as opposed to two years ago to three years ago, where you know, interest rates were closer to zero. You know, then out the FED has raised interest rates so much. We have these yields coming back up, and and you know, for our clients, we're really digging deeper into the bond uh you know, the bond ladders that we're building out for
clients and strategies with that. So and get into a little bit about bonds and where we see yields going from A yeah. I mean it's important to know that a lot of these yields, you know, really across the all time frames, whether you're looking at the three months or farther out, they're gonna be pretty tied to what the federal reserve rate is. But more so now where expectations are heading. You know, we've been paused for a while now, but as we just saw that hot inflation data come in, you
know, yields jump up with that. So you know, when you when you see yields come up, you know, it's definitely a good time to maybe look at locking in some money. And you know, especially for clients that are in retirement, are or closer to retirement, you know, putting money in these individual treasuries, uh, you know, can really be a nice asset for them. As you said, risk free and you know exactly what you're getting, and then that lets you potentially, you know, take
some more risks in money you have a set aside for equities. You know, when you know what you're getting on what end, you know it's safe money, especially if it's enough to cover the fixed expenses, then you can take some more money or risk in that equities basket. Thanks Ed, So I'm just gonna jump into some other tax items. I mean, we have the deadline coming up in you know, a little bit over a month and a half. It's tax season. I'm feeling it. All other CPAs are
feeling it. But you know, the good news is there's a light at the end of the tunnel. You know. It hasn't been that bad of a winter at all, you know, but there is a light at the end of the tunnel for the warm weather and a little bit of sunshine. But we're gonna take a quick break. After the break, I'll go into some tax items. You're listening to Let's Talk Money, brought to you by Bouchet Financial Group, where we help our clients prioritize their health while we manage
their wealth for life. Thank you. Hello everyone, you're listening to Let's Talk Money. We're coming back from the break. I am Vincenzo Testa. I'm a wealth advisor here at the firm, and I'm joined by my colleague Ed Wilhelm. Any callers please call it at eight hundred Talk WGY. That's eight hundred eight two five five nine four nine. Please call in with any
questions. So it is tax season you know, I think it's really important to get your documents to your CPA or tax repayer or a ROLD agent as quickly as possible, even if you're going on extension, because you might need to take or make an extension payment, right, and that this could help you avoid penaltees and interests. Right, you might not be filing until October, and those penalties and interests will accumulate and compound, and if you don't
make that extension payment, then that will be the case. And if your CPA doesn't have your documents, they're not going to know what your extend payment should be. They don't know how much income you're going to have. So you need to get them your documents and kind of save yourself the trouble and the payment. When it comes to planning for twenty twenty four, right, you know the twenty twenty three tax returns are doing April fifteenth. For individuals,
you should start planning for twenty twenty four. Right. Are you transitioning jobs, are you retiring? Are you planning to make estimated payments? These are the type of things that you should start thinking about for twenty twenty four. Get ahead of the game. I know it's February twenty twenty four, and your tax return for twenty twenty four isn't going to be due until April
fifteenth, twenty twenty five. But you can start doing things now to kind of protect yourself and kind of get ahead of the game and make sure that you're doing all the right things and talk to your CPA about this. Talk to your tax refair. They could help you through this. If you're retiring, maybe you're retiring midyear and beginning to take distributions from your IRA, your
situation is really going to change. You know, you had the luxury, you know, if you're withholding was on point and correct that there's so many years of working. You had the luxury of not really having to worry about that. And this is a lot of what we do for clients at the
firm. When they come and they have to take IRA distributions, I'll do an analysis to determine what percentage withholding they'll need to have on the retirement funds that they're pulling from the retirement accounts to ensure that when they file their tax returns they're not owing a lot and they're not getting a huge refund. And you might be thinking to yourself, why is it bad to have a huge
refund? You know, yeah, hip hit parade, you have a big refund, right, But especially in a high interest rate environment like this, you're giving the government your money all year long for free. When let's say, if you have a twenty thousand dollars refund, you could have put that in a money you know, you could have invested in the equity markets, of course, or in the bond markets, but you could have put that risk free in a money market account or a US Treasury bond and gotten five
percent. But no, the irs held it, you know, for the entire year, and you're just getting it act now. So it's really ideal to get close to zero as possible when you're filing your return and you don't want to owe a lot unless you meet the safe harbor and don't have to pay penalties, and you don't want to have a huge refund. We have a caller Bill Greenberg. HELLI Hi, Bill, how are you? I'm
okay? I got to I mean, I know you guys been talking about the treasuries yield with four points ten years with my question, is that okay? With inflation? Let's say at three percent, How do you make any money with that? I just don't understand the big attraction on treasuries. Maybe you can explain that to me. Well, the thing with when it comes to investing, Bill, you know, it's about risk reward, right, and to when you make an investment, you know, the higher risk you
take, the higher potential reward. Right, Yeah, and fleet three percent. Right, Historically it's been two percent, you know, on average, you know, throughout the years, two to three percent. Right, So with treasuries earning four point three three percent, you're obviously making you know a little bit over more of a percent over that inflation. Okay, you know, so that's what we call it. The difference between those two is what
we call a real rate of return. Right, you're keeping up with inflation at that point. You know, Look, you're a little bit over you know what inflation is, but you're you're keeping up. So when you're making that investment, the idea to remember is that it's risk free. Right.
If you buy an individual individual corporate bond, you know, for Apple, obviously Apple is probably not going to go on it, but a company that could potentially go bankrupt, you could lose your entire you know, loan per se that you gave to that company, right, And when you're buying a US Treasury bond, it's risk free, right, And that's the it's a risk free asset, and that's the risk free rate of return. So you're not taking any risk if you hold the bond to maturity when you buy it.
So that's really the caveat right. So you're getting this risk free return, right, you have nothing to worry about, right, And if you're comfortable and you have assets that you have on a conservative side of your portfolio, US Treasury bonds are a great investment because of that. Does that answer
your question? I kind of yeah, But still is say inflation is three percent and you have to take federal tax on top of that on the gains to mean, it comes up diversely no gain situation the way I'm looking at it. Yeah, I mean completely completely understood. But you you know, understand what you're saying. Right at this point, you're keeping up with inflation. Right, So if we put the taxes into it and we look at the after tax yield of what a US Chasury bond, yeah, you're just
keeping up with inflation. Right. But it's risk free, right, and it's the conservative side of your portfolio, So it's you know, I would obviously you want to aim to be inflation on your on your investments, but you know, that's the environment that we're in right now, right and and that's what that's what we're dealing with. So you know, there's really no way around it. You know, the yields are gonna what they are for risk free assets, and you know it's tough to you know, kind of
be inflation in that regard. Would it be in capital gains? I'm not trying to say. If let's say the trailer reels go down to like they were, like, you get capital appreciation on top of that exactly. Yeah, the bond price would increase and you could potentially sell the bond and that that would be income. Yes, yeah, I would think that would be that would be a target. Is if if they predicted rates come down,
you'd have capital appreciation. That would be another plus. Correct. Yeah, I mean that's you know, sort of the reason why bonds are so attractive right now, right because we know at some point the FED is probably going to lower interest rates and the price of the bonds are going to increase edd Were you saying something, yes, Yeah, that was kind of speaking to my point is that it is a it's a ten year so you can expect sometime over the course of the next ten years for inflation to come down,
and at that point you would see that real return you know, well exceed inflation. Did I answer your question, Bill, Yes, it does. Okay, thank you so much, thanks Bill. Yeah, bonds are really really really huge right now. Yeah, you know, it's tough to beat on inflation. But that's the thing you have to remember with the US Treasury bonds at they're risk free assets, right you really you have to take it risks when it comes to investing if you want to earn higher yields or higher
returns. That that's the name of the game, and I think that's the name of the game of everything in life. Right. You can apply that concept to know anything at the end of the day. So I was talking about, you know, planning for twenty twenty four taxes and any changes that you're going through in twenty twenty four and how it could change your tax situation and some of the steps you could take now to sort of plan ahead and and you know, do what you need to for the filing of your twenty
twenty four taxes. You know, maybe you have a liquidity event, maybe you have the sale of a business, or you have a large capital gain
that you're going to recognize in twenty twenty four. You know, you can try and accelerate your deductions, right, And you could do that by you know, charitably contributing maybe, right, And if you're if you contribute to charities annually, you could use something called the donor Advice Fund and you could open that and you could contribute maybe five ten years of contributions at one time into the account and you can invest it and you write checks out of the
account. Right versus making a five thousand dollars contribution year after year, You could put fifty thousand in the donor Advice Fund if you have an influx of inca coming in, and you could write that fifty thousand dollars off in one year, and that's when you're going to receive the most benefit. Right. Maybe you make that charitable contrabt tion year after year and you're not receiving a tax benefit. It's not putting you over the itemized deduction's threshold. But by
front loading your charitable contributions into a donor advice fund. Especially in the year where you have an influx of income that you don't normally have. These are the things you could do from a tax perspective to sort of make your situation a little bit more optimal. So we are coming to the end of the show. I wanted to thank everyone for listening. Really love coming on and
just talking about personal finance and taxes. Really appreciate you all. But you were listening to Let's Talk Money, brought to you by Bouchet Financial Group, where we help our clients prioritize their health while we manage their wealth for life. Thank you.