Let's Talk Money

or infrastructure. So hopefully they'll get through it okay. But it's great to be here with you to answer any questions you may have regarding your financial planning or investment manager concerns, and I encourage you calling with those questions. You can reach me at eight hundred eight two five five nine four nine. Again that's eight hundred eight two five five nine four nine. Or as you know now, we have an email you can email me if you're too shy to calling out the radio, and that email

address is ask Bouche at bouchet dot com. Again, it's ask Bouche at bouche dot com and Bouche spelled b O U C h e y. So if you have a question you want to email me, go ahead and I can get you an answer. But as I always say, there's no dumb or silly question except for the one you don't ask, and you may be doing your fellow listener a favor by asking the question that they have.

We have a lot to discuss today where now I'm on LinkedIn, So if you want to follow me on LinkedIn, please do and put a lot of posts out there on different topics and also post out what we're gonna

be talking about on the show every week. So me highlights for this week is a discussion on all the global risks that are out there, and it certainly are the risks that we are somewhat aware of, but certainly, any given years we start the year, the actual risks that come through may be completely different than the ones we have identified as a risk. But how do you construct your portfolio and have that set up a way

to manage that risk? Right? We recently had an initial meeting with a client very concerned about global risk and this and that, and you know, she was talking about tailing her portfolio on investments and whatever, and we had a great discussion that really kind of set her mind at ease. So talk about that. We're going to talk about distributions from a ross. When you make row of contributions, your ability to access something is really much different than

a traditional ray. So we're going to highlight those options. And then finally we'll talk about small business owners and what that process looks like to sell your small business. You know, many of our clients, we have a wide range of clients from executives to family wealth, to divorces to you know, people that just save a lot during working years are now retiring, but we have a lot

of small business owners. As a small business owner, there's different nuances that you have that other clients of ours don't have. And in particular, when if you're looking to go and sell your business, that's a major process that you have to be aware of, starting much sooner than most people do, getting it all lined up, and there's certain things you need to be aware of as you go through that. So talk about that and certainly talk about the markets. It was a good week for the markets,

starting off the year well. The S and P is up one point five percent, and this week has some inflation data that came out that was a little bit cooler than what the expectation was, and that is certainly a good thing. Right, So we've talked all along about where do we stand with this soft landing, and that soft landing is simply the building for the economy continue to grow by you have inflation moved to the FEDS

two percent target. Now, I think it's going to be challenging to continue to have that move to the two percent target. But one of the things you definitely don't want to see is inflation start to rise higher. That's really where you get to be in a problematic situation. And you know, we had a good labor report last week where the unemployment rate actually dropped to four point one percent. We added over two hundred thousand jobs, which is a great number, and this week we had lower

than expected inflation. So really, you know, it's one of those things where it is a never it's continuous, so there is never officially a off landing announcement because the

next month, the next week, whatever, it continues. But I would say that all teams considered, this is about as soft landing as you're going to get, meaning that you know, you've got a situation where the Fed has started to reduce rates or you know, we'll see if they could team or reduce rates in twenty twenty five, but maybe pause them and not raise them. And you have inflation much lower than where we were, and then you have the economy still remaining strong. As we've talked about before.

Historically speaking, that is very rare for that to happen. That you have the Federal Reserve raised interest rates by five hundred basis points, that's five percent in a year and a half and not had the economy really weak and much at all, a little bit here and there, but not much, and or certainly not go into a recession.

That that was very unusual for this to happen. So, you know, again to declare a soft landing is funny because I think you know, this concept of declaring, everybody's concerned about doing that because as soon as you do that, maybe something could happen and things go awry, which is certainly uh. You know, what happens from an economic perspective is dynamic, right, it's not static. It's always changing. So you know where we are right now is just one

snapshot in time. You know where it will be next week or next month. Is that evolution. So but this is about as close as you get to be able to say, you know, thumbs up that there has been a soft landing, and you know, really things continue. When we look at what we see for twenty twenty five,

things continue to be very strong. Now I want to see with the Trump administration, you know, in general from a business environment perspective, people are pretty happy with maybe perhaps less regulation, but there's going to be some unknowns, in particular with his immigration stance and also with tariffs, just to the extent that what does this mean for inflation? Right, because certainly tariffs can be inflationary, So we'll have to see exactly how that plays out. Uh, you know, I

think it's important not to jump to conclusions. Do we see what the actual plans are. Uh, you know, I think all along there's been a view that some of the tariff discussion is certainly a negotiating tool from a trade perspective, But we'll have to see what the reality is and how that what that means for inflation. So we'll talk about that as well. But again, if you have any questions, you could give me a call. You can reach me at eight hundred eight two five five

nine four nine. Again, that's eight hundred eight two five five nine four nine and uh again. I hope you get out to enjoy this long Martin Luther King weekend. I think most people have Monday off and today my wife and I are daughter tests are gonna go skat it. Or we haven't been up there yet. I've heard it has been great, so hopefully today the conditions are good. And then begin if you follow me on LinkedIn, I

put some pictures of our ice rink. It's been a great year for you know, cold enough to have our ice break out front of the yard, put it up in faithgiving, that's how early we put it up. And lots of great skating. And this week it's gonna be phenomenal. Now it's gonna be cold. I think a high a couple of these days is in the single digits. That's the high. So it is gonna be cold, but that's perfect weather for good for them to blow snow at

the mountains to go out skating. And you know, as I always say, if you got the right gear this stuff, you know you can stay nice and warm. It's all about the gear. And also with a lot of these activities, whether it's walking or skating or cross country skiing. Once you get out and get doing it, if you have

the right gear, you're actually pretty warm. Now downhill skiing could be a different thing, right, if you're skiing downhill and you're on the lift, and if it's as cold as is going to be, you can still get cold. I think the main element with that is you want to have that heated vest. Maybe not. You get heated gloveacy days, get heated boots, heated everything, right, so I think all those things will keep you warm. But yeah, today maybe the data to get out and do it.

Let's first dive into the discussion on small business owners. So this kind of came to light. We had a prospective client that came in, a great, very successful individual. It's done a great job of growing in his business and now he's got an offer perhaps to sell the

business and a very good opportunity for him. But it brought to light some ideas that you need to be aware of if you're a small business owner and either if you've got an off on the table or you think that at some point down the road you might want to sell it. And you know, all I would tell you is the earlier you could start planning for it, the better. So you know, just try to be you know,

seeking out ahead multiple years. You know what you don't want to do is you know, you you know, want to sell the business this year and you start the process that at that point you could do it, but you are going to be behind the eight ball and you may not get the maximum value of the business. But before I continue, let's go to the throone lines. I have Bob Castleton, Bobby.

what to do with it. I guess this is how he describes it. But as I look at what he wants to do, tell me if this is I think probably an equalizer. He wants to you know, they want to continue with the tax cuts that they put in place in seventeen but then additionally reduced taxes, so that's

stimulative to the economy. And then you can say, okay, maybe he's going to put in a tariff of ten percent or something to that effect, so that could you know, obviously have a challenge with inflation and maybe be be stimulative in the economy. So I think that it's kind of a maybe a wash or maybe a positive. I mean, what do you think about that?

their budget hawks. I mean, you know, they really really really do not want to be increasing the deficit. So you know, for them to both keep in the tax cuts that was in past twenty seventeen plus any concept of do you think taxes more? You know, I don't know, Like you never never know how this plays out. But my guess is they're not gonna be able to do that.

You know, that would be very difficult to do it because you know, it is problematic where we are with our current deficit, and even individuals in his administration that are coming in, you know, have talked about trying to get that lower. So this year we're going to be at one point eight trillion dougl theres one point eight trillion dollars and if you don't change things either reduced

to spending or increase the revenue, that's going to continue. So, you know, my my only observation is, I do think this is probably going to be some sort of agreement that exists that gets this passed. I do not think if I had to put any money on it. If they keep twenty seventeen task cuts, that might be one thing, even that might be difficult, But I just do not

see how they're able to pass additional task cuts. So to your point, that would be a stimulus if they if they did that, I don't I don't see it happening, I think, you know, and and you know, I do think they're gonna be able to cut some spending. But even that is difficult too, right, which is you know, you got the doze, which is you know, Elon Musk and but you know, but we hit this before go ahead. Yeah.

there's current administration and that that's going to end. So I think there's there's room to reduce the budget and that'll make that'll placate the Freedom Caucus, I believe. But anyway, that's yeah, I think. So anyway, I think I'm positive on the market and the stocks going.

So from an investor perspective, that's all positive. What plays out from a political perspective, you know, any bets are off, and some of them are going to be good, some of them are going to be bad, but you know it's it's I think as an investor, the bigger question is, well, two things. What is your time horizon right, and what is your risk tolerant, so make sure you have that correct. And then two in general, what is the economics set

up looking like? And you know, for as we start this year twenty twenty five, there's nothing out there to be overly pessimistic by any means, and so to me, that's a good reason to be an investor. Yes, very good, Well, thank you, Yeah, all right, you take care of Bob.

to happen. You're probably going to make a mistake and you're going to regret that. So a great question from Bob. Let's continue the discussion on the small business so again, so here's some real key things to think about. Uh, if you're a small business owner, one again, start earlier, you know, four or five, six, seven, eight, ten years out. If you start thinking about, hey, at some point I want to sell this business and it could be an

internal sale. Uh, you know, maybe you have family that works in the business, or it could be an external sale, whatever that process is. The earlier you start and you and you you engage the right group of experts. So you know, with our firm, we work with our clients to the personal CFO, so we're giving them guidance. We bring in people from evaluation perspective, you know CPAs and their accountants that really know uh, the tax elements and

kind of how that should be set up. From a books perspective, they're bookkeeping, and then you know the right attorney and legal guidance. But if you can kind of get this in place and kind of have the right vision as to how you're going to do this, going to be able to maximize your the value and the dollars you get. But also the deal structure is going to be what you're going to be most happy with, and that's important. Most people don't think about that, but

that's that's important. So one, you've got to have a good valuation. What is your company worth? And there's really there's a number of different factors on this, but one of them, you know, one of them is cash flow. How much cash flow is your business generating? Two, what is the growth that you're going to see? So you think about this. If you had a company that had good cash flow, but you have no future growth prospects or limited then that's going to limit what somebody's going

to value your company. But if you've got good current cash flow, I mean the company's profitable. If you have limited debt and your growth uh has been and the future growth is going to be good, well, people are going to want to pay up for that. So that's you can you know, that's going to really determine the valuation of your company. It can vary from industry to industry, but that's very important. The other thing too, is that you've got to make your business more than just yourself, right.

So we see this a little bit with these entrepreneurs that they just carry the way of running the business. But the problem is if somebody's going to buy the business, they're going to, you know, at some point have it run without you. So you've got to make sure that that business entity is an ncy that runs on its own. We have the right team in place, the right technology

in place. You think about it. If you of a business where somebody else can step in and from day one start operating and running it and be successful, and again that's because you have all the right processes in place and people, then that is a very valuable business. So you have to be thinking about your business along those lines. The other thing is your deal structure, right, so when you actually go ahead and you have this acquisition occur, there's a lot of different ways for the

payout to occur. You know that many times this was called an earnout where you get a certain amount up front, but then you get a certain amount over the next you know, three to five years, depending on how the business does. And also there could be an employment contract. UH maybe you know you want or they probably want you to stay on for three to five years afterwards to help continue to run the business. Uh, and make

sure that that transition process goes smoothly. The other thing is you know what's going to happen with your team, your people, your company. Uh, that is extremely important. You want to make sure that the most people want to make sure that the team is well taken care of, and so that's a big part of what that deal structure looks like, what is going to happen with them? Uh. And you know you've got to make sure that if you're getting acquired, that the culture of that acquiring firm

lines up with your business. I mean I talk about it all the time with our firm, our culture is so important. The way we interact with each other, the way we interact with our clients. Our culture is so important. You've got to make sure that the culture of your organization lines up with that acquiring organization because otherwise it gets to be really problematic. And that's what you hear very quickly. If these deals go south, it's quite often

because the cultures don't line up. The other thing to appreciate is when you have that acquiring company, there's going to be some element of financing, whether they have their own cash or they're getting a loan to buy your company. But that financing part of that equation is very important,

especially as these deals get bigger. You know, the bigger the price tag on these acquisitions, the more important you've got to know how is this acquired funding this because you know, if they've got to go out and get a loan or they're getting other backing for it, that's going to come through. And that's where we see sometimes these issues come up, is that they don't have the

proper financing and that's where it becomes problematic. And the other element, too is having the right team and advisors in place to move you through this emotionally right, so you know it is these transactions are about the numbers that's a very important part of this. But it's going to be an emotional process. Right, this is your baby. You built the business. H you know, you're you're invested in it, uh in so much. You know you you started in many cases from it being nothing. You've grown

it to be the successful thing. That transition process to now. You know, again, whether it's an internal sale or external sale, it's going to be emotional. You have to appreciate that. And so if you have the right team of advisors in place, they're going to help you not get caught up on the little things that just don't matter and be more aware of the big things that do matter. And that's where again, having the right set of advisors to walk you through that is going to be very important.

And you know, we always talk about from an investment perspective the value of uh you know, I mean the right team from an emotional perspective, which is what we do for our advisors our clients. We help remove the emotion from investing. Well, the same thing holds true when selling your business. You've got to really make sure you have that right group to walk you through from the quantitative perspective but also emotional well, folks, we're going to

go to commercial break. Well, come back and join us as we continue to take your questions. You'll listen 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. Come back and join us, folks as we take your questions. Good morning, folks. My name is Martin Shields and I'm your host today for

Let's Talk Money. It's great to be here with you and answer any questions you may have regarding your financial planning or investment manager concerns, and I encourage you to call in with those questions. You can reach me at eight hundre eight two five five nine four nine. That is eight hundred eight two five five nine four nine, or if you're too shy to call in with your question, email me. You can reach me at ask Bouche at

Brusche dot com. That's ask Bouche at Bouche dot com and it's b O U c h E Y is the way to spell Bouche. I hope that you're doing well. A couple of things we want to mention in the beginning show that I want to talk about one of which is let's talk about your how to handle global risk in your portfolio. And as I mentioned, I had it.

We had a situation where an individual came in. It was an initial meeting perspective client and very concerned about just the economy and what's going on globally and all these different concerns from a risk perspective, and uh, you know she was already working with an advisor and you know, trying to figure out where to invest in how to

mitigate these risks. And we had a great conversation with her just thinking a little broadly about the really the main way to basically look at those global risks and then to basically look at your portfolio and make the adjustments is thinking as I've talked about before, keeping it simple and thinking much more high level. Right, you start to talk about different sectors and countries and all these

different things, you're overthinking. You're definitely overthinking when it looks at when it comes down to managing risk within a portfolio. You could do any research out of this. It's pretty well well documented. It primarily comes down to asset classes, right, And this makes sense if you move from an all equity portfolio that you're going to have if you're in

a diversified all equity portfolio. So I'm not talking about just highly concentrated positions, but a diversified all equity portfolio, whether that's an internetational one or a US focus one. Like our portfolios, as you move from all equity to something that has bonds, cash or alternative investments, you're going to start to reduce the risk. And all that means is we talk about this in general. Again, if you're talking about well diversityed portfolio, you're not talking about capital

risks that you could lose your investment. Now, there are certainly, you know, if you're all in, you know, risky stock positions and individual positions, or there are other investments you can have that you can lose all your money, right, it can go to zero. But in a diversified portfolio and the portfolios that we have for our clients, you

have what's called market risk. And what that means is when the market goes down, you're going to experience some of that downdraft that is being a long term investor. But you know, over time, as the market recovers, which they do, you're going to see that recovery. So if you move to more conservative investments like bonds that can't be volatile, we saw that in twenty twenty two, and we have alternatives in that sleeve as well, which frankly did much better than bonds did in twenty twenty two,

but can have some volatility. And then certainly cash that really has no volatility if you're in a money market or whatnot. I mean, there are rare, rare exceptions, but in general it's pretty much a SETI eddy but with those they're going to protect better on a downdraft and a downturn in the market or the economy. And really, again, I could we could sit here and talk about the

risk that exists for twenty twenty five. What I think is really amazing is that almost any giving year, the ashole risk, the things that actually come up and are actually problematic, are something we're not even discussing, right. You know.

The perfect example of that was COVID when it was you know, when if twenty twenties first started, you know, there was just that few cases that were occurring in twenty twenty four, nobody really knew about it, if there was much discussion about it, it was that they would be handled just like any of the other kind of beginning issues that were occurring from a global perspective with any diseases or viruses. But yet it turned out to be

a real problem. And that's true with many times in any given year, is that the risk that we talk about are not even the ones that actually have to be concerned about. But if you want to mitigate those risks, and you said, hey, I think these are real risk out there, I want to make sure I'm not going to be impacted in a real negative fashion, then really what it's about is moving your portfolio to a more conservative allocation. And for our clients, we have what we

called our risk tolerance statement, and it's very simple. It basically breaks out our six portfolios from our most aggressive being all equity to our most conservative being thirty percent in bonds, cash and alternative sorry set thirty percent being

in stocks and seventy percent being bonds castional alternatives. That's our most conservative, and it basically breaks out those six portfolios with what the allocation is the stocks and what it is to bonds castional alternatives, and then you basically just initial next to that allocation, and that's how we manage your portfolio. So what was great for this individual came in. It just helped her appreciate, oh, this is how simple it is that I can mitigate risk. So

you know, we found the appropriate allocation from her. We talked about what her expective return would be in that allocation, what type of expective volatility, and we talk about expected is based on historical figures, right, and you know it could change. You know, what history was over the last fifty years certainly doesn't mean what's going to be next year. Now.

It might mean it might be a good indicator was going to be longer term in nature, but it doesn't mean anything about what's going to happen next year as far as those allocations. But it really helped her understand, Okay, so this is how I handle global risk. I just dial back my allocation to stocks and that's really going

to do the trick. The thing to appreciate too, And this is one of the things we talked about with her, which is, you know, right now, for many of our clients, we have individual bond portfolios where it's a bond ladder that we have bonds, primarily treasuries, but it could be investment grade corporate bonds that go out from a one year bond that the matures in a year, one, that matures in three years, five years, seven, and ten. In general,

that's the makeup of these bond ladders. And right now the US Treasury ten your US Treasury hit four point eight percent this week. Now it's back down with that lower inflation print is back down to four point six

four percent something in that neighborhood. But that's a pretty good yield about for historically speaking, you think about this, if you could build out a bond portfolio ladder that you could lock in for ten years and get four point six percent, and that's the conservative part of your portfolio, that's pretty good that that is, that is a pretty

good yield to be able to lock into it. And so in some respects, if if you're concerned about global risk, or you're moving into retirement or something's happening, it's not a bad time to become more conservative. Uh, you know, we're not I would ever encourage people to become overly conservative because they're to give up on long term growth. But you know, if you let's say you're you know, you're sixty years old, you're maybe going to retire in

the next uh, you know, a few years. Let's say you're in the all equity or let's say you're even the growth and you know, you want to kind of dial back that a little bit. You know, our growth and income is sixty forty. You know, that's a nice mix for somebody that is in retirement. Many of our retire diaries are in that growth and income. They could

be in the growth. And one of the things we've talked about before is what we do is if you're retired and you're taking distributions, we put up to two years worth of distributions in a more conservative allocation, so that even if there's market volatility, that you could get through that downturn and not sell equities when they're down.

And that's really what it comes down to. It is the most important thing is either not panicking when the market's down and selling or not having liquidity needs, not having cash flow needs they have to sell stocks when they're down. If you can do that even in the you know, really long down terms like two thousand to two thousand and two, or like two thousand and eight, two thousand and nine, if you could get through those downturns,

you could be very successful from a folio perspective. And what that allows our clients as well is to maybe be a little more aggressive than they might otherwise be. So we do have some clients that are in the growth Allocation eighty twenty who are retired, but we put their distributions up to two years worth in that market serve of allocation and it really puts them in a good spot to be able to sustain through and have those distributions occur in down markets. And again, what it's

about is peace of mind. Right, if you're not up at night concerned as to how this is going to happen, that changes everything. That changes the equation. And I talked about the emotion and the psychology of selling a business, well the emotion in psychology of retiring, it's the same thing just about right. There's a lot of quantitative elements of being prepared for retirement, but there's also we do a lot of handholding for individuals from an emotional and

psychological perspective. I just met with the clients on Friday who are talking about retiring. We went through the plan for the first time with them, and you know, I could just feel the difference in kind of what the stress and the tension is before we have those meetings and after we have those meetings. If and here's the if they've done all the right things financially to get

them in the right spot. And you know it, really it goes from lots of concerns and unknowns to an element of excitement, right because usually what we're doing is pushing our clients to spend money, and it's hard for them to kind of fathom that, right. There have been so many years of saving, saving, saving, saving, and you know, and they're saving while they have a paycheck, and now we're flipping that script and now we're asking them to take a distribution and not and this is going to

be doing this without a paycheck. That's just very concerning for most folks. But that's where we come in with a handholding, making sure they understand that this is okay, and then we're going to manage that risk. And you know, again, that's where them delegating that responsibility to us can be

so valuable. And another new client situation where uh, you know, great couple, uh, you know much older, you know, almost in the nineties, literally almost in their nineties, amazing couple and they're just like, you know what, the husband really wants to make sure that the whites protected if something would happen. He handles all the finances he used to manage his own portfolios all the way up to then. But you gotta where that challenge with that is is

feeling comfortable to delegate. You know that that is that's a mind shift change. And many of our clients they have managed their portfolios in the past and even when they you know, turn over the range to us to manage their portfolio. Though quite often we call it a sandbox account. It's an account that you can make your own trades. Uh. You know, we can see it if you want us to, but we won't bill on it.

But allows you to have that out that you've got an idea, you know, you want to go ahead and investigate. You don't have to call us to be putting in your portfolio, which would rather not do because we have

our own allocation that we're going to be using. And having that sandbox account is for many people the out that allows them to delegate the vast majority of the portfolio to us, uh, while at the same time allowing them to have, uh, you know, the ability to put some trades in a in a smaller account that they

can handle all that themselves. And and so that that ability to delegate that also is very emotional, right, This is you know, in this case I describe, uh, you know, this person has been doing this for decades and frankly it's done a nice job with it. So you know, but even in that situation, just as time's gone on and they've got more comfortable with working with our firm and our communication as a firm, uh, it's really helped put them at ease that that was the right decision, right.

And I always say, listen, when a client comes on and starts working with us, that's a big decision. We do not take that lightly. We appreciate that, you know, you're putting your wealth with us, whether it's you know, half a million dollars or ten million dollars, that's a lot of money. In most cases, you know, we work with our clients in their full well from a wealth perspective, their full portfolio, and so we don't take that lightly. But what I always say is within that first year,

if there's any concerns, they usually get mitigated. Within that first year we go through the planning process. They understand how we manage the portfolio and how we communicate. And then after that first year they're like, I get it. I understand how this works. Now, you know there's an element where they've kind of mentally come to terms with that delegation and it just gets to be a much easier process for them at that point. Let's move on. I want to talk about raw THI rays and when

you can act has those. But before I do, if you have any questions, you can give me a call. You can reach me at eight hundred eight two five five nine four nine. Again that's eight hundred eight two five five nine four nine, or you can email me at ask Bouche at bouchet dot com. Again that is ask Bouche at Bouchet dot com and Bouchet is spelled

b O U c h e y dot com. But before I jump in the row, I just want to highlight coming up in about this over a week and a half, we have our Stateday economy presentations and uh, this is this would be the tenth year that we will have done these. Uh. We have one in Troy at Frankoplaza, one in Saratoga at the eighteen sixty three Club, And I'm telling you these are are one of our hallmark events. You know, what we really really focus on as a firm is community caating well with our clients.

If we can communicate well, they know what's going on, if there's any concerns they have with the markets, the economy, whatever that is. We want to be able to communicate, whether it's via email, phone calls, zoom calls, in person, but our State of the Economy presentations one, it just gives us an opportunity to meet with a large number of our clients in person and that's always a great

thing that we always enjoy doing. And then you know, have a dinner for the presentation and then really outline for the year what they need to be aware of from an economic perspective, from a portfolio perspective, and we also talk and highlight about from a tax and financial planning perspective, and even what's going on with our firm. You know, you think about our firm has been around for thirty five years. We're celebrating thirty five years now.

We manage close to one point five billion for our clients and you know, the future of this firm is important. As Steve would say, we're set up for the next thirty five years. Uh, and that's important because our clients hire us from a long term perspective, so that having that, you know, understanding what we're doing as a firm to grow. And as I've always said, you know, as we've grown,

it's really only only added value to our clients. It's you know, you're always concerned as you grow, do you lose that culture and how you work with our clients. And I'll say from my perspective, and I think most of our clients would agree that it's only gotten better. Our communications, improved, our internal processes, the people we've brought

on or just add so much value, you know. And really what's great too is that now we as we grow, we've had people that kind of specialize in certain areas, so it would be tax planning, a state planning, what's more on the investment side, charitable giving, all these different areas. We've got advisors now that have expertise in those areas. And it's just really added a tremendous amount of value with our relationship with our clients and uh, and how

we work with them. So to me, it's been more all about the good of us growing and getting bigger, uh, versus really any of the downsides that can occur. And I will tell you that that's that's intentional. It doesn't happen by chance. We've made sure that as we grow, both the people we hire, what our culture is internally, that that that becomes just a real important part of how we design the firm and really where the future is with the firm, because that has to stay intact.

Let's talk about the law THI rays and those distributions. But again, if you have any questions, you can reach me at eight hundred eight two five five nine four nine. That's eight hundred eight two five five nine four nine, or you can email me at ask Bouchet at Bouchet dot com. I actually I have an email that came in here, he says from at Clifton Park. Hi, Joe, I am seventy one. I am in a high tax bracket with a portfolio of fifty percent stocks and fifty

percent cash. I soon have to take my rm D on multiple counts, which will drive me into an even higher bracket. What are my options to reduce taxes? Should I move cash? To non dividend e t FS ETFs, any device would be appreciated. So so great question here.

So a couple of things just to clarify. So if you're seventy one now, then you'll when you turn seventy three, that's the new age that you have your rm D. And you know, this is something we talk about with our clients quite a bit, right, which is you know, many times they're not taking distributions from their IRA because they don't need to. Uh. And then you know, you get you know, we have the requirement of distribution and when you first start taking it, it's going to be

about three point six percent of your portfolio. That's the actual equation and number to calculate that. But it comes down to about a three point six percent distribution. So you know, if you've got a million dollar portfolio or two million dollar portfolio, it's in your IRA. You know, you're talking about another thirty five thousand dollars, you're talking about another seventy thousand dollars. So Joe to your point your question, you know, what are your options to reduce taxes?

Not a lot unfortunately, you know, because you probably have Social Security, maybe have a pension, I don't know what other retirement income you have, but you know, really if you have now I'm assuming you're talking about a taxable account where you have dividend paying ETFs. That is correct, So in your taxable account you can make adjustments. So now a couple of things you can do is if you have bonds, you can move them to muni bonds, So municipal bonds you don't pay federal taxes on it.

And if they're in New York State or Puerto Rican UNI bonds, you don't pay state taxes as well. So again for your tax will account for your bond allocation.

You could do that. Now, the thing to appreciate is you have to really look at what's your after tax yield to see if that's worth it, right, because for most of our clients we don't put them in a UNI bond allocation unless they have are making you know, four hundred thousand dollars five hundred thousand dollars plus maybe three point fifty, because you've got to be in that high tax bracket to make it work a worthwhile because you're what you're looking at is what is your after

tax yield? But you know, for people who are making that much, they're in those very high tax brackets, both federal and state. It does become worth it. The after tax yield is higher on those media bonds, but that's something you can consider. And then yes, moving from non dividend ETFs, you know, now chances are you're going to be in a qualified many of those dividends maybe what's called qualified dividends, so they're only going get taxed from

about fifteen percent. So it's now you're going to be as ordinary income. They could be taxed at fifteen percent, So in that regard, it is going to add to your overall income having those dividend ETFs. So you could move to more of a growth ETF like QQQ that has you know, a yield that's you know, around one percent, or even the S and P five hundred that has a yield of about one point five percent versus h an ETF that's more focused on dividends and could have

a yield of three or four percent. So that's a possibility as well. Beyond that, you know, the only other thing is that I'm assuming you don't have any earned income. You know, if you have earned income, there's things you can do. You know you can if you're still working, you know, you can obviously save some of that into a traditional IRA that would work. It would be good.

But you know that's you know, in general we have to think about is you know, we're talking about going from one hundred thousand dollars to you know, one hundred and fifty or if you're in the more in the three to four five hundred thousand dollars range. That's really you know, kind of the question is what range are you in? And that's the determination as to what you

should be doing. Let's go on. So with the raw Thier raise, what you need to be aware of is that and the most important thing is your contributions into the raws. If you make them, you can access them at any point. The contribution, now, the growth, you can only access if you've held them for five years, and

it is important you're fifty nine and a half. The only exception of that is if you are building or a home there you can access ten thousand dollars for a first time home buyer, so that's always a nice thing, but otherwise you have to wait into your five years and a half. Now, the other thing I want to highlight before the show up here is that if you do a wroth conversion, you have to you can't access

that money even though you paid taxes on it. You've got to wait for five years to go by before you can access that those dollares you're converted without paying that ten percent penalty, So that's very important. That's different than if you've made those contributions yourself directly into the Wroth. Well, folks, we spend another hour together. I hope you learned a little bit. As always, I've enjoyed being here with you.

You'll listen to Let's Talk Money, brought to you by a Bouchet finance group, where we help our clients prioritize their health while we manage their wealth for life. Take care of yourself, take care of each other.