Let's Talk Money

my colleague as co host, Scott Strohecker. Scott is a wealth advisor at Bouchet Financial Group. Scott is a certified financial planner. He's also an enrolled tax agent and a key member of our tax team. Scott's tax expertise is invaluable as he's worked with our clients primarily for tax planning, but also we do a little bit of tax prep,

but mainly tax player. Really, that's really where we've really focused the last few years and setting our firm apart is some really extensive tax planning and Scott was a great addition to our team and a big part of that effort. So thank you for joining us. Scott.

health benefits. So interesting part of Scott there. So Scott, appreciate you trying to keep us all healthy at work. And I could use some of that advice. I'm actually got sick this week, getting over a little cold. And you know, I find whenever I'm traveling now. Is actually south for a few days the prior week and came back on Sunday and picked up a little something. But feeling much better as the week is going on. But if I do have to cough, I will mute myself.

So if I do, I'm just gonna apologize in advance for that. So, you know, appreciate everybody tuning in with us this morning. You know, we've got a lot to talk about, and we encourage listeners. We're here for you. You know, if you have questions concerns, just reach out to us at eight hundred talk WGY. That's eight hundred eight two five five nine four nine. You know, in this morning, you know, as I said, we'll have a

lot to talk about. We'll talk about the markets. Lot going on in the markets, and I know that's a little bit of an understatement, but also you know, Scott, with his tax expertise, were a little over a month away from tax filing dates, so Scott's going to talk a little bit about some tax topics. So I also encourage listeners if you've got some questions now obviously you know tax questions over the phone on the radio show.

You know, you don't want to divulge too much of your you know, personal information, but certainly more general topics would be would be appropriate for sure, But you know, primarily we'll be talking about the markets. A lot lot going on, and you know, certainly this week, you know,

started out with a bang. On Monday. You know, President Trump had his address to the Joint Session of Congress, and you know, during that address, he discussed his you know, plan to implement some major policy changes, and you know, including trade and tariff policies, fiscal policies, and I'm going to wrap up in fiscal policies, you know, his tax plan, doge in the the uh the government efficiency, you know, cutting costs, and you know you heard is here he

wants to get to a balanced budget. You know, so all that under his fiscal policies. Also immigration policies and foreign policies you know, really you know, dealing with the war in Ukraine, UH, NATO really evaluate reevaluating all of our foreign aids. So you know, the administration is doing exactly what they said they were going to be doing right in the fall, and they're acting swiftly. And you know, I will have to say, just as a person personal statement.

And as a firm, you know, we're not saying we agree or disagree with any of those policies. Really, that's not our job. Our job is to manage our client's money, regardless of who's in office. And you know, we've got a proven track record of doing that for our clients, regardless of whether party holds the executive branch. You know,

we're dealt with that circumstances. And as investors, we are, right, so you as investors are dealt with that, and I think, uh, you know it's prudent to say, uh, you know, how best to approach that, and so you know, but uh, but the reality is is the new administration is coming in, coming in with a bang and again doing what they said they were going to do, which is making changes

in uh, really a broad fashion. And you know what we're seeing is, you know, there's uncertainty with that, right with with so many policy changes being discussed and you know, not a lot of details yet or you know, define details, right, some have been spoken about but then changed, right, So certainly some uncertainty around how some of these policy changes

will impact the economy, impact growth. And we witness you know, the market's reacting to some of that uncertainty, right, And so we saw that this week as there was a little bit of volatility ups and downs in the market, really trying to digest, you know, what's what's going on with the policies and how are they going to impact things?

And you know, and it is interesting when you take a big step back and say you look at some of the you know, policies from a real big picture perspective, you know, you can kind of see the merit of them. And you know, for example, with a fiscal policy, right, Like who would argue with that getting to a balanced budget isn't a good thing? Right? I mean, as a as every business, we try to control our costs, make

sure we're prudent, make sure we're fiscally sound. As individuals we do the same, right, We manage our personal spending. We work with our clients closely as part of the financial planning process. Right. You know, one thing we've seen is those who are setting themselves up for success in the retirement, those who have controlled uh spending that's appropriate based on their income level. So so it's understandable that, hey, we as a as a nation, we'd want to institute

some of those same policies. Right, let's get to a balanced budget. Let's cut our national debt, Like, who's again, who's going to argue that a thirty seven trillion, that our debt isn't too high, that the interest drag we're starting to feel isn't isn't something that we have to deal with. And so generally, I think most of us agree. Hey, you know, controlling government spending, making sure we're efficient and is justified. Again, it's all like the devil's in the details, right,

it's how do we get there? And you know, one thing we're seeing with the Trump administration is, you know, sometimes policy changes are being unveiled with a lot of energy, and there was only just a couple I think three weeks ago. Remember images of Elon Musk, you know, at a chainsaw at you know, speech about doages, talking about slashing costs in government. And now some of the rhetoric is a little bit toned down. It's more talk about

using a scalpel for strategically trimming costs. So that creates some uncertainty. Right, we hear one thing and then we sear modifications, and but again, the policy of making our government spending more efficient is a good thing. It's a good thing. Again, it's just how we get there. And you know, i'd say the same is true with you know,

you know, our trade and tariff policies. Right. So one of the primary objectives that President Trump has spoken about with the trade policy is to bring factories and jobs back to the US and again that that would be great for the US economy, right, creating new jobs, high paying jobs, and particularly you know, you hear about some of the back and forth in the auto manufacturing where parts are being you know, shipped across borders, back and forth,

back and forth. Number of times. If we had some of that uh, you know those you know, factories rebuilt in the US and US jobs there. You know, again, who can argue that that's that's great for the economy and again long term measures, right, And we've seen similar

to some of the fiscal policies. We've seen bold announcements and then we've seen delays and modifications and and even you know as uh uh yesterday you know heard comments from President Trump saying, you know, he he will make modifications.

He he is not holding back that that uh, there's negotiations as a part of these tariffs, and he is you know, he he made some modifications based on listening listening to US automakers, right, and so he's clearly saying, listen, I'm gonna I'm gonna use this as a tool, and I'm gonna make modifications and and uh, you know, so so the market uh, and is sitting back saying, how do we understand how this is going to impact uh,

the economy and markets? And and even Fetcher Powell yesterday in some comments, you know that Vet's taking a wait and see approach. You know, certainly you need to see how some of these policy changes, particularly with tariffs, are going to play out, whether they become inflationary or not. It's not a foregone conclusion, you know. You know, tariffs can be implemented without impacting inflation. But and this flip side, they you know, they also could be implemented a way

that does lead to inflation. So uh, the Fed is really you know, not jumping to any conclusion at this point. They're kind of, you know, trying to cut through the noise and really look at data, look at facts, and so uncertainty. One thing we do know, right is markets do not like uncertainty, and we saw that this week, we saw markets bounce around, and you know, certainly I think it's fair to say we're going to continue to see that uncertainty as these policies are being played out

over the next few months. So a lot of activity in the markets. And again encourage listeners if you have questions, you know, Scott and I here to answer those, you can reach us at eight hundred talk WGY. That's eight hundred eight two five five nine four nine. So after all that volatility, you know this week, you know, the S and P, you know, regained some ground on Friday, you know, but the index still posted it's its worst

week in several months. Really, I think going back to September really dealing with all the uncertainty regarding the policy actions I just spoke about. But you know, Friday we did have you know, all the major indexes come up rise for the day day, so S and P, UP and NASDAK and the Dow up as well. But you know, Friday, again going back to the volatility, we saw volatility during the trading day. You know, the Dow was down more

than four hundred points at one point. S and P and the Nasdaq were both down over one percent at their worst parts of the day, but then we saw rally in the afternoon and and you know, you know, certainly, you know, we had jobs report come out in the morning. You know, we had Fed Powell, Fed Chairman Powell make some comments you know regarding really you know, see you know, comments that you know, the jobs report really shows we

have a solid labor market. You know, whether that helped calmed you know, nerves down a little bit, but we certainly saw the session end up in a positive so, you know, and that's kind of been the way the week has gone. We've seen major swings during the day and and then sometimes some major swings rate rate before closing. But overall, you know, we had Friday finishing positive, which

is nice to see. However, you know, for the week, you know, we had the SMP down three point one percent for the week, the Nasdaq down a little bit more three point four or five percent for the week, and the Dow down two point three seven for the week. So you know that volatively, you know, being born out and certainly you know, you know, as you know, you look at all these factors, right and you look at

the policies. You know, one of the big concerns is, you know, what, what is this going to happen with the growth of the economy. You know, we we had you know, you know, great growth in twenty twenty four. Expectations are for you know, good growth for the first half of this year. Maybe a little slow down in a second. But you know, now when you think about GDP, you know, you've got consumer spending. You've got you know,

maybe some confidence issues there. You know, i'd say, is consumers uncertain about the future and how some of these policy changes are going to come out. And so you've got consumers you know, maybe you know, holding back on some discretionary spending right now. And you've got you know, you also you know, government spending. That's certainly an important part of our GDP. And you know, Trump has been very clear we're going to see a reduction of a

government spending. Now. You know, the consumer spending component of GDP makes up about seventy percent of that is the lion's share. So consumer spending confidence really you know, primary

driver of GDP. But you know, if we do see government spending come down, and and then you know another component is business investments, you know, is you know We've heard, you know, President Trump talk about some new business investments coming in, but in general, you know, the theme with businesses right now is is, you know, if you're considering a major capital investment, you know there is some now signs that businesses are starting to slow down a little

bit on their investment right trying to see how things are going to play out. And so some of that could you know, cause some slow down in GP GDP. And remember, you know, tech companies were you know, high tech growth was our primary driver in twenty twenty four. So in twenty twenty five, we're seeing a little bit

of you know, some uncertainty there. You know, the feed Atlantic came out with some you know s GDP estimates which very low for the first quarter, negative and you know, really impacted by a number of things that probably over impacted by you know, certainly saw the trade deficit balloon in the first part of the year, and part of that is you know, you saw importers taking advantage of trying to really avoid some of the tariffs that we're

going to come into play. So how that's going to shake out, you know, whether we'll be uh, you know, in the two percent range as expected. You know, we'll

have to see how that plays out. But certainly, you know, saw the market volatility reacting to that, and so you know, S and P again down for the week about three percent, down year to date about a little less than two percent, NASDAK, uh you know again, tech companies and particularly matt you know, our mag seven you know really uh, you know, all of them really off of their highs pretty significantly, you know, when you go down, you know, Navidio off you know,

almost twenty five percent for the high and and so certainly we're seeing high tech growth really being the most hit by what we're seeing in the markets right now. And uh, you know, so we're seeing NASDAC you know, down you know year to date over over five percent, and Dow you know, down two point three for the seven for the week and down but up slightly for the year. So you know, certainly the market is reacting. And you know, again, as investors, this is where we say,

you know, we preach this. You know, we are going to see drawbacks in an average market. You know, we're going to see a drawback of fourteen to fifteen percent year, fourteen to fifteen percent in any given year, and we haven't seen that. You know, last year, we did not see those kind of drawbacks. And as investors, you know, naturally, you know, it's it's we're hearing a lot of noise, and we are right, you're hearing about all these policy changes.

Now we're seeing some market volatility, and as investors, you know, sometimes it's it's it's natural right to get a little emotional, get a little spooked, and but you know, again we have to take a big step back, right and say, okay,

you know, how are our fundamentals right. So so in the midst of all this noise, you know, this week with Trump's policies, you know, on Friday, you know, with all the market ups and down, we had broad Come calm come out with earnings release, you know, soundly beating expectations for their for their earnings and then giving great revenue guidance for the next quarter. So we had Broadcom go up, you know, almost nine percent for the day.

So again, you know, within all this noise, we've got to look at solid earnings, right and say, you know, not to be emotionally driven by by the uncertainty. Right. And as investors, we know, you know, we're rewarded for staying in markets. Now there's things you can do, and Scott and I will talk about some of those in

a future set, you know, litter segment today. Uh so we're not saying ignore it, put your head in the sand, but it's also you know, we understand there's there's some emotional uh maybe poult to say, I've got this volatility, I have this aversion to losing money, right, so what do I do? Do I go all cash? And certainly, you know we've talked about this a number of times and I'm sure you've heard Steve talk about it extensively on this show. You for everybody else that that you know,

that's that's the wrong move, right and it's not. Doesn't mean there aren't moves you know you should take for your portfolio. There are, and we'll talk about them. But as investors, you know, we get rewarded for staying in the market, and uh, you know, but that doesn't negate the fact that at times like this, you know, there is volatility, there is concern, and you know you've got to sleep at night. Right, So again, making moves are important. So again I appreciate you tuning in this morning. I

encourage any listeners to call in with questions. You get to reach us at eight hundred talk w g Y. That's eight hundred eight two five five nine four nine. We're going to take a quick commercial break, so please stay tuned and we'll be right back with let's talk money on eight ten WGY. Well, thank you for staying with us through that quick commercial break. As I mentioned, I am that time of year getting over a little bit of a cults that allowed me to get a

little drink of water there. So you know, we're talking about the markets, kind of wrapping up that segment, you know. After our next break, you know, Scott will get into some tax topics. I know, as we get close to tax filing date, some of you may have questions. Scott will go through also, you know, some information related to twenty twenty four taxes and some things about twenty twenty five. But you know, just you know, wrapping up the segment on the markets.

was a solid, solid jobs report. You know, our US economy added about one hundred and fifty one thousand jobs, just slightly below the one hundred and sixty thousand forecasts. Unemployment upticks slightly, you know, from four percent to four point one percent, and you know, also importantly, you know, the data showed, you know, American wages are keeping up with inflation, which is important, you know, and and you know,

rising about four percent at an annual pace. So you know, that's important for the US economy that American wages continue to increase outpacing inflation. Really as I mentioned before, with consumer spending representing such a big part art of GDP. So you know, jobs report, uh, you know, really you know, no big surprises really showing that from the from the from the Fed's perspective, and Chairman Powell you know, interviewed yesterday. You know, his comment was it was a solid labor market,

solid you know, and they're not. The FED is not really concerned from an inflationary perspective. And you know, we'll talk a little bit of you know, fed's got a meeting coming up later this month, March eighteenth and nineteenth. And certainly, you know, nothing came out of the the the jobs report that is really you know, gonna really push the Fed one way or another in terms of a rate

reduction and so h and that's good to see. You know, there were you know, getting into the guts of the report, you know, there were certainly healthcare was a biggest driver for the month. Also you know, funnycial activity some other industries as such at adding to the to the employment base. So overall, you know, solid solid jobs report, which is important as we head into next week where we will have you know CPI report. So we are you know,

about halfway through today's show. The show is just flying by, and we're going to be taking a short commercial break. We want to thank you for tuning in with Scott and I today. We hope you're enjoying the show. I hope you will rejoin us after the break. We encourage listeners to call in with questions. You can reach Scott and I at eight hundred Talk WGY. That's eight hundred

eight two five nine four nine. You are 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. So I want to thank you for tuning in so far this morning. Hope you stay with us during the break, and remember Scott's going to be jumping into a little bit of a tax segment, so if you have any questions please call it well. Good morning, and thank you for staying with us through

that short commercial break. I'm John Malay and I'm your host for this morning's edition of Let's Talk Money, and I'm joined by my colleague Scott Strohecker. Just in the first segment, really wrapping up markets and certainly a lot to talk about there. And we've got a caller, David from already. David, I appreciate you listening this morning and what can we help you with?

you know, being eligible to make the row of contribution. So, yeah, the earnings would be taxable on your twenty twenty five, but make sure you do all the proper report of on your twenty four taxes. So it sounds like you did took it out of your off put it over to your IRA, and then you did a back door of roth. Is that correct?

So it's all on the eighty six oh six out on the exact line in front of me, right now.

is you have to have earned income. There's also a few other factors you know as to whether it's deductible or non deductible for your IRA contributions. There's also income limits even if you do have that earned income. So again, you can make a up to a seven thousand dollars contribution to your IRA or raw FIRA for those that are under fifty years old for twenty twenty four, and

you have until April fifteenth to make those contributions. And if you're over fifty years or older, you can make it up to eight thousand dollars contribution to either your IRA or your raw IRA. Again, that's an ore. You can't contribute to both of them for twenty twenty four, not at least the full max amount for some of the other you know more nuanced, you know whether or

not you're eligible. You definitely want to make sure that you look up the rules or even talk to a financial advisor like John or myself or one of the advisors here at Bouchet, just again to make sure that it's getting properly reported and that you're eligible. In addition to that, you can make step contributions. If you're a self employed individual, you have until the duty of your business tax return to make your twenty twenty four step contribution.

Typically people will file on a schedule seat which goes on their personal tax return, which means that the deadline for the SEP contributions is April fifteenth. Another account that you still have time to make contributions for for twenty twenty four is yourn HSA or Health Statings Account out. This also has an April fifteenth deadline. HSA is simply a tax advantage account for individuals that are covered under a high deductible health plan to help you save for

qualified medical expenses. And these accounts are really unique and that they have a triple tax advantage where you get a the contributions are tax deductible in the year of contribution, the investment growth and earnings are tax free or tax deferred. And then when you take withdrawals for qualified medical expenses in the year in future years possibly you know, these are also come out tax free. So there's not really any other accounts that have that triple tax advantage feature.

So great account to really utilize if you are eligible. So with you know, maybe having your twenty twenty four taxes already wrapped up or about to wrap up, you really want to start looking at this current year twenty twenty five to see, you know, what changes may you want to make, you know, based on what your twenty twenty four taxes look like or what you're expecting for twenty twenty five as far as income or other deductions

that you may have impacting your situation. So one of the first things you'll want to do is really a gesture withholding if needed, whether that's your wages, your pension, Social Security, or even your RMD. You really want to avoid having an underpayment penalty, meaning not paying enough taxes in ahead of time. It's really a pay as you go system, so make sure you pay enough and to avoid those penalties, but also on the opposite side, you don't want to be paying too much in and getting

a large refund when you file your taxes. Really the ideal spot you'd like to fall is the breaking even are as close to that as possible.

from last year's limit. So make sure that you're if you're able to you know, if your cash flow, that you've adjusted your contributions accordingly to either max it out or really hit that you know, at least targeted ten to fifteen percent that we recommend for people. In addition to you know you're adjusting withholding. Adjusting your four oh one K contributions now is also a great time to you know, review your overall allocation of how have your

accounts invested. You know, John really went into it talking about what's going on and the overall market and what we've been seeing and the recent volatility, So you know, now is as good of a time as any to review your overall allocation, make sure that it's right for you. You know, you want to make sure you're not too

conservative or too aggressive. You know, oftentimes people, especially for retirement accounts, they just get into it maybe a default fund when they start the account, and then never go back and review it. So it's really want to make sure that you know what is going on with your account and it's the proper allocation for your situation and

risk tolerance. Additionally, another thing that has started to become prevalent is four to oh one K plans offering a WROTH component, so a raw four to oh one K, you know, working in tandem with your traditional four oh one K. More and more plans are now having to offer this along with their traditional four oh one K. So if your company does offer it, you know, take a look see if it makes sense for you, whether that's you know, meeting with financial advisor like John or

myself or anybody here at the firm to really analyze, you know, should I, you know, switch up where my contributions are being made because again it could really make sense for you. But that is really some of the highlights for you know, current year taxes they are maybe finishing and for twenty twenty five. You know, another recent headline that we've been seeing a lot about is tariffs. So I'm gonna hand it back to John to dive into that.

running through some tax information. You know, we are it's it's hard to believe we are getting so close to tax filing dates. So that's some great information. And certainly, as you talked about some some you know a lot of uncertainty, a lot of a lot of you know, things being floated around by the Trump administration, uh with you know, tax related for twenty twenty five, a lot of that has not you know, needs needs to go through Cargre's a lot of work needs to be done

before we have specifics to talk about there. But you know, certainly, uh, you know, Trump has been very clear with his policy of you know, looking for some tax cuts and really make it up some revenue gaps through tariffs and you know, tariffs. You know, I think you touched a little bit on that at the beginning, and certainly just you know, just don't want to spend too much time other than you know, tariffs. You know, you know, Trump even was speaking more yesterday.

You know, he's looking forward to April second when he can put in some reciprocal tariffs. So I would just say, you know, it is an unknown of how actually they're all going to be implemented and what is going to be the impact, you know, is it going to drive up costs? So we'll we'll save getting into more details there.

You know. One of the things I did want to cover is we're in this period of market volatility and you know, you know, let's face it, we've had back to back years of you know, twenty plus returns in the in the market really without any significant drawbacks in those you know, twenty three and twenty four. And so the question is, you know what do we do in in you know human nature, right, we don't like to lose money, and so certainly that can cause sometimes some overreaction.

So more than anything we say is don't panic, right, you don't panic. You've got to see through the noise. And uh, I see we have a caller on the line, John in Clifton Park. John, appreciate you listening to us this morning. What can we help you with?

there's gonna be withdrawn from the portfolio. Right, We're gonna take that typical So typically we're taking two years worth of R and D s out of the market and putting into a vehicle that's more like a you know, a money fund, right, so no principal risk, but still yielding, you know, and with rates as high as they've been, you know, those money funds have been yielding us you know,

you know, north of four and a half percent. Now they're they're down lower up, you know, in the in the low four percent, but it's out of the market, right, so not subject to market fluctuation, but still yielding. So I think you know, my perspective there is we're already because we're already gonna take that out of the market, even if you're taking it out on a monthly basis. Right, we're taking that money out of your invested portfolio and

setting it aside what we call a cash management fund. Right, Because more than and anything, what we want to avoid is that we know you need to take this rm D right, so it's a known distribution, but we leave it in the markets and markets go down, right, And now we if we're in a situation where we may have a down market where we have to sell securities

down to raise that cash. Right, that's what we want to avoid it all costs, because we do know, right, equities are going to go up and down, and if we don't have to liquidate them, then it's really just a paper loss and we'll hopefully recover certainly what we saw the twenty twenty two losses recovering in twenty twenty

three and twenty four. So I will say, because we're already taking it out of the market, but putting it into a vehicle where you're still yielding, I would say it comes down to really what is the preference of the client, Right, you know we're going to have it to work yielding some some return without any principal risk, right,

and then you can draw it down as needed. And the other I would say is, you know, from a logistics point, if you we do have some clients who say what I what I, I want to do it near the end of the year, and and at that point I have a better sense of whether I need it or whether I just want to move it over to a taxical account and reinvestment. Reinvest in Scott. I don't know if you had any anything else you want to add in there.

where things stand. But you know, if we do take those two years worth of distributions and put them into this you know, separate bucket, so we don't have to worry about any market volatility for you.

some compound growth from d g R own SHD. So I'm just wondering your thoughts on that type of portfolio. Their goal right now is cash flow. They're not looking for just you know, growth or you know, they're they're they're quite well off, so they're just looking for cash flow.

looking for some more stability and and some income. And you know, jefpi's been you know, we've had that holding, I mean at least I think four years. And that is you know, serve well. And same thing with SEHD and d GROW two holdings that have held up well with some of this volatility, and I think sound like they aligned well with what your you know, your client's

investment strategies are. And again I would say, you know, one thing I would just say, without having a full financial plan right in front of me, right, just making sure from a cash flow point of view, what the ultimate needs are you know, was this uh it was is this money that from our real escape perspective? Is there any interest in going back into real estate or is this hey we've cashed out and this is now used to fund retirement.

exited their their private business. So so this this portfolio is now the you know, the main mechanism for for for income for them, and they have you know, they have some different uh you know, pools of money as well, but this is this is the new kind of the main driver.

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