Let's Talk Money

Good good morning everyone. Some nice intro music. Zach. My name is Martin Shields. I'm the chief Wealth Advisor at Bruchet Financial Group, and i'm your host today for Let's Talk Money. It's great to be here with you to answer any questions you may have regarding your financial planning or investment management concerns, and I encourage you to call in with those questions. You can reach me at eight hundred talk WI. That's eight hundred eight two five five nine

four nine. Once again that's eight hundred eight two five five nine four nine. So whatever's on your mind, if it's finance related, give me a call. I can give you some thoughts as to what you should be doing with it. I want to first start by saying Happy Mother's Day to all the mothers out there. I hope that you have a great day. I will say that you're greatly appreciated. Zach and I were just talking about what would be doing, and you think about it, how important mothers are to

all of us. And I want to say a shout out to my wife, Catherine, who is just an amazing mom to our kids, and to my mom who's eighty eight and has just been a fantastic mom to me. So I hope that you have a great day for all your mothers and for everyone else. Make sure you take care of your mom and you reach out to them and do something special for them. And before we jump into the finance discussion, I also want to bring up the American Cancer Society had its

annual gala at the Hall of Springs in Sarahtoga Springs last night. This is

the twentieth anniversary of the gala. They usually raised somewhere in the neighborhood three to four hundred thousand dollars with this event, and you know, we all have people who have been impacted by cancer and so to be able to be there and support this organization, and over the last twenty years they've raised over six million dollars and all those dollars stay local, whether it's helped to support people who are going through cancer treatment or also to fund local cancel cancer research.

So again, it was a great event. I was so glad that is a firm. It's something that Steve has been very much involved with. And if you listen to the show, you know I did the men Wear Pink campaign last fall in honor of my mom. Who was thirty five years cancer free. But we all know individuals that have been impact by cancer, and I'm going to do a special shout out to the Allen family. Olivia Allen was a Saratoga Springs student who graduated a year ago and she unfortunately passed

away from cancer. Thinking of her family, but again, just it was an amazing event and as always so well put together, and to be able to raise cancer or raise money for such a great cause as something that is very important to me and to our firm. Let's jump into some of the discussions about the markets, where boy, we're just off of highs right now. Last week, this past week was great. We get in the market, and really what's driving is earnings. Earnings really continue to be very strong.

And not only earnings are they kind of surprising in the upside, but what companies are forecasting for the remaining part of the year is also greater than what analysts had expected. So you know, there's a lot of things that can drive the market higher, but really when it comes down to it, you've got to have earnings, right, that's cash flow coming into companies and

what is the expectation as they move forward Because we've talked about this. The stock market in general is a forward looking instrument, so it's looking out six to twelve months, and it's taken into consideration what's going to be going on in the economy and what do they think their consumers are going to be doing. But it wants to know really at the end of the day, what

was cash flow and what are what's the profit's going to be? And you we're seeing it in general about eighty percent of the companies of the SP five hundred have surprised the upside on that, and you know there are areas of concern, but this is a standard, right, this kind of nothing. It's very rarely is it just all good, and very rarely actually is it

even all bad. It's usually somewhere in between. And frankly, as an investor, I like to see it when there's a little bit of more of the middle ground, right, because here's the thing, like anything in life, when it's just all good, the likelihood that something bad's going to happen is is just that much greater. But when you're kind of in this middle part that from an economic perspective, from a market perspective, that is that's actually a good part to be in is kind of in that middle with some

good news some bad news. The challenging piece that still exists out there, it's kind of coming more into the front is the consumer, and in particular more in the lower income levels on these consumers, and could be a number of things driving that. Part of which we've talked about this is throughout the

pandemic with the stimulus checks that came through from the federal government. There was two trillion dollars plus almost three trillion dollars that was put out there through these stimulus checks and other federal government spending, and a lot of that cash that was built up during the pandemic when people maybe weren't spending has been drawn down, and in particular, people at the lower income level are much harder hit

by inflation. And so you see it in consumer sentiment from the University of Michigan study, those numbers are down quite a bit. And you see it in companies where more of their consumers are in that space. They're struggling right that those those companies are struggling more. Whereas more in the middle class and higher income earners, those companies that deal in that space are still seeing a

lot of upside. So you know, we've talked about this. The consumer makes up about seventy five to eighty percent of the economy, so you do need to have a strong consumer to have the economy continue to grow, to have markets do well. But you know, with that said, it's kind of a mixed bag. You know, in my role with our firm, we're constantly talking to executives, We're constantly talking to small business owners and even

with our clients with opportunities. You know, the labor markets continue to be very strong, and you know, one of the things that to me, you look, it's anecdotal, but it really kind of helps tell you where things stand. My family got three teenagers. They're big fans of Chapolte, right, you know, they just my son could pretty much eat it every day. And I guess all things considered, for what would be defined as fast food, it could be pretty healthy. You know, it depends on

what you actually get. But I was there the other day picking up dinner for our family, and right in the Wilton store, they have this big sign that says, you know, talks about getting a job at Chipolte and all the reasons that you want to do it. You know, everything from a form and K and vacation time off the whole list of things. And you know, they had that one bullet point that said within three years you could be making one hundred thousand dollars. It's like three years making one hundred

thousand dollars. That's pretty good. And again Chipote is actually a company that's doing incredibly well. So it's not indicative perhaps of all fast food restaurant chains by all means, but it does show you that, you know, if you want to you don't have the I'm sure you don't need to have a college degree to be doing this. If you want to go and find an

opportunity and work hard, there there are opportunities. And to me, it does show that again from a labor market perspective, things are pretty good. Right. It's definitely continues to be a strong labor market and that you know, will continue to propel the markets higher. The other thing that and this is where the challenge is from an inflation perspective, is with the real estate

market. So again, if you're out there pretty much across the country, as we have conversations with clients, maybe actually some weakness in the Florida market relative is speaking right this, you know, I think it's always important to appreciate that in some of these markets like Florida, you know, some of the sum Belt, like Austin, Texas, some of these other places, the prices ran up so high. I mean, it's just mind boggling.

Hommage then ran up during the pandemic. That they're coming down off of those highs. But the demand that's out there for housing is so strong that that is keeping rental rates more elevated than people expected. And that's when you look at inflation, the fact that it's stickier than many people had expected. A big driver behind that is rental rates, right because the consumer price index, the other inflation industries that are utilized by the federal government to determine if they

should cut rates. Rental rates not actually housing price sales, but rental rates are what is the measure that's utilized in those indices, and they continue to be very sticky. And that's where you're not seeing that measure go down to two percent. It really is more in the three to four percent range.

And there's just demand out there you think about it, which is if you don't have enough housing supply, which is the case since you know, the the housing bubble of eight, builders have not been building enough houses and also enough apartment buildings for the number of households being created. And then you have a strong labor market, which is what in general what you have. You're going to have challenges with rental rates, you know, going down to that

two percent inflation target. So until that happens, you know, you're probably going to see inflation. You know, it's certainly in the mid three percent range. And you know, I'm probably more in the camp that you're probably not going to see the Federal Reserve cutting rates anytime too soon. And I've

said that that's that's a good thing. That's that's okay. You look at the mid nineties, Uh, this is somewhat a similar situation to the mid nineties, where you had a good economy, you had an introduction of a new technology. In this case it's AI are artificial intelligence, and in that case it was uh, it was the Internet. It was the introduction of high speed bandwidth, and that you know, the nineties was a good time from an economy. The nineties was a good time for the markets and for

much of the mid nineties inflations. I'm sorry interest rates were kept constant, they were not being reduced. So I think it's going to be challenging for this FED to actually start reducing rates. And you know, sometimes I feel like, even in this situation, they probably would have been better off just saying that you know that there was a possibility of reducing rates, but not going out as clearly stating what they did that the rates were going to get

reduced. I just think you got to be so careful of what mindset you set for investors and people, and that could be a problem. Well, let's move on to some financial planning topics, but before I do again, if you have any questions, feel free to give me a call. You can reach me at eight hundred talk WGY. That's eight hundred eight two five five nine four nine. Once again, it's eight hundred eight two five five

nine four nine. And as I always say, there's no Dummer silly question except for the one you don't ask, and you may be doing your fellow listener or favor by asking that question that they have as well. One of the things that my colleague Sam Macy talked about last week on the radio was this idea of retiring early. And on Wednesday, she and I are going to be doing a webinar on that. If you want to listen in, you can sign up for it if you go to our website Bouchet dot com.

On that we have our insights page where we have blogs and other webinars that we've done. But if you go to our Facebook page that you can connect to from Bouchet dot com, there is an area you can sign up for the webinar. It's this Wednesday at twelve thirty. And you know, this concept of retiring early, you know, there's a term for the more dramatic side, which is retiring very early, and that's fire financial independence retire

early. And you know, it's interesting. I've been doing some reading on this topic, and you know, it's everybody has their own take on you know, what does it look like to retire early? Do you want to retire early? And I always say you can. Most people get can retire early if they have a budget in place, if they manage their spending, and if they you know, kind of understand what do they need in retirement. And that's where I think people fall down, is they kind of get

off track. They they don't stay disciplined with this approach. But you know, me personally, I kind of struggle with the idea to retire early. I think if you have a job where you're earning an awful lot of money and you don't like your job, and you want to kind of cause every retire early, meaning you want to work really hard hard at that job, and then as you get into your mid thirties, after you save a lot of money, move into a job that is something that you more appreciate.

Well, that's different. But to live so frugally, let's say in your twenties or thirties, and this is where you know, part of this movement is about, which is to live incredibly frugal in your twenties and thirties, find out how much you can, you know, need to spend as you move forward from there, save up those dollars and then go from that.

I think the problem, and this is one of the things I was reading about, is you know, when you after you do that, it sounds exciting, and when you first retire, you know, you're like, this is fantastic. You're playing pick a ball, you're doing whatever that is. But there's two things. One is you've had to live your life so frugally

that you're missing out on a lot that life can offer. Perhaps, And then you know, when you're retired sometimes you know, I always say retirement is great, but you've got to have a plan of what you're going to do in retirement, and you know, day after day of playing golf or doing whatever that is. Especially it's one thing if you're sixty five or seventy or you know, at that point in your life, you're probably ready to

really kind of kick back a little bit and take it easy. But if you're thirty five or you're even forty five and you're retired, and after a year of not doing much, most people get bored. And that was one of the things that this article was reading in the Wall Street Journal was talking about, which is, you know, a number of these individuals actually have

done incredibly well. That terms called but it's called fat fire. And all that means is that you retire early, you've actually they've done very well right, whether it's through the career or investing or something like that. They just put themselves in a spot to really to be able to live a very good life when they retire. But even these folks after three or four years of being able to spend a lot of money and travel around the world, there's

an element of what am I doing in my life? Right? And I think that's what I would always say to folks, which is as important as it is to you know, maybe think about retiring. What is as important is to find more meaning in maybe what you do in your life. And you know that's I've got three teenagers. They're in college, and you know, we talk about, hey, what is what do you think you might want to be doing after you graduate? Well, it's the idea of going

to college. And I do think it's important to find something a job where you actually might enjoy going to work. Right, That's a novel idea. And you know, I think that that is as important as perhaps trying to retire early as to at some point maybe that's again not your first job. Maybe your first job you go you try to make a lot of money.

But I always tell my kids, I said, you listen, you know, if you think you want to go make a lot of money, great, but you know you probably want to try to do it, you know, with doing something you enjoy, because what you're going to find is that you know you can only try to make a lot of money and do that in a job that you don't like for only a certain amount of time. I mean, at some point you really are gonna not be happy with it.

But the other issue that people come the challenge that they have is that you know, you can't be saving these dollars into a retirement account because you know, even if you're going to retire let's say at fifty five, you know you can't start drawing down on an IRA until you're fifty nine and a

half. So you've got to have a plan as to how we're you going to put those dollars in an account that you can access, So you really have to the earlier you're going to retire, you're gonna have to have those dollars more into a taxile account or even a raw or different accounts that you can access early. Now, there are some strategies like a seventy two T distribution that allows you to take money out of an IRA before age fifteen nine

and a half, but there are some restrictions with that. I'm not going to go into all those, but that strategy can be utilized and we use that for some of our clients. The other strategy is what's called the rule of fifty five that if you are working and you have a four one K at a company, you can start taking distributions out at age fifty five if that is the last company that you worked at before you retire. So so

that can be done. But that's just an important thing to remember, which is, you know, I see this now with some clients where they have all their dollars in an ira and a pre tax ira, and you know, that's the we talk about the importance of having a tax bile account or

having a ROF. You know, there's an element of diversifying from a tax perspective too, right, because you think about it, if you have a million or two million or three million dollars in an ira, and then you know you have a situation where you need those dollars and orf you need a lump sum from those dollars, well, guess what you're going to have to pay ordinary income on every one of those dollars. So it really becomes kind

of problematic if you put too much into a traditional ray. And that's why I usually always encourage individuals to look at you know, where they where they are from a income perspective, So when they're younger, really trying to put dollars into a wroth, right, uh, you know, pay the taxes on it now, and then that's the power of compounding, which is, if you start putting dollars into a wroth when you're a teenager, you're in your twenties, you could be in a great spot when you're your sixties.

And you know, we have a number of clients that have well over a million dollars in a wroth, and when we do financial plannings for them, it is such a different situation than an individual that has over a million dollars in a traditional array because you have to pay ordinary taxes on that traditional ray, whereas with the wroth there's no taxes. There's no h state taxes,

and there's no federal taxes as well. Now that's the one I will say, which is we have clients around the country, and you know, New York State can't be problematic with his taxes, certainly, But the upside is with New York State, you don't pay up to twenty thousand dollars you have it. You can get up to twenty thousand dollars for each person if you're fifty nine and a half, where you don't pay New York State taxes on an IRA distribution. And the other side a piece of this is New York

State does not tax Social Security benefits as well. And actually that's not the case with all states. Actually, I was looking for the client's in Virginia. You know, Virginia tends to be a little bit lower tax state, but they do tax social Security that so scurity, but IRA distributions. And same thing with California, which is not too surprising. I would expect California too. But you know, that's where you have to kind of look at

it. As you're saving your dollars, especially if you are on a tire early, you have to know where you're putting those dollars. That's that's very important. And you know, I'll tell you I just had a meeting with a client. Woman's a great you, very successful business woman down in New York City. And you know when she came to us, she was younger actually a daughter of another client of ours, and she started with fifty five hundred dollars. We just went through. We have this great graph on our

portal for our clients. It's called the capitol flows page, and it shows the dollars you've put in, so the principal amounts you put in and taken out over time, and then it shows the value your portfolio. So what's great is with you know, clients that are accumulating lots of dollars over a long period of time, we can show them the actual dollars they put in

or if they taken money out, and the value of the portfolio. And you know, I love looking at that graph with clients that have been with us for a long time because it just shows I can show them what it means to be a good long term investor. And you know what that's about is, you know, in this case, just putting dollars away, saving those dollars and letting us do our job of managing our portfolio. And now she has over a million dollars. And you know it's not like her saving

just a ridiculous amount of money. It's just that she was very consistent in her savings and when there was volatility in the market, she did panic. She was okay being in a somewhat oppressive portfolio, nothing too crazy. But these are just the basics of being a good long term investor. And you know, I always say, you know, talk about you know, finding

a job that you're passionate about. I love my job and feel that it's so fortunate to be in this position because most of the conversations we have, especially about clients, they're positive ones, right, They're talking about all the things they can do. And you know, one of my big pushes for clients is to start spending some money. And this this person's case, you

know, she's going to be able to retire early. You know, she's really almost come to a situation where she almost doesn't need to save that much more because she did such a great job in her early twenties to get her where she needs to be that she could really start kicking back and even spending more money. And you know, again, let's if you have the right plan in place, a budget, and you know you're invested properly, that's what can happen. Well, folks, we're going to go to a commercial

break, but come back and join us as we take your questions. You're listening to Let's Talk Money, brought to you by Bouchet Financial Group. What we help our clients prioritize their health while we manage their wealth for life. Folks, come back and join us in a few minutes. Welcome back, folks. For those who just joining us, my name is Martin Shield's I'm

going to be your host day for Let's Talk Money. I give him my colleague Steve Bouschet, a well deserved break, and it's great to be here with you to answer any questions you may have regarding your financial planning or investment. Manage your concerns, and you can reach me at eight hundred talk w GUI. That's eight hundred eight two five five nine four nine. Once again,

that's eight hundred eight two five five nine four nine. So whatever questions you may have, give me a call and we can chat before we jump into the finance discussion. I don't know about any of you, but uh I had the My wife and I had the opportunity. We're walking outside our house on Friday evening. We were taking care of a neighbor's dog and we're coming back. We noticed this amazing sky outside and it was the northern lights, right, so you had this solar storm that was occurring on the sun,

and uh I guess it was over the throughout the weekend. You know, you could see these amazing things. You have to normally go to Iceland or the North Pole to see and the pictures that becot are amazing. It was incredible to see this right here in Sarah tuguers Fran and I think you could see it all the way down into Florida. Now, the challenge is if you live in any place where there's a lot of lights, you know, the light pollution would either destroy or limit your ability to see it.

Plus last night there was a cloudy skies. But if you have the opportunity to see, I don't know if it's gonna be going on tonight. And again I'm looking out the window here you have clouds, guys. Again, but it was fantastic. And you know, to me, you see something like that, you just really makes you appreciate how small and insignificant we are. You know, you have the sun that well, let's face it, we more or less take for granted. And you know, they have these

incredible solar storms that were so dramatic. I think they have to go back to two thousand and three to see time when there was another solar storm that was is dramatic and really with the bizarre as you know, nuclear explosions on the Sun's surface and they're large enough that it sends this matter out into the universe and when it hits our atmosphere, that's what causes the lighting the northern lights in the sky. And again, if you see anything on Facebook or

Instagram, if you see yourself, the pictures were amazing. So if it were to clear up, then you might want to just I think today tonight there still made an opportunity to see it. And you know, I remember in three where it did impact you know, some it could impact electrical grids, it can impact cell service. I don't think it's really been that problematic this time around, but that's one of the things that can happen. But

really just amazing to see and the pictures are fantastic. Let's let's move on to another topic. This is where we discussed a lot with clients that you know, when we're meeting with our clients, we're talking about a whole array of different topics. As we mentioned, we're clients personal CFO. But one of the things I always really stress is having a budget place. And you know, I think people struggle with this concept and they don't want to be

limited by a budget. But if you're gonna go move into retirement, in almost every case, having some idea and I always say, you can keep it high level, right, you don't have to go to granular, but you have to have some idea as to where you spend your dollars and what is that going to look like when you when you're retired, Because you know, the factor matter is we hear you know how much you're gonna spend the retirement Usually it's around eighty percent of what you maybe spend. Now that's kind

of the rule of thumb, but I actually think it's the opposite. I always tell folks that, hey, you're probably gonna be spending more. Yeah, there's some things that we're going to spend a little bit less. And you know, from an overall income perspective, you're not going to be paying for FIKA, which is payroll taxes. You're not gonna be saving for retirement. And hopefully, if you're planning correctly, you have your mortgage paid off

as you go into retirement. But the factor of matter is that maybe you and your spouse, if you're working forty hours plus a week, those are hours we're really not spending dollars. Well, now, when you're retired, guess what, You've got more time to go to a home, deepot or target, or whatever the case may be. So you know, in general, I always give clients guidance that whatever your budget is, now go ahead and bump it up by a ten or fifteen percent, because the likelihood of

you spending more money is pretty high. And then the other element is, you know, again this is a personal preference, but I think with most people they don't want to go into retirement having to be overly concerned with how they spend their dollars. Right. You know, that condect to be stressful in and of itself, because if you're retired and you're always thinking about, Okay, I got a really tight budget to live in, we have all this free time. It goes to what I've talked about before, which is

you've got to be doing things that you're passionate about in life. And many of the best things in life are free. I'm a big believer in that concept. But not everything's free, right, and especially if you want to travel, you can't do it on a budget. But you know, as you get older, most people you know, they usually want to travel a little bit more luxurious than they did when they're in their twenties, right, they'd rather not be backpacking and staying in hostels around Europe. So having that

budget is just so important. And you know, again we have clients that they're successful individuals and you know, quite off from their work, and they're not they don't really have a tight budget. But I always encourage them as they get closer to retirement to have that budget. And then you know, in particular, if you find like you're struggling from casual perspectives, that's what it's so important to have a budget. And I always say this, which

is even if you have kids. You know, I think this day and age, we're so inclined to want to, you know, to expend and do whatever we think we need for our kids. And you know, having three teenagers, I will say that they are expensive for all day activities and certainly college and whatnot. But one of the best things you can do for

your kids is talk about this concept of budgeting. And you know, if it's something they want, there's something you want to do with them, you know, let them, hey, listen, we can't do that, right now because we just don't have the dollars to do it. But what we're gonna do is we're gonna put together a budget and we're gonna save dollars, whether it's to buy something or go on a trip, and show them this process of being disciplined with your spending. And you know, I think that's

a great thing to do. We talked about this with our kids when they're uh have dollars that they're earning, both budgeting at how they want to spend, in particular if there's something larger they want to buy, but also saving those dollars all right, you know, making sure that they put dollars in you know, we talked with us in general, we haven't put them into a rowth ira, which, as I mentioned earlier in the show, is

a really powerful tool to start to accumulate wealth and prepare them for retirement while they're very young. But you know, I do think that unfortunately, we live in a culture that is all about spending keeping up with the Joneses instead of really being smart with how you spend your money and having that discussion with with your kids. I mean, there's nothing wrong about telling your kids you can't afford it. We're gonna go to the phone lines we have day from

Clifton Park, Davia there. Yes, good morning, thank you for your service as usual. Yes, absolutely, what can I help you with? I'm this may be a stupid question. I'm retiring in two years around the age of sixty. I do have defined pension fortunately, and we have a four to fifty seven and we have a couple of raw thirays. When I retire, Should I still contribute to the raw thiray or that's just spoosh? Well, you cannot contribute to a row unless you have to earn income.

So if you're going to be working part time, you could contribute to the ROF. And you know, the only reason I would suggest do that is if you have extra cash flow, right, because you know you think about this. You could if you're if you're earning more from your defined benefit plan and at some points of security and your part time job, your models will put those dollars into an account that you never pay taxes on those dollars rather

than into a bank or taxible approchs account where you always pay taxes. But the big caveat to that day is you have to be uh, you have to have earned income, so you have to be working to save into a row. Now, could it be a part time job? Is there a certain amount that you have to make? Nope, Nope, a part time job's perfect. So you know, you can save up to seven thousand dollars

as long as you're earned that money and part time. It's just got to be W two income so that that works all right, Thank you sir, have a good day, okay. YouTube. Yeah, so a good question. I mean, you know, we always say one putting dollars into a

rowth, it's just such a great avenue to really save money. And you know, as I mentioned, uh, you know, if you're if you're going to be putting into a taxible account and you're you have the ability to put in the row, you you always want to be doing that because you just never pay taxes on it. So a great question there, But as I mentioned, you have to have that earned income, and many people as

they go into retirement, they don't want to be doing that. Let's let's move on to another topic that we talk about quite a bit with our clients. But before we do again, if you have any questions, you can reach me at eight hundred talk w GUI. That's eight hundred eight two five five nine four nine. Again eight hundred eight two five five nine four nine. So you know, with our clients, one of the areas that we

get involved with discussions with them is philanthropic giving. And you know, it's we always say is you know, people look at it as a way to reduce their taxes. And now with the standard deductions being so high, you know it really you have to be given away enough to go above that standard deduction. So for many people, the donations that are making it to charitable causes, to nonprofits five oh one c three organizations do not get them a

tax deduction anymore. So that idea perhaps is not as important. But most people I know that give money to charities, they do it because they believe in the cause, right, they believe in the mission. Uh there's something about that mission that resonates with them. And so you know, you still do want to find the most efficient, tax efficient way to do that, and one of the ways is using a donor advised fund, and that is simply a fund. You can set one up at Schwab or Fidelity where you

put dollars in there. You get if it's large enough you can get a deduction for doing that, and then you from that donor advice fund, you make contributions to the charity right for that fund. And one of the strategies that can be very successful is with clients that we have that have these charitable interests and they are not their contributions don't rise enough. They're not large enough to go above the standard deduction, so they're not getting the tax deduction for

those donations. But they have a decent amount in assets in a tax le broke account where they have maybe some sizeable gains. So what we do is you can actually donate appreciated securities from your tax account into the donor advice fund. And what we recommend they do is they combine multiple years. So let's say they give five thousand dollars a year to charities. So what we say is, why do you make five years worth of donations so that i'd be

twenty five thousand dollars. Again, you have to have the resources to be able to do this, but make put twenty five thousand dollars into a donor advice fund. Now, in most cases that would be low large enough that it would be above the standard deduction, so they would be getting the deduction for that contribution, which they would otherwise on an annual basis not be getting.

And here's the real beauty of it, which is if they're donating highly appreciated securities, there's no gain on there's a taxbile event with those donations. So again, let's say you have Apple stock, you have twenty five thousand dollars worth of it, you have these huge gains in it. You go

ahead and move that Apple stock with all those gains built in there. And if you were to sell those that position and then give the cash to the charity, you'd have to pay long term capital gains builth federal and state on that. But in this case, you move that twenty five thousand dollars of Apple stock to the donor Advised Fund. You could sell it in the donor Advice Fund and not pay any gains on it. You don't. You don't have to sell it in the donor Advice Fund, and then from there you

can make donations annually to your charity. So this is kind of a win win, right. Not only do you by combining those years of donations do you get that write off, but you get to move that highly appreciated stock, they would have to pay long term capital gains on into that fund and

not pay any gains on it. So it's a great strategy. The other thing with the Donor Advice Fund is you don't have to make any donations if you don't want to, so you know, it can't be a way to kind of create a fund that you use, let's say, with your kids. That way, you make some donations, but you can have that invested so it continues to grow. So it's almost like your own mini foundation and the advantages. You mean, you can't set up a foundation as well.

But the thing to remember we touch our clients about this unless your foundation. There's a couple reason you might want to set up a foundation, one of which is you have you want to do certain things with those dollars that a nonprofit doesn't currently do. So you know, with that foundation, you can give you don't have to necessily give to a five h one C three nonprofit.

You can maybe give to families that you see that need help for certain reasons, and you can do that using your foundation, right, so you can give those moneies directly. But the thing you have to remember is a couple of things. With a foundation, you have to give out five percent annually of the balance of the foundation, so you can you have to be given money out constantly. Uh. You will be paying taxes on gains within

the foundation. So you know that this example of the highly appreciated stock, if you move that money into that foundation, you sell those positions that that foundation is going to pay taxes on that. So you're not getting that that tax deduction or you know it's not you paying it, but the foundation would. Uh. And then with foundations, you need to file tax forms and there's a lot more restrictions and guidance on it that really the irs is trying

to prevent fraud from happening. Now, the upside is if you've got a large enough dollars and that you want to put in there, and you know you do have sharable interest that are outside the standard norm of what of five on one C three might do, it can also be a great way from a family wealth perspective to put those dollars in and then you can actually,

you know, somebody can get paid for managing that foundation. That is different than the Donor Advice Fund is don Avice Fund you cannot somebody cannot get paid for managing the foundation or sorry the donator avice fund and doing anything with it. But with the foundation you can pay a family member to manage it and handle the distributions. So something to consider. But again this is something where we're very much involved with our clients in these discussions. Let's move on to

another topic that we also frequently discussed with our clients. But again before we 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 eight hundred eight two five five nine four nine. So one of the areas I want to talk about is uh. You know, we work a lot with INDI. You know this is uh, it just an area that

we have expertise in. But families that couples have gone through divorce. Uh. You know, one of our colleagues, Nicole Global, is a CDFA. You know, we we just in situations where you know, it can be unfortunately clients that get divorced of ours, or quite frequently it's somebody who's

not a client who's gotten divorced and they need help. And you know that's where we do a lot of work with individuals, and you know it, if you're in that situation, you've got a lot of stuff going on many times, you know, especially the individual in that couple that maybe is not

have the knowledge from a financial perspective. You know, that's where we just do a lot of work to make sure that they're educated properly, uh they know how how their divorce decree is set up and how their assets are going to be divided properly, and having an advocate for you in that I just see time and time again where it is important if you're going through that process to try to get working with a fiduciary who has expertise in this space earlier

rather than later, because to the extent that we can work with your attorney making things, making sure things are set up properly, that's very important. Make sure that you're getting the right assets through the marital separation agreement. And that's not always the case that we see unfortunately when clients come to us after

they've been working with an attorney. So I just would encourage you if you know somebody that is going through a divorce, you know, especially if it's the spouse that is not as knowledgeable maybe does not have a financial advisor, to have them talk to a fiduciary sooner rather than later, and a fiduciaria that has that expertise. The other area that we do a lot of work

with us, you know individuals that have proceeds from lawsuits. It's the same concept to the extent that you know in many cases, you know, you have this lawsuit because something happened to you or your family, and so there's a lot of emotional elements to what you're dealing with, and then there's these financial decisions that many cases you didn't have to you know, deal with before,

and that could be challenging. So I would really encourage you if you know somebody that is going through a lawsuit process, the earlier I know with our firm, we can get involved in those discussions, start getting them prepared for you know, what they're going to do with those dollars. It's so important, it really is, because to the extent that you have a individual or family that gets a sizeable amount of dollars and they're not ready for it.

They're just they're not used to having those types of dollars. The decisions that can be made can be very detrimental and and if they do the right decisions, they're going to be setting them soup up and their family up properly. If they don't, then they could squander those those assets. So just

so important. And finally, the other the other area is just you know, as you get older, and you know, we have a lot of clients where they manage their own money, but as they get older, either as they go into retirement or they're getting older, they want to make sure that they remove that risk from them doing themselves. And also if something happens

to them, what happens to their spouse. And I would really encourage you to have a plan in place that even if at the end of the day you don't want to work with a firm right now because you're managing your own money, that hey, what if something were to happen to you, what

is your spouse going to do? And I just we see this time and time again where people don't make these plans and unfortunately, you know, life happens, and you know their their spouse could be really in a tough spot because it's the same situation as to describe the divorce or the lawsuit where they're dealing with a lot of emotional challenges and hurdles, and to throw on top of that these financial decisions can be very challenging. It really, it really

can be. And this is an area that we work quite a bit. Uh you know, I say unfortunately, but just in emine area of expertise of ours is dealing with people where spouse has died and you know, now

they need help. And again I would just encourage you even if you we have situations where you know, uh perspective, client will come in and they're not ready to start working with us, but they do tell us that, hey, if anything happens, uh, you know, I want, you know, my spouse to come to you, but I would encourage you to at some point, uh you know, to come in actually work with as a client or another fiduciary, just to get everything set up properly, properly

because we see this, you know, they they don't have it set up properly, so it's just kind of a mess of where everything is. And you know, we talk about the importance of consolidating and really lining out where all your financial assets are. That that that's extremely important is to put together and document that. I mean everything that you want to have happen if you were in the past. I mean everything from where do you want if there's

any donations to be made to charities? Uh, you know what what do you want for your funeral? What do you what do you want for your your music? I mean I literally go through the whole list of things. If there's any jewelry that you want to go to certain people. Take the time as you get older to put that all together, and you know, I would encourage you that, you know, especially if you do have a health issue of concern, is to work with a fiduciary to get your financial

house in order. Uh. There's nothing worse than you know, when we see this when the spouse dies and the remaining spouse who's not you know, the finance person comes in literally with a box of statements and they're from all these financial custodians. Uh. You're talking about a much challenge, much more challenging environment for that person. Uh. So you know, really I would encourage you to plan ahead for these life situations because unfortunately they do happen.

It really is unfortunate. One last item I want to talk about before we wrap up. It's just we see this a lot. When people are going to retirement. They have this idea that they really should be moving to a particular place, and they use quite often taxes as a main driver behind that. And boy, I will just tell you it's as if you're going to go ahead and retire and you're going to move someplace it's far away. You know, taxes should be there in the equation property taxes or income taxes,

but it should by no means be the main driver of your decision. I just see situations where people move to locations they do in a large part because of lower property taxes lower income taxes, and then they get there and they're like, what am I doing here? This is not where I want to be, And in many cases they move back, and you know, that whole process can cost a lot of money. So I would really encourage it to think just much broader as far as your decision metrics and what you're going

to be doing versus using taxes is one of the main starting points. And unfortunately that's not what a lot of folks do. They use that as one of their main starting points as to how they make the decisions. Well, folks, it's been a great hour. As always, I hope you learned a little bit more in your own personal situation, but as always has been great to be here with you. You're listening to Let's Talk Money, brought to you by Bouchet Financial Group. Well, we help our clients prioritize their

health while we manage their wealth for life. Folks, take care of yourself, take care of each other, and make sure you reach out to your mom today.