Let's Talk Money

I have the pleasure of hosting the show today. I was able to host last week as well, and I'm honored to be here again today, giving my colleague Steve a well deserved break, and you know, having the opportunity

to share this hour with all of you listeners. Steve has actually been hosting the show for twenty nine years here on WGY, although the days of the week or the times the day have changed several times, but twenty nine years since he launched Less Talk Money, and our firm, Bouchet Financial Group has been in business for thirty four years, serving serving clients here in the Capitol region, around the country in the world. So wherever you're listening from today,

welcome, Thank you for tuning in. I hope that you get something valuable or at least interesting out out of our conversation today and phone minds are open, so I would love to hear what's on your mind. I'm sure other listeners would love to hear any question that you have as well, So if you have something you want to discuss or talk about, please feel free to call in. That phone number is one eight hundred WGY. Our one eight hundred eight two five, five nine four nine. I'd love to hear

what you're thinking about today. Now, normally I would probably jump right into the market recap for the week, and I will get to that momentarily, but I thought i'd switch things up a little bit, and I came across an interesting fact this week and some of my reading, and it is related to money, so it's not totally off topic for our show, but I thought it was interesting. So let's let's kick it off with a little unique,

a fun fact today. So you know, anyone who's looked at any physical money recently, coins or bills, you may recall that the phrase in God we trust is printed on US currency. And you know, for me, I thought I had always said that, I never knew that there was a time where a different motto was written. But I did learn something new this week, which is, at one time in our country's history, there was a different model that was written on the penny, the penny only to

my knowledge, and it said mind your business. And I thought that was so funny when I first read it, But a little further research, which I realized that you know, at the time that was printed, this was a phrase that had actually been popularized by Ben Franklin and you know, now that phrase means, you know, don't be nosy or stay in your lane,

something along those lines. But when it was written on the penny at that time and when it was more popular, it was it was really a reference to focusing on your work and you know, staying mindful, being attentive to your livelihood, your industry, your career then you know, minding your business in that more literal respect as opposed to the colloquialism we all use today.

So I'm not sure exactly when that was switched out for the you know, the and got to be trust that it says now, But I just find that really interesting and you know, kind of funny to consider in light of what mind your business would would mean to all of us today. So there you go, fun fact for you. Regardless of whatever else you may get from today's show, you can at least say you learn something, hopefully, so well, you know, back to my you know, regular kind

of flow for for this show. You know, we can kind of start with a recap of the market for the week and you know, kind of taking a look at some of the bigger themes at play, and of course, as I always like to boil it down to what does it mean for us? US normal people just trying to do the right thing with our finances and our wealth. So for the for the week, it was at down

week for all the major indexes. The S and B five hundred was down one and a half percent, The Dow was down two point four percent for the week, which actually was its most dramatic weekly loss in over a year. Hasn't been down that much in one week since March of twenty and twenty three, and the natstack was down one point six percent. This probably isn't surprising to anyone considering some of the headlines that we've had over the past week.

We've seen some difficult and or concerning headlines come out in the news. We've got inflation here at home, still higher than the Fed would like to see and higher than expected. Talk about that a little more in a minute. And we've also seen some increasing geopolitical risks in the Middle East, so you know what some of those things at play. Also some earnings commentary, especially yesterday Friday, so we have we have markets off their highs. I

think the SMP is down a little bit. I think it's done about two and a half percent off a high for the year, but it is still up for the year. Still a great year so far, and you know it's good to keep that in perspective after a few down weeks, you know, two consecutive downreeks that can that can seem concerning to people, but we just to look at it framed against the backdrop of you know, the year

to date and what are the fundamentals and things that are going on. Obviously, you know, we've been towning the US economy's strength for for a long time and it has really persisted and held up incredibly well over the last year and in a few months despite some things that you would have made it that would have made you think, oh, the economy is going to struggle, the economy is going to slow down. You know, we've still still seen

a lot of strength coming out of the United States economy. So you know, that is a fundamental that we can hang our hat on and focus on. But let's talk a little more about some of these more individual factors. So, you know, the inflation CPI report did come out this past week. Those who were optimistic that we might see one or more rate cuts this year, they may have taken their report a little hard. You know, this past Wednesday came in hotter than expected at three point five percent, and

markets did react to that. You know, markets really are watching inflation. They really want to see inflation come down. That will give us a better signal as to you know, when the Fed will feel they have the ability to start cutting rates. So that is something that the markets are really waiting for. And inflation has shown itself to be you know, persistent, especially this year. This slowing down trend was much better over twenty twenty three.

You know, we're seeing inflation really kind of hang on and so we will you know, keep an eye on that as we continue through the rest of the year. But that was you know, perhaps a little disappointing to those who were more optimistic that maybe it is, you know, coming down close to that Fed target of two percent. We're also in earning season for Q one, and I think that's likely to have you know, some impact on the markets, especially you know, as the likelihood of rate cut slips a

little more out of reach. You know, you've got the one two punch of inflation sticking around and continued economic strength. Those two elements aren't giving us any strong indication that the feed is going to be over eager to cut rates, something that a few months ago was probably more likely, but now it's a little more far off, a little more distant, So, you know, I could see earnings being a major defining factor to the market performance as

we go into Q two. We saw some banks reporting earnings later half of this past week, and actually the actual data they released was good. We saw JP Morgan, Wells Fargo, and City Group all reporting first quarter earnings that actually beat expectations. So the data was positive, but the commentary from these companies and you know, their chief strategist wasn't as positive. The main sentiment being banks are starting to feel the effects of a prolong higher rate environment.

The outlook is that rates may stay higher for longer, as we've been saying for it feels like a long time now, So you know, these these major banks are expecting that to kind of d mp in their earnings in the future. They're feeling that pinch of higher rates. So there was some negative price movement even after good data, based on some of the you know commentary that came out. So I don't know if anybody else is tired of hearing the phrase good news is bad news. I I'm getting a little sick

of it myself. But that was a little bit of the situation. My good news on the data front a little bit negative some of the things they were sharing about their future forecasts, and so the stocks fell for for a lot of those companies. Goal futures are up for the week and actually set a record high this past week, and you to date, the gold futures are up fourteen percent, so a little bit interesting. We've got two kind of things up play. Typically in higher rate environments, gold is not as

appealing to investors. It doesn't bear any interest. So you can get you know, essentially risk free assets for much for much for good interest rates, I should say, you can get treasury bills or even money market funds that are considered very secure. You know, essentially those those risk free assets, as risk free as you can get in this world. So you can get those where they're paying a much higher yields and that's more attractive. So typically

that would impact the price of gold negatively. But often when there is risk on the horizon, perceived risk in the investment world's, gold is kind of viewed as a safe haven, So that's probably what we're seeing, especially this past week, people kind of flocking to something that they feel is very safe

when they're thinking about risks overseas or at home. You know, how is how is the year going to play out in the in the equities markets and even fixed income, and we consider what's going to happen with rates and all that, so you know, goal features are up despite the higher rate environment that would typically say otherwise. For anyone who's interested in some more in depth market commentary from our firm, we did do our quarterly webinar this past week.

The replay is available on our website at Bouche dot com and you can also read our most recent quarterly letter that's on our on our website as well. So if you go to Bouche dot com and navigate to the insights page, you can look at all of our blogs, all of our webinar replays, and you know, anything you're interested in reading from from our firm and our advisors you can find there. So if you want to watch that webinar replay, it is up and there's a lot of other great info usually updated

weekly. We put out new articles from our team on a variety of topics, share our thoughts on the markets, the economy, and you can find all that right there on on Bouchet dot com. We're going to go to a quick commercial break, but I'll be right back with more. Let's talk money here on WGY. Shame with me for the break, everyone, Thanks for joining me. This morning's beautiful Saturday. This is Harmony Wagner Wealth the Advisor here at Bouchet, the CFP and CPWA, and I'm happy to be

sharing this hour with you. You sharing some thoughts and hopefully answering your questions. If anything comes to mind that you want to talk about, please give me a call. That phone number is one eight hundred talk WGY. That's one eight hundred eight two five five nine four nine. Before I close out the section on the markets and the economy, I love to kind of create some perspective by talking about behavioral finance and some things that feel relevant based on

what we're going through. So, as anyone knows who's heard me host the show before, this field of behavioral finances is so interesting to me. It's the framework that I use to understand how these bigger themes that are out there are affecting all of us normal people, people who are just trying to do the right thing financially and trying to understand it, and you know, make decisions in our own personal lives and our own personal situations based on the things

that we know. So I'm kind of fascinated by this concept of the mostly rational investor, i'll call it, and how we all play that role most of our lives. But this mostly rational investor is someone who's smart, who alects to do things that they genuinely believe are in their own best interest.

They don't knowingly make errors. They have access to a lot of information, especially with the World Wide Web, we have a lot more knowledge than you know, people did twenty thirty plus years ago about how to do the right thing and what's going on and why. So theoretically those things would guide us into good decision making and you'd see rational behavior in the markets increase over time. But there's always this human element to it, and that's the part I

really find most captivating. It's the reason I went into the side of the financial industry. You know, I wanted to work with people, and I wanted to build these strong relationships with clients and get to know them well and start to understand how they think and why and help them overcome biases that could potentially hurt them. So that's kind of one of my passions and something that I identified now that is a behavioral finance phenomenon that could be affecting people.

It is this idea of recency bias. So it's described as phenomenon where whatever is happening now in the current moment, the current week, feels so much

more important. It feels like it has a greater magnitude than historical happenings, historical events from a market and and you know, economy perspective, so whether it's you know, looking at some of the risks overseas and with Israel and Iran, thinking that you know, that's that's more dramatic than anything we've seen previously geopolitically, or thinking about, you know, just the the economic situation where we are right now, where rates are higher and we're not seeing inflation

come down, and feeling like that is so much more important than other times in history where inflation was high. Perhaps some of this is fed by just the way that we are constantly bombarded by news, you know, whether it's on our TVs that are in the background of our everyday life, or on our phones on social media, people talking about this stuff. It does feel

like it's harder to escape from the financial headlines from the global news. We all know it's so much more and it's in a twenty four hour news cycle. You really think of how many times those same kind of headlines or thoughts are really pushed on you and that fear mongering feeling that comes from it, So that could really be part of why people experience this a feeling like what's going on right now is so much more serious than things that have happened before.

But it's just really not true. And we know that, you know, a year, two, five years from now, the feelings that are the things that are going on in this moment are going to be just a blip on the radar, just like you know, the things that happened in the years past. So that's you know what we feel, this recency bias creeping in and we're starting to feel like doom and gloom. What's going on

is a hopeless situation right now that we've never experienced before. My advice to you would be this, you know, sit back and take a minute to think, turn off the news, put down your phone. You don't decide on any sudden moves in your folio or in your financial life. When you're feeling that doom and gloom, talk with an advisor or someone you trust, someone who can kind of look at it from the outside and give you some objective guidance. Talk you off the ledge if need be, and take stock

of some of the other major life events that you've been through. You know, if you've been investing, even just for five years, you've seen some things in the markets. You've seen COVID, you've seen twenty twenty two, you've seen some good times too. I think of twenty twenty one or last year or this year so far, and so you can kind of see how there are major things that happen, and even how major they are, how important they feel in the moment, they still don't necessarily mean that the long

term outcome of the markets have changed. We've seen overtime, the many things that the markets have weathered, wars and you know, pandemics and many crazy things. High inflation. You've seen that before in the seventies and eighties. These are all things that we've seen before. So if you're feeling this time is different, I need to go to cash. This time is different. I need to you know, buy gold bars and put them under the mattress.

Remember, this time is not different. The odds are very high that the eventual outcome will be the same as other times, where the market will you know, go get through these bumps in the road and go on to make new all time highs. So that's my behavioral finance tidbit for the day. You know, when you find that recency bias creeping in, sit back, don't make any sudden moves and really think about, you know, how you have them through things that actually you know are quite similar, even just

in recent history. This kind of reminds me of a conversation I had with the client this week, and this individual is joking, how you know we have Bouchet are his financial therapists, which is, you know, hilarious and true in a way. You know, obviously we're not licensed counselors or PhDs or anything like that, but you know, we do work with these with

people every day on and people have similar concerns. A big part of our role as advisors is being able to identify the ways that people's thoughts, fears, concerns, expectations, the way they grew up their their mindsets on money. All these things come together and they influence the way that they invest and spend their money and manage their financial lives. And one thing a lot of

people are seeking when they come to us is peace of mind. You know, they want an expert to look at their situation and give them an awareness of where they're at and what risks might exist for them specifically. And we work with a lot of people that are very analytical, very intelligent, you know, whether it's engineers, lawyers, doctors, business owners, and although they're probably capable of doing some basic level planning on their own, certainly they

you know, can crunch numbers. A lot of our clients choose to engage us to take advantage of our expertise and to give them that peace of mind. Right. It's I think of it as what if you if you had a physical ailment of some kind and you have to decide, am I going to use doctor Google to diagnose myself or am I going to go see a

physician who's highly trained and can speak to my individual situation? You know, kind of similar, and I hear a lot of clients saying, well, I don't want to have to worry about money and even if I'm going to be okay financially, especially in retirement. You know, you think about how if you're retired and you're doing it all on your own, or if you're going through any life transition, sending kids to college or changing career, starting

a business. Most people don't want the daily, weekly, monthly stress of having to be responsible for all these different things that come together to make your you know, financial picture and keep it sound, you know, spending and risk management and investing in all the stuff saving those are There's a lot that

goes into it that makes someone successful. So you know, that peace of mind that comes through a few different ways, being organized, feeling okay, I know where everything is and I know that it's all doing what it's supposed to be doing. That's that's a key part to having that peace of mind. Financially, you know, maybe looking at different analysis, especially for specific

concerns like long term care social security. If you know the longevity of that program, how's it going to affect me if there are changes down the road. That's a question that people seem concerned about on a regular basis, pension options, you know, understanding what do I pick? Do I know go as, tour vivorship benefits, if I have a spouse, and you know, how does it affect me? If you know I passed away earlier retirement or later, or you know, all these different scenarios that can happen.

So sometimes seeing those analysis for specific concerns that you have really goes a long way towards having that peace of mind. And I think you know and from a higher standpoint, higher level, it's just having that self awareness of where do I stand on my progress to meet my goals? What do I need to do to meet them? Am I doing those things? And if you are, then you can sit back and feel good about it and money doesn't have to take up a lot of your thoughts, a lot of your energy

and a daily life. But you know, if you're not in that spot and you feel like I'm not even sure what my goals are or if I'm even close to accomplishing those, that gets stressful over time. So these are all things that give you peace of mind to go through life transitions not being consumed by fear and worry. About if you're doing the right thing, and you know, that's what we we provide to our clients as much as we

possibly can. One thing I wanted to talk about that, you know, I thought might be interesting and a little bit relevant now, is you know, the dollar cost averaging versus lump some investing question and especially for folks who may still have cash on the side. You know, we talked about last week how we've hit a lot of all time highs this year. I think it was at least twenty, could be you know, a few more, but we've probably right around twenty all time highs year to date in really just

three and a half months. And that is something that always makes people a little bit wary about putting cash to work, thinking, I know I should be invested. I know this money should be doing something for me. But when the market's being high, it creates this nervous feeling that I'm gonna put all my money in and I've been sitting on it for so long I wanted to do something and I'm going to immediately see it drop right, feeling like we're due for a correction of some type. And so a lot of people

end up sitting on cash longer term. Dellar cost averaging is an approach that can work for people who feel more conservative and especially fearful about investing cash. Essentially, you make a plan and you say, I'm going to invest you know, maybe we'll just say twenty five percent of what I have now, and I'm going to invest the other amount in twenty five percent increments over the next three months. So let's say you had one hundred thousand to put in.

You put twenty five thousand to work now, you put twenty five thousand to work in a month from now, twenty five thousand, two months from now, in the last twenty five thousand, three months from now, And that way, you're saying, I want to get this money to work within three months. I know that this is all going to be in the market, which whatever way things go, whether it's up or down, it's all

going to be invested by then. But you're also leaving a little cash available so that you can pack advantage of any corrections that happen in the meantime. So you know, if anyone is doing that now, maybe you're in the middle of a dollar cost averaging strategy. You know now could be a good time to get your ducks in a row. If if you're thinking, I'm going to take advantage of this volatility market SMP is down I think two and a half percent off its highs for the year. Now could be a good

time to consider putting some more to work. Maybe you move up the next tranch a little bit. Maybe you know you have cash and you've been waiting to get it in because the markets were high. Well, you know, this could be that step back that you needed to you know, pull the

trigger and and get invested in the market. So just thought it would be interesting to kind of discuss that as we are at a point where markets are still doing well and really we see strong fundamentals, you know, it still would be you know, likely to see more strong market performance for the rest of the year, but the last two weeks have been a little bit down, so it can be a good time to take advantag to not feel like, oh, I'm putting my money in at a high you know, you

feel like you're being a little bit more strategic with it. But ultimately, what DCA does is it helps you not time the market too much where you are leaving opportunity for to take advantage of it. But you're not in a point where you know you're gonna sit on cash watch the market just run up

without you. You're really saying in a disciplined way, I'm going to make sure that I am getting invested in the near future within you know, whether it's three, six, nine months, you want to make sure that you are invested. Well, we're coming to the halfway point of the show here, so we're gonna take a little bit of a news break, but don't go away. You're listening to Let's Talk Money on WGY and we are gonna be right back after a short break, so I'll talk to you in a

few minutes. Hi. Everyone, thanks for staying with me through the news and if you're just joining me now, welcome. My name's Harmony Wagner, Wealth advisor at Bouchet Financial Group. I'm a CFP certified Financial planner and also a certified private wealth advisor, and I had the pleasure of spending this hour with all of our wonderful listeners talking about the markets, economy, and you know, I think we're going to get into some financial planning topics as well.

So glad you are joining me this morning. As I said before, I can't believe it's halfway through April. Almost this month is flying by, and you know, hopefully spring is on the way. We had some nice warm temperatures this past week. I think I see the same in the forecast for the week ahead, so you know, it's really nice, Especially for those who are listening up here in the Northeast. Spring is always such a

welcome time, and especially after a winter like this one. Even if you are a winter person, it wasn't much of a winter to enjoy, not too much good skiing weather or snowboarding or whatever winter sports you might be into. So I think even for those winter lovers among us, I think spring is very welcome, and you know it should be hopefully another beautiful spring summer

fall here in the Northeast. April was actually a financial literacy month, and so you know, I thought I would kind of share about some financial planning topics now here on the second half of the show, and it's something that we are so passionate about here at Bouche. You know, as I said before, Steve has been doing the show here on Wguy for twenty nine years, just you know, every weekend, coming on and sharing our thoughts our

perspectives, our insights with whoever will listen. We're so happy to you know, share with people and and help them do the right thing with their finances. And education is such a big part of what we do here at Bouchet. It's our goal when we're meeting with clients or those who are you know, interviewing us to perhaps become become clients. And some of the events that we do, and you know, certainly our webinars, blogs and the radio

show. You know, we're so committed to educating people and helping helping everyone that we can do the right things financially speaking, and you know, make sure that they're set up for for success in their financial lives. With it being April, I thought, you know, let's talk about some spring cleaning from your for your finances and some things that you can do to declutter and feel organized as we move into you know, this warmer weather. It's a

good time. I know, I always get in the cleaning mood around my house. Tell my my husband and my girls too to watch out because I might go on a cleaning rampage. So, you know, let's see if what we can do as far as our finances and doing that, applying that same energy to get organized, get clean, get set up well for the future. Let's apply that to our financial lives. A few tips for you.

So the first that I would suggest is organize your essential financial documents, you know, everything that applies in some way to your financial life, getting in one place. You know, with it being tax time or really the end of tax time, you know, if you haven't five yet, this is your friendly reminder that you have until Monday, less than forty eight hours. So now's the time, and you should certainly plan to file online,

especially at this juncture, so close to the deadline. Filing online is the safest and quickest way to do that, so little aside there, but you know, tax day is upon us. But it also is a good time to say, hey, I have all my tax documents for last year.

Why don't I get organized another part of my financial life. So get statements for your four oh one K, your other accounts, your big accounts, insurance documents if you have life insurance policies or disability insurance, long term care insurance, getting those organized a state plan, even though that's not totally financial, but you know they do have a big impact on your financial life, so having any estate documents all in one place and just kind of using this

as an opportunity to have everything organized where you can easily find it, where someone else can easily find it if they need to on your behalf, and you know, feeling like if I needed to get something, I would know exactly where to go. So it's a good time to do that. You know, get your file cabinet vested off and then organize those or do it electronically if that's more your bent. But you know, getting organized with all the documents, all the different pieces that goggles Hauch a long way. I

can't even tell you how many clients sometimes come to us. They've got tons of papers, and they know about an account here, and there's probably some accounts they don't know about, and you know, they've got things every which way, and it can be overwhelming to feel like scattered. So it's a great time to do that. Another spring cleaning item you can do is updating

your beneficiaries or at least confirming them. Maybe they are up to date, but going through and confirming them, especially if anything has changed, if you've gotten married or gotten divorced, had a child, perhaps unfortunately lost someone who's important to you who was listed there before go through. And you know, make sure that your beneficiaries are up to date on all of your investment accounts

four O one k's four or three B and also bank accounts. You know, I think a lot of people don't realize that you can have a beneficiary on your bank account, but you can, and it will make things so much easier for your errors to have the assets flow to them when that time comes. So, you know, having beneficiaries on absolutely anything that will allow you to put beneficiaries on it and keeping those up to date is so so important for your errors to keep the process smooth and easy. So that is

that is something to check on. You know. I mentioned folks who may have accounts they are not aware of, and that happens more than you might

think, especially with old four oh one k's small accounts. You know, maybe you worked somewhere for six months very early in your career saved a little bit into the four oh one K and you haven't learned anything with that, and even though it's a small amount, perhaps that that's funny in your name that you know you should have, so tracking that down maybe if you have small accounts, perhaps you opened some you know, a small account somewhere and

have just a few shares of a stock in it or wherever. Getting all those really consolidated will will serve you well and other people in your life too, who at some point will you know, be helping you with your finances, perhaps down the road. Having everything as consolidated as you can is so helpful. And we have a lot of people who say, well, how many accounts should I have? You know, how do I how do I know? And the general rule of thumb, with a few exceptions, but

is you know you only really need one of each account type. So for any individual, you probably only need one IRA one, WROTH, IRA one four oh one K four through B. If you're still working, you know your current employer one. Hopefully you're taking advantage of that, especially if there's any kind of employer match, so you may have that separate from your IRA

or WROTH. And then you know one or two brokerage accounts, you know, maybe a joint one if you are you know, married and you share that with your spouse, perhaps just an individual one and then a bank account of course, but you know, generally you don't need to have five or six different taxable accounts each with a few shares of stocking them at different places, or you know, you don't need to have different iras spread all around,

and certainly with four oh one ks, as you transition from one job to another, try to roll it over as soon as you can. It really does just get harder to track it down after it's been a few years since you worked there. Right, you may not have the current HR person contacts information anymore. Sometimes we even had it where the companies no longer around, and then it can get really difficult to track down where that four oh

one K money is. So if you're transitioning from a job, whether you're early middle of your career or you're retiring, it's best practice to within a month or two try to move that four oh one K to an IRA in your name, whether you're managing yourself or having an advisor manager for you. Just having those assets all in one one place where you know where they are and it's easy to keep track of that's less beneficiary to track down too.

If you think about it, you know, if you have five different irays, that's five different sets of beneficiaries. That you need to keep updated and make changes to you as needed versus just having one. So as long as you keep things in the right tax buckets right IRA, money stays with iras we're off, money stays in wroths so on, you really only need usually

one account of each type, with a few exceptions. The next item to add to your spring cleaning to do list is to dust off your state plan if you have one, to work on one if you don't have one yet, to meet with an attorney and get that in place. And for most

people, just the basic documents will do. A will, healthcare directives, powers of attorney, guardianship designations if you have dependents that are minors, children that are not eighteen, couldn't take care of themselves if something were to happen to you, having those guardianship designations and wishes spelled down that can be in the will. But those usually those basic documents are enough, and for some

folks they do need a little bit more. If your situation's a little more complex for any reason, you know, perhaps some trusts or some different kind of estate planning tools can be helpful, but dusting that off if you have it, or thinking about and implementing one if you don't, and making sure that the people that you love are protected, are going to get what you would like them to get after you're no longer here, and they're going to

be taken care of in that way. Insurance information isn't a good thing to dust off as well, whether it's life insurance, disability, long term care, if you have that, those different types of insurances, liability, personal liability, all good things to take stock of. Make sure that you know you have what you should have, you have what you think you have, and that everything is kind of functioning so that there aren't any big gaps in

your risk and management plan. And finally, on that spring cleaning to do list, checking in with your advisors if you're working with someone, making sure that you know everything is, you know where it should be, that your investments are invested appropriate, that you're taking advantage of any strategies you can be for taxes or financial planning, and that you feel organized and on track with your financial lives. So that sums up my my spring cleaning topics for for

your financial life. If you're getting that spring cleaning bug, like I know I am, you know this is a good time to sit down and do that, especially once your house is so clean that you can't can't clean anymore, you know, turn to these items as well. That's a problem I don't have with with three young kids. Anyway, you're kind of, I guess in that vein, you know, kind of switching gears here a little bit. But you know, I talked about my my three daughters. I

have three girls, all three and under. They keep me and my husband very busy and very happy. We love them to death. And we have a lot of clients where either they have kids that are you know, in their lives or grandchildren as well. And you know, when you think about it, you have you have a child, you have a grandchild, and how that person is one of the most important people in your entire life. And a lot of clients come to us and they ask, you know,

I want to save for this this child in some way. I want to support them financially, and I want to know the best way to do that. So, you know, we're gonna take a quick commercial break here, but when I come back, we'll talk about some of the best ways to save for kids. So don't go away, We'll be right back here on let's talk money here on WGY about free commercial break. This is Harmony Wagner.

Welcome back to you Appluche Financial Group sharing this hour with you and talking about the markets, economy, financial planning, and any other financial topics that come up. If you have any questions, please feel free to call. The phone number is one eight hundred talk WGY. That's one eight hundred eight two five, five nine four nine. If you have any further questions about

anything we've discussed today or about something else. Maybe you're dealing with a situation in your financial life or have a friend and you want a little guidance, so take advantage of that and give me a call. Right before that break, we were talking about you know, children and saving for the next generation, and you know, there are really a few key account types that you

can use if that's a goal of yours. If you have a child, grandchild, niece, nephew, you know, a child in your life that's important to you that you want to invest in financially, and there's a few ways to do that. So you know, the first one I'll discuss is five twenty nine plans. These are funds that are really earmarked for education expenses.

That is the qualified reason to take money out of a five twenty nine And as long as you do use those five twenty one assets for qualified education expenses, which is you know, a little bit broad and I don't know exactly all the things that can go towards, but you know, of course tuition, you know, I believe books, you know, different types of fees that go along with getting an education. And it's not just higher education.

So of course college is part of it. In grad school too is an option, but you can also do trade school, and it's been expanded to include private school, you know, for elementary through high school as well. So a lot of folks are concerned that their child may not go to college, and that's a real concern, right, You don't want to lock up money for a purpose if you're not confident that it will be in that child's future. But it is such more of a broad scope than a lot

of people realize. And even if your child decides to go to trade school route, you can support them with these kind of assets, or if they may not be bound for a college or trade school, may take a different path in life, but maybe they're in private school at some point in their younger years. It can go towards that as well, and that could be a great help to the parents. So no, those are great ways to

save for kids. You do get a tax benefit in New York State, so you can have a tax benefit of five thousand dollars per person for New York State purposes, So if you're married, that's at the ten thousand dollars per year of five twenty nine contributions that are state income to deductible. So that is a benefit. But the real tax benefit is that as the money grows, it grows tax deferred. And again as long as it's coming out for one of these broad education reasons, it will come out tax free as

well. So especially if you're saving for a young person, a baby that's just born, or you know, a young child, and you have a lot of time for that money to grow. That's really where the main benefit comes in is having the tax free growth in that account over you know, ten, fifteen, eighteen years. A lot of people do have concerns about five twenty nine's and just whether they're too limited, and you know, I won't go through all the list of reasons why they still might be a good

choice because it really depends on the person. But I will just say, you know, broadly speaking, that they are much more flexible now than they ever have been before in terms of what you can do with the assets. And there are quite a few ways to use these, even if it's not for the traditional uh you know college college bill at eighteen I mentioned, you know, I can go to other things, and it also can be changed

to a different beneficiary. If you have you know, another child or grandchild that's going to use them for this purpose and you know the original beneficiary may not be you can change it to them, and you can actually convert it to a roth ira as well up to a certain point. So you know, there are other ways as well to avoid any penalties or any ill effects

from using this type of investment vehicle. So that's one way to say for kids, and it really is a great one, you know, if you think any kind of education expenses are going to be in their future, and that can be very broad. Another type of account that is geared for children that folks ask about a lot, and you know, really as an advisory, I see this account kind of going away, not legally not not getting removed as an option but just you know, fading out of popularity for a

couple of reasons. And that account is called a UTMA account, or you may also see UGMA that stands for Uniform Transfer to Miners Act or Uniform Gifts to Miners Act. They're similar. Utmas are more popular because they're a little bit more broad in what kind of assets they're allowed to hold. But you know, you can see either one. And essentially that is an account that

is open with a minor designated as the beneficiary. And how the account will function is that the you know, adults can fund that throughout the miner's childhood. However, at the age of majority, which is state dependent. In New York it's twenty one. Some states are as early as eighteen, and

others in may be as high as twenty five. But somewhere in that eighteen to twenty five years of age, depending on your state laws, those assets are going to automatically go to that child I suppose adult at that time and in with full access, full control over those So you know, it's a let's say you know, you live in New York and you've been funding a

for your child throughout their childhood. When that person turns twenty one. It's as if you wrote them a check and they have all that cash at their disposal and they could do whatever they like with it without any oversight from the adult who funded the account and was overseeing it. So that is a bit of a con for a lot of people, you know, especially you think about you know, maybe you're you're starting to save for a newborn baby or

a toddler. You have really no idea if that individual is going to be mature enough at eighteen or twenty one or twenty five to handle potentially a large sum of money and not go and use it on something you know, frivolous or lavish that maybe wouldn't be the best choice. So that is a reason why I think it's fading out of popularity. There also is just a ton of benefits to it. The only real pro to it, as opposed to other type of vehicles that you could save into, is that there's some tax

exemptions. So the first one fifty dollars of earnings in that account is tax free, the next one thy fifty is taxed at the child's rate, so I'm typically a much lower rate than the parents, and anything above that twenty one hundred total would be taxed at the parent's rate, so there's a you

know, a small tax benefit to it. But you know, for me and a lot of the clients I work with, you know that the fact that it's going to convert to the child's ownership at you know, what I would consider a relatively young age, and it may not be right for every child. That's enough to say, you know, to give pause and maybe

question using this type of account. Another thing that you can do, and this is what a lot of our clients are doing, especially if they're saying, I don't know for sure if the five twenty nine is right for me and right for this child. I don't know if they're ever going to use it, so that can be a concern, and maybe they're saying, I don't like the idea of my child getting full access to the money at you know, the right page of twenty one. What you can do is you

can open a separate taxable account ear market for the child. You know, it's still in your name or yours and your spouse's name, and you could access that money for you know, whatever you need to. Let's say something came up and you were you know, real entire straits and you need to use the funds, you could access it. Again, it's not locked up like some of these other accounts, but you can earmark for the child and then you have complete management over it. And if you want to give them

some at sixteen to buy a first car, you can do that. If you want to wait till they're you know, thirty, maybe they're putting a down payment on a home and you want to give it to them, then you can. You can set them as the beneficiary, so if something happened to you prematurely, it would belong to them, but it really isn't, you know, legally going to go to them at any point. And it's

also just much more flexible. The other thing about UTN mains I forgot to mention is that you can't change the beneficiaries on it, so it's very rigid and that can be a downside as well. So you know, really what we see is five twenty nine is being very popular. If you think you may use them for education or even convert to a row on the road. They are great because of the tax free growth, and so that's very very

attractive. Taxable accounts probably a close second where you open an account and you fund it with some money that you want to go towards that child, but you really maintain complete control over it, and so that that can be really attractive. And then you know, utma's are are fading a little bit. I haven't opened one in quite a few years, and I'm seeing less and less clients come to us with them. They're just a little bit more restrictive,

and there are some some things to consider. So those are some ways to save for children that are in your life that you want to set up well financially. And you know, one of the most important things that I'll always advise people on is one of the best things you can share with your

your kids and grandkids is knowledge. You know, I you know, some folks in their families, they might be more tight lipped about money and they don't want to talk about it. They don't want to share what they have with you know, other people, and sometimes for very good reason, and

I certainly understand that. But you can see times where you know, children grew up and their parents never talk to them about money and how to manage it, and maybe they didn't share about mistakes that they had made in their youth that they wish they didn't or you know, advice for the future.

And so we do still see a lot of young people entering the workforce making college decisions, you know, maybe getting married and settling down, trying to start their financial lives, and they feel like they don't really know what to do. They don't really have that guidance from trusted adults where they just don't have an understanding of what to do, even even if things that you might think are most basic are not necessarily common sense and not something that a young

person would automatically gravitate towards. So sharing your knowledge and you know, of course you don't have to reveal to your kids how much money you have if that's uncomfortable or undesirable to you, but you know, being a little transparent, maybe even a little vulnerable and saying, you know, this is what I did when I was twenty and I wish I didn't or it was great, it was the best I could have done, and I'd advise you to

do the same, whatever kind of your story is, to have those conversations with your kids. The best time is actually between ages of seven to fourteen. Research shows that that's the best time to start having these conversations with kids where they're old enough to understand it on some level, old enough to manage their own allowances or small amounts of money they may earn doing on jobs. They have a little bit more frame of reference than a younger child, but

they're not so old that they are really set in their ways. And so that is the ideal time, statistically speaking, to start those conversations, and that way you have that open door into that part of your child's life as they grow and sometimes, you know, maybe a parent isn't always the person to speaking to a young person's life, but hopefully they have someone who they trust, who can, you know, give them that guidance as they're getting

their first job, starting their career, buying a home, doing all those important things. It is so important to share your knowledge, your experience, your wisdom with those young people, even if you don't have you know, you don't feel like you have much money to give to your children or your grandchildren, you know, give them the wisdom and that will serve them very

very well throughout their whole lives. As we come to the end of the show today, I just want to thank everyone again for tuning in, and as I said at the beginning, I hope you got something valuable, at the very least interesting out of the conversation today, and I hope you'll tune

in tomorrow at eight am for another show. But until then, thank you so much for listening to Let's Talk Money, brought to you by a Bouchet financial group, where we help our clients prioritize their health while we manage their wealth for life. Stay safe and healthy, have a great weekend. It's been a pleasure.