Let's Talk Money

nice summer and Saturday morning. And when you think about it, not not to start off on a downer, but we don't have that many summer Saturdays left, you know, just in the story yesterday, I saw all the back to school stuff out there, and you know, hearing about people get getting ready college, a lot of college students already heading back. So you know, it seems like the summers

always do just just fly by. But here we are more than halfway through August and gearing up for hopefully what's a great school season for students and teachers and parents as well. But it's not over yet. We've got a couple of weeks topefully their nice weather weeks, and we'll soak it up while we can. Well, they said, thank you for joining me. My name's Harmony Wagner. I'm one of the wealth advisors here at Bouchet Financial Group.

I've been with Steve and the team for almost eight years and it's always a pleasure when I get to join you on the radio program on Saturday mornings. I know we have a lot of loyal listeners out there who tune in every week, and hopefully some people who are maybe tuning in for the first time, and all those people in between. So thank you for spending some time with us today. I hope you find something interesting

in the conversation. We'll be talking about the markets, the economy, financial planning, and any other financial topics that that may come up. And if there's something on your mind, a question you want to ask, or a situation you'd like some guidance on, please call in. You've you've got me for the next hour if you want to chat about something, So that phone number is one eight hundred talk w g Y. That's one eight hundred eight two five, five,

nine four nine. I've got plenty to talk about after a great week in the markets, and you know a lot of financial planning topics that I could go into. But if you have something on your mind, please call in. I'm sure you're not the only one thinking it, so please do take advantage of that and Before I do jump into some of the market recap and get going on the show, I do want to remind everyone that we do have a website, and we actually have a new feature on there that I want to point out.

So our website is www dot buche dot com and when you go there, right in that landing page, there's now a link at the top of that page to sign up for our upcoming webinars. We hold webinars every month. This next one is what I think would be a really interesting one. The title is relocating in retirement? Should

you consider leaving New York? So, for any of our New York listeners who are maybe preparing for retirement or in retirement, that might be something on your mind, whether you want to escape the winter weather that we experience here, or maybe you're thinking you want to move to a state that has zero income tax or lower income tax.

Whatever your reasons might be fore about leaving leaving New York in retirement, this webinar might address some of those and maybe bring up some things you never thought of. So two of my brilliant colleagues, Nicole Globel and Scott Strohecker, are going to be presenting that and you can sign up for that. So it's always, uh, you know, a new topic each month. Typically we do quarterly webinars quarterly market recaps the first month of a new quarter, so January, April, July,

and October. I couldn't think of the room for a second there, so we have quarterly market recaps there. But then we also do kind of financial planning ones, tax ones, charitable topics in the off months, so a lot of things you might find interesting. The replays are always on our website, but if you want to watch it live, you can sign up and register right there, and that way you'll also get emails reminding you when to tune in and send you the replay when it's been when

been published to the website. So without other ado all, let's hop into you know, some of the topics for today. I figure we'll start out as I typically do, with a market recap, since we can start on a very high note after this week. It was actually the best market week for the markets out of the year so far, and that's doing a pretty good year to date, so

that that is saying something. You know, a couple of weeks ago we saw some volatility, a sharp volatility on Monday two weeks ago, with some concerns about our recession risks rising, there was a jobs report that was you know, that wasn't wasn't great coming out of July, so that

was where a lot of that volatility came from. However, the last week or week two weeks really have gained back what the losses of those two difficult trading days a couple of weeks ago, so it's hard to believe that it was just a few weeks ago we saw that. And but this week we had the S and P five hundred up three point nine percent, NASDAK got five point three percent, and the Dow up two point nine So really a great week across all the major indexes.

And it really started out on Tuesday after the wholesale prices report came out, continued on Wednesday after the CPI report came in at two point nine percent, finally cracking into that two percent range. It feels like I've said it a thousand times if I have once, but you know, the FEDS target for inflation is two percent, and you know, it finally broke that three percent threshold. So that was

a really positive day as well. In on Thursday, we had more good news with better than expected retail sales numbers and jobless claims. So this three day string of good news this week really bullied the markets, closed out the best week of the year, gave investors some reasons to believe that, you know, recession risks are still lower than they were you know, fearing a few weeks ago,

so that's really positive. What else are we seeing in the economy here, So you know, a lot of eyes are on the labor market, you know, which is still in a strong position relative and you look at you know, historical numbers, still in a strong position, but it is cooling a little bit, and that's where I think some of the concern has been coming in. You know, since we're starting at a position of strength, we can afford to have a little bit of cooling there without getting

pushed into recession territory. But as always, you know, traders are trying to catch these trends, so when they see something moving, they're really focused on direction of which which way it's moving, and what that that might mean were that to continue as a long term trend or pattern, but not necessarily as fixated on the you know, actual position of anyone indicator. It's really that relative movement and

the trending. So that's where you know, a lot of the market reaction was a couple of weeks ago, as I mentioned. But we're also so we're also nearing the end of the second quarter earning season with you know, a lot of major companies having already reported earnings over the last month or so. Still a few you know, left over the next week or two. But we are coming to the end of second quarter earning season. You know, what are we seeing there? There is some worrying signs there.

Sales growth has not been as strong as usual, so profits look pretty good, but revenue is underperforming. So the reason why those you know, profit margins are still strong. It suggested that these companies are you know, doing an effective job at cost cutting. They're able to maintain their their profits. However, the revenue decrease is showing that consumers just aren't spending as much as they were. You know,

what we saw coming out of the pandemic. You know, in twenty twenty one, probably more so, American households had a lot of cash built up, right, they had a long time they hadn't been able to spend anything, hadn't been going out to eat, hadn't been traveling, had a lot of stimulus checks that had come in, so they were in a good cash position where they had some money to spend. It's you know, a big driver of

why we got into such a difficult spot with inflation. However, for the average American household, that kind of excess cash pile has depleted at this time, So a couple of years of higher inflation, people just doing those things that they hadn't been doing and you know, maybe making up for lost time when it comes to travel or you know, those things that they'd wanted to do for twenty twenty

and weren't able to. We're seeing where the average American household is back to a more normal cash position, not having those excess reserves that they did coming out of the pandemic. So that could be a reason why now we're not seeing you know the same kind of of revenue because people just don't have the money to spend anymore.

So they might be deciding not to buy one of the you know, a more luxury purchase, or it might be selecting the items that have you know, a lower price tag as opposed to maybe, you know, the ones that they were purchasing when they did have those excess

cash reserves. So people are cutting back, and you know, we're seeing that when we saw some of the reports coming out of earning season, you know, companies like McDonald Starbucks, Chipotle, all showing that their sales growth were cooling, that customers are picking cheaper items, going to passionize those businesses less often,

so that that is what we're seeing a little bit. However, you know, from an overall perspective, Wall Street is still pretty optimistic for the year, expecting that earnings will rise ten point three twenty four. So again we're seeing maybe, you know, some cooling. Maybe the economy isn't going up, up, up, as it had been for a while, but not necessarily to say that we're in a bad position or on

the verge of a recession. It's really just some of these indicators where you know, we're seeing a little bit of cooling and we'll see how how that plays out. You know, I think I read a quote this week by Lizzie Saunders who that comes from Charles Schwab, and she described the market as being in knee jerk mode right now, especially when it comes to economic data releases, and I thought that was such a great way to put it. That's exactly what we've seen these last few weeks,

really big swings up and down. The most recent economic data seems to be the most important, takes takes that number one spot in an investor's mind, and we see big reactions to that. My own opinion on why is that, I think traders are just hyper fixated right now on how this inflation war ends. There's this big question mark, does it end in a recession? Does it resolve smoothly?

You know, in some ways, it feels like the market is just just on the edge of its seat, looking for any signs of weakness, looking for, you know, that start of a trend line. Obviously, when we're in the present moment, we don't know how a trend will play out or not. We are just looking for those early signs, those first steps in a certain direction and trying to determine whether that will be the pattern or is it a anomally. So that's kind of where we stand right now.

And you know, as that quote said, the market really is in knee jerk, knee jerk mode. Any slight movement any new economic data point coming out, we see the markets react pretty strongly to whether negative or positive. The Federal Reserve is going to meet next month and it's widely expected that they will cut rates by a quarter point. That would be their first action and over year, and their last action was of course to raise rates last summer.

As always, we know that the market reaction depends on whether or not the Fed acts in align with expectations or does something different and surprises us. So we will see the cooling inflation prints from this past week would seem to bode well for the likelihood of a rate cut. We saw inflation drop again, like I said, into the two percent territory at two point nine percent, finally broke

that three percent barrier. So depending on how you look at it, the Fed has either been you know, very slow moving or very patient, or some combination of the two. But it would be pretty shocking if they, you know, did not cut rates at least by a quarter point. That's definitely the wide expectation and that's what the market

is pricing in at this time. So a lot going on really in the markets, in the economy, A lot of things to watch, a lot of things to pay attention to I think you know, for me, it always boils down to what should the individual and vestor be doing right now? And to me, that doesn't always depend, that doesn't always vary widely based on what's going on in the markets. Truly, you know, a good investor is

a long term investor. You have to be able to take that long term mindset, not be looking to make a quick book a day, a week, or a month, but to really have that long term horizon so that you can embrace the volatility of today knowing that you know historically it does always pay off over over years. But there is some things that you can do kind of in light of what's going on. And the first you know that I would say to people, and I'm advising clients on this as well, is to check your

rist tolerance. If the recent volatility a couple of weeks ago, you know, a really steep decline in a day or two, did it make you second guess how you're allocated?

I always, you know, advise it. It's a good idea to speak with that financial advisor that you trust about it, especially before making any moves, because, as we know, it's just so easy to make moves out of emotion and not always off of reason. You know, emotion can help you determine how comfortable you are or aren't, but it can't help you determine how much you know risk you might need to take on to meet your long term goals.

And that's where a financial advisor can help you. Can you know, pull up your financial plan, show you you know you're still on track, show you you know how you need to be invested to meet those long term goals, and that can be an important part of the conversation as well, just as important as your comfort level with it.

But you know, having having a little down moment in the markets, especially during a great year, it can just remind you that the markets don't always go up, and so you need to be in a risk tolerance and in a portfolio allocation that it's appropriate for you for the long term. So that can be a good time to kind of re evaluate, and for those who are looking to get more conservative now it could be a good time. Right, So investors are flocking to bond funds

right now. Rates are probably going down. As we discussed, likelihood of a rate cut and then near future is quite high, and a lot of people have had their conservative holdings in things like high yield savings accounts, money markets, which you know have been doing great a bit in the high fours or low five percent range for a while, but we know that those often follow suit with the rates, and if we're expecting a rate decrease and possibly more

as we go forward, then you'll see those money market accounts the umlos will react, you know, in step. So a lot of investors who are saying, I have these conservative assets, highield savings accounts, money markets, even cash, maybe you know, it's a good time to buy bonds that are going to be you know, at a rate that you won't be able to get in in probably a

few months, year, whatever it might be. So it's a good time to lock in some of these rates that are higher than what we expect in the future and to you know, if you are looking to become more conservative to lock it at better interest rates. So that's something to consider if again you decided I might be

a little bit more aggressive. Whether it's because the markets were so good I thought they couldn't go down and I was more comfortable with it, or just you know, my equity is part of my portfolio ran up so much this year that now I'm a little bit out of tolerance. It could be a good time to rebalance and lock in some of those higher rates and get to an allocation that you're comfortable with as we go forward. We're going to go to a quick break here, but

we'll be right back with more. Let's talk money here on WGY. Hi everyone, thanks for staying with me through that brief break. This is Harmony Wagner joining you today. I'm one of the wealth advisors at Buchet Financier Group, a Certified Financial Planner or CFP and also a Certified Private Wealth Advisor CPWA here with you for this hour to talk about the markets, the economy, what you should be doing in your portfolio, financial planning, and you know,

anything in that vein. So if you have a question something you'd like to discuss, please feel free to call in. That phone number is one eight hundred talk WGY one

eight hundred eight two five five nine four nine. We're just talking about how the markets closed out their best week of the year pro following some great economic data Tuesday, Wednesday and Thursday, but how we also saw some volatility just two short weeks ago, and just kind of what that means for investors and what they might consider doing in their portfolios. So, if you're just just joining us now,

welcome and thank you for tuning in. You know, one of the point I wanted to mention before moving on to some other topics is, you know, the those folks who might be participating right now in a dollar cost averaging strategy. So for those who are familiar, dellar cost averaging is when you have some cash to put to work in the markets, and you decide instead of putting it all in at once, you're going to spread it

out over a defined period of time. It's a way it's it's a little bit of a more conservative approach as opposed to you know, some investing where you put that whole sum in right away. It's a little more conservative, but it allows for the opportunity that if the markets decline at some point, you know, while you're within that time period you decided on, but you can take advantage of it, and you still have some cash to put

to work at a dip. So you know, for example, if you have one hundred thousand to put in, you might put in twenty five thousand right now, and every month for the next three months, you'd put in an extra twenty five thousand. That way, within three months you're going to be totally invested, which is, you know, ultimately

the goal. However, you leave some cash on the table for the next three months and say, if I see a better buying opportunity than the present, I will move up one or more of those tranches of twenty five

thousand and put them in now. So if there's anyone who's currently in the middle of that, maybe maybe you're at the beginning and you say, I have some cash I want to put to work, but I am not sure how to do it yet, you know, or or you are somewhere in the middle of that time period and you're already started to invest, but you still some cash set aside. Stay ready. You know, we saw a good opportunity two weeks ago. It was so short though,

and that is really it can be like that. You know, it's not the first time we've seen a dip that was that was so you know, short lived, truly just a blip on the radar. But those who moved cash into the markets on that Monday have already benefited from

doing so. It takes a strong stomach to be able to do that in the moment, and I think sometimes, especially when it is short lived, investors have this idea that maybe this is the beginning of, you know, a collapse or something, and they fear that there's more down to come. And of course we know that is always a possibility, right, That is the risk that you have to embrace if you're going to be invested in the

equities market. But you know, we do know historically that those who are willing and able to buy the dip, they typically make money by doing so if they're able to wait long enough. So it's not a get rich quick scheme. You know this. The last two weeks might make it seem that way, it's not. It can take longer to recover. But you know, when you're at all time highs and then you see a three, five, ten percent hold back. That's as good at time as any

to put some some cash to work. So important to note if you're gonna be putting cash to work in the equities markets, you know, make sure it's long term money, not something you're gonna need in the next month, six months, year, even possibly two years. You want to make sure that you have time for it to you know, grow, and that can be a more reasonable time frame depending on

you know, where we are in the market cycle. But assuming you do have that cash kind of in your long term funds bucket, then what I recommend in terms of how to take advantage of market dips is to be truly as robotic as you can about it. Decide on your protocol ahead of time. Maybe you say, okay, I have you know, X amount of cash I want to put to work. If I see the market drop five percent off its ties, I'm I'm doing it. I'm

putting that cash in. Doesn't have to be all the cash you have for investment, but you know you're gonna have some kind of protocol, some kind of parameter that is making the decision for you. So you see that kind of drop, you move on it without waiting an ex week to see if it drops more. Without second guessing yourself, you just do it, you say, nope, I decided I was going to do it if the market went down five percent. I know it might go down to ten, but I'm gonna I'm gonna put some in now.

And that's really sometimes the only way to really take advantage of it if you allow yourself to be, you know, an emotional actor in your own financial life. It just gets really hard to execute on these strategies, right And I'm speaking even from personal experience on that, and this

is what I live and breathe. But still, when I'm managing my own financial picture, I feel the emotions of it as everyone does, so it can get really hard to execute and to you know, take advantage of these things that logically we know it's the right move, but it can be really difficult. And that's you know, what

we counsel our clients on. It's, you know, just so important to us as a firm and as advisors is recognizing how emotional money is as a topic and trying to help our clients remove that or at least operate with an awareness of it, you know, just being conscious of your biases of the mistakes and judgment that you're likely to make. Is a great first step and removing emotion and making smart financial decisions. We're going to go to the phone lines now and chat with Rick in

half moon morning. Rick, how are you today? Good?

Obviously in a fund, you don't see all the underlying bonds, but you know, we'll operate under the assumption that they're holding fund bonds that are at a higher interest rate. Then when rates get cut, and you know, a new bond investor can't buy a bond for that interest rate anymore, I would expect that yours, would you know, go up in value. So I can't tell you when. I can't tell you if it'd be you know, a month or

six months. But if you continue to hold those they continue to be a long term bond investor, the expectation would be that, you know, as rates go down, the price of the funds that you hold should go up.

and interest rates. But generally speaking, you know, when when rates cut, that would be a inverse relationship for the price of bonds. You should see your price stock, your fun price of that go up.

We will be back in just a little bit to talk about some financial planning topics, talk about charitable giving, four oh one k's, some of the risks of retirement, so a lot of great things that we can chat about after this news break, so don't go away, we'll be back shortly. Hi there everyone, thanks for staying with me through the break. This is Harmony Wagner joining you

this morning. I'm one of the wealth advisors here at Bouchet, a certified financial planner and certified private wealth advisor, and really enjoy not only of course my job during the week of helping clients, meeting with them, getting to know their their story and their their goals and guiding them and how to make their finances help them accomplish that, but it's also a pleasure to join you on Saturday mornings here and there when I'm giving the opportunity. So

thank you for tuning in and listening. And if you have a question about something that you'd like to ask, please feel free to take advantage of this opportunity. Call in. That phone number is one eight hundred talk WGY one eight hundred eight two five, five, nine, four nine. If you have a question or a topic about the markets the economy that you like to ask, please do I'd welcome that and let's go to the phone lines now and chat with Bill from Greenville.

we're expecting them to go down. So if you bought a treasury, you know at some point in the past couple of years when rates were increasing or at their height, you know your treasury is going to become more and more valuable to people who want to buy bonds because it's going to give a you know, a higher interest rate than or they could get on a new one.

So at some point you know, if you're coupon rate on your bond or the yield is higher than you know, what someone can get in the bond mark it, then they will pay you a premium for yours. So you could elect to sell out of it and take that, you know, additional pum that you received for selling it and invest it elsewhere. I think that's where kind of

the issue may come in. So if you're looking to reinvest, you have to be aware that you're not going to be able to get another conservative asset that's going to be paying the same so you know, you have the option to you know, potentially redirect it to equities that would change your overall allocation. So it's something to be aware of. The Other possibility is that you know, at some point you might have a cash flow need and you might need to actually take money out of your

portfolio to use for your your own self. So at that point, you know, if that needed arise, you could look to sell a treasury, especially if it's you know, trading at a premium than what you bought it for because rates have gone down, you'd benefit by doing so, and that could be a good place to access cash. So it kind of depends on the purpose. If it's kind of a stay in your investment account, though, you

have to kind of consider that reinvestment risk. If someone's going to pay you a higher amount for yours, it's because you know, you can't find another one that's that's paying that anymore. So you know that is some of the risk you take. In that case, it might make sense to just hold it to maturity. Does that answer your question?

inflation arose. So we actually for a short time we sold out of you know, bonds completely in our client portfolios because rates were going up, it wasn't paying well, So there's definitely a time for that.

year to charity. And you know, contrary to what you might think, most of that comes from individuals actually not corporations. It's seventy five percent that comes either from individuals during their life or as bequests that they leave after they're no longer here. Only three percent of charitable giving comes from corporations. So it really is you know, the people that are that are doing it, not not the businesses. That's individuals and families. So I think it's applicable to

a lot of people. And we also look at the stats, and thirty percent of donors actually want to increase the amount they give to charity, according to a study by Fidelity. So when we're talking to clients, you know, a lot of them are inclined that way. They have causes that they care about, but they may not be giving as much as they want, and there's a lot of barriers to that. Some folks are concerned, you know, do I

have the ability to do this? Am I going to put myself at a detriment by giving too much, especially you know, early my retirement or while I'm still working? Am I going to set myself up for failure down the Road's that is, you know, a barrier that we help people with as we go through their financial planning process.

Understanding the tax benefits. You know, I think most people know that there are tax benefits are our tax system here in America supports philanthropy, but folks may not understand exactly how to utilize it or how to get that benefit. If they're already going to be, you know, giving, they want to make sure they're maximizing that. Other people might have concerns about, you know, how that money is being used. They you know, want to give money to maybe a

college or a nonprofit organization or something like that. But they don't want it just going to you know, pay someone's salary. They want it to maybe be part of the impact of what they see that organization doing. So some of the concerns about how it's managed a transparency there can be a barrier to it as well. So I thought, you know, let's talk about that for a little while today and just see if we can, you know, shed some light on some of the ways that you

can give and how to get some of those benefits. So, you know, one thing that is applicable for a lot of people that it isn't super well known, actually at least not in my experience. It was called a donor advised fund. It could be abbreviated to DAF. And this is a charitable vehicle that allows the individual to make

a donation. You get immediate tax deduction for the money you're putting into this fund, this account or fund, even though it's not gone to a charity yet, and it provides flexibility to fund you know, charitable goals over time. So for example, you know, we work with Childie Schwab as our partner and custodian for our client's assets. You can open up a charitable account in your own name at schwab and you can put money in there. So let's say you give five thousand a year to you know,

a nonprofit organization. But that's not enough for you to ever itemize, right, it doesn't get you above the standard deduction, so you're really not getting a tax benefit for that, even though you know you're faithfully giving. What you can do is you can take a larger amount, maybe twenty five thousand, and you can put it in the donor advice fund all in one year, so you're getting that

immediate tax deduction. You have the ability to itemize that year, and typically you weren't itemizing, so you're getting that benefit. But the money's still really in your name, under your control, just in this donor advised fund, so you can't pull it back out for yourself. It's going to have to go to a qualified five to one C three organization, but you still have the control over when you give it to which organizations you give. It doesn't always have

to be to one. You could give to many different as long as it's a you know, IRS approved nonprofit. It can go from that type of account to that organization, and then you can do it over time. So if you're giving five thousand a year before, you know, you fund this DAF with twenty five thousand, and then over the next five years you make your donations as you typically would. Gives you the ability to take an immediate

tax deduction. You can also move a highly appreciated stock or fund into that account and then you can actually sell it within the account. There's not gonna be any tax paid on the game. So if you bought you know, Apple or in Video or Eli Lilly something you know in the past, it's gone up so much from what

you bought it. If you were to sell it and give the cash to charity, first you're going to pay taxes on the gain and then you're gonna you know, turn around and make your gift and there's really no no tax benefit there. However, if you move that stock right into the donor advice fund, you won't pay taxes on the gain. You'll be able to liquidate it in that fund. You can invest it in a more diversified portfolio if you'd like, and then you can you know,

give to charity as you wish. Doesn't have any timeframe on it. You could wait you know, five ten years before it actually goes out to a charitable organization. So it gives you a lot of flexibility but really maximizes kind of the strategy you can do around taxes. And this is something that we really see you know a lot of people doing. Even if you're thinking, I don't give you know, a large amount, this is actually perfect for you, right because you're not getting probably a tax

deduction for doing that. If you're not able to itemize, but by you know, lumping some together, you can do this. You can also fund the donor Advice Fund. If you had like one year where you had exceptionally high income for some reason, you know, maybe you sold a really highly appreciated asset and so for one year your income spiked wouldn't normally happen. You can fund it this year to kind of reduce the amount of tax you're paying at those higher rates. So there is a lot of options,

a lot of flexibility. For someone who's already giving or has the desire to give to a charitable organization, this can make a lot of sense. So you can open them. Like I mentioned at Schwab I'm sure Fidelity, Vanguard, these other major berkerchousers have the same type of thing. Or if you're working with an advisor, you can chat with him or her about how you can use this as

part of your charitable giving plan. There's another charitable vehicle that has some of the same benefits to it in terms of taxes and being able to sell highly appreciated stock, but it does have another interesting component to it as well. So you know, this vehicle is called the Charitable remainder Trust or a CRT, and it's something that would have

to get established by you know, an attorney. It's a trust that have to get written up by attorney's office, so there is certainly a startup cost associated with it, something to be aware of. This kind of trust provides lifetime income to the donor or another income beneficiary, and the remainder goes to charity. So you know, we'll say, you know that there is a donor who wants to

give to charity. They have, you know, have a desire to do that, but they also are worried about income either for themself or for another person in their life. So it could be their spouse, it could be their children, right. So they're setting up an income beneficiary selves or someone else, and they're putting this asset or funds into the trust and it's going to pay income to that person either over their lifetime or over a set number of years,

not to exceed twenty. So what this can do is it's saying, hey, I have current cash flow needs, or my spouse does, or my children do. I'm not ready to, you know, give all this money to charity right now, but I want them to get whatever's left at the end. Now, you know be asking, well, why can't you just leave it to them? You know, at the end of your life you could do that. However, this charitable remainder of trust gives you the benefit that you get a tax

deduction in the current year that you fund it. Now, it's not for the total value of what you're funding it with, because obviously some of that's coming back to you or another non charitable entity. But there's you know, an actuary actuarial calculation where you're saying, okay, I'm putting one hundred thousand in. There's you know, x amount that's coming out each month to my income beneficiaries for ten years.

So it's that the value that would go to charity at the end is forty thousand dollars and you'll get that forty thousand dollars income tax deduction. So you get tax deduction now, whereas if you wait till the end of your life and it goes out of the quest, that's not a factor. So, especially if you know tax deductions are you know, important to you in the current year,

this is a great way to do that. The other thing as well, as we talked about just a few minutes ago, with the Donor Advice Fund, that you can fund it with highly appreciated stock. So let's say you have, you know, again a very large position in a stock or a fund that's grown incredibly over the years. You don't want to sell it because you're gonna, you know, take a big tax hit for doing so you move

that into the Charitable Remainder trust. You can liquidate it within that trust wrapper and there will be no taxes paid on the gain there. So you get income off of this. You get to diversify a highly concentrated, highly appreciated position without paying taxes to do so, but you still get the income, you still get the benefit from that.

So it can be really attractive for folks who are a tax sensitive you know, want a tax deduction, want to be able to diversify without paying taxes on it, and they also have some kind of income need for a set amount of time or or a person's lifetime, and then you still get that charitable goal accomplished at the end of the trust, where the remainder that's left after all the incan is paid out goes to the charitable organization of your choice, which can be changed throughout

the life of the trust as well. So there are a lot of benefits to this. Again, it's a potential strategy. This one is not certainly not right for everyone, but there are many people who they want to give to charity. But I mentioned one of the barriers for them is they're saying, well, I still need this money for myself

as well, you know, during my lifetime. So this can be a great way to kind of mitigate that risk of you know, needing to use the f it's needing to generate some income from them wanting some tax benefit, wanting the rest to go to charity at the end. It's a great way. So you know, talk to talk to an advisor, talk to an attorney if this might make sense for you. It is something that I don't think a lot of people know about, but it dresses concerns that a lot of people have, so it might

be more applicable to you than you realize. So if you have questions about charitable giving, you know, feel free to contact our office. We have, you know, a lot of people who are experts on this and can guide you. We also have a webinar on it myself and my colleague Katie Buck did a few months ago that you can see on our website under the Insights and Perspectives page. You can access those replays where we talk about don't

advise funds, Charitable Remainder trust and other charitable vehicles as well. So, if this is something on your mind that you'd like to pursue, and you're saying, you know, I've always wanted to get more to charity, you know, maybe now's the time. Maybe maybe this is something that can help you, you know, get a direction for doing that. So feel free to visit our website Bouchet dot com the Insights and Perspectives page.

You can see our webinar replays there and you can also sign up for our upcoming webinar, which we do monthly. I'm going to go to the film lines now and chat with to Jim in Albany. Good morning, Jim.

the wroth. So you're exactly right, it is harder to overcome that time to break even point gets pushed out

much much longer. On the flip side, if you're able to pay that one thousand in conversion tax from cash in the bank, you know, outside funds that you have, then you're moving that full five thousand over to the wrath and you're starting on a much more even plane where it's you know, just the growth from there is all tax free, as opposed to first having to make up a twenty percent deficit, So it's definitely advisable if you're going to do a conversion to try to pay

conversion taxes from cash outside. That way, you're maximizing the amount that's going into the wrath that can get tax free growth. If you're calculating the conversion taxes coming out of the IRA first. You're totally right. It becomes a lot harder to make money by doing so because you have a much bigger hurdle to overcome from the onset.

So that's why I don't understand the benefit of it, because you end up with less dollars in ten or twenty years by doing the conversion. That's the part that is confusing to me.

that really makes it longer to overcome. I'm going to see there is a great Do you do your own calculations or do you have a like a break even calculator online that you use?

to account for that that can't grow. But you also, you know, if it comes from the IRA, you're paying a lot more taxes on it then if it comes from a different source. So I think that could be part of the calculation difference there. So if you look up online the Vanguard Wrath break even calculator, that might show you in a more visual sense the difference between paying that conversion taxes from different sources.

to your errors. Then maybe you don't care if it's a fifteen break even because you know that it could go much longer than that. But at that point, to my mind, it does become a little less attractive as opposed to you know, eight to ten, twelve years. It's just a little bit.

If you're only pulling from WROTH iras you're not showing any taxable income and actually you know, I guess standard deduction that's going to waste. So you want to have some in each of the tax buckets so that you can really be strategic and you know, the most tax efficient from a lifetime perspective. So I definitely I don't advise people to convert every ira or four to one

K dollar to wroth. It's very individualized and often it's kind of a smaller amount, depending on their tax bracket and their ability to pay conversion taxes.

how much room they have to the next one. So let's say someone you know is in the twelve percent and they've got you know, twenty five thousand before they hit the twenty two I might suggest they convert twenty five thousand that year, so they're they're using up all the lower brackets without crossing over into the next one. And you know, from there, we can, of course look at other things, but that's often a good place to start as a guideline.

you know, even better. You allow for the chance of the recovery to happen in a ROTH which is tax free as opposed to in an IRA where you're going to be paying ordinary income tax on every dollar back comes out in the future. But but it's still a great, great,

great strategy that a lot of people are using. And I do talk about it a lot still and do those I do those calculations for people, you know, I think that that is the questions was asking were great and it's something that you want to be really thinking about.

And you know, it's so customized. So if you're not working with someone to you know, maybe speak with someone that you trusteek with an advisor, because that is uh, there's so much nuance to it and how much to do and when, and sometimes you might spread it out over a couple of tax years, or you know that there are so many things to it, and not even to mention that the complexity of when to pay the conversion taxes assuming you don't have them withheld, which is

our recommendation. You know, making sure you're paid in so that you don't get hit with any timing penalties by the I R. S. All that stuff is is so important of course. Uh well, as we come to the end of the show today, I want to thank all of our callers for calling and all our listeners for tuning in. I hope you got something valuable out of the conversation, and I hope you'll tune in tomorrow at eight am to spend an hour with one of my colleagues,

John Malay. And until then, thank you for listening to Let's Talk Money, brought to you by Bouchet Financial Group, where we help our clients prioritize their health while we manage their wealth for life. Stay safe and healthy and have a wonderful weekend. By everybody,