Let's Talk Money

Good morning, folks. My name is Martin Shields. I'm the chief wealth Advisor at Bruchet Financial Group and I could be your host today for Let's Talk Money. As always, it's great to be here with you to answer any questions you may have regarding your financial planning or investment management concerns, and as always, I encourage you to calling with those questions. You can reach me at eight hundred talk WGY. That's eight hundred eight two five five nine four

nine. Once again, that's eight hundred eight two five five nine four nine. I hope that everyone's doing well on this well summer morning here. We're officially in summer now, but it's a little rainy, but got that warm weather here. I was talking to Zach, our producer before the show, and he and I are on the same page. I'll take ninety degrees whether like we have this week, versus the cold, snowy, perhaps rainy,

below freezing weather that we have in the winter. So I'm in my element here and enjoying this summer morning, and I hope that you are too, and a lot to discuss today this week, the markets, the S and P five hundred and Nasdaq hit all time highs. Now, they came off of those highs a little bit over the last trading part of Thursday and yesterday, but the SMP did hit over fifty five hundred and the Nasdaq did hit over seventeen nine hundred, which is always great news. That's we'd love to

hear that for our clients. And hopefully you're well invested into this market. And if you're not, though, give me a call and I can give you some guidances to what you should be doing. Just because markets are hitting all time high folks, does not mean that if you have cash on the sidelines that you should not be getting it invested. Uh. You know, Yeah, it's all about having that right time horizon. If you've got a long term time horizon for those dollars, uh, it's time to get those

dollars invested. And uh, you know, in general, as we continue to look at the economic data that comes out, it's it's kind of a mixed bag. Uh. You know. You had some weakness uh in home

construction and some weakness a little bit in the labor markets. But in general, uh, you know, as far as we're looking overall from the economy, things continue to be very strong and you know this is what you want, this kind of a call it the Goldilocks environment, where not all the data is all great and you got some element of a weakness in there. Uh. You know, we've talked about the Federal Reserve, what they're going to do. Uh, in general, we're not that concerned to the extent

if they don't cut interest rates. We think that environment can be very beneficial for the markets and the economy. But you know, we think that if you kind of keep having in this mixed bag of economic data, and in particular the most important thing is having corporations with strong profits and talking about future

growth with the companies. I was actually talking to a client the other day and he was just talking about how he always just thought that, you know, with the markets there, you know, it's more rational, right that they're just looking at corporate cash flow and profits and that they could determine a

price for a company. And you know, certainly we talk about the emotional elements that all of us face as humans and as investors, but the market does as well, right, And you know, the big element with this is the market is not looking at really current earnings. I'm not saying it's not important. They have to have a company's reporting earnings, they have to

meet or exceed what the expectations were. But what is as important is what they're saying about the future, right and that unknown piece that you know, we really like certainty as humans, we want to know what's going to happen, but the fact of the matter is that we don't, and that uncertainty

is what causes any volatility in the prices. But you know, this year has been another great year in the market, and you know, if you've been sitting on the sidelines, you've been too conservative because of this fear of our recessions. You know, I always encourage folks, don't be afraid, get get off the sidelines into the market and take advantage of the markets moving higher and be that good long term investor. That's that's the big thing.

You have to remember. One of the things that we do, and we talk about this with as our clients new clients come on, is with when we manage our portfolio. Our clients are in one of five different portfolios, with the most aggressive being one hundred percent equity and then pulling back from there. Our growth allocation is eighty percent equity twenty percent bonds, cash and aal

alternatives. Our growth and income is sixty forty. We have a conservative that's forty sixty, so forty percent equity, and then sixty percent bonds cash alternatives,

and then finally a capital preservation that is twenty eighty. Now ninety five percent of our clients are either in the grow our growth and income, or in our growth or in our all equity, and that's because we kind of counsel them to say, hey, listen, you know you really want to have that element of equity in your portfolios that you know you could have volatility, but you over time will benefiting by having that larger allocation to stocks.

But with that, all of our clients really have the same holdings. So even if you're in our count preservation, you really have the same holdings that a client does who's in our growth. The only thing is if you're in a growth allocation, then you have a larger allocation too. Then you have a larger allocation to stocks if you're in the growth versus is if you're in

the cowper preservation. But the holdings themselves in general are the same and there's a reason for that, right, you know, right now we're managing we're going to be approaching one point five billion dollars in assets. And you know, we've been very successful with Steve's leadership and growing the firm, and you know, we have over twenty colleagues right now. And I always say I've

been with Steve now for twelve years. You know I first joined it was just Steve, Angie and Angela and Ryan joined or pretty much around the same time I did. But as we add all these smart folks and the complexity of our business grows, you've got to make sure that from a process perspective, you keep things simple, right. I'm a big, big believer in

the concept of kiss right, keep it simple and along those lines. From a portfolio perspective, we if we always say if we have a good idea as far as an investment, we want to make sure all of our clients have that good idea in their portfolio, right. And you know, again, even if you're in the account or preservation, you want to make sure that your equity sleep still has those same great ideas. Now you're going to have a lot less of that than than the growth And obviously if you're in

the all equity allocation. You're not going to have anything as far as bonds, cash and alternative. You're going to have all stocks, so you know you won't have exact exactly the same whole things, let's say as somebody's in

the growth and income. But what we do is when we see a situation where we want to make a change across our client's portfolios, we go ahead to make that change and we make it across all of our clients accounts, and then we send our clients in email really that day, within hours of us making that change, and we let them know why do we make this change, and what's the purpose behind it, and what do we get out of And this week we made a change. We added a Wisdom Tree fund.

It's called tickers d g RW, and the idea behind this is we have another fund that's similar. It's from a fun family called Dimensional Fund Family, and that ticker d u HP. And in both of these funds,

what they're really doing they're screening. So there's no there's no manager who's making these decisions, but they're screening using corporate data, and we're looking for high quality companies that are still growing, that are growing both their profits and their cash flow and also in some cases they're growing their dividends as well, and they might be selling a little bit of a discount, right, So you

know that not always, but in some cases they may be. But in general, if you can have these screens that you find these companies that have great profitability, that are quality companies that if there's any let's say, market turmoil or economic turmoil, these companies will do fine. And they go across sectors. It could be technology, could be healthcare, could be a little bit more in the consumer stable side. But you know, this is what

really we want to have in our client's portfolios. That these funds have done very well year to date. And as you if you're a listener to the show, you know we've been overweight technology for a long time. I mean, our top holdings are Apple and Amazon, NA VideA, Microsoft Alphabet. That's really where the bulk of our dollars are. We have a lot of in Lily as well Eli Lilly, but we also want to have exposure to companies outside the tech space that are high quality companies. We think that's very

important. So again because of technology, are technology that we utilize in our own client portfolios. We can make these changes across all of our client portfolios within hours. It really is pretty amazing. I say, when I first joined this industry, I switched over from corporate finance. I was down in DC working in the telecom industry and I was working in corporate finance for about twelve years, and I went to Georgetown, I got my executive certificate in

financial planning, and then I switched over to wealth management. Right away. I went into fee only fiduciary. You know, when I was evaluating the industry, and it's a very broad industry, I knew that I wanted to be a fiduciary. But when I first entered, we would literally write out paper trade tickets. This is it's laughable. At this point. We'd write out paper trade tickets for trades that we wanted to put through in a client's

account, and those were implemented into the system. This was also a time period where we would provide a paper quarterly report for our clients on performance report and mail those out. So I do remember this one fairly large firm I worked for, and it take almost the entire quarter to mail out these reports to our clients, and then the quarter would end and we'd started again. And now with the technology we have and our ability to manage our client's portfolios,

and they think about this. You know, we we managed one point five billion, but that's all in individual irays and roth irays and trust accounts and brokerage accounts and you know, all these different accounts. So to be

able to consistently make those changes to the portfolio is invaluable. And you know what I would tell you is, you know it really I don't even know how an advisor or you know, a firm can operate without doing that, because that would mean that you have all these positions in uh, you know,

a client's account where you're not tracking them consistently. You know, with us, we have an investment team where my colleague Ryan Bouschet heads up as the chief investment officer, and they look at our positions every week and make

determinations. Is to you know, if there's reasons to underweight or overweight them, make determinations based on the economy and the markets, if things need to be replaced and changed, you know, and that that is invaluable to let's say myself as a chief wealth advisor, as I give guidance to all of

our advisors and how to communicate with our clients. Because when we sit down with a client and let's say they're in our growth and income allocation, their performance and literally is going to be with intense if not one hundreds of percentage point of the next client I'm meeting with, who's in the growth and income allocation, and that's going to be the same of the next client I'm meeting with, And that is really valuable. It's interesting because I can identify very

quickly if there is an individual that has a custom portfolio. And we do customize portfolios to the extent that let's say somebody has a large position they don't want to sell out of for tax reasons, or let's say somebody is in the pharmaceutical field and they don't want a heavy allocation to healthcare. We can't customize that, but I can. I can see that within minutes of looking at somebody's accounts in their performance, that they must have something something customized going

on. Well, folks are gonna go to the phone lines. We have Jack from Clifton Park. Jackie, there, Yeah, I am here, Good morning, Good morning, how are you good. I don't know if you saw it or not, But there was an article in the Wall Street Journal on the twenty second and it talked about funds that they nicknamed boomer Candy. Yeah, I saw that. So could you explain what potentially would be the upside of doing that versus taking out a CD at five percent? Yeah,

so I'm not I just saw the headlines. I didn't get a chance to read it, but I did see the headline. So I'm assuming that they're talking about different things, like we actually use one of them in our portfolio. It's the JP Morgan Equity Income Fund, right, so this is the fund. Go ahead. I'm sorry the article talked about EFT derivatives. Yep. These funds are e F T derivatives not yep, that's right, and that's what this is. The JEFF Fund. The JP Morgan Fund is

an e TO fund. Right, you can buy it and sell it like a stock throughout the day, and it has equity positions in there. But these equity positions are a little bit more defensive. So the more the consumer staple space, the more in the healthcare space, and what they do in this fund, this is where the derivatives come in that fund. Sells options to other investors to be able to buy positions in that fund. And by selling those options, those are called selling calls on that fund. Those as

a fund holder, you're getting eight to nine percent yield. So you think about this. You know you might be able to get a CD earning five percent, but you're gonna lock your money up and that's all you're gonna get. You only get five percent. Where holders of this fund get a yield of eight or nine percent to almost double. And then if the markets go up, this fund goes up as well because you're holding stock positions. Now.

The only thing to remember is because they have these calls out in a year like twenty well even it's going to happen this year as well, the market's keep going higher. But the year like last year, when the markets really take off, what happens is the people who bought those options are going to exercise them and they're going to take your positions. So let's say they know they bought a call on Walmart and you know the markets are going up.

Walmart's going up. They're going to exercise that call to take that position from the portfolio. So what happens in this fund is if the market's up twenty three percent, this fund's going to get capped out at let's say fifteen because as those positions go higher, they're going to get removed from the portfolio. But you think about it, you're okay with that, right because you're getting eight or nine percent yield, Plus you're getting upside participation in the market.

And here's the real kicker with it. In twenty twenty two, when the stock market was down twenty three percent and bonds were down eighteen this fund was actually positive because it has a little bit more defensive positions that did okay in a down market. Plus it gets an eight or nine percent yield. So you think about that, bonds were down eighteen percent, stocks were down

twenty three and this fund was up one point five. Now, again, I can't tell you exactly how it's going to operate in other future downturns, but to me as an investor, this is what we use in our alternative sleeve, where it's kind of a hybrid between a stock and a bond. Right, it's a and you look at the risk returned equation. This is where it fits nicely in a portfolio. And there's other positions like that we used. We use hedge dequity in our portfolios where we talked about this where

it sells. You know, it's an ETF that trades, it has the S and P five hundred in it, but there's a hedge on the downside anywhere from ten to fifteen to twenty percent, So you're not going to feel much downdraft in your position until the market's greater than that. But to fund though, that cost right, because that costs money to fund it. They sell also options on the top side, so there's a camp. So there's

a camp at anywhere from eight percent to fifteen or twenty percent. So if the market market really rallies, you're going to get camped out at eight or fifteen percent. But you think about that for part of your portfolio where you want to minimize some of the volatility, but you want to have some upside in the market. This is a perfect answer to that that need. So

where is the downside? Then? Well, the downside is that, like let's say with the hedged hedged equity, you know, if the market's up twenty three percent, like I have clients that say, well put all my money in there, Well, you're like, listen, if you want to get you know, the real market return, you're going to have those big

years as well. Right. So you know that's why with equities the SP five hundred, which you know averages around nine nine and a half ten percent analys over you know, the long history, if you were in the hedged equity piece of that, you're not going to get the big years like you did in twenty twenty three, and so you're gonna you're gonna miss out on

that. So you know, there's not a lot of downside to the extent that you're probably not gonna get you know, say nine nine and a half percent, but you're gonna get you're gonna probably earn maybe five or six percent. So you're like, okay, well that's pretty good, right, I'm

okay with some part of my portfolio earning five or six percent. And again that's where we're using our client portfolios, which is we take some money out of the bond allocation and maybe even a little out of the stock allocation and we put it into these alternatives. So yeah, it's these are great.

Uh, you know, the thing to appreciate this type of investment was always available, but only to large institutions, right, you had to you know, be a big money manager with you know a lot of smart folks that do some of this complexity. Now it's available through an ETF that you can buy and sell on the market any given day. So essentially, if you're willing to give up the points of growth, it allows you to sleep at

night. It does. And again I would not recommend putting your entire portfolio there, but think about this with your with your portfolio, you know, you've got elements and buckets for different things. Right, You're gonna have some element of cash that you need for expenses, you know, right away. You got some element that you you know, you want really strong growth on

and that might be a little bit more oriented to growth stocks. And then you've got some parts that might be in bonds and in these i'll call them alternative ETFs that are kind of a hybrid between the two. So yeah, it's a it's a great way to build out a portfolio, in particular as you approach retirement. You know, if you're a young gun out there, you're twenty five years old, you know you can have a lot more in pure equities. You're going to benefit from that, you really want to get

that eight nine percent growth in your accounts. But as you get closer to retirement, this could be a great approach. Will you actually somewhat answered my question? I was going to ask you, do you have a certain age demographic that leans towards this investment group? Yeah? Yeah, you know, in general, we're talking as you start getting into your later forties, you know, up through you know, fifties, sixties and seventies. Yep, So you know you want to be a little bit older, more into retirement

that this fits a little bit better. Okay, well I appreciate your answer. Thank you very much. You got it, Jack. It's a great question now that really these can be a great tool, and we've been using them for our number of years now and they've really been beneficial for our clients. But again, I would use it like anything in life. You know, it's all about moderation, and there's a role for this within a portfolio, but certainly a younger person, I would really push them more towards a

broad equity exposure versus just using these alternative type of positions. But you know, this is the evolution of investing, right, I mean, back in the early nineties. Uh, you know, you really you're going to buy individual stocks or you're going to have a mutual fund where you're going to have a manager making those selections. That mutual fund was going to cost you anywhere from you know, one one percent up to one and a half to two

percent, so two percent annually you're paying for that manager. And then with the introduction of ETFs, which is what we use in our portfolios. Those are exchange traded funds. You basically have a basket of stocks or bonds. And as I mentioned, the two funds that we put in there, Uh, they use screening techniques to identify these great companies and then the cost for these ETFs are dramatically lower. Are primarily holding SDHB, which is the broad

market. Uh, you know, we use it through we get through Charles Schwab. Charles Schwab is a custodium and we don't get anything from them. They're just a partner of ours. But we use this particular fund because it really is the lowest cost broad market ETF out there. It's point zero three percent anally. So you think about that. I was talking about a mutual fund that the expense ratio could be one point five percent. This ETF that

we utilize is point zero three percent. So you know, ets were introduced in the early nineties with the first one being SPY that's the state street s and P five hundred ETF. That's like kind of the Granddady of ETFs.

And over the last thirty plus years that universe has expanded dramatically. So you think about this, for us to be able to get our clients into these ETFs, and they're going to be more expensive than you know, this broad market ETF right, that that is the case because you know, you do have individuals who are constructing these portfolios and they're handling the option element of it.

But at the same time, it's worth the cost to be able to get this type of complex city in a really simple package that is the ETF right, and that you can you know, trade those ETFs on any given day, and it just makes it real simple. So I would encourage you to utilize them. I do think again, you have to appreciate how they're going to come together in your overall portfolio. Uh, And that's you know, you got to got to do the research on them because each one is

a little bit different. And especially if you're going to look in the hedge equity element. Uh, with this, it gets it gets a little more complex. So you know, this is where again, if you're going to go on your own, got to really do your due diligence, or you know, work with a firm, you know, like Bouchet, a fiduciary who's not going to sell you these but who's gonna be able to put them in the portfolio and have them properly allocated to What we do is to maximize

risk adjuster return. Well, folks, you're 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. Folks, come back and join us as we continue to take your questions on your investment management and financial planning concerns. Welcome bad folks. For those of you just joining us, my

name is Martin Shields. I'm your host today for Let's Talk Money. It's great to be here with you as always to answer any questions you may have, and I encourage you to call in with those questions. You can reach me at eight hundred Talk WI. That's eight hundred eight two five five nine four nine. Once again, it's eight hundred eight two five five nine four nine. We're going to go to the phone lines. We have Paul from Connecticut. Paul you there, Yeah, Martin, can you hear me?

Okay? I can. How are you doing today? Good? Good? Now, I'm going to commend you and then ask three questions. And I normally don't do this. The commendation aspect that your statement at the sen I believe return nine to nine and a half ten over the long run. It is one of the few instances and listening to shows that you're accurate. And I'm saying this in the context of guys like Dave Ramsey or others that are out there, and it's really like nine to two according to Schiller and long

run data average annual return. So with that as a proxy for the first question, what was that fund that you just talked about, JB. Morgan, the ETF, what was the symbol? Yep, it was JEFPI j E P I And okay, I will tell you if there's a number of other like First Trust has them. First Trust is a great fun family. We utilize them for different funds. They have a number of the hedgeed equity

funds that we utilize on our client portfolios. And they also have a number of these similar call op funds as well, so you can look at them. I understand how that works. It's okay. The next question, have you ever put people in Invesco ETFs when they bought the bullet shares from Googleenheim that are investment great bonds with a maturity by year twenty. Yeah, I

have not, but they I know other firms that utilize them. I think they can be, you know, a great way to kind of limit some of your interestrate risk as far as uh, you know, if you're going to be you don't know, you want to hold that bond to maturity. Those types of bullet funds can can work well. So I think they're a great approach. And MEESSCA is another great fun family. We utilize them quite a bit, so I am familiar with them, but not not in depth.

Not in depth you don't use them. But it gets back to the fund approach with ETF ten basis points and I can never buy bond is on my own and be confident, So there's a portfolio effect. But you haven't bought them because I kept wondering at the end date they've got at liquid eight, and it gets a bit cumbersome to understand. Every document for each year is identical. It's just a different portfolio and a different maturity. Okay.

Third observation or question tight end is if in fact it's nine to two, and if you assume, according to Fidelity, the average advisor charges about one point one eight And I have all these two ways, even prem your firm I download. I do this for personal and somewhat professional reasons. I guess the expected return on equities should be about eight one point two from nine to two if you give it to an advisor on the average. Is that a

fair statement? Well, I guess you know a couple of things. One is, most advisors, ourselves included, are going to be investing in other things rather than just the SP five hundred. Right, So no, I don't even mean that. I'm saying if if you look at what people talk about in general when they say how did the market do, and it's a cap weighted and it's eighty percent of the market, I'm not I think it's

pretty obvious it's eight. That's all I'm saying. I mean if you if you said to a person I invest in and I know a CFO who knows another guy who he helped, who's these are very wealthy people. He goes, I don't know why he's working. Why not just send the S invest in the S and P a Harvard MBA. No less. Now, my point is the math is about eight on that metric, there's no question. So when you brought up because I'm sixty six, I'm happy, more than

happy with five to six because of the mass here I liked. Come, I don't really need to stretch. I have equities. So about a month ago there and I've called one other time on this, I found a company that was discounting to hit sales targets my gas multi year guaranteed annuities, and for tax management purposes, I want deferred income so I can manage it to then do a ten thirty five exchange if I want to, or cash it in. And I got six one five for five years and six oh five

for three years. And the reason I brought up in vesco is because I can't manage taxes in the same vein and I know the expected return with an advisor is going to be in that range on the bonds in general. So my question to you is what should I expect on sixth income within reason? That's that's kind of where I was in Jesco the mic. You know, I'm rolling some treasuries really short term and I do it myself. So isn't

anywhere five to six really about? Right? Yeah? So, I mean historically fixed income, if we're going to talk about you know, S and P, you're earning nine point five nine point two percent. From a long term perspective, historically bonds have yielded, you know, around four and a half percent. You know, so certainly now the yields a little bit different. Short term you're gonna get a little bit more than that. Long term,

you're going to be in that range. And you know, that's why with our clients, you know, we're find utilizing some bond funds that can provide larger exposure to the bond market, but we also buy individual treasuries, you know, a laddered bond portfolio where we're going to go out lock in a ten year yield. A year ago, we were buying those at clus to five percent on the on for a ten year treasury and then and then laddering it out. So but you can assume like around four and a half

percent. Okay, so I'm actually doing well if I get five and a half to six percent, aren't I on fixed income? Because I ask my friends if I'm doing this right, because I do it myself, and I do have calls with advisors next week because I made the mistake is signing up for something from Dan Ramsey and all these people are calling me from all over the country. Don't ask them the same question you're You're the only person who actually seems to make sense to me to be honest with you. I appreciate

it. I'm a parler. Well, I'm complimenting you because I listen. I will listen to Cudlow later, I'll listen to other guys on this channel. And a pragmatic approach coupled with understanding of fees, there are very good opportunities out there and fixed income. As to the point about a ten year treasury, you timed it, got lucky and nailed it fine five percent, But I would have only done that for a trade. Personally, I'm sixty

six. I'm not going to buy it, and I don't know who you're buying them from but there was a point where I thought it would be attractive enough because you get duration times yield. You know, if there's a quick change, do you trade them? As the last question, those treasuries will you sell into if they don't, if those ten years go down to four, are you going to sell them for a game? We don't. We're going to hold them in general, I mean unless client the money, We're

going to hold them to maturity. All right, that helps, yep, Okay, yeah, right, have a great week, all right, Paul, you can turn out yep. Yeah. A lot of great questions there

from Paul. Yeah. I think the big element with this one is you know, uh, you know we're talking about you shouldn't know what the expected return is going to be for different asset classes, and you know, when we're looking at a client portfolio, the big element with this comes down to, you know, putting a plan together for both when you're working and to get your dollars you need to have when you get closer to retirement and then

through retirement. And you know, you've got to understand for each asset class you have in there, what is your expected return? And you know, I think you know, having a large enough allocation to equities for most people is very important. You know, from a planning perspective, we utilize much more conservative rates of return. So it depends a little bit on what your

allocation is. But we might only for the whole portfolio for an all equity or growth assume six percent, when in fact, historically it's going to be much higher than that. Matter of fact, we just had a meeting with

a good client of our small business own are very successful. And his analyzed return and this is not you know, going to be always standing across the board, but he was always very comfortable risk, always in the hundreds in equity and he's been on since seven was up over fifteen percent analyzed and you know we're telling him that, you know, we're only going to use a six percent analyzed return, you know, through retirement. And that is you

know, our goal as advisors is to be conservative, right. We want to make sure that for our clients that if things don't come out in return like they have historically, which you know, here's the thing is, you know, in general, you know, we've got one hundred plus years of data. This shows that over time, you know, asset classes will return in a certain way, but that doesn't mean that it can't vary over a five year period or a ten year period, or maybe even a fifteen year

period. Right in the US, that hasn't really been the case, and I think there's a lot of reasons why that is as such. But you look at let's say Japan, you know, they had twenty years where the market really was down from its highs that it hit in the late eighties or early nineties. So again that's where the importance of having a diversified portfolio come in and making sure that you understand those returns. Now to pause question on

returns after fees. You know, we're a big believer in transparency m fees, right, So that is so important that our clients understand value proposition, you know, to the extent that you know, there's there's three main areas for our clients where the value is added first and foremost, I would say,

on the investment side. And you know, I just talked about our tactical adjustments, you know, our ability to see what's going on in the markets, in the economy and make adjustments and be able to overweight particular asset classes. So you know, by US being overweight technology over the last I'm going to say fifteen plus years, and for US being out of international for

quite a few years now and being underweight for a number of years. By us making these changes, you know we can outperform a blended benchmark of equity in the season. That's really what you want to be looking at, because you know, there may be a time where we get back into we get back into international, there may be a time when we overweight smaller MidCap.

So you know, when you look at performance from an equity perspective, you can certainly look at the S and P five hunter, but you want to look at it broadly speaking as well, because you know, again the small MidCap have been really underperforming over the last five plus years, but historically speaking, small MidCap have been some of the strongest performance performing asset classes from an

equity perspective, same thing with international. International is underperformed for fifteen years, an extremely long period of time, but there are periods of time where international and particular emergency markets have significantly outperformed domestic stocks. So again, when we look at performance, we're looking against a number of benchmarks, including the S and P five hundred, but also against a broad equity allocation as well.

But again the idea is, you know, us being able to manage taccoically against a benchmark. But the other element, too is the you know, the emotional strain and just time commitment that it requires to manage your own portfolio. You know, many of our clients that come on with us, that's

what they've done, they managed their own portfolio for many years. Matter of Factur just a new client coming on and he just said, you know, as the numbers have gotten bigger and the time commitments becoming larger, you know, he doesn't want to take that on. Because the other thing that's important is it is common that people, when they're made portfolio they can make some pretty doozy mistakes, and they can let emotions and their own psychology get in

the way of being a good portfolio manager. And I would say, it doesn't mean that we're not immune to some of those same things. We're human, but we have processes and a team that makes these decisions and it helps minimize those situations. But the other element from a value proposition, and this is just as important, almost as the investment piece, is the planning piece,

folks. That is just so important, whether it's tax planning, estate planning, retirement planning, insurance reviews, all these different things where that becomes so important as you go through life changes. And then the final element for us is our client service team. You know, it is invaluable. Whenever I have to call a one hundred number and have to deal with a large fine institution, it's just kind of mind numbing and I just know it's going

to be a long process. Whereas with our clients, they call in, they get a person all the time. When it picks up the phone, they get routed right to an advisor or a client service team member, and anything that needs to happen with our our custodian, Charles Schwab, happens through our client service team. So that value proposition is so important, and that's something you know, we talked about. We got to be able to offer that to our clients day to day, week to week, month to month.

You know, we have a contract with our clients, but they can leave it at any point. And you know, we have a very high client retention rate that in general is above ninety nine percent analyzed, which to me is something that we're very proud of. Is that that value that we offer to our clients. Well, folks, let's go on to some other things. I want to communicate and make sure that you're doing from your own planning perspective. But if you have any other questions, you can reach me

at eight hundred eight two five five nine four nine. That's eight hundred eight two five five nine four nine. Just a couple of things just to really keep in mind. One is I had a client ask me about putting money in to an IRA post tax. Right, So you know, if you are if you have a Form one K at work, or even if you don't have a Form on K, you can put money into an IRA. But there are income phase out levels right that are going to prevent you from

contributing to an IRA pre tax. Uh. And that's the that's the key there, right, Even in those income phase outs, if you have a form on K, you can always contribute money post tax into an IRA.

Right. But you know, I'm gonna really gonna I'm gonna tell you this is if you're not putting money in pre tax, or putting money that's into a traditional IRA, or if you're not putting money into a row, I would really counsel you against putting post tax dollars into a traditional IRA, and there's two reasons, one of which is, let's just say you put those dollars in and they grow. Well, the nice thing is so you're not

gonna get any tax benefit for putting those in. But the nice thing is it does grow tax deferred, So any appreciation in the portfolio, any income being produced, you do not pay any taxes on it. So that's nice. But you have to appreciate when those dollars come out. And let's say you have big gains in those positions. When those dollars come out and they're gonna get you're going to have to take them out. You have your R

and D on those dollars. There's two elements. One is that it's going to be taxes ordinary income, so that tax rate is higher than the long term capital gains. So let's just say you took those dollars and you put them into a taxble account. You'd have the growth on it, and yes, you would have income being produced. Now, a couple of things. One is for our higher income earners, if there's any stocks in there, we put them in meaty bonds, where if they're New York State meuni bonds.

They don't pay any federal or state taxes on that, right, so there is no tax consequence from an interest perspective with muni bonds in a taxable count. The other thing to remember is any gains in those positions if we're to sell them, that those gains are taxed at long term capital gains rate, which is fifteen percent federal versus ordinary income, which is going to vary depending on what your overall income is, but most likely is going to be

at least in the twenty percent range. So again, with all the dollars that come out of that's from a post tax contribution into an IRA, with as far as gains, all those will be taxed as ordinary income. The other thing, and this is the important thing to remember. Let's just say you put in seven thousand dollars in post tax into an IRA, and let's say you have a million dollars pre tax. Well, here's the thing to

remember. You have to keep track of how much you have in an IRA pre tax versus post tax, because when those dollars come out, they come out pro rated. So although you have a million dollars that's pre tax in an IRA. The bulk of your your dollars, you have seven thousand dollars this post tax. So every dollar that comes out a fraction of those dollars, because you're gonna do weighted average, a fraction of those dollars is going to be considered post tax and you're not gonna pay taxes on it. So

you've got to keep that ratio indefinitely. Right, You've got to track how much is in an IRA, and any distribution that comes out has to quantify that of the weighted average pre versus post tax. So for those two reasons, I would really counsel against putting any DOWA dollars in post tax into an IRA. The other thing, and this is very important these days from an

estate planning perspective. As we've talked about, when those dollars go to not a spouse but a non spousal air, they have to be taken out within ten years in an IRA, right, and it's going to be task as ordinary income. But now if those dollars were in a tax will account, when those dollars transfer to a nonspossible error, there's a full step up in cost basis. So any gain that occurs is going to get wiped away. So unlike the IRA, where those errors are going to have to pay ordinary

income on that gain. In this case, your kids, let's just say, will pay no taxes at all on those gains. So again, the everything when it comes to making these decisions, it can evolve a lot depending on what's going on with tax laws, and certainly with some of the more recent tax laws in the last let's say three or four years, that determination, that decision matrix has changed. But I would really counsel you against putting in post tax dollars into an IRA. The other thing I want to talk

about is this idea of consolidation of accounts. You know, people talk about I hear them talk about diversifying their financial custodians. And I'm going to tell you, folks that I don't think that is a strategy you want. You want to go with. If you can make your life simple, especially as you get older, you want to take that approach of having all your accounts

at one financial custodian. And the fact of the matter is, you know, let's let's face it, these days, all things considered, these financial custodians are the big ones, right, It's Schwab, it's Fidelity, it's Vanguard, maybe E trades out there, but in general, we're talking about pretty significantly sized financial custodians, and you're really doing yourself a favor by having

that consolidation and not having accounts everywhere. You know, when we have clients that come on and they have accounts everywhere, trying to clean up that mess is it takes some time, and it just going to make your life a lot easier. When you have everything at one financial custodian, you're going to know very clearly, you know, how are you performing and what your allocation

is. You know, I see that when clients are coming on, they have no idea what their allocation is or what the performance is across all these accounts. So I would highly recommend doing that. Consolidating all your accounts into one. One of the last things we have a few minutes here that I also want to share with you. You know, so our clients they come from a lot of different areas. They are small business owners, they're executives and companies, they are physicians. You know, it's a lot of it

can be families that have accumulated wealth over time. But you know, two areas where we work with clients is individuals that are going through divorces and also a situation where you know, when spouse has passed away, and you know, quite often it is with a life change where somebody decides to work with our firm, and we always one of our first questions that we ask that perspective client, is you know what brought in here? What it was the

impetus that you've decided to come talk with our firm. And you know, unfortunately it can be when you're going through a life change, like a divorce

or like losing a spouse. And you know, I just bring this up because those times in particular, you know, those can be challenging times from an emotional perspective and psychological perspective, and uh, you know that's where I see, you know, our our firm's ability to work with these individuals is so important, and in particular, trying to make decisions when you're going through kind of an emotional time period, it can be very difficult and you have

to appreciate that. And that's why I would encourage anybody if you're if you know somebody that is in this situation, or if you yourself in this situation, definitely reach out to a fiduciary advisor to help you through it. It is difficult enough to make these decisions on your own, but it's even more difficult when you know you're trying to handle the grief of losing a spouse or the sorrow of going through a divorce. And because those are going to impact

your ability to make decisions, you have to appreciate that. Uh. And so to the extent that you can have somebody as a fiduciary who's not going to be selling you a product or service is walk you through because one of the things I see is that there people struggle to make decisions, and you know, what we try to do is go through the numbers with them.

And then again I talked about this concept of keeping things simple, uh, you know, really simplify the decision making process and then having them go with their gut based on where the numbers stand. And that's if you can do that in any decision in life, you're going to be in a good spot. Well, folks, we spend an hour together. I hope you learned a little bit. It's always it's been the great to be here with you

to answer your questions you'll listen to. Let's talk money to you Buy Bouchet Financial Group while we help our clients prioritize their health while we manage their wealth for life. Folks, take care of yourself, take care of each other, and enjoy the weekend.