Let's Talk Money

Good morning everyone. My name is Martin Shields. I'm the chief Wealth Advisor at Bouchet Financial Group and I'm here with you on this wintery morning. It's a coal one out there, folks. It is a coal one. But as they say, if you've got the right gear, you're going to be fine out there, right. It's all about having the right gear. So hopefully, whether you're walking around town or getting out in nature, you have

the right gear and you'll be nice and warm, no problems whatsoever. So it's great to be here with you as always to answer any questions that you have. It's great to give my colleague Stephen Bouchet well deserve break, and I encourage you to call in with any of those questions that you have. You can reach me at eight hundred talk WI. That's eight hundred eight two five five nine four and again that's eight hundred eight two five five nine four

nine. Boy. A lot to talk about this today, and we're going to be celebrating the S and P five hundred hitting all time highs folks. And it happened yesterday. The market really really strong yesterday. And you know, as we talked about, you know all the time that you got to have that long term view of the markets. You know, the last twenty twenty two was a tough year. Last year was a great year, and

you know, we'll see how this year pans out. But you know, as with us and with us manage our clients' money, we're always big believers that having that long term perspective gets you through times like twenty twenty two when the market was in a bear market. And as we tell all of our clients, having a bear market is part and parcel with being a long term

investor. It is that that is, if you're going to be investing in store, you're going to have to expect that you're gonna occasionally have a bear market where the down the market's down more than twenty percent. And you know that is why the market provides outsize returns over more conservative investments, right if you're gonna want it, If you're not comfortable with that level of volatility, if you're not comfortable with the ups and downs in the market, then you

make sure that your portfolio is allocated more conservatively. But you're going to be giving up on return over time, right that uh, that nine and a half to ten and a half percent analyze return that the market's seen over the long term. That's there because there is the risk that you can have bear markets. Right in business, there's a clear equation and correlation between risk and return. If you take on more risk, you get greater return, and

if you don't take on more risk, you're gonna limit your upside. So you know, as you're going through times like twenty twenty two, got to constantly remind yourself that, hey, we're going to get through this bear market. It. You know, we've got a hundred years of data that shows that the S and P does recover through times like that, and it doesn't matter if it's a world war or if it's a great depression or the Great recession. We will make it through those times and we'll come out on the

top side. And this is where we are right now. And even now, you know, we get the question, hey, we're at a market all time high. Is is this a good time to get invested? And it still is if you have the right time horizon. I just read a study that if you had actually went ahead and invested all your money at the peak of the market in seven, that you would have obviously saw a sharp decline of almost fifty percent between October of two thousand and seven until March of

two thousand and nine. So you would have seen your portfolio decline if you're one hundredercent in equities, by almost fifty percent. But if you took that same money and now you looked at your performance from then until now, your a average return with dividends, you would be up over nine and a half

percent. So you think about that, you would have had to suffer through and hopefully not panicked and sold when the market was down fifty percent, But over the long run up until now, your anualized return would be up over nine and a half percent. And that's what it's about, folks. It's about having that right perspective to get you through those challenging times to appreciate these

uptimes. And again, what I would tell you is when you're at times like right now the market's at an all time high, it is a good time to do some reflection. Right. The reflection goes along this lines. One is how did you do over the last year or two with the market volatility? You know, when the market was down so much in twenty twenty two, did you really panic? Did you maybe not sleep well at night because the market was down so much. Are you moving into a different time

period of your life? You know, maybe you've been an accumulator as you are been working, but you're getting closer to retirement, you know, So if you've been in this accumulation stage, as we tell all of our younger clients, you really want to have you know, at least eighty percent, if not one hundred percent of your portfolio inequities. That's going to give you

the longest, the greatest long term returns. But as you move closer to retirement, let's say within five years, you want to maybe start thinking about, hey, maybe I want to scale back a little bit. So if I was one hundred percent inequity, maybe I want to be eighty percent equity

or seventy percent. So these times where you do have these market all time highs, it's a good time to assess, you know, where do you stand with your risk And again, it can be either a change in your life that you're moving to a different situation in your life, or you may be reassessing your risk tolerance. Maybe you thought you were a more aggressive investment or that you're okay with the volatility, but you realize that maybe you weren't.

Maybe maybe you really should be more of a sixty forty portfolio instead of an eighty twenty. And this is a good time to become more conservative, you know. Is it a good time to become more aggressive? We get that question as well, and it's not the ideal time. The ideal time to become more aggressive is when the market's down twenty percent. But if you have the right time horizon, it's still a fine time to become more aggressive if you just realize that, hey, you know, we could hit volatility

as we moved through this year. Standard intra year volatility is around eleven percent, right, So that means within any giving year, the average volatility within that year can be eleven percent. So along as you're okay that, hey, you know, I may become more aggressive and I may see the market decline eleven percent, give or take, maybe a little bit less, maybe a little bit more. If you're okay with that, this is still a

fine time to become more aggressive. If you have a right long term perspective, then there's no problem with that. The other thing that this is a good time to be doing is if you need cash for a project, whether it's buying a home, you know, doing some home renovation. If you need cash and you need to pull it out your portfolio, this is not a bad time now to go ahead and do that. Right, your markets all up. You know, you might have to pay some gains. You

may have some capital gains on those sales. Well, that's fine, that's not a problem if you have to pay gains. You know, as we tell our clients, our goal is to minimize their taxes that they pay, whether it's you know, trying to hold on to positions and not sell them, do tax loss harvesting for them when they if they do have any losses, and trying to have investments in the portfolio that are tax efficient. But at the end of the day, if they are paying taxes because they're selling

positions for cash, that's a good thing. Right. That means you've made a lot of money. That means that you're up and that the federal government,

at the end of the day wants to get their money. And relatively speaking, for most people, that is a TAXI more a much more tax efficient way to have income coming in through long term capital gains, which means you have to hold those positions for at least a year, and you're going to be paying somewhere in the neighborhood of fifteen percent probably for federal taxes on those gains versus if it was ordinary income, it would be a much higher

rate. So again, if you're in this situation where you perhaps need some cash for the next year or two, then this is not a bad time to be looking at taking some gains. We've talked about this on the radio quite a bit with our clients if they need cash in the next one or

two years, especially for distributions. So if a client has a monthly distribution, let's say of one thousand dollars, we're going to put away two years up to two years of those distributions in a more conservative portfolio and then draw them down over time. And certainly with the market's hitting all time highs like this, this is an ideal time for us to capture those funds that we need to replenish those distributions and bring it up closer to the full two years

of those distributions. And you know, this process that we do on a consistent basis for our clients, you know, it allows us to provide those distributions and they don't have to be concerned about it. Right. The big element with this too is you know, people get themselves into trouble because they either panic when the market's down twenty percent or they have liquidity needs when the market's down twenty percent, And so what that means is that they are going

to be selling their positions when you know, at a loss. And those are the situations that if you go down that route, you're going to run into problems, right, And we see it occasionally, you know, with our clients, one of our goals is to really make sure that they're educated what it needs to be a good long term investor so that they don't panic when the market has any times of volatility, and that we have the right

amount of cash set aside for them if they need a distribution. But that takes a lot of educating it and there are times where people can panic,

and in particular as they move into retirement. Right when you're in your twenties or thirties or forties or even fifties or early sixties and you're accumulating your assets, it's a lot more it's a lot easier to stomach volatility, right because we always say this one where it's actually weren't educating younger clients and or we work with a lot of form and K plans, we weren't educating participants about

market volatility. You think about it, when the market is down twenty percent, Yes, when you look at your statement, it's going to be disconcerting, right because it's going to be down. You know, it could be on a million dollar portfolio. If you're all equity, it could be down

two hundred thousand dollars. But what I always remind individuals is, especially if you're putting that money in like you would a four and K plan on a consistent basis, you are now buying your equities at a twenty percent discount, so that is actually in ideal time. I always make the analogy if you look at the late nineties into the two thousands, you know where market did

very well. Valuations were extremely high. But people were very excited back then because their statements for their full and k's showed that they were doing very well. But what they didn't realize is they were buying stocks at very high valuations with a price to earning ratio well above thirty when the average is around sixteen, so they were buying stocks at a very high price. And you know, again even over the long term, it still worked out for them.

But the ideal time for them was the next two years where the market was down until it hit its bottom in two thousand and two. So over the next two plus years, as they were continue to buy into you know, their phone and k into stocks at a now at a discount of value, that's where they really added a lot of long term value to their portfolio. And that's where, again being an educated investor, it's so important don't understand

these things. With our clients. We do a lot of communication via email, with calls, with in person meetings, and we also have what we call our State of the Economy presentations, where we have our clients in for dinner and a presentation. This will be our ninth year that we're doing it, and you know, it's just a great event where we get to spend time with our clients. We get to talk to them about what our outlook is for the markets and the economy, what we're going to be doing from

a portfolio management perspective, and what we've done over the last year. Talk to them about some financial planning topics and you know, just spend some time with them. And it really is a great way for us to educate our clients as to what it means to be a good long term investor. And it's like anything in life. If you don't know, if you're not educated, if you're not trained as to what this looks like, then you're going to struggle with it, right, I mean, you can't do anything.

I mean, I don't care if it's ride a bike or go skating or whatever it is that you want to do. If you're not trained as to how to do it properly, you're going to struggle. And the but the more you're educated, you hear the term knowledge is power, right, and if you have the right knowledge, then you have that power to be a

good long term investor. And you know, we really love to spend time with our clients educating them as to what we're doing with the portfolio is what they need to be aware of. And you know, we always say, you know, we'll spend as much time and go as deep as they want. Or with some of the clients they take a different approach, right they say, you know what, I really don't want to know that much.

That's why I hire you folks for you to handle it. I just want to be able to, you know, ask questions on returns and whatnot. So you know, for each one of our clients, that depends a little bit is to you know, what their mindset is, how much they want to know. But we really want to make sure that they get that knowledge to whatever level they want. So it's just a really important part of what

it means to work with our clients. Let's move on to a different topic, but before we do, if you have any questions, again, you could reach me at eight hundred talk WI. That's eight hundred eight two five five nine four nine. That's eight hundred eight two five five nine four nine. So any questions you may have, whether it's investment related or financial planning related, give me a call and we can chat. I'll give you some

perspective, you know. One of the things that we talk about investor mindset. You know, I think a great stat is that the market is up seventy percent of the time, right and you think about that, because I

was just doing some research on this. Casinos. If we have a casino, whether it depends on the game that you're talking about whether it's roulette or blackjack, they're more in their odds of winning as the house is more depends a little bit, but somewhere in the mid fifties percent, maybe high fifty percent, something along those lines, versus you as an individual player, and

you think about how successful casinos are. They make a lot of money and yet but their odds of winning are well below what your odds of having your investments go up being invested in the stock market. So, yes, there's gonna be times where there's volatility ends down, but seventy percent of the time the market's moving higher, and you think about that, right, So that just I think a lot of times as an investor, you have to have

good perspective on investments and what it does to mean. So if you can have casinos that make a ton of money and their odds of winning or in the mid to high fifty percent, and you, as an long term investor in the market, you're up seventy percent of the time, it makes sense that you want to be a good long term investor and not try the time the market right if you can just have that mindset that yet you're going to have some down days, but overall it's going to be you know, it's

going to be mostly up. From a long term perspective, it helps you

really handle those times of volatility. And the one of the times that we see this that that can be challenging with individuals is if they had a small business, or if they've had real estate, or even if they've had it's a little bit different if they have concentrated stock positions because as an executive, because they understand with those concentrated stock positions that there could be movement in that stock, probably more so than even in the market, so they can appreciate

that. But you know a lot of times when we're working with small business owners that have most of their wealth tied up in their small business, and I always say, that's a great right. If you're if you know your business, you know your industry, you should be reinvesting back into your business.

Now. It doesn't mean that you shouldn't perhaps be you know, saving money outside, whether it's in a tax bill account or in a form and K that could that's also a good approach, but certainly investing your time and your money back into your business. Uh, that's where you know how to grow it and yess what you should be doing. But in many cases they come to a liquidity event. Right, whether it's selling the business within to a family member or uh, you know, to an outside buyer, they're

going to have a liquidity event. And the same is true with real estate, right, which is with real estate, you know, in general, you don't know the price that you're building on any given day, and you don't see the fluctuations that may actually exist in a market, and they certainly you know, can happen in real estate, but you don't have that pricing that you do in the stock market. So you know, when you sell that because that property and you're going to put it in a diversified portfolio,

you need to understand what that's going to look like. And just the other day, you have a client that's going to be selling a building and this is going to be a large amount of money that now he's going to have in a diverse fyve portfolio. And I spent a lot of time talking to this individual about what does that look like and how is that different from when

he just had his real estate And it's going to be different. There's going to be he's going to have to be okay with seeing within the portfolio itself some of the ups and downs and knowing that that's you know, part and parcel would being a good long term investor and not to get too concerned or panicked and if he does, to give me a call and we can chat. Same thing, you know, from a small business owner, I mean, you think about it. If you're a small business owner, you have

a lot of there's a lot of risk with that business. I mean, you know, depending on your role, if something were to happen to you, that business could be at risk. You know, there can be changes within the industry, either regulatory or from a technology perspective that can really impact your business. So you know that value of your business can fluctuate quite a

bit depending on what's occurring. You don't realize that, of course, because you're one focused on your business and growing it, and then two because you don't have a pricing mechanism that allows you to understand, you know, what the value of your business is on any given time. But you know, the fact of matter is that if you could have a pricing mechanism, it would show probably the value of business going up and down depending on what is

going on. Within your industry and within your particular business. But now when you sell that business, and now if that's where most of your net worth was tied up, and now you've got a large portfolio, you've got to appreciate that. It's what does that mean to be a long term investor with with equities and stocks and bonds and alternatives. And our goal again as as an investment manager, as a fiduciary, is the educator clients is to what

that means. But it's also to manage the portfolio to mitigate some of those risks. Right. So you know we've talked about this. If you've been listening, you know we've been out of international coming on three years now, and we've been out of we're out of bonds for at twenty twenty two when the interest rates rose so much and the value of bonds declined. So we're

going to try to manage the portfolio to mitigate some of those risks. But I always tell clients if you have anything in the stock market, that allocation of your portfolio is going to feel the jib draft of the market to a certain extent. Right, So you know, right now in our portfolios, we did very well last year we had a lot of positions that did well,

in particular in our technology allocation. But you know, you know twenty twenty two, those technology positions felt the downside of that right, And again it's about reminding folks that, yes, you know, there is that volatility in that asset class, but over time, our over allocations to technology has been very beneficial to our clients. And again that's where that reminding people of having that right perspective. How important that is. Uh, it just it

takes a lot of time and effort, but it's important. Let's move on. I want to talk a little bit more on the planning side. But again, if you have any questions, you can give me a call. You can reach me at eight hundred talk w GUI. That's eight hundred eight two five five nine four nine. One of the things I want to talk about is, you know, when we are working through a plan with a client, you know, it is to me when we go through the assumptions

of you know, how much they spend. We talk about the assumptions from an inflation perspective. When we talk about assumptions, uh, you know, looking at you know, what do they want to do from a state any perspective. You know, how do they if they want to take any particular trips, if they want to help kids or grandkids. It is it becomes so important that people take some time to really think about what do they want

in the future. And I always say I just met with an individual that's going to be retiring, that this is an exciting part of our job, certainly, but of somebody who is going to be retiring, that you get to think about these things, right, You get to say, hey, what does my retirement look like when I when I retire into my sixties and seventies, if I have my health and you know, our tagline is health, wealth for life. If I have my health, what does this look

like? And you and if you're married, your spouse's maybe with your kids or grandkids, you talk about what that looks like. You know, whether you're going to be buying a place someplace or where you're going to be doing some traveling, or maybe you're going to have a boat or you know, who knows what that plan looks like. But you know you need to spend some time to put this together because you know that idea of budgeting, which

I'm a big believer of anybody having a budget. I don't care how much you make, it's important to have a budget and know, at least high level, you know what you're going to be spending in these particular categories that you know you have that set and you know it does take some time and you've got to set asid some time and you're going to have to you know,

maybe you know, do it over a multiple time periods. Right, you may not be able to do it all at once, but if you can, you know, spend the time to do that, our planning process I know with our clients is that much more valuable. And that's going to be the same with you as well, which is you know, if you can spend that time doing that, you're going to really notice a difference.

And so I would encourage you to do that if you haven't already. H when you're doing your plan and you're thinking about long term where you want to be is you know, start from a budgeting perspective and going from there. Well, folks, we're going to take a break, but come back and join us as we take your questions and give you some thoughts to consider in

your own financial situation. You're listening to Let's Talk Money, brought to you by Bouchet Finance Group, where we help our clients prioritize their health well we manage their wealth for life. Welcome back everybody. For those of you who are just joining us, my name is Martin Shields. I'm the chief Wealth Advisor at Bruchet financeed Group, and I'm your host today for Let's Talk Money. It's great to be here with you on this cold but great winter morning.

I'll tell you, as I've said before, I'll take this weather anytime over the weather we had earlier, either this month or December, where it's kind of great days there's no snow on the ground, it's there was a couple of days where it just seemed to be foggy and kind of spitting rain non stop. I mean, it was just kind of depressing after a while. But now we've got some snow. It's cold enough. As you know if you listen to the show. I got that great. We got an

ice drink in our front yard. My son and a bunch of his buddies played hockey yesterday. We'll be skating over the weekend. I was able to get out to some cross country skating skiing at the state Park here in Saratoga. I'm hopefully going to try to get up to Gore to do some skiing tomorrow. And again, now that we have some cold weather, you can actually get out and do some stuff versus when it's you know, forty degrees and dark and cold and rainy. To me that it just doesn't work.

So again, all you have to do is have the right gear, folks, make sure you have the right gear to keep warm when you get out there. But hopefully you're out and enjoying yourself and doing something fun. If you have any questions, you can reach me at eight hundred talk WGY. That's eight hundred eight two five, five nine four nine. So again, as I mentioned in the beginning of the show, the S and P five hundred hitting all time highs this week as of yesterday. That's great news.

Just a reminder of what it means to the importance of being a long term investor getting through those times of volatility. And we'll move on to all time highs again. You know, I always like to quote warm buffet, which is, you know, you have to be a little bit of an optimist to be an equity investor. You know, you have to believe that down the road, you know, things will be able to grow. And what Warner Buffett said is never bet against the American economy. Right. We may

have our challenges, we absolutely do. But as from an economic perspective, when you if you start traveling around the world, what you realize is by far, the US economy is like none other. Our ability from everything from our legal system to our infrastructure, to our education system. It really just promotes people to to invest in businesses, to take the risk to start a

business. And you know, people at the end of the day are are er ingenious, right, I mean you think about that, which is over time, when we have problems, you know that exist, we find solutions. And that's what are the US economy does. And in particular as you look at it's you know, a lot of this these days is driven by technology, our ability to find ways to improve processes through a technology. And you know, we've talked about this with the advent of artificial intelligence AI.

You know that where we go with that I don't know, and I don't think the creators of AI really know exactly where we go with it. But I do know, as I've talked about before that. You know, even my experience in this industry in wealth management over the last fifteen years, the changes that have existed from a technology perspective, it's it's amazing. I mean, how much more productive you know I am as an advisor in our firm is in general in the technology that we utilize. I can't even imagine what

it's going to be five years from now or ten years from now. And again from an investor perspective, you know, we'll have times of volatility. You'll have market volatility where the market will be down twenty plus percent, But as long as you have confidence in the US economy that over time will find solutions, will find ways to improve productivity and profitability, then the mark's going

to continue to hit all time highs. And it's just that much more important that you stay invested folks, that you don't try to time the market.

And you know, even now, you know we're really last year was us kind of moving into this goldilocks environment where it's not too hot, not too cold right where we're moving into this area of what's called the soft landing, where you have inflation moving to the two percent target that the FED has and yet you still have the economy, the labor markets, the real estate markets,

the consumer remaining strong. And you know, we talked about it a year ago that that is where we were hoping the economy was going to go, but it was actually a narrow runway, you know, historically speaking, you know, you can look at other times in history where it was more of a hard landing where you know, by the Federal Reserve raising interest rates

so much, the economy did not do well. And so for us to go into this soft landing perspective, this this goldilocks environment what we had in twenty twenty three and you know, which hopefully will continue in twenty twenty four. It is possible that you know, we keep moving higher with cash flow and profitability from corporations and that the economy keeps remaining strong. But the big

element with this, with this soft landing is inflation. Right so you know, for the month of December, it did spike up a little bit from where it was in November, and so we need to continue to be trending

down where it's with inflation. Right now, the market is expecting the Federal Reserve to be cutting interest rates anywhere from three to six times over the year, and you know that pausing certainly by the Fed starting at the last latter part of last year and as we move into twenty twenty four them potentially cutting interest rates has been very beneficial for the market's outlook and for the economy as well. But you know, this soft landing is not a given right.

You know, doesn't mean that they can't have some challenges as we go out there, and really they go in two different directions as far as you know what to call the hard landing options. One is that you know, the Federal Reserve has already raised rates enough that there's a lag effect on the impact of those those rates as they rise, and that it usually takes anywhere from

six to twelve to eighteen months before that impact actually comes to play. So you know, if they just stopped raising rates last year year, you know, it can take a while for it to actually come into play in the markets in the economy, so that lag effect, you know, the downside the hard landing would be that we start seeing in a negative fashion sometime this year, and you know that would basically mean that the labor markets, that

the real estate market, that the consumer starts to weaken and you know, there's certainly been a number of things that have been helping the consumer. And as we've talked about the consumers eighty percent of the economy, there's been a number of things helping the consumer in their spending. Everything from you know,

the stimulant stimulate checks to that were paid to consumers in twenty one. In twenty twenty two, there's been raises that have been given really across the board too many workers, for many individuals, their student loans were on pause until October of last year. So there have been number of factors that has allowed the consumer to may be strong. You know, it still looks like they are strong. I mean, the consumer sentiment and their spending remains very strong.

But you know, the consumer could weaken and that would be a potential negative. And you know, if the economy does weaken, then the Federal Reserve will actually cut rates more dramatically. But that could be more of the hard landing piece, right, which is, you know, there's the leg

of which we see the economy weakening from rising interest rates. Now the flip side of this is, you know, we could still see the economy be very strong and instead of inflation moved to the two percent target, which is what you'd hope under the soft landing scenario. You see the opposite, which is either inflation kind of remaining in the three percent range or even potentially rising from there, and that would drive the Federal Reserve to have to continue raising

interest rates. So that would be the other scenario from a hard landing perspective, because at some point point, if they were continued to do that, they will send the economy to a recession. Right, I mean it is, you know, right now again we're in that soft landing scenario and hopefully that will continue. But I think it's important to be aware that they're you know, now that it was twenty twenty two where every economist out there was

predicting a recession. Well guess what now, all those economists they're not predicting one now. So it never happened in twenty twenty two. But now as they start twenty twenty four, at twenty twenty three, I'm sorry, but now as they start twenty twenty four, they're saying, no, we're all good, no economic recession. And it's from a conturering perspective, it could be actually be a time that you know, it could be the opposite,

right. You know, I tell you when you look at the media, and I don't care what media you're talking about, whether it's the financial media or it's only on media, the TV media, you know, in general, they're selling a product and they're selling a story, right, and that story in that product works best if it's either inspirational, which is not too much of that, but if it's about fear and some headline that really kind

of catches your eye. And that's why all the big talking heads out there, they put out predictions as to what they think that's going to be going on with the economy or what they think is going to be going on with the markets, and they put you know, they say that the recipe is going to end at this level for the year, and it's just amazing to see how wrong they are most of the time, right, And you know, it just shows you that I will say, even as an economist myself,

as far as training, that economists have worse records than as far as forecasting than the weathermen. Right you look at it, actually take a weatherman's forecast or weather women's forecast over what an economist has to say as far as how accurate they are, So you know, I think it's important that your portfolio these days is set for growth and that, you know, if we do stay in this soft landing realm, that you do well. But I also think in our portfolios case, we kind of have what we describe as

an all weather portfolio. We have positions in healthcare and consumer staples and funds that have quality, dividend growing companies. We have positions that would do well in the down market as well, and that all weather approach is important. Quite often I get a question about Marty, what what should I be doing

with my portfolio? You know, if I with the account I'm sorry, with the election coming up, or with the situation in the Middle East, And I tell folks, we live in a world of global risk, and your portfolio should reflect that risk in any given year. Because I could sit here and talk about what may happen in twenty twenty four, there's a really good likelihood it's going to be something I'm not even talking about. So that's

where your portfolio asked to have that allocation. That's proper. We're gonna go the phone lines. We have Dave, who's in his car, Dave there, Yeah, Martie. Thanks for your service, sir, Yeah, absolutely, What can I help you with? I have a question regarding to my I have three children sixteen twenty one, twenty two. Okay, Dave, a small amount of money, less than ten thousand dollars be saved during their lifetime. Ten they started ruth Ira with that money and then continued, you

know, contributing. Yeah, great question. So they can as long as they have W two income. So you know, like, I'll give you an example. I have three kids too, there in their teenage years, and they all work at canteena restaurant here in Saratoga, and so they actually made some pretty good money, especially my daughter is the older one who is a server, and so she could contribute up to what her W two amount was up to. I think it's sixty five hundred for twenty twenty four in

the WROTH. So for that money. The only caveat though, Dave, is that they have to have W two income to be able to contribute, all right, So you answer my question. But also can they start a rule and make it a positive eight to ten thousand dollars before that's not allowed? So it depends on what their income is, right, now up until they file their tax any taxes they're filed, they can make it for twenty

twenty three. Still, you can still make those WROTH contributions for twenty twenty three and then starting you can also make it for twenty twenty four on what they expect to make and the amount is seven thousand dollars. So again,

let's say one of your kids they made seven thousand dollars last year. They can contribute a full seven thousand dollars even if they have it in a savings account, right, so they can just move those dollars into a up to seven thousand dollars as long as that's what they've made with a w two. Now, if they only made five thousand dollars in twenty twenty three, they're gonna get capped out with that amount, or if they made ten thousand dollars,

they're still going to get capped out at seven thousand. But again, they can make it for twenty twenty three up until they file the taxes for twenty twenty three, and they can start making it for twenty twenty four as well. Excellent, thank you for the time. One other question. Once they do this, let's just say the older ones, you know, they want to buy a house. Can they stop contributing at any time or they have to contribute a year. Nope, they can stop contributing at any time.

It's completely up to their own discretion. And the thing to remember, and this is the important thing about a roth is let's say they contribute and then they find out down the road that they need some of that money. They can access their principle at any point. There's no limitation of them accessing

the prince. Well, now I would encourage that, but you know it's that's at least from a cash flow perspective, it's almost a no brainer to fund the WROTH up to the W two amount because even if they find out that they need it for a new car, I don't know, whatever the number of reason they need it, that they can access that amount up to the principle they put in. So all right, takes for you, good time. I appreciate the help. Yeah, you got it, Dave,

take care of drive safely. So, folks, Dave brought up great questions though, I mean, that's uh. You know, we're big believers in the wrath. You know, we talk about this all the time, which is you know, you really if you're younger, you know, teenage a's or in your twenties, you know you should be putting as much money you can in a wrath, whether it's a wroth I array or most for one K plans have a wroth option right that you can put up the full amount

into a wroth for AND and K as well. And while you're starting your career in your lower tax bracket, you really should be trying to maximize funding. Are either a roth I array and or a wroth FORLL and K. And there are also income phase outs as well, meaning that if you start making too much money, you're going to be limited to what you could put into a wrath I array. But for most people in their teens and or twenties, they don't really have to be worried about that for the income levels.

But even if you are in your thirties or forties or in fifties and you don't have a lot of money, either in a taxable account or in a rough account, I would still encourage you to put some dollars of your full and K into a wrath if you have it available, and or even

if you can just put dollars into a roth I array as well. And the reason being is think about this way, which is by doing this, you're really diversifying your taxes when you retire, right, because the problem is that many times people really just put away a ton of money into a traditional ra or a traditional foll and k and they'll have let's say, you know, they're successful to have a million dollars million and a half two million dollars,

but they won't have dollars in a brokerage account and they won't have dollars in a wroth, so that if they ever need a larger sum of money, they got to take it from all from a traditional ray and pay ordinary income tax on that. And you know, it really is a beautiful thing when you know, if you get close to retirement and let's say, you know, you just have half your money in a roth and half your money

in a traditional ray. Now, certainly the advantage of the traditional fall and k or the traditional IRA is that you don't pay taxes when that money goes

in there. So that's a great thing, right, But now, when you're getting ready for retirement, you have to appreciate let's say you have a million dollar portfolio half in a wroth IRA and half in a traditional FORLL and K. Those wroth dollars, when you take that out, that's you don't pay taxes on it, right, So that half million dollars is actually worth a lot more to you than that half million dollars in the traditional form and K. And when those dollars come out of the traditional formu K, you

pay ordinary income, not long term capital gains. You pay ordinary income on those dollars. So again, if you're in your thirties or forties and fifties, and even if you're earning a high amount of money, I would still encourage you to be saving something into a rough. In particular, if you don't have many dollars in a rough at this point, it really it's gonna be something that you're going to appreciate as you go down the road. Uh, And it just becomes that much more important. Well, let's say we

had a few more minutes. Let's just move on to a few other topics. But again, if you have any questions, you can give me a call and you could reach me at eight hundred talk WGY. That's eight hundred eight five nine four nine. Again, it's eight hundred eight two, five, five, nine four nine. You know, one of the things I just want to talk about is uh is college ex instance with kids or grandkids.

And you know, I'm just going to really stress this to all of our listeners is please, if you have kids, as you go through this process, make sure you make these decisions and you help give them guidance from when they're looking at these colleges from an investment a business perspective. And you know, I just think it's so important that you know, you really try to minimize the amount of debt that either you and or your kids are taking on to go to college. You know, I've got now my one daughter

is at University of Rommant as a sophomore. My son is a senior looking at colleges, and you know, we have this conversation with them about, hey, we've put aways some dollars and we'll be able to utilize other dollars

to be able to cover some of the cost. But you know, if you can go to a school where you either get a scholarship or you know it's a state school, or you know, I even talk to them about community college and you can save those dollars, we will make sure that those dollars are something you can use down the road, whether it be for grad school or maybe for you know, buying a house or something, versus if you go to a school where you're paying full price, and you know,

it's just you have to have them, and you have to be thinking about it from a business perspective, because you know, we see situations where you know, individuals have six figures plus of debt for undergraduate and you know, it just makes it very challenging when they're in their twenties to you know, just start their lives right. They've got to be paying down all that debt that you know, if you really start to consider it, is it worth it, and you know that it's you know, up for debate if it's

worth it. I'm on the mindset that it's not like if you have to take on that much debt to be able to go to certain schools, I don't think it is. And again, you have to very minimum look at it from a business case perspective. And all I mean by that is if you want to go and you want to be a teacher or something where you know you're going to cap out with where your income's going to be but you're

really excited about it. Well, you know, you really should not be taking on sizeable amount of debts to go to a private college where you could probably get as good of an education, you know, either at a college where you get a scholarship at or at state school. And you know, at the end of the day, you know, most school districts are not going to look at it and say, oh, Okay, you know this individual went to Albany versus this individual went to some elite private school. I

think we're going to go for that person from an elite private school. They don't really care that much. It doesn't really matter too much. They're more interested in who that person is and what kind of teacher then be. They're less concerned about what is their pedigree of where they went. And I will tell you, I mean we talked about this. I just talk out out for dinner with a small business owner last night. We both said the same

thing. I'm of the mindset that if I saw a candidate that they went to the University of Albany or Binghamton University or the one that went to, you know, an elite private school, at the end of the day, I'm going to hire who I think is the best candidate, and it could very well be that person that went to the public university or boy, they might even gotten to community college for the first two years, saved a lot of money, and then gotten their degree in the diploma from whatever college.

But I just really think that our society, our culture, and each of us as you know, parents or even grandparents need to change that perspective because you know, when you look at the price tags of some of these private schools at you know, sixty seventy eighty thousand dollars and I don't know where it stops, right, I don't think it does stop. Frankly, It's just an awful lot of money to be spending. And you need to make sure, you know, because when you're teenagers. I know this from mine.

They're great kids, but you know, I don't know if they completely understand this concept of you know, how much debt that is and you know what it's going to impact their twenties and thirties by taking on. So really would encourage you to look at that and you know, consider that before any decisions are made. One last item that you know, I just wanted to talk about before we wrap up here is just make sure that with your portfolio. We see this so often that you know, if you you're working an

advisor, you should know how your portfolio is allocated. You know, what do you have in stocks, what do you have in bonds, what do you have in alternatives? And understand what that means from a risk perspective.

You know, because we'll have a perspective client come in and talk about, you know, a rate of return in the portfolio, and you know, the thing is they don't understand either they have very little risk perhaps and that's why the portfolio is not performing well, or they have a lot of risks. They're in, you very aggressive funds and all inequities, and you know, yet they're getting closer retirement, so they should be scaling back perhaps.

And I would encourage you that if you don't know, if you can't answer that yourself, whether you know you have somebody managing your portfolio or you manage your own portfolio, you need to really take some time to look at that and understand it. I think it's at the very minimum I talk about being a good, well educated investor. That is an important starting point. Well,

folks, we've spent a great hour together. Hopefully you're a little smarter, a little more knowledgeable about the finances and investments, but as always is great to be here with you and come back tomorrow for the show at eight. 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. Take care of yourself and take care of each other, folks,