Let's Talk Money

bit more relaxed environment. I know a number of companies take some more time off, either from an individual perspective or from just a company perspective, and it's just great to move into that season. I think it allows us to appreciate what is really important in our life, and so it's great to have you here. As always. When I left my house today it was minus five, so not warm by any means. But as I've said before in the show, folks, this is this is a great time.

It's you know, forget that that one day, I forget what day it was two weeks ago. Driving down to the North Way, it was foggy and rainy. That's not winter right, that just stinks. But a daylight today. If you have the right gear, that's all it's about. You have to have the right gear the right mindset you get out there. I don't care if you're skiing or hiking or walking skating for those of you know that listen to the show. I have the ice grate ice

rink up in my front yard. Put it up right before Thanksgiving because we had the snow that came and hasn't leftists since then, and this is ideal conditions for skating. We'll have some skating and my son will have all those friends over to play ice hockey. I'm hoping to get out to do some cross coachry skiing as well. And also one of my new activities is yoga. So if you haven't done yoga, be open minded to it.

Try it out. You got It's great from a flexibility perspective, strength, and as you get older it becomes so much more important. With that great for kind of mental focus and almost a meditative type of approach. And I don't do the vicrum, which is a really hot one, but I do do a hot yoga versus you can just do a yoga just a normal room temperature, and I'm telling you it is. It's a cleansing process. So be open minded to try and something different and do it, and being open minded

to get out and enjoy this cold weather. But we're not here to talk about the weather, are we here, folks. We're here to talk about finance and investing. So if you have any questions, feel free to give me a call. You can reach me at eight hundred talk WI. That's eight hundred eight two five five nine four nine. Once again,

eight hundred eight two five five nine four nine. And as we've mentioned before, we know also if you're too shy to be on the radio, which I hope is not the case, you can email me a question at ask Bouchet at bouche dot com. Again the email addresses ask Bouchet at bouche dot com. And for those of that you to who don't know, Bouche is spelled b O U c h e y dot com. So any questions you may have, as I always say, there's no dumber silly question except for the one you don't ask.

And you may be doing your fellow listener a favor by asking a question that they have as well, So shoot me an email or give me a call and we can chat. A little bit of volatility here this past week in the markets, so that we don't really seen much this whole year. We did have a market

correction of about ten percent in the summertime. But you know, as we've talked about, the average intra year of volatility for the stock market is about fourteen percent, So that means in any giving year you can have a decline of the market around fourteen percent. So we were below average at least to this point. We have a few

days left. But on Wednesday when the Federal Reserve came out, and it's interesting because they did cut rates by a quarter percent, so now they've cut rates by a full percentage point starting this fall, and this was the expected amount with a quarter percent. But this is how the market reacts. I always say, it's like even a short term you know, the market can be volatile and like a child reacting to the news that the parents telling

them about pulling away some sweets or something. And that's really what was going on here, which is the again, what the Fed did match expectations, but they looked out twenty twenty five and said, you know what we talked about maybe cutting rates three or four times in twenty twenty five, but instead it was probably even be more

like one or two. And Jay Powell came out and said, you know, some of the economic data it remains still very strong, which is a good thing, but some of the inflation data also remains more elevated than we would like, and so we're going to be really monitoring the situation. So that's in Federal Reserve speak, that's more hawkish from a rape perspective. And so the market didn't like that. It kind of freaked out and sell some volatility and

these were down two percent. I was reading that that was one of the worst down days on a Federal Reserve announcement that we've seen in a number of years. But you know, at the end of the day, it

doesn't really matter that much. I mean, one of the things that can be a little problematic if the FAT doesn't cut rates, you know, at least as they describe one or two times next year or greater is from a valuation perspective, right so if valuations are more elevated, which they are, they're a little bit above average right now, then you know you really need to have interest rates

be lower to justify those higher evaluations. If interest rates are higher, that makes the future cash flows worth less, and so those higher valuations don't sit as well from an investment perspective. So that's really probably the biggest challenge with higher interest rates. Now it does impact borrowing costs certainly, but you know, I think that you're seeing from a broad perspective that even with these higher interstrates, people are

still buying homes. Then we have a problem not enough homes. It's not a issue of oversupply. People are still buying cars, people are still co into college. Everything that you were concerned about how much this was going to impact the economy or the consumer, it certainly hasn't come out to play yet. Now, I will say, and this has been the case certainly for the last number of years. There is a bifurcation in what's going on in the economy

broadly speaking. And I think certainly that individuals that are in the lower income bracket are getting hit harder by inflation and perhaps getting hit harder by these higher interest rates versus others that have seen high appreciation in their homes and other real estate holdings. They've seen high appreciation in their stock market holdings, and also perhaps they've seen

higher increases in their wages. So again you can have a situation where broadly speaking, the economic environment is very positive, which is I think what we're seeing right now. Unemployment still these remains around the four percent range and has not increased dramatically, which is what people were concerned about as the Fed star raising interest rates. But it doesn't mean that there's not parts of the economy individuals that are not kind of hurting getting impacted by inflation in

a more dramatic way than other folks. And that's important to remember. But from my perspective, I've said this all along, which is I would really like to see the economy remain very strong, corporate profits remain very strong, and have that corporate product growth, which is what you're seeing. But you know, I'd rather see inflation move slowly to that two percent target. I think that's the most important key.

If you can't get inflation to at least start heading down to that two percent target, or worse yet, it starts going higher, then we have a bit of a problem. Because it's what's interesting is from the Federal Reserve perspective and also the bond market perspective. They do forecasts of where interest rates are going to be, and this is one of the first times now in quite a few months where there is a small chance now that the Federal Reserve certainly to keep rates flat, that's a much

bigger chance, but actually even increase rates next year. Now it's very small, but it does exist out there, which shows you the mentality has changed. But it is interesting we talk about forecasting interest rates, both long term and short term. How bad the market is, how bad the set is, you know. So you think about this. There's a lot of things that we forecast in our lives, the weather, the market, you know, just different things people

like to prognosticate and forecast out. One of the worst things that you've seen I've seen is the ability for the market and the Fed to forecast where interest rates are going to be. I'm going to be putting out a blow here this week about just how bad that market is. It is just incredibly bad at forecasting where rates are going to go. So to say that we're going to be seeing anything particularly happen with interest rates, uh,

you know, who knows. But you know, again, the odds are pointing more towards rate reductions rather than rate increases. But I do think it's important to be aware that that's that to me, is the biggest risk for this said, is that they're wrong on that and they have to actually raise interest rates. And I've said this all along.

They j poll does not want to be that Federal Reserve chairman that is presiding over cutting increasing rates is by as much as that they did, and then turning around and cutting them by a percent and then at some point having to raise them back up. That's you start losing real credibility, uh if you do that, And so hopefully that will not be happening. But all things to watch. Let's move on to some other topics. But again, if you have any questions, you can reach me at

A hundred talk WI. That's a hundred eight two five five nine four nine again eight hundred eight two five five nine four nine. Or you can reach me at ask Bouchet at Bouchet dot com. Again, that's asked Bouchet at Bouchet dot com. You can email me a question. One of the things I want to highlight is if you're a listener, you know that with our clients, we don't have custody of our client's assets, which is very important. Charles Schwab is our custodian. They're a great partner. We

don't get paid by Charles Schwab. We don't pay them, But what it does is allows us to have a great partner that really protects our clients' assets and their data. It allows us to get access to the world and the universe of investments. And then from our clients perspective, they are really a client of ours, but they also are a client of Schwab and that's important. They have a large national, international financial custodian to where your assets reside.

But what our clients do allow us to do is have discretion to trade on their accounts. So you know, when we make a trade, we make it across all

of our client portfolios. You know, the only difference is from a client to client is if you're young and you're more aggressive, you could be at one hundred percent equity allocation, whereas as you start scaling back just over in your risk tolerance, and perhaps as you get older, you might be in the growth allocation, which is eighty percent equity, twenty percent bonds, cash and alternatives, or one of the allocations that's more prominent with our retirees is

the growth and income that's sixty forty sixty percent equity, forty percent bonds, cash and alternatives. And then we have three other tiers from a risk perspective, but the majority of our clients are in those categories. And you know, we always talk about that there's this kind of this mindset that as you get older, you really have to ratchet down your risk, and that's really not the case. You know, you've got to make sure that you want you don't panic when there's an adjustment in the market

there's volatility. And two, you've got to make sure you have enough liquidity to provide that cash flow if there's if you need it, and you don't want to be selling equities when they're down. Those are the two risks

you have to be aware of. But with our ability to have discretion to trade on our clients accounts, what's great about that is when we see a situation where we want to react to it, we can put it in a place in our across all of our clients, and we manage close to one point five billion dollars for our clients, we can put it in place within ours time frame. And then what we do is we email out to our clients what the change was so they know and if they have any questions to give

us a call. So it's just a great way that they don't have to think about what's going on with their accounts. We're not getting the permission to put a particular trade in. They give us the authority based on those risk tolerances to stay within those parameters, and they're kind of why parameters to the extent that we think it's appropriate really to become either more aggressive or to become more conservative. But so the pretty why parameters. But this week we put a couple of trades in, and

we've talked about this before. We use hedged equity positions in our portfolios and they're just a great addition to what they allow us to do. Is it's an ETF to trades. There's a couple of different types of providers, are fun families out there that offer them, and they heads on the downside of an ETF that has in

this case the S to P five hundred. So this is the one we utilize and they're issued every month and the goal here is there to find outcome ets for a particular twelve month period, so that we know over a twelve month period what the floor is going to be as far as when the market goes down.

So that's what we're looking for protection on. And then they pay for that floor by selling a cap on the upside so that there is a caps out and it can vary, right, so the deeper the floor, it costs more money to do that, the tighter the cap is on the upside. And you know with this what our goal is again to provide some protection in particularly when we talk about our alternative assets. So these are dollars that we want to be a little bit more

conservative with. But we can provide protection on the downside anywhere from ten percent to fifteen or even greater if needed. And then it's going to cap out on the upside anywhere from eight to fifteen percent. But what we'd like to do. We have two approaches from a trading perspective.

One is, let's say the market were to go down and the market's down ten percent, Well, we can go ahead and protect on the downside with that, and if it's down ten percent, we could turn around if we want to and sell that position, and that position we'd be selling would not be down ten percent, but the markets down, So we turn around and buy the S

and P straight up at that ten percent discount. So now we've just basically sold the position for our clients where we've had very little loss, but the market is down ten percent, and now we're buying into the market for them at a ten plus percent discount, could be

fifteen percent, whatever the amount is. Now on the upside, we also have a great trading strategy with these positions because what we do in that regard is as the market moves higher and it starts to get close to that cap, we will sell those positions and then buy a new one again for a twelve month period where we have a floor starting at the higher starting point, and the cap gets moved higher from that higher starting

point as well. So in both directions, whether the market goes lower and we buy into the straight S and P five hundred index, or the market goes higher and we basically sell into a new head equity position, in both options, it adds a lot of value to our client's portfolios. And those are two We made two trades this week in the hedge equity positions because the market has done so well, and again it really just adds

a lot of value for our clients. It makes their life a lot easier, and you know, that is what they pay us for. We always say that take the emotion out of investing. That is our job and to be able to implement things, you know, that's the problem in many cases. You know, an individual could have a good idea, right and but what we see is that they don't implement those ideas. And that's that's the problem. You know, You've got to be able to have the confidence,

the time, the resources to implement those ideas. And that's what our team executes so well. You know, we have an investment team that Ryan Bruschet heads up as a Chief investment Officer, and that team is constantly doing research for our clients, constantly looking at their holdings and making those decisions as to what needs to be done across all of our client portfolios. We're going to go to emails.

I've got an email in here from Paul. He said, I would like to know if you think that f h L bonds which are callable that generally yield higher than treasuries, are a viable option and why or why not. Well, I'm going to say about the first of that that I'm not familiar with FHL loans. I think it's Federal Home Loan banks, So I have to make that statement.

I think a call you have to appreciate this. The only problem with a callbel loan all that means are a bond is that you know, we're in a more of a higher interest rate environment, and as rates go higher, what you really want to do is to lock in to those higher rates. Right. So for example, a year ago, when the ten year US treasury hit five percent, we were trying to be buying individual bonds for our clients where we could and buy a five year or a seven year or a ten year bond and locked that

that five percent rate in for that time period. So you know that that's where if we can lock in five percent for ten years on the conservative part of a client portfolio, that's fantastic, Right, that's what we're going to really want to do. So again, without knowing too much about the FHLB bonds, that's the only challenge with a callable bond is you know, I think in general, uh you know, having get being able to get a

higher and straight is great. You have to appreciate this though, which is, you know, with those higher rates, there is an element of risk that's just straight up and anything from an investment perspective, from a business perspective, if you're get get a higher yield, there's a reason you're getting a higher yield. It's that because you're just a nice person,

but you are taking on more risk. And so again I don't know exactly what those bonds are yielding, but you know, if you want to put with any bonds, if you want to have a diversified bond portfolio, we have some bonds that are very short term in nature, you have some bonds that are more longer term, and then you've had some bonds that take on a little more credit risk versus those that are more conservative. So you know, putting this as part of a diversified bond portfolio,

I think it's to be a great idea. And this could be true with any more high yielding bonds. You know the number of different bond funds out there that provide that that's great, but you got to appreciate when you get a callable bond, if interest rates were to drop, and that we haven't really seen that. I mean, the ten year US Treasury did hit three point seven percent earlier this year, but now it's back up to round

four point five percent. And again the high we've seen in a number of years now is around five percent. We saw that last year, so we're more in the higher range of interest rates. In of rates we go higher.

My general recommendation to you is to be buying in and locking into those longer term rates versus buying a bond that's cullable and that rates drop and then that entity, whether it's a government, c or corporate entity, says hey, we want we want to call our bond, and now you lose out on that bond and you got to try to figure out another place to put your money with rates being lower. So another thing I want to

talk about before we go to break here. It's just really just reminding you as we start the new year next year and as we approach end this year, just being hyper vigilant for any phishing scams, for any cybersecurity issues. You know, the main ones that we always remind our clients of this if you're getting I don't care if it's a text, a phone call, or an email, and

it's coming from, you know, an entity. In this case, what we're seeing with some individuals that we heard from Schwab is it's coming in from what looks to be a Schwab text about an international wire and you've got to click to say, hey, is this me or not? You've seen this before, right, You get these texts. It's everything from dinner reservation, do you want this one or not?

To something going on from your financial perspective. But you have to be hyper aware in those circumstances that if this was not something that you know you transacted that you did, you do not want to be responding to that text. Certainly, the big element is clicking on any sort of link, and this is true with an email or a text. You just don't want to be doing that. So just a reminder as we go on the holidays,

be hyper vigilant about this. And the big thing too is remind your family members, whether it be in my case teenagers or you know, might have older people in your life. Remind them to be super aware of this because it can kind of get lax as we go into the holidays. Folks, we're gonna go to a commercial break, but you're listening to Let's Talk Money, brought to you by Bruchet Finance Group. While we help our clients prioritize

their health while we manage their wealth for life. Folks, come back and join us as we take your questions and we give you some perspective of what you should be doing in your financial life. Welcome back, folks. For those of you are just joining us, my name is Martin Shields. I'm the chief weld Advisor at Bruchet Financial Group and I'm your host today for Let's Talk Money. If you have any questions, you can reach me at

eight hundred eight two five five nine four nine. Again, that's eight hundred eight two five five nine four nine, or you can email me at ask Bouche at Bouche dot com. Again, that's asked Bouchet at Bouchet dot com. That's b O U D H E Y dot com. So give us a call or you can email me any questions. You may have number of things that I

want to talk about. We see this with our clients who are buying or selling real estate, and in particular when you're out buying the one of the challenges they're running into is individuals that are putting all cash offers to buy real estate, and you know, many of these purchases have escalation clauses where they'll put up a asking price that's above the the list price and then have a escalation clause that keeps bringing it higher and higher.

And we've seen in a number of cases where client's done that, they've been the highest priced at the end, but they didn't get the contract because the person that won it add an all cash offer, and they may also buy it without any inspection contingencies as well. So just to clarify some things here. One is, you know, you have to appreciate obviously when you go down this route if you're not going to have any inspection contingencies what that means. So it could be a situation where

you're willing to do that. You know you've looked at enough the house, enough, you've had somebody come in, and you've got a good idea as to any of their real risks with the house. But that's not a given, right. There are things that could pop up that you're not aware of. But with the all cash offer, really what that is, you know, it just means that you are

not going to have any financial contingencies. You know, you actually have to be able to show that if you had to, you do have the ability, you have the funds to actually buy the house outright for cash. Now with that said, we have many clients that actually do that. They're in that position if they wanted to, but they don't go through and sell their stocks or have all that cash, but that they just remove that financing contingency.

So you have to be aware that if you're going to go that route, and you know you want to also use a mortgage, you know even though you do have the funds available, that if something were to happen and your loan sell through, you would still be liable to purchase that real estate even if you didn't have the financing. So that's the big element is you've removed that risk for the seller that you're not going to get hung up on some sort of issue with your bank.

So you just got to be aware of that risk if you go down the all cash offer and you are planning to finance it. In many cases that works, right, which is you you know, feel very comfortable that you're in a good, great spot with your bank. You know everything's going to go through smoothly, but you have to appreciate the hiccups do happen, and that could put yourself in a bad spot to pay on exactly where you're

going to get those funds from. Now. One of the things we do for a number of our clients that are going to go down this route is, let's say they have a large taxable account. We can coordinate through Charles Schwab to have a marginal loan put on that. And all that means is that with a marginal loan, you're using your assets in that tax account as the collateral for the loan. And you know, depending on the size of the loan we can to Charles Schwab, you

can get a very competitive rate. And you know, there are different ways as also, you can do what's called a colatteralized loan, where it's more of a a more of a standard bank loan. But this is a marginal loan is really just through the broken account through Charles Schwab, and again you get a very good rate and they just use that as backup. Right, you know, you could use it to finance it because the upside with this is that there's really no payment terms to a marginal loan.

You just if you're not paying it back, you're going to be getting incurring interest rate charges on it, so you have to be aware of that. But there's no you know, there's no requirement to either pay back the interest and the principle in any amount. So if you want the most flexibility, this approach can be very effective.

And you know, the only you know thing you have to be aware of is if you have a market correction, there are certain requirements where you get the loan to asset value has to remain in a certain level, depends on what the assets are in there. It's usually around seventy seventy five percent. You can't have your loan be more than that of your overall account balance. But again, if you're just smart with this and you don't take on too much of a marginal loan, then you should

be fine. And also, you know, if you use it for short term financing to kind of bridge you while you're getting a mortgage set up, that's also a great approach. But you know, again, in many cases, going with that all cash offer can really put you in a much more competitive spot versus you know, you requiring in your offer that you're going to need to get financing. So so something to be aware of. We've seen this with

our clients. Uh. So you know, just when you're talking to your real or uh, you know, have that conversation and see what's the best approach. And again appreciate that there are some challenges and risks with that, as there are with many things from a business perspective. Let's move on to a new topic. But if you have any questions, again, you can reach me at eight hundred talk WI. That's

eight hundred eight two five five nine four nine. Again, that's eight hundred eight two five five nine four nine, or you can email me at ask Bouche at Bouche dot com. That's asked Bouche at Bouche dot com. Uh. You know, one thing I want to highlight is we're moving into the season where we're having our stated Economy presentation and you know this is where we get all of our clients together for a dinner and a presentation.

We've been doing this now I think this is going to be your ninth year, which has been great, and you know we even did it through COVID virtually, and we have one of the presentations down in Troy and one up here in Saratoga Springs, and it's where we want to get the opportunity to kind of catch up with our clients, which we love to do, but also that we are able to ride an outlook of what we see for the upcoming year for twenty twenty five

from both an investment perspective but a tax and planning perspective as well. So we're planning right now. We'll be looking probably at the end of December, I'm sorry, end of January, and it's just a great time to you know, to be able to kind of catch up with our clients and as we start the year give them an

idea to what they should be aware of. So just want to highlight that now one of the things, moving on to a different topic that we solve with the Federal Reserve with the concerns over inflation, as they talked about, they cut rates twenty five basis points, which now we are up to a full one percent reduction, but really it comes down to inflation. And you know, we had the market drop quite dramatically after the Federal Reserves meeting this week and then on Friday you saw it reverse

quite a bit. Now, we didn't make up for that lost round completely for the week, we're down over two percent, but it still was a strong day in the market on Friday. And really what we saw there was the PCEE indicator, which is that's the inflation indicator the Fed really looks at was actually only up by point one percent for the month of November, when expectations would be there it was going to be up by point two percent. So and a number of the other Federal Reserve chairs,

so there's j. Pollow is the head. There are other individuals who were on what's called the fo MC committee, and a couple of them came out basically indicating it that the Fed will probably still cut rates at least a couple percentage I'm sorry, a couple of times next year. So but really it all comes down to inflation, folks, and you know that's what we'll see. You know, it's

it is. It can be challenging to have an economy that is this strong with the labor markets are this type that you don't have inflation remain above that two percent target. And the question I get sometimes is where does that two percent? Why two percent? And you know it is a bit arbitrary. It was just set in the last twenty years by the said, and it is a target that is used by other countries as well. And the question I get is why not just put

it at zero, just have no inflation. Well, the problem with having zero inflation is that it risks the possibility of having deflation. Right. So, deflation is where you actually have prices declining over time, and that's you know, the opposite of inflation, where you have prices increasing over time. And the problem with deflation is that as that starts

to build people, it actually really snowballs on itself. Right because if you were going to buy, let's say a refrigerator and we were in a deflationary environment, or real estate for that matter. You think about it. If you knew that the house or some large purchase that you're going to make in three months or six months was going to be actually less well, boy, you know, you might say, you know what, I'm going to hold off. I'm not going to buy that either, you know, asset,

whatever that may be. And so that would that would do It's a supply and demand issue, right, so that would actually have prices drop by more, and so that deflation starts to build on itself, and as much as we saw that inflation is really a problem, especially when it's an elevated level of inflation. Deflation can be even worse at any level. We really have not seen much in the way of deflation, I'm going to say, in

the last fifty years, a little bit back in eighth nine. Uh, you know, with the financial crisis, there was some element of deflation, but we really have just not seen that, and so that's why the Federal Reserve puts it at two percent, which is, you know, there was a period of time that we were running at let's say one percent inflation or half a percent inflation, so we were

below that two percent target. If we were at zero and that was the target for inflation, there would be the probably the pretty decent likelihood that we would overshoot that mark and that we would be at below that zero percent range, and that becomes very problematic. And again it's one of these things where you know, we had it's been so long since we saw inflation, and you know, I was a kid in the seventies when inflation was really roaring through and you knew even then how bad

that was. But to see it come back and how it impacted people in the last three or four years. You know, you know that that's really problematic. Same thing with deflation. You know, we really haven't seen it in decades and decades, but if it were to come into place, people would be it would not be good from an economic perspective. Let's move on to another topic. But again, if you have any questions, you can give me a call.

You could reach me at eight hundred eight two five five nine four nine, or semi email it ask Bouchet at Bouchet dot com. One of the things I want to highlight here get this question, which is with ketchup amounts with a full and K plan. You know, right now you're able to put in additional amounts for a full and K plan if you're fifty and older, and now there's gonna be what's called the super Ketchup amount if you're between the age of sixty and sixty three.

That's starting in twenty twenty five. Right now. You can either do those pre tax or WROTH, which is post tax. Either option works, but now starting in twenty twenty six, so not this year in twenty twenty five or next year, but the year after that in twenty twenty six. Those for higher income earners, if you're earning over one hundred

and forty five thousand dollars, will have to be WROTH contributions. Right, So just that that was actually supposed to be already have taken place, but it got delayed by the Department of Labor and the IRS. So just a heads up on that it's not going to be occurring in twenty twenty five, but it will be occurring in twenty twenty six. That if you're a high income earner over one hundred and forty five thousand dollars of AGI, that that WROTH

that's going to be a WROTH catchup amount. We're going to go to the phone lines we have Alan, Alan, are you there?

not going to be pumped into the economy. And with that said, what type of an effect do you think that will have on GDP?

the overall economy. But want I have to be honest with you, and you know you have Elon Musk and mcrom looking at this through with a condge that you know, I just first of all, it's going to take a number of years even before their evaluation of any government spending reductions are going to put it be put in place. But one they can't do anything, nor can President Elect Trump.

It is going to have to go through the House and the Senate, and you know, it's just very very difficult, even under a Republican House in a Republican Senate to given the margins to get any major changes put in place. So my general hope and I listen, if there's one thing that concerns me, is the federal deficit and debt.

That's you know, people talk about concerns with the markets and all these different things, you know, beyond a world war, beyond terrorism, you know those let's say those two elements. To me is the national debt from an investment perspective, from a law term. So I really feel like we got to find a way to balance our spending. But I'm just going to tell you, I just don't see

a lot of reductions. I mean, you think about it, that's two trillion dollars is almost the whole bulk of our discretionary spending on the federal budget, which is just over six trillion dollars. So their ability to really impact change, uh, And it had to get this through the House and the Senate. I think it's going to be limited. Now. Hopefully they can just improve the you know, the efficiency

of the federal government. And I think, you know, really there is bipartisan support for that, and there's probably ways to do that. But I just don't see any sift changes to spending. And I think, you know it's going to happen, it's going to be a couple of years down the road. So from Alan to answer, your question. From an investment perspective, I don't think you have to be over the concern with that. Uh, it's something that's

going to be farther down the road. And you know, frankly, I think the bigger concern more down the road is, you know, the ability to manage how much we're spending, how much are annual deficits are, and what does that add to the national debt. So hopefully you know, we'll get some improvements in that to make sure that you know we're right now. I think we're going to be at one point eight trillion dollars. I mean, it's just

in insae number now. The only thing I will say is, you know, as our national debt grows, uh, you know that is not great to begin with, but you're seeing it is actually at levels that probably most people have thought would have been problematic ten, fifteen, twenty years ago. Just the what you're really looking at is not just the national debt, but you want to know as a

ratio of GDP. Right, so for example, you know, if we're at thirty plus trillion dollars of debt, if against this larger US economy of over twenty plus trillion dollars of GDP. It's not great. But if you look at that number, you know, versus a smaller US economy twenty five years ago, it would be even worse. So you always have to look at we talked about the national debt.

You have to look at it as a function of the size of the economy, both the economy growing plus inflation and you know the dollar weakening, which we've talked about inflation from an annual perspective, So we're looking at all those together. But all things considered, you know, long term, that's where it becomes problematic. And that would say, you know,

when does it happen and how does it happen? I could not tell you, but yeah, I think when you start moving into the twenty thirties, twenty thirty three, thirty four, we have issues with the solvency of Medicare or social Security and those trust that's probably where you're going to potentially have some issues. Where is the best place to

be putting money to, you know, to mitigate that impact. Well, I don't think there's anything you need to do right now, but long term, you know, you know, everything from investing outside the US to things like gold, perhaps a cryptocurrency, although I think that's right now, just way too much

in the realm of speculation. The other thing to appreciate is, you know, just because the federal government is struggling doesn't mean that US companies can't be doing quite well, right, because one of the things that would happen in this scenario of having too much debt is the dollar would weaken quite a bit, and so in that weaker dollar environment that US companies could sell more goods and services overseas and actually, you know, do quite well from a

business perspective, So you have to at least be aware of that. Let's go on to another question that we

get regarding four fifty seven plans. So a four to fifty seventh plan is really just another retirement plan that is offered by either nonprofits that I know a number of hospitals offer four fifty seven plans, or state governments, the state government and other government entities offer four fifty seven plans, And it's really just additional way that you can save money on top of a four to three B plan, which a four to three B plan is

the nonprofit or that's it also called deferred retirement accounts for the state plans. The thing to appreciate is with those they operate really just it's all pre tax dollars going in. So just like a standard four oh one K or four to three B. But there's two things you need to know. What is you know with a four to fifty seventh plan, you really if that entity

is will become insolvent, those dollars are at risk. That is not the case with a fourth or B or four one K. When you put those dollars in there,

they're absolutely guaranteed protected from both creditors from lawsuits. And if that entity, let's say the company you're working for or goes into bankruptcy, your dollars are not at risk with a four to one K, But with a four fifty seven plan, let's say you're at a hospital and the hospital we're going to under doesn't mean you're absolutely going to lose your four fifty seven dollars, but they are at risk. You have to be aware of that. That's one of the requirements with us. It's not a

qualified plan. But now the other element they have to be aware of is that when you take when you're ready to retire with it a government entity four fifty seven plan that can get rolled right into an IRA, there's no tax consequence. You roller right into an IRA along as your fourth through B and you're good to go. When it's with a nonprofit four to fifty seven plan, you can't do that. You can't roll it into an IRA.

What you can do is you can take distribution. You can do it either in a lump sum amount or you can spread it out over ten years. So for many of our clients, what we do is, we're just going to look at your overall asset allocation, where do

you have your funds. Again, We're going to alidate your funds as much as we can into iras, whether it be WROTH or traditional iras, and then with your four fifty seventh plan, we're going to be looking to take those dollars out perhaps let's say in the first ten years of retirement, and that's going to cover your cast flow distributions for that period of time. But it is important to understand that difference. A lot of times, you know, we have new clients coming on. They've been contributing to

a four fifty seventh plan and a nonprofit. They don't realize that one those dollars are at potential risk if that entity were to go under, and two more importantly, that they cannot roll those over into an IRA. So just something to be aware of. One of the last items that I want to talk about is distribution rates. So you know, in general we talk about that. Really what you want to do is have a distribution rate

that's in the four to five percent range. You know, that amount, let's say on a million dollars, that means you're gonna be able to take out between forty to fifty thousand dollars annually and that about if it's managed properly, you should be able to sustain that distribution and grow it for inflation concerns over time if you have a well managed portfolio. But now we have some clients that want to take out more than that amount, and what

I would tell you is that is fine. Now this is where it becomes that much more important to work with a you know, a fiduciary forearm that really knows what they're doing in this regard. But if you want to take out some more dollars to be able to spend them, why you have your health that that is fine.

And we have you know a number of clients that do that, you have to appreciate some of the risks with that, right, I mean, the last let's say, you know, fifteen years have been great with the markets, we could come into the next ten years where you get below average return, so instead of in the mid teens, you're in the six or seven percent range, which could make that more problematic. So you just need to be aware

of that. But you know, again, if you're working with a good investment advisor, good fiduciary, you know you can set that up to work in a way that you can take more than that amount out and it's a distinct possibility. Well, folks, as always, it's been great to be here with you to answer your questions. You'll listen to Let's Talk Money, brought to you by Bruchet Finance Group. While we help our clients prioritize their health while we

manage their wealth for life. Folks, have a great holidays, enjoy your time with your friends and your family, and as always, take care of yourself and take care of each other.