Let's Talk Money

Ohibe from them to good morning folks. My name is Martin Shields. I'm the chief wealth Advisor at Bruchet Financial Group and not going to be your host today for Let's Talk Money. I really didn't even want to interrupt that gorgeous Irish music bringing us into the show on this Saint Patrick's Day. Thank you Zach for teeing that up. It's as I look out the window, it looks like we could be in Ireland with some dark clouds, be a little

bit of rain. I think some son's going to be peeking through. But I hope that you and enjoy your Saint Patrick's Day. And you know what's great on this day is even if you're not Irish, you are Irish. Everybody's Irish on Saint Patrick's Day, and I'm fifty percent Irish the West the rest of I'm fifty percent Welsh, which is based almost the same thing.

So I hope that you have a but good Saint Patrick's Day. But 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 I encourage you to call in with those questions you can reach me at eight hundred talk WGY. That's eight hundred eight two five five nine four nine. Again it's eight hundred eight two five five nine four nine. And 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 them a question that they have as well. So give me a call and we can chat. A lot to discuss today, both with the markets and a number of financial planning topics I want to bring to your attention. Let's let's start with the market. So the markets were down this week, but they're still very much in the

positive territory for the year. Probably the biggest news that we saw was in the consumer price in X and the producer Price Index, which track inflation, and they came in a little bit hotter than expected. And what that's saying

is that this economy still remains strong. We talked about the potential for rate cuts by the Federal Reserve for this year, but if inflation is not moving to that two percent target, if in fact it's staying kind of around the three percent range or hopefully not, but if it moves higher, that's going to delay any potential rate cuts. You know, we've talked about maybe they're being you've heard as many a six rate cuts by the Federal Reserve for twenty

twenty four. Now we're maybe in the neighborhood of two to three, and the timing of the first one has been pushed off really until June. There's a Federal Reserve meeting in March. I don't think that's going to happen. There's another one between now and June, and you know, really, I think the first opportunity that they're going to have to cut rates is going to be in June. So we'll see really interesting stuff. I'll tell you what's

interesting. There is a like this dynamic graph that looks at the forecast for indust rate cuts and what actually happened. And it looks over the last fifteen maybe it's even last twenty years, and it's a really interesting graph because again it's showing it goes year by year, and it's showing what the forecast is both from the market and even from the Federal Reserve itself, and then it shows what the actual rate changes were for that year. And boy, you

want to see a forecast that gets it wrong. It's incredible how off these forecasts were, particular in the twenty tens when there was real concerns over inflation and the expectation that the FED was gonna have to rates quickly, and if you recall in the twenty ten they didn't raise quickly at all, if anything, that kept the flat and it was declining. So it's a tough game.

If you think you're going to be accurate and forecasting rates, good luck with that one, because it is a very tough game to forecast rates. And I've been a little bit more in the camp that I think inflation is going to be a little more sticky. I think, you know, you just look out there in the economy. We have conversations with our clients, many who are small business owners, maybe who are executives, or with many of the what we call centers of influence are kind of our partners in the

community, which are attorneys and CPAs. There is nothing out there, at least that it's more anecdotal, right, because it's just you know, our Albany Capital community. But it is nothing out there that indicates that we see that the economy is weakening in any way. And you know, we have a strong economy, we have strong labor markets, we have a tight real

estate market. It's tough for inflation to really hit that two percent target, and it's been said that we were hitting nine percent coming out almost two years ago. And it always when you look at it from a historical perspective, inflation can drop much quickly, quicker when you're at those higher numbers, But as you get closer and closer to that two percent target, it gets more

challenging to do that. And I'm also the mindset that the Fed it talks about this two percent target, but I think if they could just get close, they may be good, meaning that may be sufficient enough they don't have to get necessarily at or below the two percent target. The other thing to remember, too, is, because I've talked about this, if you compare this to the mid nineties, which was a very good time from an economic perspective, and for the markets, that was a period of time where the

Fed wasn't cutting rates for much of it. They actually had paused their rate increases and cuts, and that the rates, the federal funds rate was flat for much of that time, and that was a very good market time is very good economic time. So I'm also the mindset that if the economy can remain strong and companies can increase cash flow and profitability, then it's not a

must for the Fed to have to cut rates, you know. I actually you look at historically many times when the Fed starts cutting rates, that's not always great from a market perspective. But when they pause rates and they keep those rates paused, that what that means is the economy is good, they don't see any reason to cut them, but inflation remains, relatively speaking speaking

in checked, and they don't see any reason to raise rates either. So you know, I do feel as though having rates flat can't be a positive thing as well. And I know that the market has been expecting a rate cut this year, but that didn't They were expected to get last year too and that didn't happen, and it was a good year of the markets last year. So again, forecasting interest rates is a very challenging effort, and it doesn't because we don't have rate cuts, it's not necessarily a bad thing

for the markets. That could actually be a good thing now what we're seeing it to be a bad thing for though relatively speaking, as bonds, and you know, The reason I say that is, as we've discussed on the show before, there is an inverse relationship between bond interest rates and bond prices, So as rates go up higher, the value of bonds go down. Now, the upside to higher rates, as we also discussed, is that you're going to get higher yield from your either your bond funds or also from

individual bonds that you can go and purchase. And as we've talked about over the last couple of years, as rates have gone on very high, we've been buying individual bonds for our clients and locking in those good rates. We were very fortunate and effective at buying them when the tenure Treasury was up around

five percent. Now the tenure Treasury, which is again that's the benchmark rate when you're talking about interest rates and the market, you're really talking about what is the US tenure Treasury rate, and it has moved quite a bit higher, so it's at four point three percent. So what that's mean is that the value and the performance of the Barclays US Bond Index is actually negative for

the year. So that again is the challenge of higher interest rates, is that you're going to get negative performance from bonds to the extent that bond prices are going to go down as rates go higher. But again for you can't get too caught up in that, to the extent that for the most part, you're holding bonds not for price appreciation. You're holding bonds for capital preservation, meaning that if some thing really bad happens, bonds will tend to do

quite well. And also for income and the thing to appreciate. As as rates remain higher, you're going to get more income from your bonds, which can be a good thing. So that this is where understanding you know what each part of your portfolio is doing. It becomes very important. As we've discussed one of our big beliefs is our best client is an educated client. Right, you have to know what each part of your portfolio is about,

how you're allocated, and what that risk return equation looks like. And I've said this before, which is if you're managing your portfolio or you have an advisor and you don't understand this, or you can't have a conversation with us and have some element of understanding. Right, you don't just be an expert in it, but some basic element of understanding. You got a problem there,

right, that's that's not a good thing. And we always try to have this conversation with our clients and talk to about what their allocation is. You know, we have six different portfolios that are clients are in all from an all equity down to the more conservative with only twenty percent in stocks and in between. So all of our clients know that they're in a particular allocation and what that means from a risk return perspective. And the great thing is

we talked about this which our clients they all have the same holdings. Our portfolios are very consistent across from client to client, and the value of that is when we make a change in a client portfolio, we make it across all of our client portfolios within literally a matter of hours. With the technology we have. Right now, we're managing about one point three billion dollars for our clients, and so you can imagine that's a lot of I rays and

roth ir rays and trust accounts. But we are with the technology we have, we're very effective and be able to make those changes. And we want our clients' portfolios to be consistent. Right, So when I sit down with a client who's growth and income allocation, which is sixty percent bonds and forty

percent I'm sorry, sixty percent equity and forty percent bonds. I know that that performance is going to be almost exactly the same is the next client I sit with that is in the growth and income, and that's very important to have that consistency. That way, our clients know that their what their performance

is going to be. And also, really when we're looking at the holdings in our client portfolios, and we in our investment team is looking at them certainly weekly if not daily, and making any thoughts of changes that need to be made. Really, in that regard, we are looking at our client's portfolios daily or weekly because they all have the same holdings, So it becomes

very important to have that consistency in the portfolios. Let's go on. One of the things I want to talk about from a financial planning perspective is what we have now that just went into place is the ability to convert five to twenty nine funds into a raw fire raise. This is a huge game changer that was put in the law about a year and a half ago, and

the first time you can do it isn't twenty twenty four. So I just want to spend a few minutes to go through because there are some nuances to this, But this really is a game changer because before, if you put money to a five to twenty nine plan, and let's say you did for your child or your grandchild and they didn't go to college, you can still get access to that money, but it was much more clumsy to do it.

Now, because you can convert these dollars for a raw, it really is a no brainer to contribute to a five to twenty nine plan, especially for grandkids. I think it's a great way for grandparents to show the support for their kids, for their grandkids in a way that it's not just providing

funds that they can spend. This is either going to support them to go to college or it's going to give them a good headstart art for retirement, which let's face it, if you could be eighteen or nineteen or twenty whatever that age and you can convert dollars into ross that, boy, that really sets you up well for retirement. So let's go through and spend just a

few minutes talking about that. But again, if you have any questions, you can reach me at eight hundred talk WI that's eight hundred eight two five five nine four nine. Again eight hundred eight two five five nine four nine. So again, if you've put money into a five twenty nine plan, the beneficiary not the owner. So that's an important thing, right, So let's say the grandparents put that money in. Let's say that the parents put

that money in. You're the owner of that count. It's the beneficiary of that count, which is either your child or grandchild can't convert those funds into

a row. But there's a few stipulations. One that the account has to be been open for fifteen years, right, So what they're trying to do is make sure that you just don't make this as a tool to fund a wroth, right, So it has to be open for at least fifteen years, and contributions that have been made in the past five years cannot be converted, right, So it has to be funds that were contributed before that five year window. And so that's just again not just they're just making sure that

you don't set this up just to do wroth conversions. The other requirements are that you can do up to thirty five thousand dollars over the lifetime of the account. Or for the beneficiary, but it can only be done for what the maximum contribution is for that year. So for twenty twenty four, it's seven thousand dollars. It's eight thousand if you're fifteen and older, but I think most of these five to twenty nine plan beneficiaries are not in that category.

So seven thousand dollars that you can convert into a wroth IRA. Now the other requirement though, is you have to have earned income up to that seven thousand dollars. Or let's say that the child only has four thousand dollars of W two income, then they can only convert four thousand dollars for that year. So there's still the income requirement. You have to have income for

that year. And the other requirement is that you can't double dip, right, so if you are contributing for their on their own dollars, this is not additional money's right, So you still have that seven thousand dollars cap that is going to be in place for that year, so you have to be aware of that. Now, there's a few things that have not been clarified that you still need some guidance from the IRS. One of which is is can you move the beneficiary, right, So is that thirty five thousand dollars

per the owner of the five to twenty nine plans. So let's say you had seventy thousand dollars a five to twenty nine plan. Can you dowenty five thousand dollars for one beneficiary and then change the beneficiary, which is what you can do. You can change the beneficiary and then move it over to another

grandchild and then do another thirty five thousand dollars roth perversion for them. That has not been clarified, so that needs clarification from the irs, But you know, you think about it with this option for five to twenty nine plans. Along with the fact that you know, for up to ten thousand dollars per couple or five thousand dollars per individual, when you contribute to a five to twenty nine plan, you get that New York state tax deduction. That's

a nice benefit when these dollars they grow tax free. If you use for qualified educational expenses, that's another nice benefit of a five twenty nine plan. The other element is if the grandparents set these five twenty nine plans up and the distributions don't occur, until there's to their juniors or seniors, because there's a two year leg as to when these dollars come out and how they're actually

tracked for a financial aid perspective. But if the grandparents set it up and the distributions don't occur until they're a junior senior, there's no financial aid impact. Right. These these dollars as a fund, when they're a five to twenty nine account, they don't get tracked from a financial aid perspective, So that's also a very nice benefit. The other thing too, is these dollars can be used for any The beneficiars can be moved to any family member.

The other thing is, let's say you're you set it up for your grandchild and they get scholarships or whatever the case may be, they don't go to college, you do the Wroth conversions on them, but you still have additional dollars. Well, you know, the nice thing is these dollars can stay in that account, continue to grow tax deferred again laws use for qualified educational

expenses, and it can actually go to the next generation. Right. And it's one of the few accounts where when the account owner dies there is no requirement that they take those moneies out right. So if you have a rawth ira or you have a traditional ira and it goes to a non spouse, you have to take those dollars out right. You can't keep them in there. They have to be taken out within ten years with the requirement of distribution

before a five twenty nine plan. If the grandparents own that account and they continue to let it grow and the grandparents pass away, you can put on a new account owner keep you know, either change or keep the same beneficiary, and those dollars continue to grow. So really it is now a new way to transfer wealth from generation to generation, and there's no taxes on it. And we think about it. If college is expensive, now, could you imagine what it's going to be for the next generation. I mean,

it's hard to fathom. I always think about this. I've got three teenagers. One my daughter's at university and she's a sophomore. My son, Hayden's a senior at Saratoga High School looking at colleges, and then our daughter tests is a sophomore. You know, so you think about these three schools. Fortunately, they're all very good students. They've done well, gaining some scholarship

money. But could you imagine I was thinking of it. So if they got into some of these high priced schools and we had to pay eighty thousand dollars plus for them to go through, and if we're I mean, either you pay for it out of pocket or you pay for it in loans or whatever that you that could be a million dollars. A million dollars for three

kids to go to college. That is a crazy number. And frankly, I just think it's hard to justify it being worth it, right, you know, I you obviously in this world, we live in this environment. For many jobs, you have to go to college. I mean when we hire people, you know, we really require for an advisor position, we require a college degree in general, where you require our advisors to either be CPAs or cfps in which case you have to have a college degree so you

have. That is the entry way into many positions. But when you start looking at it to pay eighty thousand dollars versus finding ways to go to college either for a low cost amount or you know, potentially free, you know you got to look at alternatives. Without a doubt. It is a business decision. I can't stress that enough. It is a business decision as to what college you're going to go do and how much you're willing to pay.

We actually have a new colleague starting with us on Monday, and this gentleman he went to the military and he had military service coming out of high school and then the GI Bill paid for, if not all, much of his college. And you know, so there are ways that you can go and find a way to go to college without really loading up on debt. And you know, we see it the other way where people do go and they take on a lot of debt for undergrad I'm not talking about med school or

law school or to get a master's degree. I'm talking about undergrad and it just becomes a real burden on them in their twenties and thirties. So again, for any listeners out there, whether it be grandparents or parents, would really highly encourage you to think about college as a business decision. You have to do this because your kids are not going to and understand what that ramification is of either you or them taking on excessive amounts of debt as they go

through this. Well, we're going to move on to another topic, but folks, if you have any questions, feel free to give me a call. You can reach me at one eight hundred talk WI. That's eight hundred

eight two five five nine four nine. One of the things I wanted to bring up is our investment team had a great webinar this Wednesday and it's available on our website at Bouchet dot com and it talks about direct indexing and this is a new investment offering that we have for our clients where it's a very tax efficient way to get exposure to. It could be the SP five hundred or QQQ or a number of different indices. But what it does is it

actually holds we hold individual stock positions. So let's say in the SP five hundred there's five hundred positions, we're not going to hold five hundred. We're going to hold somewhere around one hundred stock positions, and that it's going to track the SMP very closely, very closely, and we use an outside partner

on this called Canvas. And then what happens is if there's movements in the stock where they are able to sell a position for a loss, capture that loss, and then move into another position that is going to perform in a similar fashion, they go ahead and do that. And now so our clients are able to get exposure to let's say the SP five hunter, but they're

also able to have realized losses that don't impact their performance. Right, so the performance is going to be very close to the SP but now they can utilize those losses against any future gain. So the tax efficient manner of this portfolio is tremendous. And the other thing is that you can customize the portfolio in any way you want, meaning that you can include or exclude any particular industries or companies. So a real kind of game changer with many of our

clients. Well, we're gonna go to commercial back break, but I'll continue to discuss this when we come back, and I can answer any questions you may have on it. Your listen 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. You cany money me mother sang a song to me in tone, so sweet lord. Just to welcome back folks those are

just joining us. My name is Martin Shields. I'm going to be your host today for Let's Talk Money. I'm giving my colleague Steve Bouschet a break and Zach another great song there. It's great to do any I don't even do anyon want to interrupt it, but I guess we have to talk about finance here. But Happy Saint Patrick's Day to everyone out there. I hope that you have a great day celebrating whatever that may be. And please be safe out there as well. It's great to be here with you to answer

any questions you may have regarding your financial planning or investment manager concerns. And I encourage you to give me a call. You can reach me at eight hundred talk WI. That is eight hundred eight two five five nine four nine.

So I want to go back to what I was discussing before the break, and that is this new service offering from an investment perspective we have for Dexing, and I was as I was mentioning it basically allows us to get exposure to our clients to a number of different indices, whether it's QQQ for technology or in growth, or whether it's the SP five hundred or even some smaller MidCap indices. And we use a partner called Canvas that helps facilitate this

and that we're actually holding individual stock positions. They track those indusices very closely, and as I mentioned, if it's the S and P. Five hundred that we're going to track, we're not actually holding five hundred positions. We're

actually holding probably somewhere around one hundred or so positions. But what we're doing is we're going to be the role of this is to get exposure that tracks very closely to these indices, but also allow us to do some tax loss harvesting when there is when some of these any positions are down and gain, I take advantage of those losses to offset any few gains. So this is a very not only is a great way to get good equity exposure, but

it's a very tax efficient way to manage a tax portfolio. So this is really used mostly ninety nine percent ninety five percent time in a tax will account. But the other thing too, is we are able to customize a portfolio for any restrictions, limitations, or interest that people have to either overweight or underweight either particular positions or particular industries. So for example, let's say we

have a client that works in the pharmaceutical or healthcare industry. They have a lot of exposure to that through their work, so they want to get exposure to the SP but they don't want to include the healthcare sector. We can exclude a particular sector, so customize the index for what they want, so that that is the most common situation, which is, uh, you know, they they work in a particular sector, they have a lot of stock

that tracks very closely. You know, they may have it from a previous employer we've seen this before, or even they may even invest a little bit in that sector because they know the companies there. They don't want to have additional exposure, so we can exclude it. We can, we can customize it in whatever way you want, whether it's specific companies or industries. So

it's it's really a great new edition that we can offer our clients. UH. And again, we have this great webinar that our investment team put together.

It's on our website at Bouchet dot com under Insights, and as I've mentioned to you before, our team were very talented with the really knowledgeable folks that we have UH and that we put out a blogger or webinar every week basically and it highlights topics, so we encourage you to go look at that our blog and insights page just to see the topics that we're talking about,

but in particular to watch the webinar. It's very interesting. I want to talk about something that we get questions on all the time, and this is the idea of lump sum investing versus dollar cost averaging. And all that means is, let's say you have a lot of cash. Either you've been sitting

at cash and not getting invested it's been accumulating. Or let's say you have a liquidity event you sell a business, or you sell number of concentrated stock positions, or you receive a lot of money in inheritance, and you really if you want to get that money invested, relatively speaking, you have two

main options. You can go ahead and invest that money all at once as a lump sum, or you can dollar cost average, which is simply invest that money over multiple time periods to take advantage of any volatility with the markets. So we can you know, dollar cost averaging. You know it can

happen in a lot of different ways. So your four oh one K plan if you contribute your dollar cost averaging, right, so you're putting in money on every pay period and you're buying into the market, whether it's up or down, You're not being concerned about that, You're just putting that money in.

So, you know, with our clients, we always if we have situations where they have money to invest, we're giving them guidance and just reading an interesting stat on this that seventy one percent of time lump sum investing has better long term performance than dollar cost averaging, right, So seventy one percent of the time, And that's what we explain to our clients, which is, you know, you look at the data, and the data is what

you want to look at when you make these decisions. The data shows that dollar cost averaging is does not provide as good a return, you know, in the majority of times, seventy one percent of times as lump sum investing. So you know, the best approach is to go ahead and put those

dollars in right away lump sum. But you know, as we've talked about, there is an emotional alment with investing, right and so many times these dollars, you know, let's say they're coming from dollars have been accumulating over time and somebody's been hesitant to getting the market dollar cost averaging can be a way that even though the data shows you should be alump sum, you put

that money in lump some that's where you get your best return. But for many people, just that concept that we have, it's just shown from humans, we have this loss of version, right, we would rather give up greater returns than have a loss. And so if I've got a half million dollars, I just sold a business or I just received it from an inheritance, you know, many people have this aversion to putting the money into the

market and having to go down by twenty percent. So if we can utilize dollar cost averaging to get them into the market, and you know, it

can be effective if there's volatility. What we'll do is we'll have let's say, set up dollar cost averaging over three or four periods, so every month we put a certain amount in and then let's say there is volatility, the market's down five percent or six percent or something like that, we will move in move up some of those what we call tranches, those investment amounts to

take advantage of that volatility. So it can be a way that if you've got cash on the sidelines, to go ahead and get over that mental hurdle of continue to have it sit in cash. And this is true too when if there's a sale of a business. Now somebody has a million dollars from the sale of a business, I've seen it where they're wary about putting that money into the market all at once, even though I'm telling them it's the

best way to go. That dollar cost averaging can be a way to get those dollars in, and it can be a way to take advantage of market volatility. And as I mentioned, we will move up investment tranches if there is volatility. But you have to appreciate that if the market keeps moving higher, which is what it tends to do, you're going to not get as great a return. The other thing that can be done for individuals again trying

to get cash invested, is that you can adjust to your allocation. Right, so maybe you're a growth allocation, so you're eighty percent equity, twenty percent in bonds. But it just you know, you can't get over if the market tading all the time highs. You know, just this idea of putting money into the market and having it go down, you can go into it as a growth and income, right, so put it all at once, put it as a growth and income. You know, you're now you

get that money's invested. You know, the downside is the market keeps moving higher, which is what it's gonna do. It's going to trend higher over time. And now you're only in the growth and income, so your overall return is not going to be as great. But if it gets those dollars in, you can then become more aggressive and move into that growth allocation when that happens, but you know, you could be sitting there for a long time and missing out on that higher return if you had just gone in as

growth. So again from a professional perspective, the best way to get dollars invested is to lump some put that in, and I got data to show you're going to get a better return even with markets at all time highs, even with markets at all time highs. But at the end of the day, you know, as we talk about, there's the psychology and emotions of finances and investing, and you need to do what is going to allow you

over time to handle any volatility with the market. Right, so you know, certainly what is not an ideal situation is you do the lump some investing, the market goes down by twenty percent, and now you panic and you pull out. That is right there is the worst case scenario. So you know, all this kind of comes into play as you're making decisions is to

how to handle this. Let's move on. I want to talk about something we're seeing out there with worker productivity and what that means and what it means as we look at historical trends. But if you have any questions, you can give me a call. Call. You can reach me at eight hundred talk WGY. That's eight hundred eight two five five nine four nine again eight

hundred eight two five five nine four nine. So what we're seeing over about the last year or so is something that's very interesting, which is a real

tick up in worker productivity. So for the last let's say, since almost fifteen years, worker productivity has been around anywhere from one and a half percent to one percent, right, So you know that that is relative speaking, a fairly low level for increases in productivity at just at one percent, but that is kind of where we've been is at this low level of productivity increases and it's hard to determine exactly what's driving that you know, really a lot

of it is companies investing in technology and processes, different things to make their workers more productive. And what we've seen is that it just there hasn't been a high level of worker productivity. And what that means for companies is that's going to limit their ability to increase profitability and reduce cost. Right if worker productivity is at that level of one one and a half percent, now, in the last year, we've seen it pop up to three point seven percent.

Three point seven now, that's one of the highest we've seen going back even to the nineteen nineties where worker productivity was so high. And the importance of this is when we've talked about a very robust economy, which is what

we have tight labor markets type real estate markets. If you can have high worker productivity, again, it increases profitability and cash flow for companies, which is what you know, allows the stock market to move higher, and it also allows companies to control cost and can be very important for keeping inflation in check. So this is something we will be continued to watch. You know, if you look at a historical perspective, let's look at the nineteen seventies.

So in nineteen seventies, she had a very in the beginning of the seventies, he actually had a very robust labor markets. You actually had fairly high wage growth, but you had low worker productivity. Again, it was around one percent, So that means every year work is only increased in their productivity by one percent, So that's that's not a lot of increase. And in that time period of one percent increase, you know, because you had

wage growth, you'll also had high inflation in the economy. But then let's compare it to the nineteen nineties, also a very good economic time. You also had high wage growth, but worker productivity from let's say nineteen ninety five to the mid two thousands was in the three percent greater range. And you know, what you saw in that time period was a strong economy but low

inflation. And there were a few other reasons for that low inflation, including that was really one of the main time periods that we were outsourcing production of goods and services overseas to China and other locations, so that certainly reduced cost. But worker productivity is very important, and you know, we've talked about

this. If you'll look back historically, you know, I like to think and hoping that we're maybe more in a situation like the mid nineties where again you had good labor numbers, but you were able to have a robust economy. As I mentioned earlier in the show, that was a point where the

Federal reserved pause raising interest rates for quite some time. And with that productivity in large part in that situation, from the introduction of the Internet, introduction of a high bandwidth to companies, it really was a dynamic time in the economy for companies. And so as we move into this time now of AI are artificial intelligence and the ability for companies and workers to be more productive,

that can be very beneficial. And so that's something that we'll be looking at, uh, and that could drive this economy and its ability to move forward and hire with the markets. Let's let's move on to a different topic. UH. You know, what I try to do is highlight situations that we see with clients and some of the questions and challenges they have. So let's let's move on talk about four and ks and rm ds. But again before I do, if you have any questions, you can give me a call.

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. So a question that we get is if I'm still working, UH and I have a four and K plan where I work, do I have to take an R and D if I I am of rmd AH which is aged seventy three now, And the answer is that you do not. Right, So you can have an outside IRA that again, you're working, you're seventy three years old,

you have to take your rm D from that outside IRA. But if you are working and you have moneys in a form and K plan and you're not a five percent owner or greater, that's a big caveat to this, right. So you small business owners, you're obviously above that five percent threshold many times, if you're in that category, you still do have to take your rm D. But for those of you who are not five percent owners are

greater in the company, you can avoid taking it. So it really is a big benefit to be able to delay that now for many people if they're one may people are not working when they're seventy three, so you have to be you can't just have a form and K plan in a company where you're not working. That doesn't count. It has to be the company where you're currently employed. So just to be aware of this, and then what happens is when you it's the year that you do retire that you have to start

taking rm ds. So that's the timing of it. You've got to be aware of that to make sure that you keep on track on that because as we've talked about before, if you fail to take your rm D, it can be pretty expensive, so as far as penalties from the I r S, So you want to make sure that you're taking your ir D r m D. It is very important. Let's move on to another topic, and

that is with concentrated stock and ownership positions. So you know, as we always say that having those concentrated positions is a great way to create wealth. Right. I always tell small business owners if they they're good at their business, if the business is doing well, one of the best ways they can do to create wealth is to invest in their company. Invest in themselves,

invest in the company. That is a great way to create wealth, either current cash flow or the ability to liquidate the business down the road, sell it and it really having that concentrated wealth our positions can be very valuable. The other thing too, is this is true if you're an executive in a company, you think the company really has a great path forward. You know,

we see this a lot of times. Having those concentrated positions can do, you know, be very beneficial for creating wealth, but having that concentrated position is not necessarily a great way for preserving wealth, right, And we have to appreciate that, which is, as you have created that wealth, whether it's you investing this on your own or whether you know you have it through your company or your small business, the best way to preserve wealth is

to diversify your asset classes, right, And we really try to communicate this to clients, especially this where it gets tough is when you're in that company that's doing well, you know, appreciating that in many cases there can be

volatility in those stocks and uncertainty that exist. And you know, in many cases, you know, you have companies like Apple or Amazon or Microsoft that have done very well, but in many cases, you have companies that have not done so well, right, and they have been you know, big companies like Sears or I remember when United Airlines went into bankruptcy, or Lehman Brothers, so it is possible that you have these concert positions and not you

know, many times it's not the industry, but let's say it could be management of that company really becomes a problem. Gees another perfect example, right. You always remember back in the nineties, people say, well, I don't need to diversify. I own ge and they own a lot of underlying businesses and you know, come to find out they also were in the nineties, they were largely a finance company and that where it became problematic in the

two thousands. So you know, just have that mindset that you're willing it's it's much about risk management as it is investments. At that point. We have those concentrated positions and that's where we work a lot with our clients, uh, to have them get that mindset that it's you know, it doesn't mean if we're if we're gonna recommend that you start diversifying out of position. It doesn't mean that we don't think it's going to get to you to go

up. Because if we were concerned about that position going up, we tell you our best thing that oh welcome back, So sorry about that. I had a little bit of technical difficulties there, but Thank you to our amazing producer Zach for reck to find those. It's great to be back with you. I even forgot where it was. But let's move on to another topic. But if we have a few more minutes left, if you have any 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. One of the last items I want to talk about is, as you know, our firm, Bouchet Finance Group, big sponsorship of nonprofits out there. And you know, I give credit to Steve. This is something that he's instilled in all of us and in the firm itself, and we we just think that's important. Right. We've been fortunate enough to be part of this community and we want to make sure that we through the radio program, provide education to

our listeners, but also where we can help nonprofits. And you know, if you if you listen to the show, you know on the chair of the board for the Ron McDonald House. But there are a number of other nonprofits that we support, but we also work with those nonprofits from an endowment perspective, and I would just encourage you that if you're if you're on a nonprofit board or you're involved with it, and you know you have an endowment that you make sure you get the right guidance on it. I just see

this all the time now, been with the firm for twelve years. You know, where we work with these nonprofits and we've been able to grow their endowment. It becomes a really valuable asset, right, so you know, it allows them to have cash flow for different things that they want to do,

different projects. Maybe it's a one time distribution, or you know, we we've got nonprofits that we work with that set it up that they've got a five percent distribution on an annual basis, and that can be very powerful for a non profit to have this, but you have to have the right type of firm managing that, being able to educate those board members and those finance committee members of what it means again to be a good long term investor.

Educate them on what is a very reasonable way to be allocated and what is a very reasonable distribution rate. And you know, I think what's important with the endowment is the time horizon is really infinite, right, I mean, you really are looking for that nonprofit that endowment to go on. There's no end to it, which is even different than let's say a retirement plan.

So you've got to make sure you have the right perspective on that and also that you know again the right level of risk from an equity perspective is okay, right, And that's where you know, sometimes these nonprofit boards get very conservative, which I don't want to take on too much risk, but you have to be okay with understanding with a different my portfolio, you can take on some level risk. Well, folks, it's been a great hour. I hope you learned a lot. As always, I always enjoy being

here. Have a great Saint Patrick's Day. Remember you're listening to Let's Talk Money, brought to you by Bouchet financi 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 your Sunday.