Well, good morning, and thank you for tuning in to Let's Talk Money on a ten WGY. I'm John Malay and I'm going to be your host for the next hour. I'm a Certified Public Accountant and the chief financial Officer, chief operating officer, and a wealth advisor at the firm. This morning, I have the pleasure of being joined by my esteem colleague, Vincenzo Testa. Vinni is also a CPA. He's also a Certified Financial planner and holds an Advanced Equity Compensation designation.
Vinni is a.
Wealth advisor with the firm and a key member of our tax team. Good morning, Vinnie, and thank you for joining me.
Thanks for having me, John.
Ray.
Well, I hope Vinni, I hope you had a wonderful Thanksgiving holiday. I know I certainly did. It was great time spent with family, friends, and certainly seems like Thanksgiving also kicked off the start of winter here in the Northeast. We have now snow on the ground and cold weather and cold weather in the forecast. I will say on Thanksgiving Day I did brave the cold and went down to Troy and ran in the Troy Turkey Trot with
some friends and family, had a great time. And I will say the weather was miserable, it was cold and rainy, but still just a great, great tradition, great way to start the day, burning some calories, you know, getting your body moving so you can spend the rest of the day, you know, consuming lots of food and sitting around talking to friends, family and watching some football. So I hope everybody had a wonderful Thanksgiving and then into the long
holiday weekend, and boy, here we are December first. You know, it's hard to believe, you know here you know, with Thanksgiving so late this year, we transition so quickly from November into December. So November is in the books. Here we are now the final month of the year, so starting December first. So you know what, I just want to you know, share, you know, behalf the bouchet, behalf
of a bouchet financial group. Just want to take a moment to express our gratitude to you, you know, our listeners, but also our clients, and we have many clients who are also listeners for your trust and your partnership throughout the year, you know, as we reflected what we're thankful for, we're reminded that financial success isn't just about numbers. It's about our listeners and clients, you know, achieving the goals
and dreams that matter most to them. And you know, also we encourage you to take stock of not just your financial health, but it's a great time of a year to take stock of also, you know, the time you're spending with friends, family, and those that are most important to you. So we hope you had a joyful Thanksgiving. We are thankful your tuning in to Vinye and I this morning, and we encourage listeners to call in with questions.
You know, we're here for you, and I will say there is no dumb question when it comes to your money, and I guarantee if you have that question, other listeners have. So certainly, you know, pick up the phone. You can reach viny and I at eight hundred talk WGY. That's eight hundred eight two five five nine four nine. You know, we also if you're don't want to call in, although we do encourage that certainly makes our show more interesting and fun is to engage with listeners. But we also
have a website, Ask Bouche at Bouche dot com. That's ask b o U c A g u y at Bouche dot com. You can email questions into that and we'll also answer that. But Vinny and I would highly encourage that if you have a question, pick up the phone call us at eight hundred talk WGY eight hundred eight two five. So again, we appreciate you tuning in with us today. I hope you enjoyed the next sixty
minutes with Viny and I this morning. We're gonna be talking about the markets, investing, financial planning and whatever questions you have, and certainly some tax planning as well. You know, with Vinie with his tax background, it's great to have him on the show this morning, we're certainly going to be you know, talking about some tax updates as well. So just gonna jump right into first, you know, a
market update. You know, the stock market closed out the month of November on Friday, you know Black Friday, with it was a shortened trading session, so market's actually closed at one, but.
It closed out the best.
Year so far of twenty twenty four, so S and P five hundred and the Dow both notch records and Friday shortened session, capping as I said, their best months of the year. The Dow finished Friday just underneath the forty four thousand point milestone. It just seems like we're at forty four, sorry, forty five thousand point milestone. It seems like we're just at the forty four thousand. It just seems it was so quick to get to forty.
Five, you know.
And actually on Friday, the Dow did break the forty five thousand mark, but retreated a little bit at the close of the session, so closing just below forty five thousand, and that was good for its forty seventh record close of twenty twenty four, and ended the month at an increase of seven point five percent. S and P also arose a little lesson of one percent on Friday and
hit its fifty third record finish of the year. So both the Dow and SMP hitting records and repeatedly hitting records this year, and the SMP closing out the month at a five point seven percent increase. You know, we're
seeing such a broad recovery. You know, in the beginning half, first half of the year, we talked about, you know, just how it was such a narrow growth in the markets, and that was really spread between the mag the magnificent seven, magnificent eight, and now we're seeing a broad, broad recovery of the market. And on Friday we saw nine of the eleven S and P five hundred sectors closed up Friday, So just a great, great month and a nice broad recovery.
So you know, overall November it was just a spectacular month in what has already been.
A great year.
At this point, we have a caller in. We have David from New Hartford. David, thank you for tuning in and how can we help you this morning?
Good morning, gentlemen. My question is about investing for income, and I'm interested in you in hearing you of discussed j E T I and j E p Q and the the Schwab Fund SHD and how they would performing the down market.
Perfect, Yeah, David, we appreciate that. Yeah, appreciate that car that call there, and so you know, you know, J E P I is certainly you know, investment we like and actually have in our portfolios and it has performed well. And and Jeffy, you know what it does. It tracks the S and P, but it does so also generating income through through selling covered calls.
So it's it is really you get the best of both worlds.
You get tracking the S and P. Now it doesn't track entirely because it you know, because of the covered calls do get executed.
Right, so that happens.
But what it does is generating income throughout that So we've we've been very.
Happy with Jeffy.
We've had that in the portfolio for for several several years. So certainly we think, you know, as we look at you know, investing, you know, into twenty twenty five, you know, we we think it's important really to have a balanced portfolio with growth, but also to have holding in there that are also also generating and you know, generating income.
So J E.
P I is certainly, uh, you know, an investment that we're we're very comfortable with. But do you want to throw in any other additional comments there?
Yeah, I mean, yeah, Jeff definitely a hybrid position in our portfolio. You know, kind of use that as sort of a buffer between fixed income in equities. But you know, like John said, you know, in some years it will generate you know, pretty high yield, but the volatility you know,
referred to it as beta. It doesn't really track the S and P five hundred in full right, it's a little lag in that regard, but you know that that dividend yield that is generating for investors, that's being generated from the revenue from the sale of covered calls, definitely, uh, you know, makes up for any lag, you know, in the event that the market is up. So yeah, we definitely love JETPI.
And if you could DISCUSSHD fund.
SHD yeah, yeah, So SDHD, you know another position obviously that Schwab offers. What's really helding there are companies with strong balance sheets and growing dividends. You know, basically it's
a value play, right. There's growth companies and there's value companies, and you're the value companies are the home depots of the world, and you know those companies are really strong balance sheets with steady growth but not really exponential growth, right, and just about kind of getting that dividend yield and and being investor in those companies and kind of just staying the course versus you know, companies like Tesla, where you know you could expect percent growth year over year.
So SDHD is really just tracking those companies that have already kind of made a name for themselves and had that steady but slow growth year after year.
No, Jeff P would, But I'm just gonna comment with you know, with SHD so so you know they're certainly they're they're targeting, you know, companies that are high dividend payers. Right, so they've they've uh, you know, you're getting high dividend payers, so definitely you know, generating some income through that, right.
And JEFPY would to some extent preserve the principle to some extent, right, I.
Wouldn't say that it was there.
I would say I would say that it moves at a lower volatility than the S and P five hundred, Right, It's not going to move, So we refer to it as something called beta. So beta is a number that is equal to the volatility in the S and P five hundred, right, and that and you refer S P five hundred moves in a beta of one point zero, right, So anything lower than that is going to move slower than what the S and P five hundred would do
on the upside or the downside. So it's not completely tracking S and P five hundred, uh, you know, at a same percentage rate, but it moves a little, you know, a couple percentage points lower than that. And then the covered call revenue that's being generated, uh is being paid out in dividends, So I wouldn't say preserves capital, but it's definitely a little bit less risky on the equity sleeve.
That makes sense, right, And the dividend income is that paid out monthly quarterly.
Or what do you know?
I'm not one hundred percent short. It's usually paid out quarterly, but I would have to double check for jeff.
Right, And can you have dividends reinvested or is that they need to be paid out?
Yeah?
I mean that's just an option or whatever custodian you're using. Right, So when you purchase position, like Jeffy, you would ask you if you want your dividends reinvested or just paid out in cash?
Okay? And but jp Q it just tricks the QQQ.
J EQ I'm not really familiar with. Yeah, so I'm looking at it right now. So jp Morgan, NASDACK equity premium and come fund. So it sounds like sort of the same idea as Jeffy, but using the Nasdaq as the index that's being tracked versus the S and P five hundred.
Right, I understand? All right, Well, thank you?
Right, and I would say with yeah, perfectly, just you know commony of that, David is jeffy is you know, really targets more defensive stocks to it, and you know, I'm sorry, and uh, you know, the the EPQ definitely targets you know, heavy growth index, right and uh, polsis you know Jeff actually tracks the S and P five hundred index. Sorry about this, So certainly the the jp Q taking more of a growth slant than.
The jep does.
So appreciate that call in, yep, thank you for calling in. Appreciate your question. And then we have Howard Howard from Schenec Gay Book. I see that Howard didn't stay with us through the entire question, so again appreciate the call ins there from both David and Howard Howard. If you do, if you do have time, call back in. We we appreciate you tuning in with us this morning, so you can reach us at eight hundred talk WGY. That's eight hundred eight two five five nine four nine, So appreciate
the calls right there. So just in the middle of giving you know, market update, so, uh, you know, as we talked about November, we know here we are December one. We wrapped up the month of November. And November was, you know, as I mentioned, spectacular month in what has already been, you know, a great year. So Dow and SMP delivered their biggest percentage gain of the year. Dow up seven and a half percent, s and P up
five pointy seven. The text heavy Nasdaq was up six point two one percent in November, and the Russell two thousand in November, you know, monthly games of over eleven percent. So again, what we saw in the month of November was a broad, broad recovery really from all parts of the market, which is you know, great to see. And so November, you know, remember we went into November with all this uncertainty, uncertainty around the elections, uncertainty about you know,
what the Fed was going to continue doing. But certainly the election was the biggest uncertainty on our mind.
And and we've we've got a quick and decisive.
Closure to that uncertainty, you know. And so you know with President elect Truck Trump, you know, really with the red sweep in the elections and Republicans, you know, really with a pro business agenda, and you know, certainly with a lot of dialogue about continued tax cuts and increase
in tariffs, so very pro business environment. And we also you know, so that was the markets responded very very positively to that in the month of November, and we also saw you know, continued positive economic data you know, uh, you know, inflation numbers, you know, maybe showing a slight uptick, but nothing you know, real concerning to the FED. And you know, we did have some chopping its with jobs data.
We'll talk about that a little bit. Uh, Certainly, the jobs data that came out in October was you know, impacted by few events, but still not you know, job markets are still strong, are seeing a weakening, but you know, we're not seeing layoffs, We're not seeing any you know, massive concern But again, we will talk about that a moment.
So certainly, you know, November had just the state that well, once we got through the election, you know, the economic indicator state positive and we're in the midst of a strong you know, earning season, so earnings continue to come in positive really across many sectors. So you know, investors sentiment is high.
You know, we looked at the VIX.
The VIX is uh, you know, down dramatically from where it was. You know, a month ago. And uh so we're certain certainly seeing investor confidence is being high and and uh you know, certainly continue the expectations of continued pro growth policies from from Trump. You know, he's talked a lot about that, and you know, I think the investor confidence is you know start you know, you know, when he takes office in January, we're going to see some quick action. You know, as we're seeing Trump is
putting his team together. Uh, you know, much different than than his first time in office. You know, he walked in and had to create his team and get things in motion. And you know, as we can see, he's moving swiftly. He's he's got his team uh identified and you know, as you can see, they're they're they're identified. Some individuals got feedback making changes. So certainly all signs that they're going to hit the ground running. And I think generally investors thinks.
That as a positive.
Now, you know, certainly, you know, there are headwinds and we can't deny that. You know, one is you know, Trump has spoken very aggressively about tariffs, and there is a lot of debate about you know, how that could impact certain segments of the market. Head wind also as you know, certainly we're seeing escalating tensions you know, Russian Ukraine.
You know, we're seeing that escalate, you know, almost daily, and and certainly with North Korea getting involved directly, you know, so there always is a concern that if that flares up in a different capacity, certainly that could cause some issues. And you know, other headwind is the FED. You know, what is the FED going to do where they meet
in December. We're going to talk a little bit more about that in a moment, but certainly, you know, with a FED meeting coming up, you know, how are they going.
To react to to you know, the data they're seeing, but.
Also anticipating what the impacts of President elect Trump's.
Policies will be.
So as we again, as we we finish up, you know, in recap, SMP November up five point seven percent for the month, up twenty six and a half percent year today, I mean outstanding, the Nasdaq up a little over you know, six point two percent for the month, up twenty eight
point oh two percent year to date. The Dow, as we said, flirting with the forty five thousand milestone, that was up seven and a half percent for the month, and up nineteen percent year to date, and the Russell two thousand, you know, the small cap index was up over ten point eight percent for the month and for the year to date over twenty percent, So all major indices up significantly for twenty twenty four.
Great year.
We're starting to see in the bond market, you know, we're starting to starting to see a retreat of the you know, ten year treasure yield. But still you know, on Friday it fell to about four point under four point two percent, down slightly, so it's not you know, dropping strong, but still we are seeing a little bit of retreat, you know, and as investors, you know, keep your eye on you know, some data coming out this week in terms of you.
Know, jobs data.
Uh.
You know, certainly anxious to see what bet chair Powell has to say, uh in mid December at the next meeting, So you know, certainly keeping our eye on treasury yields.
So you know, as we as we.
Close the books on November, we have a lot to be thankful for, right, you know, from a market perspective, certainly the market's delivered and delivered positively. So I just want to encourage listeners. We had a couple of quick callers right out the gate. Unfortunately, Howard couldn't stay with us through the first call, but encouraged listeners to.
Reach Vinnie and I.
You can reach us at eight hundred talk w g Y. That's eight hundred eight two five five nine four nine. So this, you know, as we head into December, you know, we're going to get some important data.
On jobs actually this week.
But we did have, you know, in the shortened trading week. You know, it largely went unnoticed, but we did have the FEDS preferred inflation gauge, which is called the PCE, the Personal Consumptions Expenditures Price Index, you know, came out and it you know, largely came in line with expectations. It did show a slight uptick, so it came you know, the preferred PCE showed a twelve month inflation rate of two point three percent, so a little bit above their
target of two percent. But their core inflation, which you know showed actually stronger readings, came in at two point eight percent. Now that was it uptick from September. Both
were but both were expected. So again, you know, you know, FED expected to see some uptics in both the main and the core PC numbers and we saw that, so again nothing out of the ordinary, just you know, kind of long expectations, and so we're seeing is inflation is being persistent, you know, but the FED does feel confident that they're they're getting a handle on this and getting it down into the range they want to see.
And you know, and that's all building up.
You know, we have the FED FOMC meeting is scheduled for later in December, around the seventeenth and in the eighteenth, and at that point they'll make the next rate determination. And so you know, you know, for the last two years, fed's been you know, almost singlely focused on inflation. But we have to remember the FED has a dual mandate, right, and that is maximum employment and FED and then inflation
within their targeted two percent. And so we're starting to see the FEDS, certainly, as they're feeling more and more confident with the inflation, that more focus is going you know, really on the labor markets, right and there we have seen you know, labor markets deteriorate slightly, and so the FED is certainly keeping that in eyes. They don't they don't want to see, you know, a significant spike in
the unemployment rate. But at this point, you know, again, we have seen some uptick in in unemployment and certainly the last jobs report that came out in October was showed a significant decline in jobs being created. But that was you know that no, you know, no, that was definitely impacted, you know, by Hurricane Helene and Milton and then the strike that that Boeing was having. So even though they were much lower than expected, uh, certainly, you know,
there were some events that were causing that. So we've got the jobs report coming out this week for sure, and we'll have a lot of eyes on that. So we are halfway through today's show and we're going to be taking a short, short commercial break, So we want to thank you for tuning in with us today on this Sunday of our Thanksgiving holiday weekend. We hope you're enjoying this show, and we're going to hope you rejoin us after the break. We encourage any listeners to call
in with questions. You can reach Vinnie and I at eight hundred TALKWGI. That's eight hundred eight two five five nine four nine. You are listening to Let's Talk Money, brought to you by Bouchet finance group where we help our clients prioritize their health while we manage their wealth for life.
Thank you for tuning in. We hope you stay with us through the commercial break.
Well, good morning, and thank you for staying with us through that short commercial break. I'm John Malay and I'm your host for today's show. I am joined by my colleague Vincenzo Testa. Appreciate you tuning in with us this morning. I hope you are enjoying this Sunday morning, December first, the start of the month of December, wrapping up you know, our Thanksgiving holiday weekend. Hope everybody had a great Thanksgiving. Hope everybody had a great with family, friends, and hopefully
enjoyed some great food. I know I enjoyed all of the above. So we were first half of the show, we're kind of going through a you know, a recap of the markets, you know, wrapping up the last segment.
You know.
So we've got you know, jobs data coming out this coming week, some important data. So Jobs Report on Friday, jolts, the job openings in labor Turnover survey coming out on Tuesday, and as the Fed, you know, prepping for their December meeting. You know, they are a data driven FED. They've made that very clear. So as they head into their December meeting, we'll be looking you know, very strongly at that intently at that job data, you know, because again FED has
a dual mandate. You know, the last twenty four months has been primarily driven by getting inflation under control, but it seems like that is getting you know, closer and
closer down to their target. So but they want to make sure the job markets are going to be you know, okay, as we head into twenty twenty five and beyond, and you know, we have seen an uptick of unemployment, but what we haven't seen is we have not seen you know, massive layoffs and that that's you know, really one of the important things they're looking at.
You know.
So we've we've certainly seen a slow down in job growth, but the unemployment rate you know is you know, in that four point one percent they do expect to see, you know, I think a slight increase in that, and I think in you know, the last job report was impacted by you know events not only you know, some of the storms, but also Boeing's you know, labor turmoil. So certainly the FED will be all eyes on the
jobs data coming out in the upcoming week. And so here as we come to the end of the year, you know, many people are you know, kind of taking stock of also their tax planning. And I will say is a firm, you know, investment management is a primary reason clients come to work with us, but financial planning being secondary and an important part you know, I will say of our financial planning process is our tax planning.
And so you know, Vinnie is joining me on the show this morning as co host and you know, if Annie's gonna take some time to go over some you know, some tax information, some tax updates that you know you should be thinking about as we.
Come to the end of the year.
Benny, yep, thanks John. So, like John said, you know, tax planning and financial planning go hand in hand. And you know, we did a webinar on this a couple of weeks back about some things you could do to kind of plan at the end of the year for your taxes. Right, So it was a webinar on year end tax planning. And you know, one of the topics
we discussed first and foremost is maximizing your retirement contributions. Right, So when we're doing financial planning with clients, you know, we do a comprehensive analysis and we look at, you know, how much are you going to need to retire? Right,
that's really the end game there. And you know, if you are in a position where you have to maximize your retirement contributions to retire, if you know maybe you're paying playing a little catch up later in your working years, you know, it's really crucial to maximize those retirement contributions. And you know, when you're looking at your employee retirement plan, we're looking at four oh one k's four or three
b's four fifty sevens. The maximum contribution limit in twenty twenty four was twenty three thousand for those ages fifty or forty nine and under, and then there's a catch up for ages fifty and over and it's another seventy
five hundred dollars. Right, So the total of thirty thousand, five hundred for folks in twenty twenty four, if you you know, it moves higher with inflation year after year, So there's an inflation index on the contribution limit, and it's crucial to pay attention to that if you are trying to maximize your retirement contribution. So in twenty twenty five,
that contribution limit increases by five hundred dollars. So in twenty twenty there was or twenty twenty one, there was Secure Act two point zero that was passed, and that was legislation that kind of you made some changes to you know, some tax items, some retirement planning items, and one of the things they added to that was a mega catchup. So usually for ages fifty and over, for every retirement plan, there is a catch up that allows those that are ages fifteen over to contribute more to
the retirement plans. So the Mega catchup added a clause that those ages sixty sixty one, sixty two, and sixty three get a little bit of a higher catch up.
In twenty twenty five, that higher catch up for those people those ages is eleven and fifty dollars, right, and that's up from seventy five hundred, So it's allowing folks those ages to kind of, you know, stash some more retirement funds a way into their employer retirement plans and kind of if they are behind on the eight ball, kind of getting that you know, those catchup contributions in at a higher rate and obviously providing a benefit for
those folks that are you know, enging your retirement and you know, allowing them to meet the retirement goals if needed. So for self employee retirement plans, we have you know, Step I RAS and simple IRA, so if you're self employed,
you can open those retirement plans and fund those. You know, we have tax season coming up, you know, two months from now, right February is usually when all the documents start coming into us and those tax repayers, So paying attention to how much you're going to contribute to those self employed retirement plans, right, and your CPA or tax
payer can help you with that. Sometimes the calculation the sep IRA, it's a percentage of net income from your business in that year you have until you file your tax return usually to fund those maximum contributions. Right, and it's really crucial pay Like I said, in financial planning, we're trying to determine if you are able to retire. And with the step or the simple you know, it's kind of something you have to do on your own, right.
The four one K, the four or three b's easy, just comes out of your paycheck and you determine how much you put in per paycheck if there's a limit, and they'll kind of you'll stop you if you're going over that limit. But paying attention to how much you're putting into your self employed retirement plans and when you're doing it is pretty crucial. On the flip side, we have those individual retirement plans, right, we have the IRA, the self funded uh, you know, sometimes you're managing it
on your own. Sometimes you have an advisor like us managing them for you. You have the traditional and the Wrowth IRA. Right, you have until you know tax stay to make your contributions for the U prior, so for twenty twenty four, you would have until April fifteenth, twenty
twenty five to fund those contributions. So you know, obviously there's income limits for contributions to the traditional and Ross IRA, So diarys is saying, hey, let's figure out how much your income is and your taxes and then you can
determine if you make a contribution or not. So that's why they give you until packs day to make your twenty twenty four contribution for those iras, and a contribution limit for the traditional and Roth iras or seven thousand, and then again they also have to catch up for those ages fifty and over of one thousand dollars, so total of eight thousand dollars for those fifty and over.
And again there are income limits and you know, crucial to pay attention to those, so you're not making contributions if you're over those income limits. We do have a caller.
We have pall on hold. Hello, I fall how.
Hello Paul, Yeah, Paul, thank you for tuning in with this this morning.
How can we help you?
Yeah? I get you started to answer the question in the last couple of statements that you've made. But my question was, if you talk about a ROS on your four oh one k's or your iras or whatever, is there a limit on you know, like when you're working to put into a ROS, if you make over a certain amount, you can't put into a ross at all, is what I understand.
Yeah, so there is an income limit on your tax returns that this allows you from you know, making ross contributions. And if you're over that limit, you obviously are not able to put into a rock, but you could put it into something called a non deductible IRA. So in twenty twenty four. If you're a single filer, if you make over one hundred and sixty one thousand dollars, you're
not able to contribute to a ROTH. And if you're married, it's two hundred and forty thousand dollars, so it's not double from what the single filer is, but it's about fifty percent more, so you would not be able to make a ROTH contribution. And again that's why they allow you until PAX day to make a contribution for the prior year because not everyone knows what you know, their income is going to be.
Yeah, it fall just there. I was the impression that there's those restrictions, but I thought maybe under in the four oh one k through work it was I don't know all.
Right yet yet?
Correct, there is no income if you do have a WROTH portion on your four one k, there is no income limit to make contributes. So that's one of the benefits, right, And that's that's honestly a great loophole for a lot of you know, working folks. You don't have an income limit on the WROTH portion of your four o one k.
Oh, thank you very much.
The wroth ira yet no problem pull Yeah, and we haven't.
And just following up on just follow up on Paul's question there. And you know, raw four one ks are becoming more and more popular and so more and more four oh one K plans are covering that. And you know, we advise many times, you know, it makes sense to split you know, some of your contributions, uh, into the wroth portion versus the traditional And you know, it really comes down to, you know, from a planning perspective, do you expect interest rate or do you expect.
Tax rates to go higher or lower?
And uh, you know, there could be a great argument for putting more and more of your four oh one k, you know, into the wroth component. So and again, as Vinny said there, it's not subject that the the incomp limitations that you you see with a wroth I RA outside of a four oh one k, so, so you know, a normal wroth IRA. And we have another caller ed from Rent. Theer ed, we you listening this morning and appreciate you calling in.
Yes, my question is, uh, what are the advantages of ETF over a mutual fund in like a non I R A and account. Hey, I got a brand connection? Can I listen to you? On the radio.
Sure absolutely, yep, yep, no no problem, yep. And you know and that that's a question, yep, yep. So you know I understood your question ed is you know, what are the benefits of an et F over a mutual fund?
And you know, so so that's a that's a question.
We we get a lot and and as our firm, you know, we uh, we invest primarily in ETFs. You know, we do hold some single stocks and we you know, we can at time hold more, but at this point we we hold just Amazon and Apple as individual stocks, and the rest of our holdings are really you know, ETFs and and you know, benefits of ETFs are a couple. You know, one is uh, you know, they tend to be lower costs, you know, index driven or factored driven, so you know, much lower costs and an et F
uh than a mutual fund. And you know, one thing, I'll just take a step back, and there are similarities you know between the two in terms of how they invest right in terms of you know, you're you're you're investing in you know, a basket of stocks versus an individual stockholding, and so one is with both you are getting the bet the benefit of that. Instead of investing in you know, one single stock, if you invest in a technology based et F, right, you're you're getting you're
getting you know, the benefit of that, right. So that is a common uh. And and that's you know, from a diversification point of view, that's great, you know, but they are structured differently. And you know ETFs you know, from a you know, trading perspective. You know, they're traded on exchange it and you know market. You know, the price fluctuates during the day, you know, as opposed to with a mutual fund, where they're priced at the end
of the day, right, uh. And so from a cost perspective, you know, and that's one of the things we like best about it is that you know, generally you know, much lower expense ratios than mutual funds. And so from that point, if you're holding in our portfolio, really that's what we're looking at, is we want to make sure we have the lowest cost investments that that meet our
investment objectives, right, and so ETFs do that. And also the other is really you know about tax efficiency, right, and so you know, if you hold mutual funds, one of the things you experience is you know, they can generate capital gain distributions. Uh you know, what's your tax to shareholders, you know, even if they didn't sell the shares right and and really with the structure of ETFs,
really they minimize capital uh gains distribution. So mutual funds, you know, you know, you know nothing more frustrating if we have a year where maybe the mutual fund didn't perform well and then you get this large capital you know, unexpected capital gain.
Distribution right at the end of the year, which you have to pay taxes on.
So uh so from that, you know, we I get in that you know, lower costs, more tax efficient and quite frankly, you know, transparency, which.
Is is what we're all about. So you know, appreciate that question.
I know our caller ed jumped off, but video, I don't know if there's anything you know, additional.
You want to add to that.
Yeah, no, I mean you hit the nail on the head ets. I mean it's not something we're explaining to clients, you know, on multiple occasions. Feelings every conversation we have with new clients is talking about, you know, the benefits of using ets versus mutual funds. So I think it hits the nail right in the head, perfect, perfect.
You know, and as we.
You know, one of the things that we we also get a lot of conversation this time of year, you know, in regard and especially you know after the holidays, right we all just spend our Thanksgiving holiday, you know, many times we've spent it with you know, friends and family, and so you know, we we tend to get a lot of questions about gifting, you know, this time of year. And uh, you know, I know we have another We're gonna jump to another caller, but we come back from
that caller. I might have any you know, uh, if we've got time, you know, touch on some some gifting or you know, uh some you know strategies by philanthropy. And uh so we got a caller from John from Delmar John, we appreciate you listening to this this morning.
What can we help you with?
Yeah, you were talking about the returns on the sm P and the queues and I'm just kind of wondering as an invest you know, for your investments, just simpler to invest in the indexes themselves, you know these you know, the Spider and the q q Q, you know, as opposed to go into a mutual funds and things of that nature, which you know involve charges, et cetera. And
it's kind of simplistically understand that. But it just seems that the returns from the indices are substantial and you know, just mhm, you know, whatever the risk is this, whatever the risk, but it's compared to hold and a mutual fund also es how how big impact that they have on the average person's return, you know, if you can get to that. But the index question has been been wondering about that for a long time. I said, it seems simplistic, and I apologize.
Could you just repeat the second part of your question.
I just want to make sure we get that what the ESG part, Yes, I just want you know, ESG seems to be one of these things that's it's an expression that gets bandied about, I know, black rock. It has to do with I guess the environmental type of you know, approach to investing. But you know, more than that, I don't really know. It's kind of you know, it's kind of one of those things you don't hear about, but you're being charged for.
Great.
Yeah, yeah, perfect, great, Well, yeah, appreciate both those questions. And certainly, you know, you know when you see you know, the X and P you know, go up, and you're like, well, why don't we just you know, invest in an S and P five hundred index and and and again, our investment philosophy is really to have a diversified portfolio. And so certainly there's a place and we have you know, broad based indexes uh fund you know ETFs holdings in
our portfolio. But but believe you know, from a from a portfolio construction point of view, you know, we we also then try to identify you know, really sectors that are that are going to perform well based on the current economic situation. So certainly feel like you know, broad based index funds ETFs, there's a place for them in your portfolio. But our philosophy is not to be to put all our eggs in that one basket, right, to
have a well diversified portfolio. Uh and to do that again, they we have a place in our portfolio for you know, just index base But you know, again like we are we are you know, big believers in technology at this point, we have been for a while, right, so so we tend to be uh yeah, we tend to be you know. But but we use you know, an et F right that that's that's you know, based on you know, you know,
top technology companies. So we use a q q Q as our et F right as opposed to going out and trying to pick you know, the individual technology companies who are going to win this year. Right, picking individual stocks it's hard, right, and and uh so we we do. Uh that's why you know, we mainly invest through ETFs and you know index base and so. But again instead of putting all those exit in one basket, you know, we we over right now, we're overweight technology, and we
believe and that's that's performed well for us. But there's times where we've seen you know, sector rotation. We've seen other sectors where we wanted you know, you know where we thought there was opportunity that's understandable, correct, that's.
Right, that's right, yep, yep.
And then you know ESG have average returns. You know, it's like for a simple, simple approach for the simple person. You know, that type of.
Right right, you know and right right.
And I and I and I think you can achieve both, you know, even in a well diversified portfolio. Right, it's just not saying, hey, I'm going to just follow this one index, right, It's it's I'm gonna you know, you know, maybe you have a handful, maybe it's eight holdings you have, and you're you're going to balance those those waitings based on you know, kind of what the current environment is.
And uh, you know, certainly that can be helpful.
And you know, you know ESG and you know, I will say, you know, there's ESG has. You know, there's a lot of discussion about it, and it kind of what you know wanes at times and then and then resurfaces. And really, you know, in ESC stands for Environmental, Social and Governance, it's really you know, investors saying, hey, I don't want to just think about the numbers of a company, right, you know, the financials. I also want to look at
other impacts, right, and other factors. And so it could be looking at you know, sometimes it could be companies that you want to exclude certain companies, right, you don't want to invest in certain companies that you know, you could say, uh, you know, maybe are in an area that you you don't you don't believe it, right, And it could be tobacco, right, it could be one we see, or it could be uh something religious based, or it could be you know, you know, maybe they're just environment
they're not environmentally you know, ah, whether they're meeting too much. They exactly right and and so.
Right and so there are you know, there are investments you.
Don't get as the result of investment in you know, the industries of that nature. You know, I can appreciate people's private right the right thing quote.
Unquote correct correct in? Can you hit it?
I think very good?
Oh all right, Purpie, Well, you know, thank you for the call.
We appreciate John, appreciate you tuning in to us this morning.
Great and video.
I know you were wrapping up your tax segment. You know, I think we've got a few minutes to touch on, uh, you know, the gifting and you know, maybe just touch on you know, maybe you know the annual amount you can gift and you know what happens.
If you exceed that.
And certainly you know this is the time of year we do get a lot of conversation with clients on gifting.
Yeah.
Absolutely, so when it comes to gifting, there's a lot of common misconceptions, right, and the one misconception that comes across the table more often than not, is that you have to pay tax every time you give someone money. Right, And I'd get calls and questions from people that are close to me all the time, Hey, I'm giving my son this much money to buy a house. Do I have to pay tax? And it's usually not case nine to nine percent of the time.
Right.
So, DIRS issues an annual exclusion amount that any individual is allowed to gift another individual on any given year, and in twenty twenty four, that amount is eighteen thousand dollars. So one individual gifting another individual eighteen thousand dollars. There's no you know, requirement, there's nothing you have to do.
But if you go over that amount in any given year for one individual, right, you can give two individuals eighteen thousand, right, eight thousand and one eighteen thousand, the other in the same still aplies. But if you go over that amount with any one individual, you are required by IRS legislation to fire file a gift tax return.
Right.
So, like I said, more often than not, you're not going to own any tax, but you are supposed to track the amount that you gift over that annual exclusion amount because when it comes to your state at the end of your life, there's a lifetime exclusion limit, and that limit's about thirteen million dollars. The amount you gift over that annual exclusion induces the state lifetime exclusions. So that's why you have the file gift tax return to track it. We are coming to the end of the show.
What John give us closing remarks?
Yeah, no, it is. You know it's going to mention.
It's a hot topic this time of year, so certainly we'll have to cover that again at another show.
So, as we said, we are ending this show.
We want to thank you for tuning in. We hope you enjoyed the show. I know that we certainly did. Hope you enjoy the rest of your holiday weekend and have an amazing week ahead. Be sure to tune in next week to hear some other great shows. Check out our website Bouchet dot com for great content and information. You have been 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.