Good morning and everyone. My name is Martin Shields. I'm the chief Wealth Advisor at Bouchet Financial Group, and I'm gonna be your host today for Let's Talk Money. As always, it's great to be here with you on this absolutely fabulous fall morning. As I always say, this is what we live for in upstate New York is days like this, And actually we've been in multiple days like this, and I think the forecast holds for more of this gorgeous weather.
So I hope that you're out there enjoying yourself and you get out to do something to appreciate this fine weather. But as always, it's great to be here with you. Do 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 eight two five five nine four nine. Again that's eight hundred eight two five And as I always say, there's no dumb or silly question except for the one you don't ask, and you may be doing your fellow listener a favor by asking that question that they have
as well. So we have a lot to discuss. Today was a good week in the markets with the S and P being up four percent and the NASAC being up around six and you know, we got big news this week with the Federal Reserve coming out talking about whether they're going to be cutting rates, which almost good, pretty much guaranteed, but whether it's we be twenty five
or fifty basis points. We'll also discussing the show how to handle concentrated stock positions and some things you can do, some strategies that we work with our clients on what you needed to know if you have an inherited IRA and the potential for require minimum distributions for those. We'll talk about death and divorce and this is an area that we work with many individuals going through this and
it can be just very challeing in both respects. You have also the financial elements of these situations, but the emotional piece which can be very just very strong, and you know, trying to get guidance through those can be very challenging. So a lot to discuss. But I want to also introduce my colleague again, Ed Wilhelm On he's one of our investment gurus. This is a young guy out of Sianna. He's been with us for a couple
of years. I'll tell you when we talk about the challenge that the talent on our team, it's really about these young folks that are just amazing. So, Ed, it's great to.
Have you on.
Yeah, I'm happy to be here. I just want to thank everyone for tuning in. Should be a good show.
And just before we get into the financial discussions, you were out on the links yesterday for a good cause. What do you tell our listeners about that?
Yeah, so yesterday I was fortunate enough to get out of the office for the day for the Bob Best Memorial Golf Tournament and memory of Bob Best and his wife Lisa. It's a great event led by Steve Butler of the Saratoga Branch, and it's a golf tournament. You know, it was a great day. We we're fortunate enough to have great weather. You know, everyone in high spirits and the YMCA utilizes the Bob Best Memorial Fund to support local youth and need through areas such as membership, youth
sports programming, and childcare. To date, they've now hosted six golf fundraisers for this fund and have raised over one hundred and twenty five thousand dollars to support the community and youth in need. So it was a great day. You know, always very fortunate to get out for events like this and very grateful you know that Bouchet is able to be in a position where we can sponsor you know, charities and local areas of the community and need.
Well, that's great, that's great. Glad you're able to do that. And as we always say, that's a big part of who we are as a firm, are DNA is about giving back to the community, and that's all started with Steve, and so it was great that you could be out there doing that and we appreciate your involvement with the YMCA, obviously a great organization. We're gonna go to the phone lines. We have Diane from NASA. Diane, are you there?
Yes?
Hi?
Hi? What can I help you with?
Can you hear me? I?
Can I have a question for you? I was wondering. We're both my husband and I are both retired and we're I'm not sure if this is the question for you or not, but we have a large sum of money in our four oh one and I'm nervous about leaving it in there. I'm just wondering what you would recommend doing at this point in our lives to secure it.
We say nervous about leaving in there you're talking about in the formul ca itself or in the markets in the Fourah.
One where it's like going up and down and I want to secure it. My husband thinks we should leave it as long as it's making money. I'm just feeling like, you know, we're in our seventies. Should we move it to something secure and what that would be?
Yeah, great question. So a couple of things. One is I would give any individual the recommendation that if you're no longer working for an organization, that you should move a money from a four and K into an IRA or from a four to three B into an IRA because with those four one ks four three b's, even with the big company or big organization, you're paying for some fees that you don't need to pay for anymore,
so administrative fees, worckord keeping fees, custodia fee. So I would absolutely recommend that you roll that into an IRA at Charles Schwab or Fidelity or a Vanguard very low cost options. Right, So that's kind of a no brainer. Plus your ability to interface and get things done with your IRA is a lot easier than having to go through a four one K. So that that'd be my first recommendation to you. And then then it's about what are you going to do with those dollars when they're there?
And I would tell you is this, which is you know, you got to have the right mindset is to and understand what your risk tolerance is for those dollars. And if you're in your seventies, you know, if you're in recently good health, you know you probably have you know, ten fifteen, twenty years or something in that neighborhood for
for both of you to be living. And you know, along those lines having ye yep, yep, and you know along those lines, you got to have some element a diversified portfolio, right, So something in maybe a little bit in cash that you know that you have for liquidity, uh, some in bonds to provide some income, and some in stocks to provide for growth. Let me ask you this, are you taking distributions from that account?
Now?
We are not yet, No, we're not.
Okay, Well, one thing, do you have kids?
One daughter grown?
Okay? So what I always tell clients are is that you know you should you know what is the role and purpose of this money And it could just be to backstop you in case there's unknown expenses, but you know it's also there for you to enjoy while you're living,
right and if you have your health. Uh, you know, there's nothing wrong with going takeing some of those dollars and doing something whatever that is that is you know makes you and your your husband enjoy doing so I would encourage you to do that, but you think about this, You're not you don't even need those dollars, you know from a from a spending perspective, you know, having some element of growth. So let's just say you know you have a growth and income portfolio is sixty percent stocks,
forty percent forty percent bonds, cation and alternatives. That is going to allow you to stay sustain through ups and downs. And let's just say there is a recession, right, Well, you've got forty percent of your money in assets will probably do well if we ever did hit a recession. Right. So that's where it's just important to have that right
mix of stocks and bonds. Even if you want to be more conservative, you could have it in what we would call a conservative portfolio where you only have forty percent in stocks, but you know, over the long time horizon five ten years, stocks are not really risky. They will come through for you. So I think I would get too caught up and say, hey, what's going to happen in six months? So what's going to happen a year.
It's more about, hey, we're at long term investors. We have some of our portfolio in assets that are good if there's volatility, and we have some of our asset classes that are good for growth, and just have in that mindset. And again I would also encourage you just to not be afraid to spend those dollars right they're there for you. That's one of the things we try to coach our clients on is listen, if you don't spend it, you know your kids probably will or whoever
receives your assets probably will. So make sure why you have your health, you use your wealth for your enjoyment.
Boy, I'll tell you that you nailed it, because that's the one thing my husband said. We all these years, we you know, we learned how to save, now we have to learn how to spend it harder than you know it seems like it should be so easy, but it's really hard.
You're nervous about it.
It is really hard. I mean you think about it. You've been ingrained for how many years? Fifty years to save safe safe, safe safe, And now they say, you know, with our clients, we're like, no, switch that around. And where is it even more challenging is you don't have a paycheck anymore. Right, So not only are we telling you you should spend it, but you don't have a paycheck. It just doesn't seem the correct thing to do. But it is the right thing to do. That's what those
dollars are there for. I mean, they're not really there for to give to your daughter. And now it doesn't mean you can't get to your daughter. And and maybe spending those things is helping your daughter out, like I don't even know, I mean, maybe that's how you. What I would rather do is spend the money down to zero and in doing so help your daughter out if that's what you wanted to do. Oh through that time period, Verse is dying and giving her a bucket of money.
I know, I know it's true. Well, I appreciate you talking to me, and thank you very much.
For the information.
You got it. You enjoy your day. Now we're going to keep with the fall lines. We have Dave from Wilton, Davia.
There, Yeah, I'm here.
How you doing, I'm doing well.
How about yourself?
Oh? No complaints? What can I help you with?
Okay, I think I've got a bit of an unusual question for you. I'll give you a little bit of background first. I'm sixty four, my wife sixty three. We're both retired. We have about two point five million in iras traditional iras and about four hundred thousand in rocks. For the last two years, I've done rollovers one hundred thousand dollars roll over to a raw and I'm really
tired of paying those New York taxes. So we've recently sold our home here in Wilton and we're buying a home in Gettysburg, Pennsylvania to take advantage of their tax their taxes on retired people. They don't have an income tax on public or private pensions or IRA distributions. They only tax interest for retirees. One of my I can't seem to get a straight answer on this. I want to do if I hate to say this, but if
the Trump tax cuts expire on the election. I'd like to do a three hundred thousand dollars roll over this year to stay, you know, to take advantage of that before the tax brackets go up three percent on each of the each of the brackets. But if I'm going to move into my house in Pennsylvania next month, and I always do with my conversions at the end of the year in December, do I have to pay New York State income tax on that rollover money, whether yeah, thousand or three hundred thousand.
Yes, because New York State says if what Well, because New York State says, as.
I'm actually go ahead, I'm actually to withdrawal when I'm a Pennsylvania resident, you know what I mean.
Yeah, So, what New York State says is that if you live within New York State for six months out of a year and out of a calendar year, that you're a resident of New York State. So for twenty twenty four, you will have lived in New York State for more than six months. So any income that is made in that year is considered New York State income.
Okay, I guess I'm willing you to do one hundred thousand.
Then, yeah, it just is what it is. You can't you know, I agree with what you're saying, right, which is that's that's and it comes coming in when you're a Pennsylvania resident. But it's just the six month rule. They're very strict with it, and they're going to be
going after you for those taxes. Now, the one thing I would cost you on is just being aware that even let's just say, you know, just to kind of give you a perspective on this, let's say you went ahead and did this, and let's say you could qualify for Pennsylvania taxes, you have to be aware that when you start moving up as far as one hundred thousand, two hundred thousand, three hundred thousand, that your marginal tax rate starts to increase as well, and that you actually
may be better keeping it at the one hundred thousand dollar range, because let's say I don't know exactly, but let's just say you're at the marginal tax rate of twenty four percent. Well, if you added a couple hundred thousand dollars on to to be now three hundred thousand, you could be at the marshal tax rate of thirty
four percent. So you know, you actually, yeah, you're right with the tax cuts expiring, but overall on those dollars, you would actually pay in a higher marginal tax rate thing you would otherwise, So you know, without doing I've already.
I've already done the calculations and determined that I would remain in the twenty four percent tax bracket. My effective rate would be like twenty one percent. Actually. But the thing I have to take into consideration is next in February, I'm going to be applying for Medicare, and that's gonna put me over the two hundred and one thousand dollars threshold.
You are correct, Ierma, Yeah, that's right, that's right. I got consider IRMA as well. So yep, that's it sounds like you know what you're doing. It sounds like you're doing the right projections. So that's accurate. But yes, you would have to pay in New York state taxes.
Yeah. The uh, the other thing I could do the the fall into the higher tax bracket and do the larger amount because my wife is a retired state employees so she has a medical through them, you know, So I got whichever really works out best. Well, I'll do the calculations to determined. I just tired of pay in New York state taxes.
Yeah, now I get it, I get it. Well, I hope your move goes well. Could you say Gettysburg? What'd you see when you move in too?
We chose getting okay, we chose getty We chose Gettysburg because the opportunities to do volunteer work down there at the at the National Park and stuff like that.
Yeah. No, I mean I I used to live in d C. So I drive and my parents were from Binghamton, so drive to Gettysburg all the time. Great little place of town there. So you got the university there as well. So uh yeah, and I hope it goes well for you.
All right, Well, thank you very much for your time.
You got it. Take care now. Yes, yeah, so great question by Dave. But that is unfortunately the case that the sixth rule is pretty hard and fast. They do check it. They If you're going to try to avoid pay in New York state taxes and claim yourself as a resident of another state, don't think you can just
kind of wing it. You're going to have to really make sure you have a documented that you are not in this state for at least six months or otherwise you're going to be considered a state resident in New York. State's going to want their money, so just to be highly aware of that. All right, Well, let's go on to talking about Let's talk about the Federal Reserve and the meeting coming up this week and what that means to you as an investor, what you should be looking at.
But again, if you have any questions, you can reach us at eight hundred eight two five five nine four nine. Again that's eight hundred eight two five five nine four nine. Whatever question you may have. As we've talked about, where are our clients personal CFO, so anything financial related, whether it be investments, tax, the state planning, insurance, whatever that may be. Those are the questions that we get from our clients, and you, as a listener, give us a
call and we can chat. But let's talk about the Federal reserves. So they have their meeting coming up this Wednesday. Pretty clearly it has been telegraphed that the Federal Reserve will probably reduce rates by twenty five basis points. So remember this is we're talking about the Federal funds rate, which is the short term overnight rate that exists with banks it's the one lever that's one of the main levers that the Federal Reserve controls to dictate where rates
will go. They also have something called quantitative eavening and quantitative tightening, which is them buying bonds, but this is the main lever that they use to control the rates, and they increase rates by five hundred basis points. That's five percent back at twenty two and early twenty three, which was just a dramatic increase and everybody was concerned about that pushing us into a recession, and that hasn't
happened or more in the soft landing approach. But now that we're starting to reduce rates, we're at five and a quarter to five percent for the federal funds rate. You know, it's this parlor game what are they going to reduce it by? And then you know, also the big question will be what is the statements going to be for November when they meet. And that's you know, always kind of with the no different with companies with stocks.
It's not just what's happening in this quarter first, this meeting this week, Well what are they forecasting for those times coming up? And you know, so a lot to discuss with the with this rate cut, and you know, kind of looking at historically what does a rate cut mean for the markets, and it's a bit split. You know, you look at over the last four main times that the FED did this. In twenty nineteen, it was a
positive for the markets. If you remember that December t I was eighteen, the markets really were not doing well, and then they rallied once the Fed started cutting rates. Two thousand and I'm sorry, nineteen ninety five also a good thing, you know, it was the kind of the boomy nineties. The Fed started cut rates. The markets did well for the remaining part of that decade, but two thousand and one and two thousand and seven not so great.
And there's a number of factors that drive that, right, So you know, you're looking at, hey, what do the labor markets look like? What does the economic growth GDP look like? And one of the most important things is what's happening with corporate profits. Certainly corporate profits and GDP
remain strong. But and what are your thoughts as you look at these these potential rate cuts, you know, give us your insight is to you know, what you think maybe coming from the Fed as far as their outlook, and what do you think from a market perspective these rate cuts mean to the markets?
Yeah, thanks Marty. So if we're thinking about you know, this coming rate cut this one day, you know, we're at a fifty to fifty probability between twenty five basis points and fifty basis points, which might sound like a small difference, but you know, when we're only looking at a you know, total of you know, five hundred basis points that we just got, you know, this is a you know, every every hike or cut, it does mean
quite a bit for markets. So if looking at that fifty to fifty probability, if we do get twenty five basis points on the short end of the curve, we could see yields come up. However, looking at you know, where the unemployment is at right now, I do think that your own power is going to stick with twenty five basis points. Right now, the unemployment rate is lower than eighty percent of other cycles where the Federal Reserve
has started cutting. And there's a lot of interesting, you know, market dynamics that can skew some employment data that we get. So one of the core things we look at is jobs added in non farm payrolls, and they break this down by sectors and industries, so you know, looking at all of these different areas, you know, whether it's healthcare or government jobs, there's a ton of market dynamics that
can skew these numbers. You know, a couple of key points here, you know, in the broader economy that we're looking at is you've got this huge chunk of baby boomers that are retiring, and along with that you also have record levels of immigration. So these things are are very hard to you know, analyze and predict out into future time frames. And as we know, markets are always
forward looking. And even if you're you know, following some larger financial institutions, you know, whether it's big banks or hedge funds forecasts, we do see a lot of you know, split on both ends. So one thing you know, we focus on here right now is we're looking at construction jobs added, which have still been strong. So I don't see, you know, any major fears of our recession. I think if we started to see construction jobs added flide, that would be more cause for concern.
But I don't.
I don't think Jerome sees the economy, you know, really in a super dire spot where he would want to get fifty basis points because you do run the risk of cutting rates too fast, which could result in a reacceleration in inflation, which then you know, could put point could point to UH an economic regime that is stagflationary, you know, where we're getting little to no economic growth along with inflation, and that that is historically the worst
kind of regime to be in. So ultimately, this year, I are this September, this coming Wednesday, I think we're going to get a twenty five basis point cut, you know, seeing the short end of the curve yields come up.
Yeah, I would, I would agree with that, and I agree that it's actually in Jerome Paul's interest to do that, right that just kind of he could then dictate also what he wants to say for November's cut, and that will help influence the market. But you know, I've said this all along that you know, if the FED does start cutting rays dramatically, you got two issues. One is it could reignite inflation, which would be very problematic, or the other thing about it, it could be an indication that
the economy is much weaker than expected. And it's one of these things, which is be careful what you hope for. I'm more in the camp of hoping for just a twenty five bases cut case cut. I think that indicates that the economy is strong, which I think it is. You look at the earnings and GDP growth and everything,
and I think slower and steady wins the race. I actually think that even from a monetary policy perspective, that was the issue with the five hundred basis points increase was it was so dramatic, and that's where things can get thrown off. And I think on the backside, if you're too dramatic on the cuts, it's gonna be or problematic. Well, folks, we're going to go to commercial break, but come back
and join us as we take your questions. You're listening to Let's Talk Money, brought to you by Bouchet Finance Group. Will we help our clients prioritize their health, well we manage their wealth for life. Come back and join us, folks. Welcome back, folks. For those of you who are just joining us, my name is Martin Shields. I'm your host today for Less Talk Money. I'm with my colleague Ed Wilhelm, who's on our investment team, to answer any questions you
may have. I do want to let all of our listeners know that my incredibly knowledgeable colleague, Stephen Bouche will actually be back on the show tomorrow at eight am. So if you want to catch up with Steve or ask him any questions, tune in tomorrow at eight am and Steve will be on. But it's great to be here with you on this gorgeous UH Saturday morning. I hope that you're out enjoying it, and it's great to
answer any questions you may have. UH And as I always say, any questions, any financier related questions, fire away. Let's the more interesting the better. What's what do you have? Let's chat. You can reach us at eight hundred eight two five five nine four nine. That's eight hundred eight two five five nine four nine. We're gonna go all right to the phone lines. We have ron Ronnie there.
Yes, Hi, good morning, thank you for taking my call. I have spoken to mister Bouchet and this is Regind, my daughter, and so he got me to UH to do her rust in the in an Schwab Intelligent account, which we did so but the latest she's a brand new school teacher. She this was her first teaching job, and so when you go in there, they they give you the whole, the whole, you know, it's like shopping
list of enough to do. And yeah, and then they were talking about that they have a four oh three b and so you know, my thought was that to get her into as many retirement uh focused things as possible, because the early start the better. But then when we were going through the paperwork, my wife has said, do
you realize that this is an annuity? And so I yet my red lights went up because I know that mister Bouchet is not a proponent of annuities, and so that basically stopped us in our tracks because it's it's it's not really done through the school system. It's done through these individual or insurance companies. And and I had no clue. So before we even attempt to do anything on this thing, Yeah, ye, is that something that we
should be looking into. I know, she's limited in options, you know, she's limited to the rows that she has right now, and there's really nothing else that she can invest in that would uh you know, help her down the road. But yeah, I'm just kind of antsy on the whole aspect of the four oh three B. And so I'm wondering if you can give me some kind of your thoughts on how to process.
This great question. And congratulations on your daughter starting off as a teacher. That's fantastic.
Well we'll see.
So let's hear yeah, yeah, yeah, So let's hear so. Uh So she's max now on her WROTH contribution. Is that correct?
Yeah?
She ever since she started working and and and she had a two year residency, we've been putting in uh as long as it meant that the uh, the criteria we've put in the you know, money into the into the ARSS. So she's she's basically out nearly thirty thousand in In that roars and muster Bouchet UH indicated that we should look towards the intelligent account, which we did. We switched it over to the aggressive part, so recovered there.
So she maxes out the WARS contributions. But it doesn't seem to be that many other options for income potential.
I was easier looking at maybe peoples for her. I have no idea how yahcause I'm not sure about this four or three B because they talk about, and then I got on, I went online and with a bunch of webinars and and a lot they just they say the worst thing that they ever did the school teachers was the four or three B because they're like the most you know, underappreciated sector in that these insurance companies
basically take advantage of them. And so before we even invest a dollar, I want the to know if we're making the right decision and whether or not there are other alternatives.
Well, this is a great question because I'm sure there's many other people that either they or their family members are involved with education. I actually come from a family of educators, So great question here. So a couple of things. One is when they talk about a four to three B being annuity plan, that is more of an IRS declaration. Then the fact of matter is that it's not all, not all the investments are a nuity products. Right, So we manage our firm manages a number of four three
VP plans. There's nothing about those plans that is associated with an annuity. It really is a term that is utilized by the I R S that that it's kind of interchangeable, but it is not just because you contribute to a fourth through B does not mean that money is going into annuity. But now here's here's where the
kicker is of this. The problem with in general, this is truly across most of the US, but certainly in New York State, is that the options that are available, it's like overwhelming, right, And there's so many different funds and fun families and financial cutodians that you could utilize,
and so it gets kind of overwhelming. And the people they are usually in those schools talking about the options are the insurance people, and they are very aggressive and they're usually pitching their annuity contracts as that option to utilize.
But within each one of those plans, I do know with New York State that there are options to select, you know, either fidelity or somebody like a Fidelity to utilize to contribute to, and in that option you will be able to you know, identify the S and P five hundred as you're index and all these other basic straightforward ways to get invested into the market. So I would encourage you that if you wanted to go down that path with your daughter, you can do it, and
it's going to be fine. You just got to really stay clear of any of the insurance based options go you know you can. There'll be a list of different financial custodians to utilize, and those financial custodians that are more kind of in the fidelity realm are going to have straightforward equity investments, so you can do it that way.
The other thing is, you know, it's not outrageous by any means just to open now with schwab open a taxable account, right, so you have the rowth and now just open a tax wblecount where you can invest moneyes in a tax manner. And the advantage of that is, let's say down the road she wants to buy a house, or you know, she needs some for something. Those tax
dollars she could access at any point. And yes, she'll pay taxes if she sells a position, and she'll pay taxes on any income being produced, but they're completely flexible and she can utilize those at any point. So that's that's another That's another option that really can be very effective for people to save dollars, and it can be done, it can be managed in a tax efficient manner. So I think either of those options uh RON are good.
Just if you go down the option with the fourth thre b stay clear of anything that is on the insurance side that is going to that is going to be more annuity based.
Hey, do you have I know, I know bouchet your handles high net worth situations, But do you have like lower level people that if we wanted to pay for the service to just talk through this with someone who kind of knows more than we do about this. Is that something that that you do.
It's unfortunately not, We're just not set up that way. But what I'll tell you is this, Uh, you can go to an organization we're members of it. It's called NAFA, n A p f A, NAFA dot org National Association or Personal Financial Advisors. Every firm that's on there is a fiduciary, meaning that they only are fee only. They don't they don't sell any products or anything. Now are our firm just the way we're set up, we do, uh, just tend and skew more to dealing with more high
network individuals. But there are other advisors that are listed there that do hourly and one time planning work and you'll they'll describe it in their bios and they're in the Albany Capital region. They describe it what type of work they do. And those are advisors that you can come to with any financial related questions and they'll say, great, I could do this for you. They're either going to give you a flat rate that's going to cost or they're gonna say, my hourly rate is one hundred twenty
five dollars an hour. I'm just gonna bill you at that. And and you know, these are very ethical people. They're not going to over bill you, they're not going to try to sell you something, and they'll give you advice just in the way you're looking for, uh in this case, uh, you know, to kind of get some guidance on these topics.
Okay, yeah, because it's so confusing. I I did. I don't know whether this is something that you're aware of, but but anybody who is listening in that might be
having the same situations that we're having. On one of the web webinars that I had gotten into, they made reference to an organization that that it's called follow three B Compare and it's four three be wise if you, if if anybody goes into that, what they do is you can put in any school district in the United States States and they will give you all the companies that that that the school deals with, and it gives ratings from A to F in terms of, uh, the
investment profiles, and uh yeah that if if a school doesn't have any any of the firms in a green category, then they don't rate them. And and so I looked at it, and uh, there's a bunch of them, and it seems one comes up, I don't know, call Aspire a s P I R. E. Financial, which I've never heard of, but they rate them based upon the fees that they charge and and and so it's uh, yeah, they give you some information, but it's just a matter
of it's so overwhelming. As the last question, I won't bother you if it isn't crazy too to open up a Schwab account to purchase a treasury bills and have them roll over, you know, is that a crazy way to invest some of her money?
I would say, for her, given her age, unless she needed the money next you know year or something. Yes, it's not crazy, but I would not buy treasuries for her. You know, you could even buy in those taxic accounts just a fund that is, you know, a growth fund or a growth and income fund. But you know, she's young, she needs you know, she's fine with you know, having
sixty seventy eighty one hundred percent in equities. So unless it was something you're like, well, she might use this money in uh, you know, six months or a year, in which case you could just open a Schwab fund, a Schwab account and buy either a money market fund. Uh, there's sw v xx which yields over five percent right now, and just put the money in that money market fund. It's completely liquid. You earn over five percent an only,
and then pull it out if you need it. But if this is long term money, meaning that let's say three to five years plus, then you don't want it in t bils. It's just not going to earn enough over time. She can take on more risk, and she's at the age where she can do that.
Okay, well you've been very, very helpful. It's still a whirlwinds. So I think we're going to hold off on the four or three B right now, but we'll figure it out. But we listened to mister Bouchet's advice and so far he hasn't gotten us wrong yet, so we'll see. But thank you so much. I appreciate it.
You got it. Ron again. Anytime you any questions, call in and good luck to your daughter. Great questions there. And you know, without a doubt, I've heard this before.
There's been a lot of articles about it that some of these four or three B plans through school districts, and in particular, it's the people who are going in there trying to sell their products are the annuity salespeople, and they're aggressive, and they're you know, they earn a lot of money and they're trying to sell insurance products to the teachers directly, and so they're really not getting
the fiduciary guidance. And you know, that's one of the areas we do specialize in is four and K four through B plans and a huge element of how we work in that space is through fiduciary guidance. Right, so as we're sitting down with the participants, we'll talk about anything. I mean, we talk about debt management, about budgeting, about estate planning. Because we're a fiduciary, we can do that
and we're never going to sell anything. We're never going to sell a product to those participants who frankly don't have access to a New I'm sorry to a fiduciary, and that's just a huge part of what we do for our four and K four the B plans, and so to have those more insurance based products and people in there is unfortunate. And you know, the last thing that Ron's point is just the complexity of this. It's just there's a lot of complexity that really can trip
people up, and it's it's unfortunate. We're going to keeping the phone lines we have deb w there, Yes.
I am what can I help you with here?
Hi? Thanks for taking my call. I also have a four oh three B through New York State and the fees are very limited. Seventy five dollars a years would I pay? And I pay that over you know, two payments, so half of that twice a year, and plus of course the expenses of the funds that I'm in. So those the cots are really good. But if I wanted to get that over into a ross iray, is it possible for me to do that if I'm not working? And how would I do?
You're not?
Yeah, so you're not working anymore? Correct, yep, so you can roll that right? Way you want to do first is roll it right into a traditional IRA, assuming these are all pre tax dollars, in which I'm guessing they
probably are. So just open a traditional IRA again at ban Guard, Shwob or Fidelity who when any of the big custodians and UH, you have to call up New York State or whoever the uh the accounts with and let them know that you're going to roll it into an IRA and that money will roll over note note it will be a check or it'll go you know, go directly to the custodian. And then when it goes over there, you can get it invested no tax consequence
from doing that transfer, uh. And then when it's over there, then you can convert it to a roth you know, either all or part of it. So you would also open a roth ira at that custodian and then convert it over hold you now, deb I'm a sixty two sixty two okay, so you can you know, you get up to twenty thousand dollars excluded from New York State New York State's access for either IRA distributions or paston income.
So you could you know, be converted that first twenty thousand dollars would be tax me from the X state. And the only thing to remember is if you're going to do a wroth conversion, you're gonna want to have dollars outside cash outside to pay for the taxes, so just to cover that tax liability. But that would be the route that you go to, uh to handle that.
Okay.
Is there a limit on the number of times that you can do that in a year?
Nope, you can convert. Yeah, I don't know. I mean, I don't know why you would not do it all at once versus do it multiple times in the year.
I guess to take advantage of dollar cost averaging when you go to sell your assets.
Yeah, I would. Again, this is where you know a lot of life, just don't overthink that. So you know, it's ideal to do this when the market's down. You know, we've done this for our clients. You know, do a wroth conversion when the marks down, because then the tax fils lower because the market's down. And then when you converted over it to wrath and the market recovers, now you've got all that growth in the wrath, so so there is some value in that. But you know, to
do this over throughout the year. I mean, my suggest to you is simplify your life. Make the decision to do it, do it, and don't overthink it.
Okay, So that's a good point.
That's yeah, yeah, sometimes because here's the thing is, over time, it's gonna work in your favor. Could it work against you if the market goes down a little bit, sure, but like you can't get caught up in that. That's you're gonna drive yourself crazy, right.
So okay, and I have one other question. Where is the best place right now if you have surplus cash to invest and you don't need it, you don't need.
To use it. So are we talking about short term dollars or long term dollars?
I'm probably maybe both.
Okay. Well, one, you know, if it's short term, I think a money market is great right now. If the fence starts cutting rates, which they may on Wednesday, you know, the interest yielded from a money market, it's gonna start dropping. But right now is completely liquid, meaning you could you know, sell today, have your cash tomorrow. It is yielding over five percent. And so that's that's a great way. That's
again keeping with the idea is keeping things simple. That's a great way to get some yield on money that you need in the short term, you know, long term, it's more about having a diversified portfolio, right, So having some element, you know, a sixty forty portfolio or something where you've got broad diversification across many of the markets and then you've got something in bonds and you've got
something in cash. So broad diversification works. You know, we may be in a situation where if the Fed does cut interest rates, you know, their asset classes like real estate, investment trust or utilities that could do well, but they've already really rallied this year. They've rallied quite a bit this year, so you know, whether they continue doing that,
and that's where it becomes a challenge. So that's where again keeping life simple, you know, just you know, owning the s and P. Five hundred, it's some broad difverersification.
It's going to add value, okay, thank you very much. So that doing something like that might be better than a maga in that.
Case, right, better than a what maga.
H it's called a maga. I forgot the what the acronym stands for. But it's basically an annuity that you lock up your money for, say five years. Please don't please have no.
That's real, real clear here with business and with life, simple is good, right, and you think about anything, you start making it complicated. You're like, okay, you know those annuities, there are some circumstances there are you know a few circumstances we're having an annuity can make sense, but appreciate when you lock up you just use the term lock up your money. When you lock up your money, you
don't have liquidity. That is a huge negative, right that you get you should get paid a lot more money. You think about anything. If some require you to lock up your money, well I want to get paid a lot more money for doing that. Whereas I just describe to you with the money market, you're getting five percent now, granted that rate can fluctuate, but you can get your money back tomorrow if you want it. And guess what,
it's pretty much ninety nine point nine percent guaranteed. So you know anything like that, and that's where you know. Even a diversified portfolio, which is you needed your money, there's an emergency, something happens, you could sell today and
get all your money tomorrow. That that transparency, that liquidity, all those things are awfully valuable as a business person and as an investor, And you know reasons to stay far away from annuities where you're going to sign a contract with an insurance company and they're going to lock you in, right and and so I always tell people, unless you're in that small subset that the annuity is the right thing. And oh, by the way, you've talked
to a fiduciary, not just the annuity salesperson. Right. The annuity salesperson can tell you a thousand reasons why it's good for you, but guess that's what's driving their commission. So unless you talk to and the fiduciary that says, yes, this is the best thing for you, stay far away from annuity. I'm just telling you. It's you've got to be really aware. I mean, how many times we see people coming in who are prospective clients who have an annuity.
They have no idea why they had it. They got sold it and they have no idea why they had it, and they're locked into these annuities with high expenses, penalty, lock up rates, all these things that are negative. But but somebody, a newity salesperson did a great job of convincing them that's what they need to have.
Okay, thank you very much. I really appreciate your advice.
You got it, dev. You can take care of a good day.
Thank you you too.
Yes, yes, yes, so you know I don't In regards to the annuities, I mean again, it's you can't have. I mean, it's just it's just a way of having money invested. And there are these circumstances. I've said before. If you are deathly afraid of the market and you have no airs and all you want is a pension, then that may make sense to take part of your
dollars and put them in there. But even in that case, I have I talk to a fiduciary that I mentioned NAFA, So going to NAFA dot org and APFA dot org and talking to a fiduciary saying hey, this is what I'm looking at. What do you think and having them give you a guidance of whether or not it's the right approach. That is just so important to get that guidance. Otherwise, you know, appreciate that that person that is talking about
that nuity is selling that product to you. And the biggest thing with this is it's the lock up rate. It's the high fees. If you just decide to change your minds, guess what you can't get out of it, right, And that is just so important. The reason we always tell you know perspective clients with us, which is, hey, you come as a client. It's a big deal. We take we don't take this lately. You're you're in trusting
your financial future to us, and it's very important. But oh, by the way, the term that you're signing with the contract to us is you can change and leave us in twenty four hours. Just give us notice. We move you from the institutional side of Charles Schwab to the retail side of Charles Schwab. And that ability for a prospective client to change their mind on a dime is that's where the value is. There's a tremendous amount of value in that and that's unfortunately with an annuity you
don't have that. And you know, it's easy to get caught up in a sales pitch. And nothing against the salesman, that's that's what their job is to pitch these but you know it can be problematic in that regard. And before you go down the route to make that decision, you know, make sure you've talked to a fiduciari. Well, folks, we have spent an hour together. It's been great and thank you for joining us. As you can tell, folks,
one smart young man to have on our team. And as always is great to be here to answer any of your questions. As I mentioned, Steve will be on tomorrow at eight am, so if you want to come and ask them some questions, join then. As always is great to be here with you. Listen, So let's talk money. Brought to you by Bouchet Financial Group. When we help our clients prioritize their health, when we manage the wealth for life,