With the recent announcements of Instacart and ARM seeking to make their debut on the public equity markets, the IPO gate may be re-opening after closing through much of the last year and a half. And in the dynamic world of tech startups, pre-IPO employees have a unique opportunity to build substantial wealth through their company's equity compensation.
For long-term investors, understanding what can and cannot be controlled is the key to financial success and peace of mind. While all investors would like to believe they can predict or even control the market's direction, experience teaches us that this is difficult. Constructing and risk managing an appropriate portfolio, while making strategic and tactical allocations based on market opportunities, ideally with the guidance of a trusted advisor, is often the best approach. However, while following markets and maintaining a perspective on the economy is essential, an even more fundamental key to success is investing early, investing often, and remaining focused on long-term financial goals. What can investors do to benefit from these principles today?
Founding a business is a monumental undertaking — a crucial life decision that may not always be made rationally or with cemented fundamental business practices. Even still, many entrepreneurs found themselves nine months into a 9-5 soul-sucking job, taking the proverbial (and more challenging) road less traveled.
On August 1, Fitch, a credit ratings agency, downgraded the U.S. debt from AAA (the highest rating) to AA+. Fitch had warned of a possible downgrade during the debt ceiling crisis earlier this year and has sounded alarms since 2011, when a similar crisis occurred. While few investors, economists, and business leaders view the downgrade itself as meaningful, primarily because AA+ still represents an extremely low default risk, that does not mean it has not impacted financial markets. After all, investors have benefited from markets mostly moving upward this year, leaving some investors unprepared for even small stock market swings. What drove the downgrade of the U.S. debt, and how can long-term investors maintain a balanced perspective?
Market and economic expectations have shifted 180 degrees since the start of the year when many investors expected a recession and prolonged bear market. Ongoing economic growth, low unemployment, improving price pressures, and slowing Fed rate hikes have spurred a strong market rally, especially across sectors that struggled last year. While the economic situation is far from perfect, and investors should always be prepared for uncertainty, it's also essential to recognize the positive trends raising the odds of a "soft landing." What factors are driving these changes in investor expectations?
For many Tech executives, figuring out the right mix of Roth and Traditional 401k contributions is complex. With the Secure Act 2.0, the IRS will push out the RMD (required minimum distribution) age to 75 in 2033. This could make Traditional contributions more attractive.
If you are a business owner, you have a great deal to think about. As I've written about in the past, you wear many hats! So, not only are you looking for ways to grow your business, but you are also thinking about ways to save time and money. You also need to think about your corporate taxes, which can vary depending on whether you have an LLC or an S corporation.
Celebrating as a family member graduates high school and attends college is a monumental event and the culmination of years of hard work. However, paying for college remains a significant source of stress for many households. It's no secret that college costs have risen much faster than inflation over the past 40 years, increasing the financial burden on families as they set money aside and on graduates once they enter the workforce. And yet, there are numerous professional and personal benefits to pursuing higher education for those who wish to do so. Weighing the costs against the benefits while considering personal priorities and the broader economic picture makes college planning a complex topic.
Planning for retirement for mid-career tech professionals has never been more important and yet so challenging. Given the problematic inflationary conditions of the past two years, the risk that worries most continues to be outliving their savings. This is because, when it comes to markets and the economy, we can't control the timing of events - including day-to-day market swings and whether investors begin retirement in a bull or bear market. What we can control, however, is our own behavior by staying disciplined. While there are never any guarantees, history shows that having a sound financial plan that can adjust to changing conditions, accompanied by proper financial guidance, is the best way to minimize retirement risks.
Restricted Stock Units (RSUs) are a popular form of equity compensation many companies use to incentivize and retain employees. RSUs are often granted as part of an employee's compensation package and represent a promise to deliver company stock at a future date, usually after a vesting period. While RSUs can provide a valuable opportunity for employees to participate in their company's growth, they also come with unique tax considerations, including asymmetric tax risk.