The Market Feels Unstable — Here’s How to Stay on Track
There are times in market cycles when economic, geopolitical, and financial conditions converge in ways that create palpable uncertainty. In many ways, it can feel like standing on the precipice of an abyss.
Today, I would argue that we are in just one of those moments.
Often, it’s not just one event, but a cascade of interconnected developments that lead one to conclude that things are about to get bad.
History Often Rhymes
Early on in my career, it started with the failures of Bear Stearns and Lehman Brothers, the nationalization of Fannie Mae and Freddie Mac, and the bailouts of AIG and Citi, all of which signaled the fragility of the global financial system in 2008.
In 2020, early reports of health warnings, travel restrictions, and border closures eventually escalated into a near-total shutdown of the global economy, prompting widespread existential fear.
Now, in early 2025, we are experiencing heightened uncertainty as the resumption of trade wars with ambiguous objectives, shifting geopolitical alliances, and a retreat from post-war global institutions and a seeming move towards isolationism create a new political and economic reality. These shifts pose significant implications for the global economy and financial markets.
Needless to say, there is much to worry about in the current political, economic, and market environment. It’s enough to make any sane person want to bury their savings in their backyard.
How to Navigate the Uncertainty
That said, having been through multiple market cycles, being an avid student of history, and considering my background in macroeconomic strategy, I would like to share some thoughts on how to frame today’s environment and what you can do about it financially.
Firstly, I want to acknowledge that we are in the midst of an anxiety-provoking time in U.S. history. I am not going to discount the legitimate fear that many of us may be feeling right now amidst all the political tumult and economic uncertainties. This is a natural response.
With that said, when it comes to investing and the markets, it’s crucial to remember that we’ve been through similar challenges in the past. And with history as our guide, during times like these, it’s essential to remain committed to a long-term, disciplined investment strategy.
Make no mistake, what’s happening today will have significant implications for years to come.
Why It’s Essential to Stay Committed for the Long-term
However, history has shown that, from a capital markets perspective, risk assets tend to sell off during political and economic inflection points, before eventually recovering. These ebbs and flows are a natural part of the market process when key narratives change.
In fact, over the past 100 years, there have been many paradigm-shifting political and economic events, but stock prices continued to march higher thereafter. This point is evidenced in Figure 1.
To be sure, financial markets, after periods of uncertainty, do eventually recover as investors eventually adapt to new political or economic paradigms. Indeed, as figure 1 illustrates, risk asset prices are naturally biased to the upside because if they weren’t, then investing would not be much different from gambling, would it?
Nevertheless, you might say that now is not the right time to be in the markets and that you would prefer to get out. However, history has also shown us that exiting the markets at the wrong time could lead to major disappointment down the road.
For example, Figure 2 shows how missing even the best five days over the past 20 years could have led to significant missed opportunities in the markets. Indeed, back in 2008, it is arguable that peak market fear occurred at the end of the year, just a few months before the market bottomed out in March 2009.
Similarly, in 2020, peak fear occurred in late February before markets bottomed out in March and then took off again in April. Therefore, trying to time the markets or get out when it feels like things are starting to get bad might work against you over the near- and long-term.
Practical Steps to Take
So then, amidst all of this, what should you do about it all?
Well, in uncertain times, many investors often find themselves torn between taking action and standing still.
Here are six key strategies to consider regardless of where you stand today:
#1 Know Your “Sleep Well Number” (Cash Management)
When it comes to cash management, during times like these, it is crucial to know your “sleep-well” number. Depending on where you are in your retirement journey, having enough cash on hand to cover six to eighteen months of living expenses is something to consider now.
Having this number available will enable you to avoid making knee-jerk decisions with your portfolio, enable you to stay committed to your long-term strategy and avoid selling assets at an inopportune time.
#2 Rebalance Your Portfolio
Rebalancing your portfolio now allows you to take some risk off the table. Markets have rallied handsomely over the past eighteen months, which means that your current holdings are very likely out of alignment with your strategic asset allocation.
Rebalancing includes taking gains from positions that have done well in your portfolio and adding to positions that are underallocated in your portfolio relative to your strategic allocation. This approach ensures that you’re not taking any more risk than necessary with your investments.
#3 Stick to Your Long-term Plan
When in doubt, stick to your plan. Remembering your long-term plan is essential during market uncertainty. That’s because it is easy to become distracted and search for a salve to relieve the unease in the near term when things start going off the rails.
However, it’s crucial to remember that your financial plan was created to help you navigate not just the good times, but also uncertain times like the ones we’re experiencing today.
#4 Reconsider Big-Ticket Purchases
If you are contemplating purchasing a new home, car, or other big-ticket item, you may want to consider holding off on any moves for the next few months. This approach will allow you to preserve cash and ensure that you are not locking yourself into a decision at an inopportune time.
#5 Sharpen Your Pencil
At the same time, it is worth sharpening your pencil. Warren Buffett is known to have said, “Be fearful when others are greedy, and greedy when others are fearful.” Depending on your living situation and cash position, fear-driven market sell-offs often provide opportunities to purchase assets at a discount.
If you are in a solid cash position, keeping an eye out for favorable buying opportunities once we have more clarity on the political and economic environment could be worthwhile.
#6 Consider Tax Planning Opportunities
Finally, market sell-offs also present an opportune time for tax planning. And a key tax planning approach includes completing a Roth conversion. That’s because lower portfolio values often translate to lower taxable values. Remember, Roth conversions are not just a fourth-quarter tactic but a year-round opportunity.
Similarly, market downturns can present opportunities for tax-loss harvesting. This approach involves selling stocks at a loss and buying a similar but not identical asset. Even if you do not have gains to offset the losses, you can carry forward the losses as a tax asset to offset future capital gains.
The Big Takeaway
When it comes down to it, the big takeaway from an investment perspective is to stay invested for the long term even though the near term seems so uncertain. While we may be headed for a dark period in the months ahead, I am reminded of how essential it is to remain optimistic.
Viktor Frankl, a Holocaust survivor and author of the book, “Man’s Search for Meaning”, points out in his work that those who adapted and sought meaning in each moment, especially in trying times, had greater ability to endure trials and uncertainty than those who did not.
Make no mistake, we are likely headed for some very trying times in the weeks and months ahead. From a political and social perspective, we do not have a roadmap for navigating what lies ahead, which means we will have to take things one moment at a time. As difficult as that may be, however, finding purpose and direction in uncertain times has always been a defining trait of those who successfully emerge from such events.
What’s more, from a financial perspective, history has repeatedly shown that uncertain times like these often create opportunities for those who stay the course. That’s why having a solid financial plan and a disciplined investment strategy is essential now more than ever. While the near-term outlook may be uncertain, remaining objective and committed to a well-thought-out financial plan continues to be the best way forward.
Five Reasons Why a Roth Conversion Might be Right for You
You've done everything right: you've worked hard, built a successful career, and saved for the future. But there's one piece of the puzzle that could quietly erode your wealth if you don't plan for it: taxes.
Retirement isn't just about how much you've saved, it's about how much you get to keep. And if most of your retirement savings are in tax-deferred accounts like a 401(k) or traditional IRA, the IRS has plans for that money. That’s why tax planning is crucial now more than ever.
In fact, when it comes to IRAs, those withdrawals you take in retirement will be taxed as ordinary income, and when you turn 75, Required Minimum Distributions (RMDs) will force you to take money out, even if you don't need it.
But here's the thing: what if you could pay taxes on your own terms?
What if you could lock in today's lower tax rates, reduce your future tax burden, and create a more flexible income strategy for retirement?
That's where a Roth conversion comes in.
In fact, by converting a portion of your tax-deferred retirement savings into a Roth IRA, you pay taxes on that money now and at a rate you can control.
In return, your Roth IRA grows tax-free, and when you need to withdraw in retirement, there are no additional taxes owed.
What's more, there are no RMDs, no surprise tax bills, and a better plan for passing wealth to your heirs when it comes to your Roth IRA.
But the big question here is is it the right move for you?
Well, the answer depends on several factors, including your current and future tax rates, your retirement timeline, and how you want to structure your income.
So then, let's break down five key reasons why a Roth conversion could be one of the smartest financial decisions you make in 2025.
#1 Would You Rather Pay Taxes at Today's Rates or Risk Higher Rates in the Future?
First things first, would You Rather Pay Taxes at Today's Rates or Risk Higher Rates in the Future? Think about it: do you believe taxes will be lower in the future? Or do you think they'll go up?
If you're like most people, you're betting on higher taxes. And that's not just a guess. The tax cuts currently in place are set to expire after 2025, which means tax rates for high earners could rise significantly. If nothing changes, the top tax bracket will jump from 37% back up to 39.6%.
And even if the Tax Cuts and Jobs Act is extended, there's no guarantee that tax rates won't go higher in the future given our country's massive debt burden.
Indeed, with rising government debt and shifting tax policies, higher taxes could become the norm. So then, if you wait to withdraw from your tax-deferred accounts in retirement, you could find yourself paying much more in taxes than if you had acted earlier.
That's where a Roth conversion lets you take control. Because instead of waiting to see what happens, you can lock in today's lower rates and create tax-free income for the future.
How so? Well, let's say you convert $500,000 from a traditional IRA to a Roth IRA today while you're in the 24% tax bracket. In this case, you'll likely owe $120,000 (24% of $500,000) in taxes today.
Now, let's assume you wait 10 years, but by then, higher tax rates push you into the 35% bracket. With that same amount, assuming no growth of your savings, you'd likely owe $175,000 (35% of $500,000).
That's a $55,000 difference, just for waiting.
And here's where it really adds up: if that $55,000 in tax savings were invested instead at an average 7% annual return, it could grow to over $400,000 in 30 years, all because you converted when rates were lower.
So then, by making a move today, you're not just reducing taxes, you're potentially adding hundreds of thousands of dollars to your retirement savings all by paying some tax today, to save a lot more in the future.
#2 Do You Want to Avoid Required Minimum Distributions (RMDs) That Could Inflate Your Tax Bill?
The next thing to consider when it comes to determining whether a Roth Conversion is right for you is whether you're comfortable paying your anticipated RMDs.
Now, you may not need the money, but the IRS does.
That's because by the time you're age 75, you'll be required to start withdrawing money from your traditional IRA or 401(k), whether you want to or not. And these Required Minimum Distributions (RMDs) aren't just forced withdrawals, they're taxable income.
Now, depending on how large your retirement accounts are, RMDs can push you into a higher tax bracket, trigger higher Medicare premiums, and cause more of your Social Security benefits to be taxed.
That's where a Roth conversion can help you get ahead of this problem. Because Roth IRAs aren't subject to RMDs, converting today means you keep more control over your income in retirement, instead of letting the government decide for you.
So then, how does this work? Well, let's say you're 65 years old with a $2 million traditional IRA, and it grows at 6% per year. Here's what happens if you don't convert any of it to a Roth.
By age 75, your RMD starts at $87,591 per year. But each year, Uncle Sam forces you to take out more and more money from your IRA each year. So then, by age 90, your RMD balloons to $258,741 per year.
That means you'll be withdrawing more and paying more in taxes, whether you need the money or not.
However, if you convert a portion of your IRA to a Roth before RMDs kick in, you might be able to reduce your future tax burden and avoid being forced into withdrawals you don't want to take.
Put a different way, this isn't just about tax savings, it's about having more flexibility in how you use your money in retirement. So then, wouldn't you rather make that decision yourself or have Uncle Sam force you to take money out of your savings? That’s where prudent tax planning comes into play.
#3 Do You Want to Leave More to Your Heirs Without a Tax Burden?
You've spent a lifetime building wealth, and now you're preparing to pass it on. But do you really want the IRS to take a big chunk of what you leave behind to your children?
Because here's the thing: if your heirs inherit a traditional IRA, they'll be forced to withdraw the full balance within 10 years, and every dollar they take out is taxed as ordinary income.
So then, if they're in their peak earning years, those withdrawals could push them into a much higher tax bracket, costing them hundreds of thousands in unnecessary taxes.
A Roth IRA, on the other hand, passes on tax-free savings to your heirs, and no forced distributions for a spouse. In other words, no income taxes for your kids and no surprises when they inherit your wealth.
How does this work? Well, let's compare a $1 million traditional IRA and a $1 million Roth IRA passed down to your children.
If the money stays invested for 30 years at 7% annual growth, here's what happens. With a traditional IRA, your heirs must withdraw all funds within 10 years, and assuming they invest it, after taxes, it grows to $5.8 million.
However, if you left behind the same $1 million in a Roth IRA, it's possible that the portfolio would grow tax-free to $7.6 million and be available for tax-free withdrawals. That's a $1.8 million difference, all because of taxes.
Even if your heirs don't need the money right away, a Roth IRA lets them delay withdrawals until it makes sense for them, avoiding tax spikes and keeping more of your legacy intact.
So then, if you're planning to pass on wealth, the question is simple: Do you want your money to go to your family, or to the IRS?
#4 Could a Roth Conversion Help You Save on Medicare and Social Security Taxes?
Most people don't realize that their Medicare premiums and Social Security benefits are tied to their taxable income. In fact, the more income you report in retirement, the more you could pay for healthcare and the less of your Social Security you'll actually get to keep.
How does this happen? Well, it happens because withdrawals from a traditional IRA count as taxable income. So then, even if you don't need the money, those withdrawals could push you above key income thresholds, and trigger higher Medicare premiums which could make up to 85% of your Social Security benefits taxable.
A Roth IRA on the other hand avoids this issue because withdrawals don't count as taxable income. That means you can take money out as needed without pushing yourself into a higher tax bracket or triggering unexpected penalties.
How so? Well, let's take a couple who are 67 years old and are planning to retire soon. They have $1.5 million in a traditional IRA and $60,000 in combined Social Security benefits per year.
Now, if they start taking $80,000 per year from their IRA, they're likely to face a few complications. First, their Medicare premiums likely will increase due to IRMAA (Income-Related Monthly Adjustment Amounts). Next, they could find that up to 85% of their Social Security benefits become taxable and so, their total tax bill and healthcare costs jump by over $112,000 over their retirement.
Now, let's say this same couple converts $300,000 over three years into a Roth IRA before claiming Social Security and Medicare. In this case, their taxable income stays below Medicare surcharge limits, their Social Security remains largely untaxed and they save over $112,000 in combined healthcare and tax costs.
So then, this isn't about avoiding taxes, it's about planning ahead, especially when it comes to balancing retirement income with goverment benefits. From this perspective, why give more to the IRS when you can keep more for yourself through prudent tax planning?
#5 Are You Planning a Move to a Lower-Tax State?
Finally, where you live in retirement matters a lot, especially if you're considering a Roth conversion.
In fact, if you're planning to move from a high-tax state like California or New York to a no-income-tax state like Florida, Texas, or Nevada, the timing of your Roth conversion could save you tens, if not hundreds of thousands of dollars in state taxes.
That's because when you complete a Roth conversion, you'll also end up paying state taxes in the year you convert. So then, if you do a Roth conversion while living in a high-tax state, you could owe state income tax on that conversion. But if you wait until after you move, you could pay zero state tax on the conversion.
How does this work? Well, let's say you have a $1.5 million traditional IRA and are moving from California to Florida. You decide to convert the full amount before moving and California state tax (13.3%) on $1.5M conversion leads to $199,500 owed in taxes.
Now, let's say you wait until after you move to Florida where you pay no income tax. Here, you could effectively save $199,500 in taxes just by planning your move before coverting.
But what if you plan to stay in a high-tax state? A Roth conversion might still be a smart move, especially if state tax rates are expected to rise. In other words, locking in today's rates could still be a win.
Regardless, if you're thinking about moving, or even if you aren't, state taxes should be part of your Roth conversion decision. Because when it comes to taxes, timing is everything.
So, What's Your Next Move?
Let's be honest. Nobody enjoys thinking about taxes. However, whether you think about them or not, you will pay them on way or another. So then, the real question is not if you will pay taxes, but when and how much.
Right now, you have an opportunity to do some prudent tax planning. Tax rates are at historic lows, and you still have time to plan. Most importantly, you have the ability to decide what happens next, which might not always be the case.
So what's your plan?
Are you going to wait and hope the tax code works in your favor? Are you going to let the IRS determine how much of your wealth stays with you and how much goes to them? Or are you going to take control of your financial future while you still can?
Here is what we know. Tax rates are expected to rise in the coming years. Required Minimum Distributions could force you to withdraw more than you need, potentially pushing you into a higher tax bracket. If you plan to pass on wealth, your heirs could face a significant tax burden unless you make a plan.
Medicare premiums and Social Security taxes can increase unexpectedly, but with the right strategy, you can avoid these unnecessary costs. And if you are planning to move to a state with lower or no income tax, the timing of your Roth conversion could save you thousands of dollars.
That sounds like a lot. But here's the good news.
You do not have to figure this out on your own. You have time to plan. You have the ability to make smart decisions today that will give you more financial freedom in the future. Most importantly, you have options.
That is why I am here. Let's run the numbers, talk through your options, and build a strategy that works for you. The best time to plan for your future is today.
If you are ready to take the next step, schedule a call and let's get started.
How to Review Your Cash Flow and Retirement Spending Assumptions
This video offers a detailed walkthrough of how to scrutinize your annual spending, compare it against your projections, and adjust your retirement planning accordingly.
Understanding these elements is essential for ensuring that your financial habits support your future retirement lifestyle.
Key Benefits:
- Enhanced Financial Awareness: Gain a clear picture of where your money goes and how it impacts your future.
- Strategic Adjustments: Learn how to adjust your spending and savings to better align with your retirement goals.
- Informed Decision Making: Empower yourself to make decisions that optimize your financial well-being.
- Increased Preparedness: Ensure that you are on track to meet your retirement needs without compromise.
Key Steps:
- Analyze Your Annual Spending: Review and categorize all expenses from the past year to understand spending habits.
- Compare Actual vs. Projected Spending: Assess how your real expenditures stack up against your budgeted projections.
- Adjust Your Retirement Strategy: Make necessary changes to your financial plan to better support your desired retirement lifestyle.
FAQs:
Q: How often should I review my cash flow and retirement projections?
A: Review your financial projections annually or whenever there is a significant change in your income or expenses to keep your retirement plans on track.
Q: What is a Monte Carlo simulation and how does it help in retirement planning?
A: Monte Carlo simulations use probability models to predict various outcomes in your financial plan, providing a range of possible retirement scenarios based on your spending and saving habits.
Q: Can adjusting my spending habits now really make a difference in my retirement?
A: Absolutely. Even minor adjustments in spending can have significant long-term effects on your retirement savings, enhancing your ability to enjoy a comfortable retirement.
Schedule a Consultation:
If you need personalized assistance with your financial planning, don’t hesitate to schedule a consultation.
We’re here to help you tailor a financial strategy that meets your unique needs and goals.
Open Enrollment – Tips to Avoid Costly Mistakes
This quick video guide offers practical tips on tackling open enrollment without stress. From understanding deadlines to exploring additional benefits and choosing between an HSA and FSA, we cover everything you need to make the most out of your healthcare benefits.
Key Benefits
- Save Time: Quick tips to streamline your enrollment process.
- Ensure Accuracy: Avoid common mistakes that could cost you.
- Increase Savings: Uncover hidden benefits and tax advantages.
- Reduce Stress: Proactive steps to manage enrollment smoothly.
- Make Informed Choices: Understand the nuances between HSA and FSA to make better decisions.
Next Steps
- Act Early: Set reminders for reviewing your benefits options two weeks before the deadline.
- Explore Benefits: Thoroughly investigate all available fringe benefits for additional savings.
- Understand Your Accounts: Decide whether an HSA or FSA is more appropriate based on your health plan and financial strategy.
FAQs
Q: What’s the difference between an HSA and a general-purpose FSA?
A: HSAs are available only to those with a high-deductible health plan and allow you to contribute pre-tax income. FSAs are less restrictive but cannot be combined with HSAs for medical expenses.
Q: Can I change my benefits choices after the enrollment period?
A: Typically, you cannot change your benefits post-enrollment unless you experience a qualifying life event such as marriage, divorce, or the birth of a child.
Q: Are there benefits to enrolling early in the open enrollment period?
A: Enrolling early gives you ample time to review and compare plans without the pressure of a closing window, potentially leading to better decisions and less stress.
Schedule a Consultation
If you need more personalized assistance or have specific circumstances to discuss, schedule a consultation with one of our experts today
We're here to help you navigate your benefits confidently and make choices that best suit your needs.
What to Do with Vested Stock After Taking that New Job?
Congratulations on the new job!
Now, what are you going to do about all that vested stock?
As you likely well know, navigating a career change in the tech industry involves critical financial decisions, particularly concerning what to do with Restricted Stock Units (RSUs) that have vested and are held in your former employer's brokerage account.
Now, for many of you out there, this stock represents a significant portion of your wealth concentrated in one company.
And this situation presents a unique set of questions including do you hold onto the stock or sell it all now that you’re no longer personally vested in its growth?
The truth is that the answer to this question does not need to be a binary one. In fact, depending on your situation and risk appetite, it’s possible to have your cake and eat it too.
Why Managing Vested RSUs is Critical
Now, you might be tempted to sit back and let the stock ride and not do anything, right?
Why not leave the stock alone and see how things turn out?
Well, the truth is that management of your vested RSUs during a transition between companies can significantly impact your financial and mental well-being.
In a quickly changing environment, you know how one company’s fortunes one year, can be their demise in the next. And so, imagine no longer having that “insider’s edge” to know how well the company whose stock your holding is actually doing?
All it takes is one bad earnings, legislative or industry event to wipe out your hard earned wealth.
So then, waiting too long to make the right moves can lead to excessive tax burdens, missed opportunities for growth, and a general risk imbalance in your investment portfolio.
That’s why each decision you make after you transition from one role to the next should be strategized not just for immediate financial benefit but for securing long-term financial stability.
A Step-wise Approach to Managing Concentrated Wealth
So then, what can you do if you find yourself in a situation like this?
Well, consider the case of Alex, a senior software developer who recently switched companies following a big career move.
Now, Alex had a substantial amount of vested RSUs from his previous employer, which had appreciated significantly over the years.
And so, naturally, after moving to a new company, Alex faced the dilemma of managing his concentrated stock position.
Should he hold onto this position or sell it all?
Well, by consulting with his wealth manager, Alex and his advisor created a strategy where they staggered the sale of his former employer stock in a tax-efficient manner and explored diversification options to mitigate risks associated with market volatility and his previous employer's stock performance.
Alex didn’t need to commit to an all-or-nothing strategy.
In fact, this careful planning helped Alex balance his investment portfolio more effectively, reduce risk and better position himself for his early retirement and financial independence goals.
Navigating Vested RSUs After a Career Transition
When it comes down to it, managing vested RSUs after a career transition isn't just about making a single decision—it's about crafting a strategic approach that aligns with your broader financial goals and risk tolerance.
Remember, you're not locked into an all-or-nothing choice.
Like Alex, you have the opportunity to create a nuanced strategy that balances potential growth with prudent risk management. Whether you choose to hold, sell, or adopt a gradual divestment approach, the key is to make informed decisions that complement your long-term financial aspirations.
As you navigate this journey, consider these final thoughts:
- Take time to thoroughly understand your vested RSU position and its implications.
- Develop a transition strategy that reflects your unique financial situation and goals.
- Integrate your RSU decisions into your comprehensive financial plan.
- Don't hesitate to seek expert advice to guide you through this complex landscape.
By thoughtfully managing your vested RSUs, you're not just dealing with stock—you're actively shaping your financial future.
So, take that first step, evaluate your options, and set yourself on the path to long-term financial stability and success.
Look Beyond Equity Comp Before You Accept That Offer
Switching jobs?
Sure, you might be ready to negotiate a compensation package that safeguards your current stock awards.
But what about the other benefits you might be leaving on the table?
From comprehensive retirement benefits to premium health insurance plans and robust life insurance coverage, these elements are essential to your financial health.
That fact is, however, that many professionals, especially high-earning tech employees, often concentrate solely on financial compensation without considering the broader implications of a change in the benefits package on their broader financial lives.
And this oversight can lead to gaps in retirement savings, unexpected changes in benefits coverage, and unforeseen risk management vulnerabilities.
That’s why, adopting a more strategic and integrated approach to negotiating your compensation package during a career change is of the utmost importance.
Navigating the Big Picture
Now, when it comes to choosing to take that next job, you’re more likely interested in the scope of the role, and more importantly, how much you’re getting paid every two weeks, right?
Well, if you don’t consider the totality of your compensation package, including all benefits, you could end up earning less at your new job than you did in your current role.
How so?
Practical Example
Imagine you're in a senior tech role, earning a substantial base salary of $350,000 annually.
Along with this, your compensation package includes a number of benefits, including comprehensive health insurance fully covered by your employer, and an employer match of up to $19,500 on your 401(k) contributions, maximizing the IRS limits.
At the same time, you receive equity in the form of Restricted Stock Units (RSUs) that vest over a four-year period which contributes significantly to your long-term wealth building strategy.
Now, consider that you receive a job offer from a startup promising rapid growth and a higher base salary of $400,000.
That’s a nice boost in pay, right?
Maybe.
That’s because this new role presents different financial implications where the health insurance requires a $1,000 per month premium contribution from you and your family.
At the same time, the retirement benefits are being offered at a less generous match, which are capped at $10,000.
With an additional $12,000 annually required for health insurance and a reduced retirement match that could mean $9,500 less in employer contributions, your apparent $50,000 salary increase is effectively reduced by $21,500.
Every Job Change Needs a Comprehensive Financial Review
That’s why, before making the leap to that next new opportunity, a comprehensive review with a financial advisor is essential.
This review should cover not only the immediate salary increase but also how changes in equity compensation, retirement benefits, and tax implications affect your overall financial strategy, including your goals for wealth preservation, estate planning, and philanthropic endeavors before your make the leap.
By thoroughly evaluating the entire compensation package and its implications on your financial situation, you can ensure that any career move not only meets your immediate needs but also aligns with your broader life and financial goals.
So then, start by evaluating the impact on your retirement savings, particularly any changes in employer contributions that could affect your long-term plans.
Then, review any changes to your other benefits, including your health and life insurance benefits to ensure you maintain continuous and adequate coverage.
The Big Takeaway
And if you really want peace of mind knowing that you’ve covered all of your bases, be sure to involve your wealth manager during this crucial time in your life and career.
This way, by embracing a comprehensive approach to your financial planning, you can navigate career transitions with confidence knowing that the move you’re about to make will help you secure your retirement and financial independence goals.
Avoid These Three Home Buying Mistakes
Everyone makes mistakes when buying a new home.
But the wrong mistakes can cost you money and your sanity as well.
So then, with mortgage rates falling, and more homes hitting the market, here are three common mistakes you’ll likely want to avoid so you can buy with confidence:
Mistake #1: Neglecting All-in Costs
Underestimating the true cost of homeownership can quickly turn your dream home into a financial nightmare.
One major oversight I've seen time and again is neglecting the all-in costs of home ownership.
Sure, it's tempting to think that if you can afford $5,000 a month in rent, you can afford the same in mortgage payments.
But that doesn't account for the additional thousands you might need to cover property taxes, insurance, and upkeep, especially in pricier locales.
And this gap in budgeting can steer you toward an emotionally charged purchase.
That's why it's essential to understand every cost down to the last dollar before you even think about calling a real estate agent.
Mistake #2: Rushing the Buying Process
The best thing you can do for yourself when buying a home is to slow down.
Sure, it's exciting to find a house you love when inventory is up, but moving too fast can lead to missed details and costly mistakes.
How so?
Well, one of my clients overlooked an aging roof and an outdated heating system because they were eager to get to closing.
And so, this oversight ended up costing them more than $40,000 one year after their closing date.
So then, when buying a home, remember: patience isn't just a virtue; it's essential.
Slow down, take your time, scrutinize the fine print, and make sure that your investment is as sound structurally as it is financially.
Mistake #3: Not Considering the Local Community
Finally, it's essential to do your homework on the local community where you're planning on buying.
Sure, you're likely more interested in commute times, and access to local dining and entertainment, but the biggest disservice you can do to yourself is not to get a feel for the local community.
Listen, I've lived across the West Coast, Midwest, and East Coast and can tell you firsthand that the vibe changes not just from city to city but from one neighborhood to the next.
Real estate isn't just about the four walls and a roof, it's also about the community surrounding them.
You may have seen it in San Ramon, but it's likely not the same in Ladue.
Indeed, if you're not careful, you could find yourself the odd man out in your own neighborhood. And if this happens, guess what? You'll be back on Zillow looking for your next new home sooner than you think.
Now, you might not plan on joining every community committee. But, understanding the local economy, the quality of public services, and even the daily bustle at the nearest grocery store can impact both your quality of life and the long-term value of your new home.
So then, take the time to understand not just what you’re buying but also where you're buying and the kind of people you'll likely interact with on a daily basis.
Remember, these people could be your neighbors for the next ten years or more!
So, visit, explore, and maybe even chat with some future neighbors to really get a feel for the place you're planning to settle into.
Either way, when it comes to real estate, being thorough and deliberate is the key to securing not just any home but the right home for you and your family.
Always remember that a thoughtful approach to home buying goes beyond securing a reasonable price, it's about protecting your investment and ensuring your home meets all of your needs for years to come.
What to Do With That Old 401k?
$1.65 trillion (with a T). That's how much is sitting unclaimed in forgotten 401k accounts as of 2023.
Could some of that be yours?
You never know, there could be a retirement account or two from a past gig that's slipped your mind.
It happens!
That's why now might be the perfect time to round them up and get your retirement strategy dialed in.
Let's face it: life gets busy, careers change, and sometimes, the last thing on your mind is that 401k from a job you left years ago.
And here's the thing: every dollar in those accounts is a step closer to the retirement life you've been dreaming about.
So then, if you haven't planned for those funds yet, there's no better time than the present to start.
Because here's the thing: the most essential thing to know now is that leaving those accounts unchecked could mean missing out on money that should be contributing to your retirement strategy.
So, what can you do about it? Here's a simple plan:
✓ First, reach out to past employers.
Get on the phone or shoot an email to the HR departments of places you've worked before. They can help you figure out if you left any retirement money on the table.
✓ Next, keep track of your progress.
As you confirm each account, jot down details like which employer it was with, the account balance, and who's currently managing the money.
✓ Finally, plan your next move.
Got all your account info? Great!
Now, you can either roll them into your current employer's plan if that's an option. Doing so will allow you to manage your retirement savings in one spot.
Or, if you have multiple accounts and want more flexibility, you can set up a rollover IRA with a custodian like Schwab, Fidelity, or Vanguard. This approach gives you more control over your investments and could simplify your financial life.
So then, take an hour this week to reclaim your forgotten accounts and get closer to the retirement you deserve.
Sorting them out could not only tidy up your finances but might even let you hit that retirement goal sooner than expected!
Expected Returns and Your Retirement Portfolio
"Get a 12% return on your investments." Sounds great, doesn't it?
Well, it's great until you begin reading the fine print.
You see, these sorts of claims raise eyebrows among professional investors because expected rates of return on a diversified portfolio are often lower.
So then, understanding what goes into your expected return can help make you a more informed investor and to be better prepared for retirement.
What, then, is your expected return?
Well, simply put, it's the growth you need from one year to the next that helps you calculate your retirement portfolio savings need.
But, if you're overly optimistic and assume too high a rate of return, you could risk saving too little if markets underperform your expectations.
On the other hand, you could end up forgoing early retirement if your assumptions are too conservative.
So, how can you set a realistic expected return?
Well, start by assessing your risk tolerance.
Here, what you'll want to do is to consider how you typically react to big swings in the markets.
For example, when the market is volatile, do you panic and think about selling, or do you remain committed to your long-term strategy?
Understanding your reaction to these situations can greatly influence the suitability of different investments for your portfolio.
Next, understand that different investments yield different returns.
That is, stocks are generally riskier with higher potential returns, whereas bonds offer lower, more stable returns.
Finally, pull everything together and build a diversified portfolio of stocks, bonds, and other assets that align with your risk tolerance and investment objectives.
From here, your portfolio's composition will help you arrive at an expected return based on a realistic set of assumptions.
So, the next time you hear a promise of double-digit investment returns, remember to read the fine print.
And more importantly, arm yourself with the knowledge you need to set realistic expectations based on your risk tolerance and develop a disciplined investment strategy.
Market Update: Is it a Correction or Something Bigger?
What do you do when the market takes a turn you didn’t expect? Do you panic? Do you make quick decisions? Or do you take a step back and look at the bigger picture?
As we step into the first few months of 2025, the market has given investors plenty to think about. Stocks started the year on a strong note, but since then, we've seen a pullback. The S&P 500 briefly entered correction territory, bringing its year-to-date return down to -5%.
Similarly, the Nasdaq 100, home to some of the biggest names in tech, is down 7% this year, while the small-cap Russell 2000 has fallen 9%. And the what about the Magnificent 7 of Microsoft, Apple, Meta, Alphabet, Amazon, Nvidia, and Tesla? They’re down nearly 15%.
So what’s really going on? More importantly, what should you do about it?
What’s Behind the Market Selloff?
Well, it’s easy to blame market swings on one big event. But in reality, it’s rarely just one thing because there are likely a few reasons this year’s recent pullback.
First, the stocks that led the charge last year are the ones struggling the most today. And it’s not unusual to have yesterday’s winners become today’s laggards. Indeed, figure 2 shows us that the biggest winners of 2024, like tech stocks and the Magnificent 7, have become 2025’s underperformers.
Why?
Because last year’s rally was built on enthusiasm, especially around artificial intelligence. And when enthusiasm drives prices higher, valuations get stretched. Investors pile in, positioning gets crowded, and eventually, the weight of that momentum starts to break down.
That’s what’s happening now.
Second, investors, both individual and institutional, came into 2025 with a high level of exposure to stocks. In fact, some of the largest institutional investors like pension funds, endowments, and insurance companies held a record share of their wealth in equities.
And that strategy works well when markets are climbing, but when momentum reverses, institutional investors start deleveraging. And when they unwind positions quickly, it amplifies the selling pressure.
Finally, there’s the policy backdrop. What started as optimism around pro-growth policies under the Trump administration has shifted to uncertainty. As we’ve written about before, concerns about spending cuts and the impact of tariffs have raised questions about economic growth.
Because the fact of the matter is that investors don’t like uncertainty, and right now, they’re adjusting to a new, highly uncertain reality.
Market Volatility vs. Economic Reality
So, does all this mean the economy is struggling? That’s a great question. And here’s where we need to separate perception from reality.
The stock market reacts quickly to new information, but that doesn’t always mean the economy is following the same path. One way we can test that is by looking at real-time economic data.
For example, the Federal Reserve’s Weekly Economic Index (WEI) tracks real-world activity using data points like unemployment claims, rail traffic, steel production, and tax withholdings.
And right now? It’s still positive (Figure 3).
Another piece of the puzzle is the bond market. High-yield credit spreads, which are essentially the difference in yield between risky corporate bonds and safer U.S. Treasuries, are a great way to measure financial stress.
And today, those spreads remain near all-time lows (Figure 4). Indeed, if we were facing a deeper economic problem, we’d expect to see those spreads widen. The fact that they haven’t tells us this market selloff could be more about repositioning than it is about a fundamental crisis.
With that said, no one rings a bell when we’ve entered a recession. And it’s very well possible that a policy error from the current administration could push the economy into a downturn. For now, however, the data continue to reflect modest economic growth.
Is This Normal and Can the Market Selloff Continue?
Now, if you’ve been investing for a while, you likely know that market volatility isn’t new. But let’s be honest, knowing that doesn’t make it feel any better when stocks drop, does it?
So what should you do?
Well, one of the best things we can do is put this moment in perspective. For example, since 1928, the S&P 500 has experienced a decline of 5% or more in 91 of the past 98 years.
Read that again.
In almost every year on record, we’ve seen the market pull back like this. And yet, time after time, markets have recovered. Investors who stay the course, who focus on the long-term, are the ones who have been rewarded.
So let me ask you: What’s your plan?
Because the difference between reacting and responding is having a plan. The key isn’t trying to predict every market move. It’s making sure you’re positioned to succeed no matter what happens next.
And that’s why sticking to a disciplined process and having a long-term perspective matter over the long-run.
The Bottom Line
Market volatility often feels personal. It’s your retirement savings on the line, isn’t it?
And so, when you see headlines about market swings, it’s easy to wonder, “Is this the beginning of something bigger? Am I missing something? Should I be doing something differently?”
So then, if that’s where your mind is right now, you’re not alone.
But more importantly, you’re not powerless. You don’t have to let fear dictate your financial future. You can make decisions based on a thoughtful strategy rather than short-term emotions.
Whether you’ve been working with our team for years or you’re just starting to explore your options, here’s what I want you to hear: clarity, confidence, and peace of mind don’t come from guessing the market’s next move. They come from knowing you have a plan that’s built for moments like this.
Because at the end of the day, the market will move up.
It will move down.
That’s a given.
But those who stay focused on the long term, those who stay diversified and patient, won’t just weather today’s volatility. They’ll be in the best position to thrive beyond it.
So, the real question isn’t what will the market do next? The real question is: Are you ready for whatever comes next?