By Paula Pant
Let’s talk about negotiations. You know, those back-and-forth talks where you try to get the best deal possible on a used car, a house, or a couch on Facebook Marketplace? Or when you ask your boss for a raise? Turns out, asking the right questions can be a game-changer.
According to Jeff Wetzler, Ed.D., people […]
By Paula Pant
We sit down with financial educator Brian Feroldi to dive into the often-overlooked world of stock-based compensation. This form of compensation is becoming more common, especially in large companies, but many employees don’t fully understand how to make the most of it. Brian helps break down the basics, explaining what stock-based compensation is and why companies use it to attract and retain employees.
We start by discussing why companies offer stock options or restricted stock units (RSUs) instead of just higher salaries or bonuses. Brian explains that stock-based compensation is a way for companies to align your interests with the success of the business. When you own a piece of the company, you’re more likely to care about its performance, which can drive you to work harder and stay longer. This also allows companies to conserve cash while still offering competitive compensation packages.
Brian also highlights the importance of understanding the different types of stock-based compensation. He breaks down stock options, where you have the right to buy company stock at a set price, and RSUs, where you’re given shares of stock that vest over time. Each has its pros and cons, and understanding these differences can help you make better decisions about your compensation.
One of the key takeaways from our discussion is the importance of negotiation. Brian emphasizes that the best time to negotiate stock-based compensation is when you’re first hired. Companies often have more flexibility with stock options than with salary, so it’s crucial to ask for more stock or a shorter vesting period upfront. This can make a big difference in your long-term financial gains, especially if the company’s stock value increases over time.
We also touch on the tax implications of stock-based compensation. Brian explains that different types of stock options are taxed differently, and understanding these tax rules can help you minimize your tax bill. For instance, holding onto stock after exercising options can lead to lower taxes if the stock price rises and you qualify for long-term capital gains.
Throughout the interview, Brian shares practical tips for you, such as targeting companies in industries like technology and healthcare that are known for generous stock-based compensation packages. He advises you to educate yourself on your company’s specific policies and to be proactive in managing your stock options to avoid leaving money on the table.
By the end of the episode, you’ll have a clearer understanding of stock-based compensation and how to leverage it to build wealth. Brian’s insights are particularly valuable if you’re switching jobs and want to maximize your compensation package.
By Paula Pant
Anonymous, 60, recently lost her job and is worried about retirement. She owns a paid-off triplex, living in one unit and renting the others for $30,000 a year. She used her 401(k) funds to buy the triplex and now has $50,000 in retirement savings and $150,000 in cash. She expects only $2,400 a month from Social Security at age 67. After losing her son two years ago, she’s seeking advice on managing her underfunded retirement.
Noelle, 40, and her husband, 49, want to cancel his whole life insurance policy. They are debt-free, own their home, and plan to retire soon, relying on Noelle’s $80,000 income. They have $504,000 in retirement savings. Should Noelle keep her $100,000 term life policy until she retires?
Sleepless in San Antonio, age 35, plans to retire at 45 but is concerned about how this will affect Social Security benefits, which is calculated based on the top 35 earning years. Should they work longer in order to boost their Social Security benefits?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
By Paula Pant
The Federal Reserve recently decided to hold interest rates steady, leading to significant shifts in the stock market. The Dow dropped over 850 points, and the NASDAQ entered correction territory, falling more than 10% from its peak.
But what do these numbers mean for you? We break down the latest jobs report, which shows a rise in unemployment to 4.3%, triggering a recession indicator known as the Sahm Rule. This isn’t just economic jargon; it affects real lives, impacting job security, investments, and financial planning.
We discuss potential ripple effects on various sectors, such as real estate, where interest rates influence housing affordability.
We also examine the technology sector’s volatility and how recent market corrections might influence tech stocks and the overall investment landscape.
Understanding this can help you make informed decisions about your investment portfolio.
Every First Friday of the month, we bring you our “First Friday Monthly Economic Report,” where we help you make sense of these trends.
We aim to make complex economic concepts accessible. Join us as we explore these pressing economic issues.
By Paula Pant
Christina is worried. She’s retired with a paid-off condo in Florida. But rising fees, insurance rates, and a major HOA assessment are killing her cash flow. Is it time to become a renter?
Les is surprised by Paula and Joe’s allocation recommendations for international equities. Based on market capitalization, it makes no sense. What’s he missing?
Luke and his wife are breaking some personal finance rules in the name of financial independence. Are they right to take this approach or is there a better way?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
By Paula Pant
Recorded LIVE on stage at the Morningstar Conference in Chicago! We chat with behavioral finance professor Meir Statman. He breaks down the differences between standard finance and behavioral finance, making it clear that understanding human behavior is an essential part of investing.
Statman starts by explaining that standard finance assumes people are rational. They make decisions purely based on logic and aim to maximize wealth.
However, behavioral finance sees people as normal, not always rational. We often act on emotions and cognitive shortcuts. For instance, people might prefer receiving dividends over selling shares, even if both result in the same financial gain. This is because dividends feel like income, while selling shares feels like dipping into savings.
He uses a great metaphor to explain how investors view their portfolios. Think of a dinner plate: behavioral investors like their investments separated, like mashed potatoes on one side, vegetables on another, and steak in the middle. Rational investors don’t care if it’s all blended together because they only focus on the total nutrients. This shows that normal investors have different needs and want to balance safety with growth.
Statman talks about the importance of diversification. He recalls a lunch with Harry Markowitz, the father of Modern Portfolio Theory, who supported the idea of having a mix of safe and risky investments. Markowitz himself had municipal bonds to avoid poverty and stocks to grow wealth. Diversifying helps investors manage risk and meet both their safety and growth needs.
We then dive into how people manage money across their life cycle. Statman points out that young people know they need to save but are tempted to spend. They often control this urge by putting money into retirement accounts like 401(k)s. As people get older, they become so good at saving that they sometimes forget to spend and enjoy their money. Statman gives a funny example of his mother-in-law, who refused to replace an old sofa because she didn’t want to dip into her savings.
Statman also touches on asset pricing and market efficiency. He explains that while traditional finance focuses solely on risk, behavioral finance considers other factors like social responsibility. Some investors are willing to accept lower returns to stay true to their values. Additionally, he argues that market prices do not always reflect true value, and it’s hard to predict when they will.
Towards the end, we discuss the broader aspects of wellbeing. Statman emphasizes that financial wellbeing is just one part of a happy life. Family, health, work, and community are also crucial. He believes financial advisors should help clients achieve overall life wellbeing, not just financial success.
By Paula Pant
We chat with renowned financial advisor Michael Kitces at the Morningstar Investor Conference in Chicago.
Kitces answers a big question: Is the economy worse than we think? He explains that a few big companies like Nvidia, Meta, and Alphabet are holding up the S&P 500. But this doesn’t mean the economy is bad. It’s common […]
By Paula Pant
An anonymous caller and his girlfriend are musicians who dream of building a home with a monetizable recording studio. How do they untangle personal wants from business needs?
Will feels stumped about the options in his defined benefit pension plan. When should he choose a guaranteed annuity over a lump sum payment?
Mark and his partner will soon inherit an IRA worth over a quarter million dollars. With today’s elevated interest rates, would throwing it all at a primary residence be the smartest play?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
By Paula Pant
How much is an hour of your time worth?
Google’s Executive Productivity Advisor, Laura Mae Martin, joins us to answer that question.
By Paula Pant
Emily Anne is worried about her obsessive tracking behavior. She’s in great financial shape but struggles to shake the constant compulsion to check her accounts. What should she do?
An anonymous caller and his partner plan to use geo-arbitrage to retire early before reaching their financial independence number. Can they have their cake and eat it too?
Kevin and his wife are having second thoughts about their Delaware Statutory Trust (DST) real estate investments. How do they back out without compromising their estate plan?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
