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Category: Investing

What Do You Need to Know About RSUs?

Posted on by Kelsie Joos

There are a lot of things to understand about Restricted Stock Units (RSUs). Hear from Commas advisor Katelyn on what they are and the 3 key dates associated with RSUs.

“There’s a lot of things to understand and know about restricted stock units or RSUs but here’s some of the highlights. RSUs are awards of company stock, given to attain and to attract key employees. These can be used instead of cash bonuses or alongside of cash bonuses as a way to compensate their employees as part of the entire compensation package. There are three key dates associated with RSUs: the grant date, the vesting period, and the vesting date.

The grant date is the day that your company grants you shares of the RSUs. This doesn’t mean that you necessarily have that company’s stock yet, but they’ve given you your award and told you how many shares to an expect and over what period of time. Then comes into play the vesting period every company is different, but this is the amount of time that must pass before you actually get those shares. This could be a cliff vesting schedule or it could be gradual vesting schedule but it’s going to vary from company to company. The vesting date is when you become an owner of those shares so they’re no longer RSUs, but actual shares of the company and at this time you can sell them or hold them or do whatever you like. There’s a lot more to know and understand about RSUs, especially around the taxation of them so if you have any questions don’t hesitate to reach out to your advisor”

What to Do With Leftover 529 Funds

Posted on by Kelsie Joos

The passing of Secure Act 2.0 in 2024 introduces a huge benefit for 529 account holders. You can now use those funds to make Roth IRA contributions. This means leftover dollars from education savings can now be redirected towards retirement, offering a smart head start for beneficiaries.

“Since the passing of Secure Act 2.0, there is a new law as of 2024 that anybody with a 529 account can actually then use those funds to make Roth IRA contributions. Now there are definitely some complexities and things that are in place that you want to talk to your financial advisor about before enacting this on your own. But big picture what can happen is you’ve been saving into a 529 all these years, you’ve gone through your education and now there’s leftover dollars.

Typically what would happen happen is you can either roll those over to a new beneficiary or keep it for legacy planning or maybe you just take the distribution and a 10% tax penalty on those funds that aren’t used for education expenses. Well now you have the opportunity to make Roth IRA contributions from the 529 funds. As long as the account has been opened for 15 years, you can then make up to the IRS yearly limit of Roth IRA contributions for the beneficiary. This can be a great tool for parents or grandparents or even kids who have leftover funds. You can start funding Roth IRAs for your beneficiaries that aren’t going to be using 529 funds for education and give them a great head start to retirement saving.”

Mega Backdoor Roths

Posted on by Kelsie Joos

The mega backdoor Roth strategy is a great option for high earners at a company that allows After-tax 401(k) contributions. Hear from Commas advisor Katelyn to learn why this may be the right choice for you.

“When you think about saving into a 401(k) plan, you traditionally think of making pre-tax or Roth contributions. But there’s another category called After-tax contributions and, in certain company 401(K) plans, After-tax contributions allow you to save above that limit and then we can convert those dollars into Roth. Roth is one of our favorite types of retirement accounts and so the more dollars we can get in there the better.

Examples of 401k companies that do this would be Google, Netflix, or Microsoft but it’s not exclusive to those large companies. It’s really important to look in your 401k plan document to see if these types of contributions are offered. Granted, we want to make sure that we’re prioritizing short-term goals and long-term goals, but if you have the capability to save more into retirement this is a great option for you.”

The Power of Compound Interest

Posted on by Kelsie Joos

“The best time to start saving and investing is yesterday, the second-best time is today.”

The true trick to taking advantage of compounding interest is to start early and give your funds time to compound and grow.

“It’s really important to start saving and investing as early as you can. Certainly, you want to make sure you’ve got the basics covered. You want to have enough money in the bank in case of emergency and some of the basics like that. But once we start to talk about saving for various goals, it’s really important to start that as soon as possible.

One of the investing quotes that you’ve probably heard before is ‘the best time to start saving investing is yesterday, the second-best time is today,’ and that’s absolutely true because of compound interest. Every dollar you earn today snowballs and becomes a lot more dollars in the future so even adding one year, five years today, starting a little bit earlier, can make a huge difference 15, 20, 30 years down the road. Being invested for a long period of time is the number one thing you can do to build wealth.”

Webinar: A Look Back at 2023 & Planning for the Year Ahead

Posted on by A.Tuke

The Commas team was excited to partner with our colleagues at Truepoint Wealth Counsel to host our first Truepoint Talks webinar of 2024, featuring August Hemmerich and Conor Feldmann. 

Some of the planning opportunities covered in the webinar include:

  • Utilizing retirement savings accounts and Health Savings Accounts (HSAs)
  • Navigating college funding and the FAFSA
  • Converting a 529 to a Roth IRA
  • Using Flexible Spending Accounts (FSAs)
  • Saving in a high interest rate environment
  • Reviewing your insurance coverage

Feel free to share with anyone who might be interested in these tips. And as mentioned in the recording, you can follow Conor’s ongoing market commentary on Demystifying Markets. 

If you have any questions about the content shared in the webinar linked above, please feel free to reach out to our team.

Investing Based on Your Goals

Posted on by Kelsie Joos

Don’t lose sight of your financial goals! 📈 Hear from Commas portfolio manager Conor on the importance of understanding why you’re investing before diving into investment strategies.

“If you’re aiming to maximize your return over any shorter time period, you may be losing sight of why you’re investing those funds in the first place. For example, if you know you need to buy a car in the next three years because maybe your car is getting old and it’s time for an upgrade, if you invest those funds fully in the stock market, you’re taking on outsized risks. So much so that one year later if your car breaks down and you need to buy one; maybe the 10 grand you set aside is now 7 grand or 5 grand and you have to change the kind of car that that you’re looking to buy. That would be a difficult investment decision and really mistake to make because you forgot to tie the reason you’re investing with your portfolio. So, investing according to your goals is really the very first step you need to make before you decide exactly what strategy you’re going to enact.”

Navigating Equity Compensation

Posted on by Kelsie Joos

Commas advisor Jordan tells us that navigating equity compensation is all about making decisions that will give you the greatest likelihood of achieving your long-term financial goals. There can be a lot of complexity around taxes and what to do with the company stock, but he distills it down to three steps to focus on.

“Equity compensation is when people get paid in company stock. And when that happens there’s a lot of complexity around taxes and what to do with that stock, but really you want to distill it down to a few things.

First is how do I make sure that I have enough cash on hand to pay any taxes that are associated with exercising and liquidating the company stock that I have.

Then, you want to set up a plan to make sure that you’ve got some money to pay for any short-term goals. A lot of clients I work with want to use the equity that they received to buy a house, or to fund a sabbatical, or to go on a trip, and so you want to make sure that you have money available to do those.

The third step is thinking about your long-term wealth. So are we able to take some risk and to continue to hold on to this stock in order to grow our wealth over time or do we want to pull some of the risk off the table by selling the stock and making sure that we’re able to achieve our goals? It’s all about making decisions that will give you the greatest likelihood of achieving your long-term financial goals.”