Day trading is nothing new. Whenever financial markets start to get extraordinarily volatile you tend to see an increase in the number of new day traders enter the market. Add in the element of sports gambling being diminished (due to the pandemic), and you get a recipe for increased speculation from those looking to make quick gains. In this podcast episode, I talk about the difference between entertainers and those providing real practical financial advice AND why it's important to keep the proper perspective when making investment decisions. Keeping the proper perspective is crucial to avoiding the BIG mistake, and ultimately, continuing to build on good financial habits. Connect with T.J. on Twitter: https://twitter.com/TJvanGerven To learn more about working with T.J. head to https://www.modernwealthbuilders.com/

Do More With Your Money

Robinhood Culture, Millennial Day Trading, And The Rise Of DDTG

Let’s get it out of the way and start with the disclaimer that personal finance is always personal and that this isn’t advice.  In this post, I’ll explain how I think about and manage my personal finances based on where I’m currently at in life. While some principles can be applied to any life stage, I’m sure how I think about money for my personal situation will change over time. And I’m sure yours will as well. Everyone’s personal finances start with understanding cash flow. You need to understand how much you’re spending and be able to review whenever you need to. I use Mint and Right Capital for tracking my personal spending. I use QuickBooks Self-Employed for tracking the cash flow of my financial planning firm, Modern Wealth Builders. It’s not necessary whatsoever, but I review my cash flow daily . Re-categorizing any transactions within Mint, Right Capital, and QuickBooks that don’t have pre-determined rules or are miscategorized. Being on top of reviewing transactions helps with: Immediately identifying fraudulent purchases. Maintaining consciousness of spending decisions. Incentivizing yourself to spend with intention. I regularly audit my spending decisions to ask myself, “do I value this purchase”. I use my credit cards for all purchases (that can be charged via credit card) for the following reasons: It keeps all transactions electronic and trackable. It adds a layer of security as opposed to a debit card. It allows me to maximize cashback rewards. I don’t get caught up in maximizing specific cashback rewards (it doesn’t really move the needle), but I do think it’s important to get at least the standard 1% back on all purchases. Part of the reason I am so on top of tracking cash flow is that I get paid primarily quarterly. As you might imagine, I want to budget properly for expenses, taxes, and *ideally* investment contributions. Understanding cash flow helps to determine how much cash to keep on reserve. Because I’m self-employed and somewhat risk-averse, I tend to keep more cash on hand than I probably need. I prefer to have twelve months of living + business expenses in cash at all times. While this may not be the “smartest” mathematical decision from a financial planning perspective, it does give me the following: Peace of mind Flexibility in drastic economic environments Leverage to quote my value as a solopreneur A strong cash reserve gives me a “hidden return” by enabling me to be aggressive in other aspects of my financial life. Additionally, it allows me to maintain my investment allocation across my various retirement accounts. Let’s talk about my personal investment philosophy. The vast majority of my investments are held in a combination of six ETFs. My primary concern always starts with asset allocation and asset location, as I believe most returns (net of fees and taxes) can be attributed to these factors. The six ETFs cover the following: US Equity International Equity (developed and emerging) Domestic and International Fixed Income I keep it as simple as possible and allocate based on market cap, while being mindful of asset location. For example, keeping the asset classes with higher expected returns (long term) in Roth accounts, and keeping less tax-efficient investments (fixed income) in pre-tax accounts. Rebalancing occurs automatically based on pre-determined rules for drift. Each tax year, I take full advantage of the tax-preferential accounts at my disposal. This currently includes a SEP IRA, Roth IRA, and Health Savings Account (HSA). I anticipate I’ll be changing from a SEP IRA to a Solo 401(k) and taking advantage of backdoor Roth IRA contributions soon. At this point, I’m not currently investing in any taxable accounts as I need the cash reinvest in MWB. The way I look at it, once you’ve maxed your available tax-preferential accounts in a given tax year, that’s when the fun starts for determining the best use of your money. When you’re investing in a strategic bundle of ETFs globally diversified, you know (generally) the ceiling on expected returns. There’s nothing wrong with this ceiling (when compounded over time), but if you want to achieve higher returns with your money, you usually need to take matters into your own hands.    Invest for beta. Earn for alpha.

How I Manage My Money As A Solopreneur

"I have money going to my savings account each paycheck that I don't know what I should be doing with; what should I be doing with it?"   Let's start with the ever-important caveat that personal finance is personal, and as always, "it depends." With that out of the way, let's talk about some ideas, habits, and strategies you should be thinking about if you feel like you're sitting on too much cash.   It may seem trivial at this point but having a sizable cash reserve is crucial for many reasons, some of which provide a "hidden return" like having the flexibility to search for better job opportunities or be more selective with investment opportunities. At a minimum, you should have at least three months worth of living expenses in cash at all times. This should range as far as eighteen months of cash reserve depending on a variety of factors such as if you're self-employed, how economically sensitive your job is, or how many income sources you have in your household. Personally, I strive to have twelve months' worth of living expenses in cash as it provides me the peace of mind to run my business and invest (in personal investment accounts) long term with confidence. If you're still working towards building towards your ideal cash reserve, don't feel bad about not investing additional cash flow. The opportunity cost of building a sizable cash reserve is well worth the peace of mind.   When you're determining your ideal cash reserve, you can base it on your baseline spending needs or what you're currently spending. The lower your baseline spending needs, the lower your cash reserve can be, and in turn, the more cash flow you can use to grow your net worth on an ongoing basis. If you've determined you're "sitting on too much cash" relative to your cash reserve requirements, here are some things to consider:   Are there any major short-term expenses or purchases you anticipate to have in the next 6-18 months? Generally speaking, you want to avoid investing in the stock market for any money that will be needed within the next three years (ideally five years +). However, if you have a sizable cash reserve, stable income, and a high tolerance for risk, there is some flexibility. If you don't anticipate having any major short-term purchases and are looking to maximize the value of your hard-earned money to grow your net worth, here are some ideas:   Are you maxing out your 401(k) at work? You can contribute up to $19,500 (under age 50) in employee contributions for 2020 and 2021. Why would you want to contribute more to your 401(k) than is necessary to receive your employer match? Because contributions to a Traditional 401(k) reduce your taxable income and can be invested to grow tax-deferred until you need to pull them out after age 59 1/2. If your employer offers Roth 401(k) contributions, you should strongly consider taking advantage of these "after-tax" contributions (no income tax deduction) to increase your tax-free investment assets. In addition to maxing out your 401(k) at work, you should also be taking advantage of an individual retirement account (IRA). You can contribute up to $6,000 (under age 50) for 2020 and 2021 and receive the same tax-deferred benefits as investing in your 401(k). However, if your income (MAGI) exceeds ~$124,000 (2020), you'll want to consider a backdoor Roth IRA.   Does your employer offer a Health Savings Account? You'll need to have chosen the "high deductible" plan to take advantage of the account. HSA contributions are a no-brainer as they provide a potential "triple tax-free" benefit. Contributions to the account reduce your taxable income, can be invested with tax-deferred growth, and if used for a qualified medical expense, can be distributed tax-free Additionally, if the money can be drawn penalty-free after age 65 for any reason. An extremely tax flexible account to take advantage of if you have access!   If you're taking advantage of all your tax preferential accounts and still have additional cash flow, you should consider investing in a taxable brokerage account. The specific investment selection should align with your overall investment strategy. Meaning, you should invest in a taxable account that factors in your investment holdings across your various retirement accounts. A taxable account is more flexible in that you always have access to the money penalty-free. However, unlike a retirement account, you'll be subject to taxes. Consider holding most of your equity allocation in your taxable account (as it grows in proportion to your other accounts) as stocks will have more tax flexibility with capital gains and/or tax-loss harvesting.   If you're sitting on too much cash, the most important thing is that you have a plan for how to maximize the use of additional cash on hand. Getting in the habit of investing regularly is the most important factor for achieving long-term financial success as it puts the odds in your favor. Although cash is safe in the short-term, it becomes risky long-term as the purchasing power is eroded from inflation. Make sure you're doing all you can to preserve (and hopefully grow) your hard-earned wealth.

Am I sitting on too much cash audio-extractor.net

One of the biggest (if not the biggest) investments you can make is choosing a lifelong partner. You and your partner must be aware of each other's values, goals, and desires as it relates to your money. There is no perfect strategy when it comes to managing finances as a combined unit. However, you both must have at least a general understanding of each other's finances and long-term financial goals. That way, you can avoid any unneeded stress or disagreement because you weren't on the same page. We can all benefit from having a professional, objective third-party who has our best interests at heart to bounce off ideas and provide us with guidance.   Here are four financial tips for newly married couples:   1) Your income is now taxed as a joint singular entity, so make sure to maximize it. Before you're married, you pay taxes separately. Depending on your respective income level, filing jointly may benefit you or cause you to pay additional taxes. If one person in the household is the primary earner, then filing jointly will most likely provide you a tax benefit due to the larger bands in the marginal tax bracket. Regardless, it would be best if you worked together to maximize the efficiency of your combined income. If you view your income as combined, you should work together to make sure both of you max out your retirement accounts or additional tax preferential accounts. If one spouse's income is substantially lower, it may not be easy to maximize a tax-deferred account like a 401(k) without the higher-earning spouse supplementing their spending needs. These strategies depend on your specific needs and how much cash flow you have to dedicate to discretionary investment contributions. However, if done correctly, you can substantially increase the efficiency of your after-tax joint income.   2) Have a joint checking account and joint credit card for joint expenses. There's no "correct" way to approach spending as a couple. The most important thing is that it works for you, and no one is resentful about how expenses are paid. A strategy I've seen work for various couples is maintaining a "his and hers" spending approach with a joint checking and credit card for joint expenses. In certain cases, it may make sense to consider a "pro-rata" approach where the higher-earning spouse pays a higher proportion of the fixed expenses. Again, the most important thing is that you and your partner agree on the approach you'd like to take. As long as both spouses are comfortable with the level of ongoing saving (preferably investing), no one should be concerned with the other partners spending.   3) Discuss your individual and joint financial goals. You may be surprised to learn how different your partner's individual financial goals are. How important is achieving financial independence to you vs. your partner? Do you want to fund your child's education savings fully, or do you want them to have "skin in the game"? Our personal experiences with money have a massive impact on how we view the world. Your partner may have had a substantially different experience with money growing up, which will influence their individual goals and preferences. Again, communication (ideally with an objective, third-party professional) is essential for getting on the same page about what financial and lifestyle goals you'd like to work towards together.   4) Have a combined investment strategy that factors in each other's tolerance for risk. Like your income, your investments should be viewed as one unit for all intents and purposes. It's important that you both have a general understanding of your investments, what you own, and why you own it. Your long term financial plan should influence how your investments are structured. Ideally, you'll factor in your combined tolerance to accept the risk needed to achieve your financial goals. If one partner substantially deviates from the investment strategy, it can have a large negative impact on your combined finances. Again, communication (ideally with an objective, third-party professional) is essential for getting on the same page about the appropriate investment strategy to achieve your desired financial outcomes.

Four Financial Tips For Newly Married Couples

One of the most common windfalls of wealth can come from employee equity compensation. Often, this happens when you’ve worked at a private company that experiences an Initial Public Offering (IPO), and the share price appreciates dramatically once it enters the publically traded market. However, you can also experience a windfall with a publically traded stock that experiences a dramatic rise causing your stock options (or equity position) to represent a large portion of your investment assets. You can analyze many factors in whether or not to diversify your stock position. I’ll be primarily discussing incentive stock options (ISOs), but many factors for determining diversifying can apply to any concentrated stock position. The overall message you should remind yourself is that “concentration builds wealth and diversification maintains wealth.” The decision to diversify should be based on your long term financial plan. Let’s discuss it!

Seven Factors For Determining How To Diversify Concentrated Employee Stock Options

You have limited energy. You have limited time. If you want to achieve progression in anything, you have to give it your best effort. However, giving your best effort isn't always enough. You need to focus your limited energy on high leverage tasks and avoid shiny objects. In this podcast episode, I discuss examples of focusing on tasks that amplify outcomes and propel progression. Whether it's your personal finances, career progression, or taking back your time, these principles can be applied to your situation.   

High Leverage Tasks And Avoiding Shiny Objects

Are you self-employed or a small business owner looking to reduce taxes and invest in your financial future? In this podcast episode, I break down the different types of investment accounts you should be thinking about establishing. The primary accounts discussed are the SEP-IRA, Solo 401(k), and Traditional 401(k). Depending on if you have employees (and how many) is a significant factor when deciding which account to use. The SEP-IRA is the easiest and most cost-effective (from an administrative standpoint) to establish. However, if you have more than a few employees, the matching requirement can quickly become expensive. In which case, considering the 401(k) could make more sense. The great thing about the current small business 401(k) landscape is that there are more low-cost third-party solutions than ever before.  If you're not currently deferring taxes and investing for your financial success outside of your self-employment or business, you'll want to give this episode a listen!  

The Best Investment Accounts For Self-Employed Individuals And Small Business Owners

Financial planning is a relatively new profession that can take on a variety of meanings.  The term "financial planning" is also often abused by corporations as a means to sell expensive financial products. In this podcast episode, I discuss what financial planning means to me, and ultimately, what the end goal is. Financial planning is advice-centric, meaning it's about providing recommendations unique to your situation and long term goals. Financial planning is the use of technical knowledge to maximize your financial resources to create the life you want. Creating the life you want could mean: Buying back your time (financial independence) Taking care of the people you care about Material Items (Cars, Houses, etc.) Leaving a legacy Since we don't know what the future holds, financial planning is about putting you in a position to accomplish your goals regardless of future market returns, tax rates, economic environments, and things we have zero control over. By making strategic decisions and keeping realistic assumptions, we can put the odds of success in our favor!

What Is Financial Planning And What's The End Goal?

There's no shame in having some unavoidable debt in your 20s and 30s.  However, it's CRUCIAL to build a financial foundation of strong personal finance habits in order to advance to the next step of your financial life -- wealth accumulation. Until you have an understanding of the resources you're working with, it's hard to make decisions on how to maximize the free cash flow you have to pay down debt and ultimately, grow your net worth.  In this podcast episode, I discuss the pros and cons of investing versus paying down debt. This includes different debt repayment approaches such as "Snowball" versus "Avalanche". Although one may be more "mathematically" advantageous, the other provides the behavioral momentum to keep you on track towards progress. I also discuss investing in the stock market and how that isn't necessarily the right thing to do when you're building your financial foundation. The market will still be around when you're ready to start aggressively investing on an ongoing basis. Best to develop valuable personal finance micro habits in the beginning! That way, you'll be better equipped to avoid lifestyle inflation when your income inevitably increases! P.S. don't forget to connect with me on twitter @TJvanGerven

Should I Pay Down Debt Or Invest?

It's standard for beneficiaries of a trust to not have access to the funds until a certain age (age 35 is common).  Because assets held within an irrevocable trust are taxed at higher rates, there can be a lot of planning opportunities to maximize that money (if you're being responsible). The first step is to review the trust documents and see what the stipulations are for the intended use of the money. From there, you can work with the trustees depending on if they can make discretionary distributions.  In this podcast episode, I discuss some different ideas for making the most of that money, including filling up more tax-efficient accounts, paying down high-interest rate debt, and even funding a business endeavor. I also discuss how you (ideally) want to make sure the trust is invested appropriately for your long term goals and needs. 

How To Maximize A Trust Fund You Don't Currently Have Access To

No pain, no premium. The unfortunate reality is that to benefit from the returns of financial markets (especially the stock market) we have to be willing to accept the inevitable risk of short term declines. Declines and periods of volatility happen regularly and are a normal part of investing. The ups and downs can go on for weeks and months, which can be psychologically taxing, even when it’s a normal part of the market cycle. The best thing you can do is to develop a plan AHEAD of time and then remain disciplined. Why? Because panic-driven reactions don’t lead to smart investing decisions. The biggest mistake investors can make is not having a plan ahead of time and/or not remaining disciplined. Tune into this week's episode for my complete thoughts on dealing with market corrections.  

How To Deal With A Market Correction

In this podcast episode, I discuss the framework for deciding how aggressive to be with employer equity compensation. Equity compensation discussed includes Options (at-the-money vs out-of-the-money) vs Restricted Stock Units (RSUs). In situations where there is a vesting schedule (over a 3,4,5 year period), it almost always makes sense to take the equity compensation (vs cash). However, I also discuss situations where taking cash would make sense based on personal financial circumstances. Equity compensation is an amazing opportunity to concentrate and grow your wealth. You just want to make sure you have a plan in place to minimize the tax ramifications and diversify in the long term once you've built your foundation for financial independence.

How Aggressive Should I Be With My Employer Equity Compensation?

The fear of missing out (aka FOMO) is one of the strongest forces that can affect investment decisions. The best investors are comfortable with accepting FOMO and staying in their lane (focusing on their individual race). It can be difficult to not let "water cooler talk" affect our investment decisions when we hear about what our peers are doing. In this podcast episode, I share my thoughts around dealing with investment FOMO. Concentration gets you rich, diversification keeps you rich. If you're winning YOUR race to achieving YOUR financial goals, it shouldn't matter what anyone else (or any other individual stock) is doing. The real opportunity cost should be, "can I still achieve my financial goals" and "does this strategy increase or decrease my odds of success". I hope you enjoy the episode!

The Fear of Missing Out

In this podcast episode, I discuss the three "mainstream" investing styles for the Mainstreet investor. Active vs. Passive vs. Factor Investing  

The Big Three: Active vs. Passive vs. Factor

On this guest podcast episode, José Hernandez aka The Millennial Money Mentor (as he goes by on Instagram) joins me to talk about the future of financial education and personal branding. In this episode, we discuss José's journey of navigating some of the pitfalls of corporate wealth management while trying to build a platform focused on educating the next generation of investors. If you've ever come across José on Instagram (@themillennialmoneymentor) you'll find he puts out a massive amount of valuable content focused on educating millennials on personal finance and investment concepts. I appreciate José's candor and straightforward approach. It's refreshing to follow someone who has had real-world experience in the day to day operations of wealth management. Don't hesitate to reach out to José directly via Instagram (@themillennialmoneymentor) as he's always willing to share ideas and engage!

Financial Education and Personal Branding with José Hernandez

Welcome! The 'Do More With Your Money' podcast is an exploration of using money not only as a tool to build wealth but ultimately to create a meaningful life. My goal is to help you think differently about your money!

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Robinhood Culture, Millennial Day Trading, And The Rise Of D...

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