How To

Host Mark Struthers CFA CFP® will give you tips and strategies to build wealth on your terms. Mark is a father; he knows how important balance is in our lives. Mark’s focus for the podcast is to give you the tools for well-balanced wealth building, realizing we all have goals beyond making money. Wealth has a different meaning for everyone.

Episodes

Is Your 529 Plan Packed? Getting Your 529 Plan Ready For College.

(Please Forgive The Sound - We Were Outside For The Last Few Days Of Summer) 

As school starts, many parents are beginning to tap their 529s. Those that packed their 529s in advance decreased the risk in at least a portion of their portfolio at least a year or two out. But for many, the balance they counted on in December 2021 has dropped 15%-20%.

Managing college-funding risk can be more challenging than retirement because the runway and spend-down periods are shorter for college, 18 and 4 for college, and for retirement, 40 and 25, respectively.

If you have a sophomore or junior in high school, now is the time to develop a risk-reduction plan. 

Don't PANIC!

If your child is starting college now, there is no perfect solution in a down market, but here are some possible solutions and thoughts:

  • Use other assets and give time for risky assets to come back

    • Roth
    • Other 529 plan
    • Other accounts
    • Realizing the risk of staying invested
  • Dollar-cost sell, again realizing the market may not come back
    • If you don't need the assets right away
    • A tuition payment plan set up with the school may allow you to spread out payments
  • Sell bonds or lower-risk assets first
    • Even the equities that haven't gone down as much might be able to be sold

If you are in a target-date fund, be aware of the current risk and how it reduces risk over time.

Listen, rate, and subscribe!

Mark Struthers

www.SonaWealthAdvisors.com

Chanhassen, MN 55317

The Architecture of Wealth Podcast is for educational purposes only. Investment Advisory Services are offered through Sona Financial LLC (DBA Sona Wealth and Sona Wealth Management), a registered investment adviser authorized to do business in states where registered or otherwise exempt from registration. Nothing discussed during this show/episode should be viewed as investment advice. If you have questions pertaining to your specific situation, please consult your own financial professional.

 

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Shownotes:

Takeaways

  • More companies are giving employees a choice between NSOs (Non-Qualified Stock Options) and RSUs (Restricted Stock Units).
  • There is no right or wrong choice. It is about understanding the pros and cons of each and how they fit with your goals, risk tolerance, and personal financial profile.
  • RSUs are easier to understand, manage, and most often considered less risky, with less downside. 
  • NSOs are more complex, harder to manage, and riskier, with more downside.
  • Generally, you will receive more NSOs than RSUs.
  • It is often helpful to breakout your considerations into tax and investment issues.

Rest of blog post:

https://www.sonawealthadvisors.com/nsos-non-qualified-stock-options-vs-rsus-restricted-stock-units/

Listen, rate, and subscribe!

Mark Struthers

www.SonaWealthAdvisors.com

Chanhassen, MN 55317

The Architecture of Wealth Podcast is for educational purposes only. Investment Advisory Services are offered through Sona Financial LLC (DBA Sona Wealth and Sona Wealth Management), a registered investment adviser authorized to do business in states where registered or otherwise exempt from registration. Nothing discussed during this show/episode should be viewed as investment advice. If you have questions pertaining to your specific situation, please consult your own financial professional.

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The Architecture of Wealth Shownotes:

Could retiring in the 2020s be as bad as retiring in the late 60s? Now is a scary time for retirees. 

Mark reviews a Barron's article about sequence-of-return risk and the luck (or bad luck) of retiring before a bad stretch of stock and/or bond market returns.

https://www.barrons.com/articles/retirement-recession-bear-market-51657228473?mod=past_editions

Mark expands on how the 4% rule relates to some of the article's observations. While equities are critical for the inflation adjustment to work on withdrawals, putting some thought into your emergency fund and the increased use of bonds can help weather a bad-decade storm. Some other solutions Mark touches on:

  • Have more assets at retirement
  • Be flexible with spending – change lifestyle if a bad stretch happens
  • Larger emergency fund - comfort cash
  • Dividends and interest going to cash
  • Overweight bonds early in retirement
    • A bond tent 

      • Increasing from 40%-70% from age 55-56
      • Decreasing from 70%-40% from age 65-80
  • Use of Treasury Inflation-Protected Securities, or TIPs

Listen, rate, and subscribe!

Mark Struthers
www.SonaWealthAdvisors.com
Chanhassen, MN 55317

 

The Architecture of Wealth Podcast is for educational purposes only. Investment Advisory Services are offered through Sona Financial LLC (DBA Sona Wealth and Sona Wealth Management), a registered investment adviser authorized to do business in states where registered or otherwise exempt from registration. Nothing discussed during this show/episode should be viewed as investment advice. If you have questions pertaining to your specific situation, please consult your own financial professional.

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This week Mark goes through what it means when equity compensation options are underwater. Underwater Incentive Stock Options (ISOs) and Non-Qualified Stock Options (NSOs) have no intrinsic value. Because the strike price is more than the current market value, they show no value on your statement. Mark provides an example of an underwater option and what you should do about it. There is often little reason to pay more for a stock than it is worth. There is no tax deduction by exercising an underwater option. Many people mistakenly think that a paper “loss” on the exercise will offset the ordinary income tax on options that have value.

The only time exercising an underwater option may be appropriate is when it’s a privately held company. If the stock is not publicly traded, exercising the underwater, out-of-the-money option and paying more than it is worth may be the only way to access the stock, but it is a very BIG risk. 

Lowering expectations, and being realistic about the value of your equity compensation, will help you make better financial decisions and more effectively build well-balanced wealth.

---------

Each equity comp type has its own tax and risk profile. Make sure to consult a financial professional before acting.

Listen, rate, and subscribe!

Mark Struthers
www.SonaWealthAdvisors.com
Chanhassen, MN 55317

 

The Architecture of Wealth Podcast is for educational purposes only. Investment Advisory Services are offered through Sona Financial LLC (DBA Sona Wealth and Sona Wealth Management), a registered investment adviser authorized to do business in states where registered or otherwise exempt from registration. Nothing discussed during this show/episode should be viewed as investment advice. If you have questions pertaining to your specific situation, please consult your own financial professional.

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The Architecture of Wealth

Episode Title:

6 Equity Comp Tips For Dealing With Market Volatility

Embed podcast player 

Episode Introduction

Market downturns and volatility affect equity compensation more than other types of investments. Non-qualified Stock Options (NSOs) and incentive stock options (ISOs) can be particularly hard hit. Mark gives you some tools and tips to deal with these uncertain times. 

Equity Compensation Mentioned:

  • Non-Qualified Stock Options (NSOs)
  • Incentive Stock Options (ISOs)
  • Employees Stock Purchase Plan (ESPP)
  • Restricted Stock Units (RSUs)
  • Stock Appreciation Rights (SARs)

Main Topics

  1. Change expectations – Stop expecting quick cash (2:55)
  2. Lower stock prices - lower taxes (5:00)
  3. Don’t plan to use funds for day-to-day expenses (6:02)
  4. Ignore! Ignore! Ignore! (7:14)
  5. Volatility is the new normal (9:04)
  6. Make a plan (9:55)

Additional Resources and Thoughts

Each equity comp type has its own tax and risk profile. Make sure to consult a financial professional before acting.

Listen, rate, and subscribe!

Mark Struthers
www.SonaWealthAdvisors.com
Chanhassen, MN 55317

 

The Architecture of Wealth Podcast is for educational purposes only. Investment Advisory Services are offered through Sona Financial LLC (DBA Sona Wealth and Sona Wealth Management), a registered investment adviser authorized to do business in states where registered or otherwise exempt from registration. Nothing discussed during this show/episode should be viewed as investment advice. If you have questions pertaining to your specific situation, please consult your own financial professional.

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Podcast Show Notes – The Architecture of Wealth

 

Date: 6/5/2022

Name of podcast: The Architecture of Wealth

Episode Title: 4 Ways to Make the Most of a Market Downturn

 

By taking inventory of your risk tolerance, you can take advantage of this lower market. Here are four ways to make the most of a market downturn.

 

For information about Sona Wealth Advisors: www.SonaWealthAdvisors.com

 

 

Summary:

 

In the wake of a bad week for the market, now is a good time to evaluate your risk tolerance. And checking your risk tolerance via your financial plan and investment strategy can help you find ways to leverage a lower market. You should be doing this on an ongoing basis. Then, these things will affect you less and less.

 

Here are four ways to take advantage of this market downturn:

 

  1. Frontloading: Contribute to your retirement account early in the year. Historically, the market doesn’t go substantially lower than 20% down in any given year – where it is currently – meaning now might be a good time to frontload. The con is the 401K match: most companies will require you contribute every month to get your full match.

 

Also, small business owners may not know their full income for the year and how much they can afford to frontload.

 

  1. Put Cashflow to Work: If your job is secure and your emergency fund is well stocked, now might be a good time to put your cash to work.

 

  1. Tax Loss Harvesting: Capital gains were a big deal in last year’s market. When the market is down, you can take advantage of losses. Keep the wash-sale rule in mind when doing this. Separately Managed Accounts (SMA) are popular because the technology has improved. They can harvest capital losses at the individual stock level.

 

  1. Roth Conversions: If you were going to convert, the tax burden may be lower now because valuations are lower. This also works if your income is low. Converting during a 20% pullback might be a good idea. Increasing your income from a Roth conversion may have unintended consequences. There are tax deductions that rely on income. You may lose loss credits and deductions by increasing your income through a ross conversion.

 

Anything with a Roth has a five-year rule, including each Roth conversion. Each conversion has its own five-year rule.

 

One strategy is to convert higher-risk, higher-growth potential assets from your traditional IRA with the idea that they will grow more inside your Roth. Lower-risk assets will be in your traditional IRA.

 

 

Timestamps:

 

0:00 Introduction

2:25 Self-Check with Risk Tolerance

3:26 First: frontloading

6:12 Second: put cashflow to work

7:57 Third: tax loss harvesting

9:07 Fourth: Roth Conversions

 

 

Mark Struthers
www.SonaWealthAdvisors.com
Chanhassen, MN 55317

 

The Architecture of Wealth Podcast is for educational purposes only. Investment Advisory Services are offered through Sona Financial LLC (DBA Sona Wealth and Sona Wealth Management), a registered investment adviser authorized to do business in states where registered or otherwise exempt from registration. Nothing discussed during this show/episode should be viewed as investment advice. If you have questions pertaining to your specific situation, please consult your own financial professional.

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We continue our discussion of the Roth and Traditional account types. Building wealth means balancing your goals with the characteristics of each. Mark gives some rules of thumb and things that investors and even advisors miss!

 

For information about Sona Wealth Advisors: www.SonaWealthAdvisors.com

The Architecture of Wealth Podcast is for educational purposes only. Investment Advisory Services are offered through Sona Financial LLC (DBA Sona Wealth and Sona Wealth Management), a registered investment adviser authorized to do business in states where registered or otherwise exempt from registration. Nothing discussed during this show/episode should be viewed as investment advice. If you have questions pertaining to your specific situation, please consult your own financial professional.

 

 

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Mark reviews the basics of Roth and Traditional account types, laying the foundation for Part 2, where we compare the two and discuss how you decide which one is right for you. 

 

For information about Sona Wealth Advisors: www.SonaWealthAdvisors.com

The Architecture of Wealth Podcast is for educational purposes only. Investment Advisory Services are offered through Sona Financial LLC (DBA Sona Wealth and Sona Wealth Management), a registered investment adviser authorized to do business in states where registered or otherwise exempt from registration. Nothing discussed during this show/episode should be viewed as investment advice. If you have questions pertaining to your specific situation, please consult your own financial professional.

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Inflation. The stock market. Ukraine. The Timberwolves bounced from the 1st round of the playoffs. These are scary times. But spring is finally here in Minnesota, and Mark hopes to provide a little sunshine in this gloomy stock-market storm. The average market drawdown in any given year is 14%. So for 2022, we are average. So why do things seem so bad?

For information about Sona Wealth Advisors: www.SonaWealthAdvisors.com

The Architecture of Wealth Podcast is for educational purposes only. Investment Advisory Services are offered through Sona Financial LLC (DBA Sona Wealth and Sona Wealth Management), a registered investment adviser authorized to do business in states where registered or otherwise exempt from registration. Nothing discussed during this show/episode should be viewed as investment advice. If you have questions pertaining to your specific situation, please consult your own financial professional.

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I-Bonds. Used to be boring. Now, not so much. As inflation has risen, so has their return. They are not for everyone, and be aware of liquidity issues and penalties, but they could be a great inflation hedge for many.

 

For information about Sona Wealth Advisors: www.SonaWealthAdvisors.com

The Architecture of Wealth Podcast is for educational purposes only. Investment Advisory Services are offered through Sona Financial LLC (DBA Sona Wealth and Sona Wealth Management), a registered investment adviser authorized to do business in states where registered or otherwise exempt from registration. Nothing discussed during this show/episode should be viewed as investment advice. If you have questions pertaining to your specific situation, please consult your own financial professional.

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