Insights

 As financial planners, we get to assist people on a quest. Simply put, our job is twofold. 

Equity-based compensation is a wonderful way to potentially share in the profits and appreciation of your company. Getting the most out of your equity compensation requires understanding key concepts, terms, and conditions related to this equity. It is also important to understand the tax implications and to make decisions with a long-term financial plan in mind. Not fully understanding what you have been granted or not having a plan can easily lead to mistakes, lost opportunities, and even outright losses.

For employees at late-stage private companies, having Incentive Stock Options where the 409A valuation (or, stated simply, the current valuation) exceeds the grant price might feel like buying a new home that requires renovating. Your cynical side wonders whether the home is actually worth what the appraiser says, and if you should really be putting any additional money into it. Your pragmatic side embraces that this wealth-building opportunity could build a legacy. 

The valuation and exercise of stock options with privately held companies introduces unique complexities for investors. In this Insight, I will review some key considerations with a focus on the main differences between common types of equity compensation and their implications for taxes.

Health Savings Accounts (HSAs), as the name implies, are savings accounts for health care expenses. There are restrictions on who may contribute, how much, and what counts as a qualified medical expense. It is worth exploring whether you have the opportunity to participate in one of these accounts as they provide some compelling tax benefits.

Anyone who has lived in, rented, or owned a home or apartment has some level of familiarity with real estate. Compared to other investments like stocks and bonds, this familiarity can make rental real estate investments seem like the most straightforward way to produce passive income.

Is an “income investing” strategy right for your portfolio? 

The right answer requires a bit of nuance. While many investors may eventually want to rely on their portfolio for income, doing so does not necessarily require shifting toward income-generating investments.

This Insight explains why. Below, we define income investing, examine some common income-generating investments, and explain why this approach is likely not the best way to maximize total returns.

The Wealthstream Advisors team was excited to learn that the firm has been named as a 2023 finalist for the University at Buffalo’s UB Fast 46 list for the third year in a row.

This competition honors University at Buffalo alumni who own or lead businesses, recognizing 46 (a nod to the institution’s founding in 1846) of the fastest-growing firms each year. 

Wealthstream Advisors President and founder Michael Goodman is a proud Buffalo alumnus.

According to the university’s official contest announcement, “eligible companies must have been in business since January 2019; have verifiable revenues of at least $100,000 or more in 2019 and 2020 and at least $250,000 in 2021; and the owner or leader must be a UB alum or former student.”

We extend our thanks to the State University of New York at Buffalo for this honor and look forward to seeing the full list of finalists unveiled at a September 14 event at UB’s Center for the Arts.

In this Insight, we explain Monte Carlo analysis (also commonly called Monte Carlo simulation), how it works, and how it can be a powerful tool when projecting a family’s long-term financial future. 

10b5-1 plans can be a great option when divesting from concentrated equity positions in a firm, potentially offering protection against insider trading charges while avoiding the perception of failing confidence.

In this Insight, we explain these plans, how they work, and how they will be affected by new SEC rules changes.