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Looking for inspiration to kickstart 2021? Check out the top 10 list of what our readers liked the most in 2020. Our most-read posts dealt with tax-efficient strategies, Coronavirus uncertainty, goals-based investing, employee equity compensation, early retirement, and medicare planning. Not surprising given the uncertainty we experienced in 2020. The best way to cope with uncertainty is to set goals, have a plan, and make the most out of your resources. Our number one post was about breaking down your paystub to know where your gross income is going. If you are looking for ideas that will open your eyes to your finances, check out our winners!
1. BREAK DOWN YOUR PAY STUB AND LEARN THE IMPORTANCE OF PRE-TAX SAVING
Understanding the breakdown of your pay stub will help you better understand your tax withholding and optimize your savings. So here is a breakdown of the major items in your paystub, from your gross pay to your take-home income. Everyone is different, so little differences may apply to you.
2. PERSONAL TAX PLANNING FOR 2020 AND BEYOND
Tax considerations affect virtually all areas of a financial plan, including retirement, education, investment planning, insurance planning, and estate planning. Learn some tax planning tools to maximize the value of your resources for YOUR goals.
3. WHAT TO KNOW ABOUT THE CORONAVIRUS AID, RELIEF, AND ECONOMIC SECURITY ACT (CARES)
The CARES Act is an economic relief plan for individuals and businesses of unprecedented size, totaling about $2 trillion. As a comparison, the 2019 US GDP was about 21 Trillion. The Act is very broad and includes many different programs aimed at reaching broad sections of the economy. Our goal is simply to inform readers and clients of parts of the Act that may affect their financial plans.
4. THE ECONOMICS OF TAX-EFFICIENT SPENDING IN RETIREMENT AND HOW TO APPLY IT TO YOUR PLAN
A key goal when you retire is to generate a steady level of spending and not run out of money too soon. For many, the retirement spending strategy involves a combination of social security, taxable accounts (T), tax-deferred accounts (TD) like 401(k)s or IRAs, and tax-exempt accounts (TE) like Roth accounts. Because of the different taxability across accounts, how you withdraw from them can make an important difference to the level and longevity of your retirement spending. Research shows large differences in ending account balances or the expected number of sustainable years across different strategies.
5. YOU SOLD YOUR COMPANY’S OPTIONS OR SHARES. NOW WHAT?
Equity compensation is becoming more and more popular. However, many employees have a hard time understanding the value of equity comp and how it should fit in their financial plans.
6. SO YOU WANT TO RETIRE EARLY, HERE IS WHAT YOU NEED KNOW
More and more people are trying to redefine retirement. Many are young professionals with good income trajectories and excellent savings habits. Their goal is to get Financially Independent and Retire Early, ideally sometime in their forties (the “FIRE” movement). The key question for them is: when will I be ready to make the leap?
7. WHY YOUR GOALS SHOULD GUIDE HOW YOU INVEST. HERE IS HOW TO DO IT
Goals-based investing uses the information contained in each individual goal, including their value, priority, and time horizon, to build a dedicated investment portfolio for each goal. This leads to a more purposeful portfolio and allows for adaptable strategies that improve the long term performance of your investment plan.
8. CORONAVIRUS UNCERTAINTY AND MARKET RETURNS
With everyone talking about the coronavirus, you may wonder what to do, if anything, with your portfolio. There has definitely been a lot of action in financial markets this past week, with no lack of dire predictions and recommendations for your investments. You can expect more of this in the coming weeks. So how should we interpret all the information thrown at us? As we discussed recently, do it like a scientist. While it is impossible to make any reliable prediction about market performance, over 90 years of data on stock market returns can help us put last week’s volatility in the right perspective.
9. LEARN YOUR MEDICARE ABC
Many people think their health care in retirement will be free or close to it because of Medicare. Here is some bad news for you: Medicare is subsidized, but not free. The sooner you learn the basics about Medicare and its likely costs, the more you’ll be able to plan and cover these costs.
10. THE IMPORTANCE OF GOALS IN FINANCIAL PLANNING
Financial planning helps you achieve your most meaningful goals in life. This post helps you set your own goals and discusses how to use your goals to drive the design of your financial plan and your investment allocation.
Massi De Santis is an Austin, TX fee-only financial planner and founder of DESMO Wealth Advisors, LLC. DESMO Wealth Advisors, LLC provides objective financial planning and investment management to help clients organize, grow, and protect their resources throughout their lives. As a fee-only, fiduciary, and independent financial advisor, Massi De Santis is never paid a commission of any kind, and has a legal obligation to provide unbiased and trustworthy financial advice.
