Robbing Yourself Blind? The Truth About 401(k) Loans


The ability to borrow from your 401(k) plan remains one of the most highly popular features with plan participants. A few years ago, the Wharton School of Business reported findings that 20% of active workers have a loan outstanding at any given time and 40% of all participants will have taken a loan sometime over the last five years. Intentional or not, this certainly lends credence to the idea “if you build it, they will come.” Paradoxically, an internet search for opinions on the wisdom of borrowing from your 401(k) plan would lead most investors to quickly conclude financial planners and money experts are nearly united in their opposition to such schemes. This conclusion is often well-meaning human resource & benefit departments of large employers. To illustrate this point, we recently came across a 401(k) publication from Delta Airlines stating in bold print that a 401(k) loan “shrinks your account,” “carries risk,” and “taxes you twice."
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Your Child’s Inheritance: Spend it or Save it?

 "I would as soon leave my son a curse as the almighty dollar." -- Andrew Carnegie

Let's blame it on parental DNA. Somewhere deep in the marrow of our bones, many of us believe it is an act of love, generosity--or pursuit of forgiveness--to leave our children an inheritance. Sometimes we even convince ourselves that the more money we leave, the greater our act of love! However, is it possible the assumption that our kids will benefit from, and appreciate, our gift is flawed? Could it be that leaving money to our children after we die is a zero-sum game? Said another way, is it possible that for everything we give our children, we take something else away?

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Financing The Boomerang Tax

In 2018, Zillow released a report estimating that nearly one third of college graduates will move back home with their parents. For some parents, that outcome is a dream come true. For others, it’s a nightmare. Regardless of how you feel emotionally, it’s important to understand the financial impact of indefinitely supporting children after graduation day.

How can this increase in aid towards children be explained? The sudden expansion in support for adult children is usually linked to rising education expenses, increasing housing costs, stagnant wage growth and numerous additional factors.

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The Power of RSUs - Understanding Your Restricted Stock Units

2019 is shaping up to be a big year for tech company initial public offerings (IPOs). Uber, Pinterest, Airbnb, and Slack are looking to follow in the footsteps of Lyft which was first to the party in April. These unicorns - privately-funded startups with a market value of at least $1 billion - are just a few examples that are making headlines for the large windfalls early investors are expecting to receive as a result.

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The Conundrum of Naming a Trust as a Retirement Account Beneficiary


Naming beneficiaries to retirement accounts is a seemingly simple task, yet it’s quite often misunderstood, especially when it includes a trust. For many individuals, retirement accounts represent the majority of their assets. Therefore, getting this piece of estate planning right is crucial and should not be overlooked.

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The Price is Right: Stock Buyback Edition

When Andy was ten years old and in fifth grade, he discovered that if you strode confidently toward the bike rack at lunch time, the Hall Monsters (sorry, Monitors) would assume you had permission to go home to eat lunch with a parent. A few times that year, he used this method to hop on his bike, take his bag lunch to his empty home, and (sometimes with an accomplice) watch as much of The Price is Right as could fit into an elementary school lunch hour. Andy learned a few important lessons that year:

  1. Confidence and initiative are a powerful combination
  2. If you are unsure of the exact price of a thing, do your best to build a range of decent guesses before you bid
  3. When push comes to shove, bidding at the low end of your range leads to better outcomes over time
  4. We all have a responsibility to help control the pet population

Collectively, the West Wing at Exchange Capital Management has spent years studying architecture, engineering, finance, and mathematics, and we are all CFA charterholders or candidates. Sometimes, though, some educated guessing and intuitive logic can answer a complex question better (and faster) than quantitative analysis; just ask the contestants on The Price is Right. Given the recent revival of criticism toward corporate stock buybacks, we decided to walk through a thought experiment considering a simple question that is often ignored in the conversation.

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4 Ways You Can Help Empower Women

In the spirit of women’s history month, let’s talk about the future of women. In the past few weeks, two of my colleagues blogged about financial issues affecting women today. The pay gap, advancement gap, investment gap, time out of the workforce, and extra longevity risk are some of the unique headwinds that make it harder for women to attain financial security. As we learn about challenges women face, we are all left with the question of what to do about them. If you don't identify as someone who could be facing these unique challenges, you might be wondering what any of this has to do with you or, perhaps you’re eager to learn how you can help the women in your life get ahead and take control of their future.

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Women and Retirement: 4 Financial Challenges

We all have women in our lives we care deeply about: mothers, daughters, sisters, cousins, work colleagues, and friends. Educating yourself on ways to challenge the economic biases that systematically disadvantage women is a crucial first step towards effecting positive change and creating a more equitable society. When that happens, we all win.

Since we’re all supposed to save a percentage of what we earn for our retirement, what happens if half of the population isn’t earning enough? The National Institute on Retirement Security (NIRS) ran a study where it concluded that women are far more likely than men to face financial hardship in retirement. Even in 2019? Yes, even in the age of raging feminism, grl pwr tattoos, the #MeToo movement, and Ruth Bader Ginsburg memes, we see time and time again how women are disadvantaged in long-term savings opportunities. Now the real question is, what can we do about it?

Women face unique financial challenges. Some of these challenges fall under large economic issues like disproportional earnings and investment potential, penalties for time out of the labor force, and longevity risk. Let's break it down.

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Social Security and Divorce: 5 “Non-Negotiables” You Need to Know

She stood in the storm, and when the wind did not blow her away, she adjusted her sails.

-- Elizabeth Edwards

Even in the most thoughtfully run and financially independent of lives, there will be heart-wrenching twists and turns. Some of these life transitions are expected and planned accordingly, while others are abrupt and uncertain. It’s no secret that a significant number of marriages end in divorce, raising many emotional and financial uncertainties.  However, understanding the benefits entitled to you will help build a secure framework for the next chapter of your life.

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Have You Had "The Talk" With Your Kids?

No, I don’t mean that talk- but there is another conversation that can be equally as difficult for some parents. It is hard to know when the most effective time is to talk about finances with your children. Teaching sound financial behavior starts as early as a first allowance and continues through college to when they get their first “real” job and thereafter.

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