Why You Need To Understand The Tax Implications of Capital Gains 

With tax season in full speed and the recent influx of DIY traders, it’s a great time to discuss the tax implications of capital gains in the market and how to better educate traders who are lacking the knowledge of the implications when trading the stock market. 

In a recent twitter thread, tweeters were discussing the lack of education platforms like Robinhood provide on capital gains and wash sale rules. With the recent short squeeze stocks and bitcoin craze, people have been seeing enormous gains in the market, yet do not know what to do with the gains once they make them.

Pictured above is a snippet from a NAPFA forum where a guy started with $30,000 in his Robinhood account, transacted $45,000,000 in 2020, for a net profit of $45,000. However, when he received his 1099B, he had accumulated 1.4 million dollars in capital gains and a $800 tax bill. Because of his lack of knowledge about wash sale rules and the tax implications of capital gains, he saw a huge tax hit. 

With financial literacy month just days away, this example is extremely timely and important to bring light to. As you can see, there is such a large gap in financial literacy in this country, especially surrounding the implications of trading and behavioral biases involved. Please inquire with a financial professional before making major moves in the market. It’s important to fully understand the implications of your decisions and how they will affect all aspects of your portfolio. If you have any questions, please reach out to us at info@shermanwealth.com or schedule a 30-minute complimentary appointment here.

Here are the Benefits of Sherman Wealth Financial Tools

If you budget your money, analyze your investments, and save for retirement, you’d likely benefit from being able to track your finances in one place. With financial literacy month around the corner, it’s a great time to discuss tools that you can utilize to simplify your financial life. Additionally, given the technological shifts due to the coronavirus pandemic and as we are all learning how to operate our lives from the confines of our smartphones and laptops, it’s crucial to continue to automate our lives, especially our finances. 

This is where we can help. Our state-of-the-art technology at Sherman Wealth allows you to track and stay on top of your finances, on your own time, and without charge. Life is complicated, your finances shouldn’t be. We know financial planning may seem like an overwhelming process, but by utilizing these tools, you can do everything in one place, at the tip of your fingers. 

With our comprehensive financial software, all of your financial accounts will be aggregated into one place, and you can use the tools to budget your money for short-term goals and prepare for the long run.  Additionally, through this holistic software, you can utilize the following tools: investment check up, fee analyzer, savings planner, net worth tracker, long-term goal planner, retirement planner, cash-flow planner, running balance sheet planner, and more.

If you have not utilized a financial software yet, we encourage you to consider a trial run of our software. Within minutes, you will be able to see your assets and liabilities in one tab. If you have any questions or would like to trial the software, please reach out to us at info@shermanwealth.com or schedule a complimentary 30-minute meeting here.

The Benefits of “Time” In The Market

As we hit mid-March of 2021, we think about the rollercoaster we’ve been on this past year. A year ago today, the stock market bottomed out. Given this wild ride and great volatility, it’s important to discuss the value of “time” in the market. We saw a very interesting tweet by Peter Mallouk, CEO of Creative Planning, which is a great depiction of what you should save incrementally at each stage of life to become a millionaire by 65 years-old with a 7% return.

As Peter Mallouk states above, “time” in the market truly does matter. It’s crucial to understand consistency, dollar-cost averaging, avoiding the noise, and understanding that there will be drawdowns in the market. Despite these drawdowns; however, stick with your long-term plan because the market will recover, as we have seen a year since the catastrophic lows. Starting early is an essential key to building your long-term wealth, as you can see in the figure below by JP Morgan.

For Brad’s deep dive on a year in the market and the true benefits of “time” in the market, check out the video below. If you have any questions about how to capitalize your financial situation or plan, reach out to us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here. 

https://youtu.be/_0-eEe76bgg 

Launch Financial-How To Make The Most Out Of Your Charitable Giving This Year With Elizabeth Goldstein

With everyone having increasing gains and thinking about giving back to charity given COVID-19, donor advised funds have become increasingly popular. To uncover how donor advised funds can benefit you and better your financial plan, we brought on expert Elizabeth Goldstein from the Jewish Federation of Greater Washington to Launch Financial to discuss donor advised funds. Click here to listen now! 

The United Jewish Endowment Fund (UJEF) is the planned giving and endowment arm of The Jewish Federation of Greater Washington. UJEF provides you with the opportunity to establish a legacy that will shape and improve Jewish life for generations. Gifts to UJEF can be made outright during the donor’s lifetime or through one of the planned giving vehicles. Your gift can be added to an existing endowment fund or create a new fund to support a specific field of interest, the annual campaign or unrestricted needs. UJEF allows our community to maintain a permanent, self-sustaining source of income to support existing programs of Federation and to develop new approaches to address emerging needs here and overseas.

More information about UJEF funds, gifts and programs.

For more information on opening a Donor Advised Fund at Federation’s United Jewish Endowment Fund, contact:

Elizabeth Goldstein, Esq.
endowment@shalomdc.org
301-230-7228

Launch Financial-How To Make The Most Out Of Your Charitable Giving This Year With Elizabeth Goldstein

With everyone having increasing gains and thinking about giving back to charity given COVID-19, donor advised funds have become more popular. To uncover how donor advised funds can benefit you and to better your financial plan, we brought on expert Elizabeth Goldstein from The Jewish Federation of Greater Washington.

For more information on opening a Donor Advised Fund at Federation’s United Jewish Endowment Fund, contact:

Elizabeth Goldstein, Esq.
endowment@shalomdc.org
301-230-7228

The United Jewish Endowment Fund (UJEF) is the planned giving and endowment arm of The Jewish Federation of Greater Washington. UJEF provides you with the opportunity to establish a legacy that will shape and improve Jewish life for generations. Gifts to UJEF can be made outright during the donor’s lifetime or through one of the planned giving vehicles. Your gift can be added to an existing endowment fund or create a new fund to support a specific field of interest, the annual campaign or unrestricted needs. UJEF allows our community to maintain a permanent, self-sustaining source of income to support existing programs of Federation and to develop new approaches to address emerging needs here and overseas.

More information about UJEF funds, gifts and programs.

Check out this episode!

How COVID-19 Has Impacted Women

As the coronavirus continues to sweep our country, we are seeing more and more data on how this past year has impacted certain demographics. One demographic in particular, women, have found this pandemic to be quite strenuous for various reasons. 

Women are seeing the fabric of their lives unravel during the pandemic, especially when it comes to their jobs. In September, an eye-popping 865,000 women left the U.S. workforce — four times more than men. The coronavirus pandemic is wreaking havoc on households, and women are bearing the brunt of it. 

Not only have they lost the most jobs from the beginning of the pandemic, but they are exhausted from the demands of child care and housework — and many are now seeing no path ahead but to quit working. A large portion of job losses during the pandemic has come in businesses such as restaurants and hotels, both sectors with high female employment. Many of them are low-income, and the impact on their households is devastating. 

In a recent survey by Daily Capital and Empower Retirement, women revealed that this pandemic has altered their confidence in their financial future. Below are some findings they discovered:

  • A majority (62%) of single working moms do not feel confident in their ability to plan for retirement. Conversely, less than half of the general population (40%) lacks confidence in their retirement plans.
  • More than two-thirds (64%) of single moms no longer feel confident in their ability to retire when they want. That’s in contrast to 43% of the general population.
  • More than half (52%) of single moms do not feel confident in their ability to build emergency savings. Again, this stands in contrast to 39% of the general population and 36% of single dads.

While this data is quite astounding, this brings light to discuss the importance of financial literacy and continuing to educate women on their finances. While the coronavirus pandemic has surely set back some women in their careers, they need to remain driven and determined to reach their financial goals, even if that might mean switching up their financial plan. It’s important to discuss these topics with a financial advisor who can help you alter your plan when life throws you curveballs or setbacks. If you have any questions, please feel free to reach out to us at info@shermanwealth.com or schedule a complimentary 30-minute appointment here

How To Take Advantage of the Tax Deadline Extension

For those scrambling to get their tax returns together before next month’s deadline, you’re in luck. The federal income tax filing deadline has been extended one month, the Internal Revenue Service (IRS) and the U.S. Treasury Department announced this week. It’s official. The federal income tax filing due date for individuals for the 2020 tax year is now May 17, 2021 instead of April 15, 2021.

The 2021 tax filing season began on February 12th, 2021. The IRS is still urging Americans to file as soon as possible even though the deadline has been extended. The filing deadline extension applies to individual taxpayers, including those who pay self-employment tax, the IRS said. After May 17, Americans who have not filed will be subject to penalties, interest and additions to tax. 

Because the tax deadline has been extended, that means you have more time to fund your retirement accounts as well. Take advantage of this extension to make sure you are well prepared for the May deadline. If you have any questions regarding this year’s tax return, as always, reach out to your tax professionals or CPA for guidance on your particular circumstance. Additionally, for more detailed information, check out the IRS website detailing the fine print of this extension. As always, you can reach us with any questions at info@shermanwealth.com or schedule a complimentary 30-minute consultation here.

MCPS Business Pitch Challenge on March 19th

Brad Sherman is very honored to be asked to judge the MCPS Business Pitch Challenge on March 19th. Students from nine high schools will be participating in this year’s event. As an entrepreneur, Brad Sherman is thrilled to support such a wonderful event promoting leadership, financial literacy and empowerment, and creativity. With the lack of financial literacy around the world, this event is a great opportunity for students to start thinking financially and as an entrepreneur from a young age. 

The event will run from 9 a.m.–noon. Participating high schools are: Montgomery Blair, James Hubert Blake, Winston Churchill, Albert Einstein, Gaithersburg, Northwest, Northwood, Paint Branch and Sherwood. Students will pitch their business ideas for a solution to an existing problem, improvement of an existing product, or create a need for a product/service to a panel of local entrepreneur judges.

The Challenge will be aired via the MCPS homepage, the MCPS YouTube channel and MCPS-TV (Comcast 34, Verizon 36 and RCN 89).

Brad, along with representatives from the MCPS Business, Management and Finance Program Advisory Committee will serve as judges, mentors or supporters. The three top winning teams will receive cash prizes.

Please tune in on Friday, March 19th at 9 a.m. as these bright students pitch their business ideas. Check out our blog from the 2019 MCPS Business Pitch Challenge on ways we helped coach the students in preparation for the big event. Support student growth and empowerment by attending this wonderful event. If you have any questions about the event, email ASKMCPS@mcpsmd.org or let us know at info@shermanwealth.com and we are happy to connect you with the right contacts.