What You Need To Know About NFTs

With NFTs and baseball mania taking over the news, some of you may be wondering: What actually are NFTs? 

Blockchain technology has opened up new markets for investment and consumption. And one of the hottest recent trends in this space has been the production and sale of non-fungible tokens (NFTs). NFTs are one-of-a-kind, authenticated digital files, such as artwork or collectibles. The reason gain and retain such high value is due to the fact that they cannot be easily copied. 

The hype around NFTs has been so strong that some have sold for millions of dollars. So, is this an emerging asset class that you should be jumping into? Let’s dive a bit deeper into NFTs to see if this is something you are interested in. At a very high level, most NFTs are part of the Ethereum blockchain. Ethereum is a cryptocurrency, like bitcoin or dogecoin, but its blockchain also supports these NFTs. It is worth noting that other blockchains can implement their own versions of NFTs. 

So what types of companies are selling NFTs? The NBA has NBA Top Shot – a way of selling digital collectibles in the form of trading cards embedded with iconic moments from the game. With a plan to add virtual jewelry, accessories and clothing that can be used across social media, the NBA is seeking to find ways to expand this revenue stream as far as it can go. And Topps now wants to do for Major League Baseball (MLB) what Dapper Labs did with NBA Top Shot. And now, even tweets hold value, with Twitter co-founder Jack Dorsey selling off the first-ever tweet for a massive $2,915,835.47. Musicians are also selling the rights and originals of their work, as well as short videos to clips of their music, and you can even buy digital real estate and 3D assets like furniture. 

NFT’s are definitely the craze right now, and may only just be getting started. If you have any questions on what NFTs are or how it may impact your financial planning or tax situation, please email us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here. 

4 Commonly Made Financial Mistakes Young Families Make

As we are halfway through financial literacy month, we want to continue to discuss simple ways to better your financial life. At Sherman Wealth, we focus on helping young couples and families get their finances on the right track, which is why we want to talk about common financial mistakes young couples and families often make in their 20’s and 30’s that come back to haunt them in the future.

One of the first commonly made mistakes we see with our clients is purchasing the wrong insurance products. We see tons of people in their 20’s purchasing whole life and non-level term policies from large insurance companies that are truly not right for them and that they truly do not understand. Oftentimes, it is not until these individuals are starting their families and progressing their careers that they realize they have been losing money with the wrong policy for them. It is very important to discuss with a professional or research what policies are best for you and your family before blindly purchasing the wrong insurance. 

Another commonly made mistake we see among this demographic is not signing up for your company 401(k) and taking advantage of the match. We have seen tons of cases where individuals are not signing up for their company’s retirement plan and matches until five to ten years later, which is giving away a large chunk of your salary benefits and essentially, “free money”. It is always the right move to sign up for your company 401(k) and contribute the full match if your situation allows you too in order to build a strong retirement account.

Budgeting and saving is always a priority when it comes to building your financial portfolio and especially starting a family. In previous blogs, we have talked about the importance of starting and saving from an early age and the power that compounding interest and  “time” in the market has on your money. Whether you are starting your first job or graduating college, it is never too early to start saving, even if it’s only a few dollars per month.

Lastly, another mistake we see individuals making is not contributing to their health savings accounts (HSAs). A health savings account (HSA) can help you lower your taxes as they are triple tax free. Our advice is to always take advantage of these types of accounts if you are eligible, that can help you make the most of your current situation and future. 

By avoiding these four commonly made financial mistakes in your early years, you and your family will be in a much better situation as you embark on the next chapter in your life. As always, speak with your financial professional to ensure you are making the right decision for your particular situation. If you have any questions, please email us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here

Don’t Forget This Year’s Tax Deadline Extension

As we kick off April and financial literacy month, we want to remind you about the tax deadline extension the IRS instated this year. Due to the coronavirus pandemic, the federal government extended this year’s federal income tax filing deadline from April 15, 2021, to May 17, 2021. This extension automatically applies to filing and payments. So, if you owe taxes for 2020, you have until May 17, 2021, to pay them without interest or penalties. This extension applies to all filers, including businesses, individuals, trusts, estates, and more. This gives you plenty more time to fund your HSA’s along with your Traditional or Roth IRA’s (depending on what you are eligible for). 

Taxes likely won’t be the only aspect of your finances to be affected by the COVID-19 pandemic. Speak with your financial professional or tax professional about your particular situation. Before making any decisions, make sure to check your state deadlines to ensure there are no different cut-offs you must comply with. Check out the video below as Brad discusses the unemployment benefits and how those will affect your tax situation this year. As always, if you have any questions, please reach out to us at info@shermanwealth.com or schedule a 30-minute introductory call here

Financial Literacy Month Q&A

As we kick off financial literacy month, we want to share some frequently asked questions we’ve received from clients and friends and provide actionable answers. As we embark on a new quarter and the spring season, it’s a perfect time for some “spring cleaning” and financial organization. Throughout the month of April, we want to stress the importance of financial literacy and spread the word about financial education and empowerment. We will be sharing questions, answers, and advice we receive in hope to help you all organize and prepare your finances for the rest of the year.  

Below you will find some frequently asked questions:

Q: As a new college graduate, where/how do I get started in terms of investing?

A: First and foremost, it’s important to take a step back and establish what your financial goals are. If you are saving up for a new apartment or expenses in the near future, maybe consider building up your emergency fund/savings account. If you want to set yourself up for a solid financial future, you should think about contributing to your retirement, in a 401(k) through your workplace, or a Traditional/Roth IRA if you don’t have a 401k at work.  But most importantly, don’t forget about that emergency fund.  If 2020 taught us anything it’s to prepare for the unexpected.  

Q: How do I decide which credit card to apply for?

A: Before applying for a credit card and opening lines of credit, make sure you understand the responsibilities involved. When opening a new credit card, you must remember to pay your balances and statements on time in order to keep your credit score in tip top shape. That being said, opening lines of credits are crucial in establishing your credit score, so it’s important to do so. When deciding which credit card to choose, think about your expenses and where most of your dollars go. For example, if you spend most of your money at Amazon, consider purchasing an Amazon credit card that may provide you with cash back or points offers. Or, if you love to travel and dine at restaurants, consider a card that provides you with double points for those activities. Making the most of your credit cards is a great financial literacy tip to start the month. 

Implementing these small tips into your everyday financial routine is a great way to get organized and start off on the right foot. For more financial literacy advice and questions, check out our most recent podcast. If you have other questions similar to the ones above, please feel free to send them to us to answer at info@shermanwealth.com. If you would like to directly discuss your questions with us, please book a complimentary meeting here

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

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.