The Financial Industry Is Changing, And What You Want Is Too

As generational wealth continues to transfer, we are seeing a shift in the way today’s consumers are wanting to conduct relationships with those who are managing their money. According to a recent WSJ article, rich customers are changing what they want; they are shifting away from these bigger public companies and are seeking niched start-ups and individualized advice and relationships. We are also seeing that those who only offer asset management services are becoming less desirable and holistic financial planners are the future. 

At Sherman Wealth, we have noticed similar attitudes amongst prospects and clients, those who are feeling ignored or unheard from their “Wall Street-esq” or parents’ financial advisor that they assumed a relationship with. With this ever evolving bifurcation of financial advice, clients are no longer interested in working with their parents financial advisor they may have an estranged relationship with, but rather are looking for evolved and all encompassing individualized wealth management and financial planning advice delivered at the ease of their fingertips. We’ve been seeing tons of clients and individuals getting organized under COVID-19, stressing to us the importance of finding the right person to walk them through their whole financial life. This is where we come in. 

We have long recognized this shift in financial service needs and are constantly battling financial stigmas and adapting the way in which we deliver unique and customized advice to our clients. We recognize that holistic financial planning is the future. This new way of navigating your financial life encourages those seeking an advisor to look for someone in line with this approach. With a financial concierge such as Sherman Wealth, your advice will stay current and constantly communicated, not getting lost or forgotten.

At Sherman Wealth we can help you with the following 

  • Goal Setting 
  • Cash flow analysis and budget planning 
  • Net worth analysis 
  • Debt strategy 
  • Student loan planning 
  • Retirement planning/projections
  • Work benefits 
  • Rent vs. buy mortgage strategy 
  • Education planning 
  • Investment management 
  • Tax planning 
  • Insurance need analysis 

We are a fiduciary to our clients, but we are also, in some respects, a concierge and a coach. What we mean is that we work with you in an all-encompassing way- ensuring your specific needs are being heard, understood, and proactively addressed. For further details on our philosophy and core values, click here to learn a little more about who we are and what we strive to deliver. If you feel that your financial needs align with our core values and philosophy or your current situation feels stale, email us to inquire about our services at or schedule a 30-minute complimentary intro call here.

Holding Onto Too Much Cash? Here’s Why You Shouldn’t 

Accumulating a large sum of cash in your bank account can be a good feeling and it might bring you a sense of security and safety. Building up your savings accounts knowing that the cash is sitting there risk-free and easily accessible can give you a sense of comfort. However, this isn’t always the smartest option when it comes to your finances. Sitting on too much cash in a savings account can often hinder your ability to build wealth for retirement and other long range financial goals. In addition, you could actually be losing money due to inflation instead of growing your assets, and here’s why. 

At Sherman Wealth, we often talk about diversifying your portfolio and the importance of long-term market investment in order to increase and grow your money over time. In a recent survey by Personal Capital and Kiplinger Personal Finance within retirees and soon-to-be retirees portfolios, 26% was made up of cash, which tends to be on the conservative side of diversifying and investing. It’s okay to be nervous about market volatility and the natural ups and downs in the stock market; however, holding on to too much cash can actually hurt you in the long run. It’s crucial that you find an equilibrium point between your cash and investments that works with your financial situation and risk comfortability.

So how do you know if you are sitting on too much cash? As mentioned in our previous blogs, you should always have an emergency fund that typically has enough liquid cash to sustain your monthly bills for about 3-6 months. If you have any upcoming large purchases, you should have a separate bucket of funds available to pay for those goals as well. When planning your budget, think about your wants versus your needs, while also taking your cash flow into consideration. Once you have fulfilled these liquid cash buckets, you should then determine your risk tolerance and think about allocating your dollars towards diversified investments that will gain long term returns, such as equities, fixed income and real estate. 

We know choosing the right investments and asset allocation for you can be overwhelming, which is why there are professionals to help in this process. So, if you have questions for us or would like to use our risk tolerance software to help determine where your investment risk comfortability stands, email us at or schedule a complimentary 30-minute consultation here


Here Are The Differences Between A Roth and Traditional 401(K)

Have you been hearing more about Roth 401(k)’s lately. There are more and more options in company 401(k)’s recently, including the Roth option, whereas before many companies only provided traditional 401(k) options. More employers are now offering this option to their employees so check out the rest of the blog and then see if it’s a valuable option for you. 

So, you may be asking yourself, what is a Roth 401(k)? A Roth 401(k) is an employer-sponsored retirement savings account that can be funded with after-tax dollars up to its contribution limit. For people who think they may be in a higher tax bracket down the line, this might be the better option for you. On the other hand, in a traditional 401(k) plan, you contribute pre-tax money, which will be taken out based on your future tax-bracket in the future. 

Now that you know what a Roth 401(k) is, you may be wondering, do I qualify for one? As long as your employer offers the Roth options, you are eligible for it if you are also eligible for your company’s traditional 401(K). 

Let’s take a look at this example: 

​​Your yearly base salary, gross income is $50,000.  If you choose to contribute 10% ($5,000) to a traditional 401(k), your taxable income becomes $45,000 for the tax year. You took that 10% and deferred paying taxes on it. That $5,000 now grows tax-deferred inside of your traditional 401(k). When you withdraw the money from your traditional 401(k) at retirement, your total will be taxed then with regards to your tax bracket. 

Within a Roth 401(k), you are paying your income taxes as you should, and then the funds head into your Roth account. So with that same $50,000 salary, if you choose to contribute 10% to your Roth 401(k), you will pay income taxes on your full $50,000.  After income taxes are taken out, your funds for the year ($5000) goes towards your Roth 401(k). When you withdraw the money from your Roth 401(k), you can take both the contributions and earnings out tax-free since you had previously paid them. 

For both Roth and Traditional 401(k)s, the contribution limits are the same, at 19,500.  You can defer $19,500 out of your paycheck into a traditional 401(k). In contrast, you also can contribute $19,500 to your Roth 401(k). Additionally, you are also allowed to contribute to both a Roth and Traditional 401(K), as long as you stay within the contribution limits. 

Considering Roth options when deciding on your 401(k) and IRA contributions is a very important step. If you want your money to grow tax deferred, you should highly consider opening a Roth account. Continue following along to see if there are any tax changes in the near future, and make sure you consult a tax professional to see what options make the most sense for you.  If you have any questions about your personal situation or want to know how to get started, email us at or schedule a 30-minute consultation here. 


How American’s Became 401(K) and IRA Millionaires A Year After The Pandemic

Even though the coronavirus pandemic over, retirement accounts are thriving. Retirement account balances, which took sharp declines almost exactly one year ago, have now bounced back entirely, according to the latest data from Fidelity Investments, the nation’s largest provider of 401(k) savings plans.

“Despite recent losses in the market, from January 2020 to the beginning of May, the S&P 500 has had an annual return of more than 20%, Fidelity Reported. ” This data shows record levels that surpasses previous highs pre-pandemic. As we can see from these statistics, during this time, many more people contributed to their investment accounts and enrolled in company retirement accounts, leading there to be more retirement millionaires in our midst. 

So, you may be wondering, how do I become a retirement millionaire? Well let’s take a look at this graph.


The picture above shows how much wealth you can build over time if you contribute from a young age and consistently over time. We are thrilled to see an increase in funds and savings amongst Americans especially given the hard year we have had.  If you have any questions about how to better your personal financial situation, please let us know at or schedule a complimentary 30-minute consultation here

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. NFTs are one-of-a-kind, authenticated digital files, such as artwork or collectibles. The reason gain and retain such high value is because they are not easily replicated.

The hype around NFTs has been growing rapidly, in the news and especially online. 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.  There is also Topps, who 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 or schedule a complimentary 30-minute consultation 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 or schedule a 30-minute complimentary appointment here.

Here’s How Bitcoin Will Affect Your Taxes

Getting swept up in the crypto-currency craze? Thought so. Since the coronavirus pandemic took its toll on the world in March, bitcoin has rocketed towards the sky. Hovering at approximately $5,000 in March, bitcoin broke its record high at $50,000 this week as you can see in the chart below.  

With the increase of interest in meme stocks and crypto-currency in recent months, we want to bring light a facet of these stocks that you may not be thinking about. With tax season beginning as discussed in our previous blog, you should take a second to look at the tax implications involved with bitcoin and meme stocks. If you are to get swept up in day trading on Robinhood or other platforms, you should know the difference between short and long term tax rates. It’s important to note that some of these alternative coins cannot convert to cash, which could cause some complications when it comes to your taxes. Most people are not aware that if you hold onto any asset for less than 365 days, it will be taxed as ordinary income, which can get quite expensive for some individuals, as you can see in the chart below.

No matter what asset class you are investing in, keep in mind that it’s either most tax efficient in a retirement account or to hold onto for more than a year. If you are day trading or thinking for the short term, be very aware of the tax implications and how that affects the overall return of said investment.  If you do not plan on selling your investments or are thinking about selling, it is important to understand  these tax implications as well. As always, make sure you understand the risks involved before investing  and only risk what you can afford to lose. When listening to the media and the Dave Portnoy’s of the world, it’s easy to swept up in the hype; however, these influencers do not usually discuss the serious tax surprises that these investments can have. Sherman Wealth is charitably inclined, and if you are as well you might want to consider setting up a donor advised fund or donating your gains right to charity if you are sitting on gains before selling. 

While it may be exhilarating and increasingly popular to get involved with meme and heavily shorted stocks, keep in mind the complications and volatility involved. At Sherman Wealth, we always encourage you to keep a diversified portfolio that will benefit your financial future and goes along with your individual risk tolerance and financial plan. If you have any questions about anything discussed in this blog or need help finding the right tax professional to help you with your tax return or discuss donating assets to charity, please reach out to us at or schedule a 30-minute consultation here


Avoid These Mistakes when Rolling Over a 401(k) to an IRA

As we kick off 2021 and you begin thinking about money moves you want to make this year, we want to provide you with some insights on a common rollover and some costly mistakes associated with it. 

A good place to start is by distinguishing the difference between 401k plans and IRAs. You may be subject to penalties and taxation if you break any of the rules associated with a rollover, so it’s important to do your research first or consult with a financial professional. Both types of retirement accounts, 401(k)s and IRAs let you save tax-advantaged money.

Let’s discuss a few things you should look out for if you or your spouse rolls over a 401(k).

“Once you’ve decided to move your retirement money to an IRA, it’s best to avoid receiving a check made out directly to you from the 401(k) plan, even if it is sent to you,” according to a CNBC article. You do this so that there is no tax withholding that occurs. 

When conducting a rollover, make it clear that you want a direct rollover so that the process is easier for yourself and you can avoid any withholdings. With a direct rollover, funds are transferred directly from one trustee to another automatically, whereas with a indirect rollover, a check is paid directly to the participant, less a 20% with holding, along with a time window to get it transferred. 

Always remember to keep the rule of 55 in mind. Well what is the rule of 55 you may ask? The rule of 55 is an IRS guideline that allows you to avoid paying the 10% early withdrawal penalty on 401(k) and 403(b) retirement accounts if you leave your job during or after the calendar year you turn 55.

If your significant other is rolling over their 401(K) to an IRA, you could lose the right to be the heir of those funds. Once the money moves into rollover IRA, that account owner has the right to name any beneficiary they want without your consent. Things also tend to get tricky when a divorce occurs, so make sure to consult with your financial professional before making any financial moves or assuming any money. 

When rolling over money to an IRA, there are many steps and factors to think about and things can certainly get complicated. It may be best to consider seeking the guidance of a financial professional. If you find yourself in this situation, we would be happy to help and walk you through your rollover. To inquire more, schedule a free 30-minute consultation on our site. 


Attention Robinhood Power Users: Most Day Traders Lose Money

It’s easy to get swept up in the rush of day trading and the ability to trade money at the tip of your fingers. And over the course of the last few months, we’ve seen “TikTok” investing and day trading increase in popularity, especially amongst young investors. But according to a CNBC article, despite what some might think, in reality day traders often have terrible track records. While we think investments and long term ownership is a great way to build wealth, we want to raise light to be careful when day trading and understand the tax implications and risk tolerance there. 

“I don’t confuse day traders with serious investors,” Princeton professor Burton Malkiel, author of “A Random Walk Down Wall Street.”  “Serious investing involves broad diversification, rebalancing, active tax management, avoiding market timing, staying the course, and the use of investment instruments such as ETFs, with rock bottom fees.  Don’t be misled with false claims of easy profits from day trading.” He also added, “Large increases in Robinhood users are often accompanied by large price spikes and are followed by reliably negative returns.” 

Why did that happen? The authors noted that most Robinhood investors are inexperienced, so they tend to chase performance. The layout of the app, which draws attention to the most active stocks, also causes traders to buy stocks “more aggressively than other retail investors.”

As young and inexperienced individuals begin day trading more and more, it’s important to spread the message about behavioral and investment biases that are present in investment management and financial planning, and oftentimes persuade one’s decisions about when and what to purchase and sell. Day trading may or may not have a piece in your portfolio, but if it does make sure to understand the whole picture and take your risk tolerance into consideration. Long term stock ownership and appreciation is a great way to build wealth but it’s important to be aware of the biases that are hidden within day trading. In our previous blog, we discussed ways to identify these biases and use that knowledge to make the best decisions on behalf of your investments. If you would like to discuss this day trading trend or behavioral biases that pertain to your portfolio, please reach out to us at and schedule a free 30-minute consultation here


IRS Finalizes ABLE Account Regulations: Here’s What to Know


The IRS recently published final regulations for Achieving a Better Life Experience, or ABLE, accounts for disabled Americans. ABLE accounts aim to help people with disabilities and their families save and pay for disability-related expenses. Even though the contributions aren’t deductible, distributions such as earnings are tax-free to the designated beneficiary if they’re used to pay for qualified disability expenses. These expenses can include housing, education, transportation, health, prevention and wellness, employment training and support, assistive technology and personal support services, along with other disability-related expenses.

The regulations come in response to and finalize two previously issued proposed regulations from the IRS. The first proposed regulation was published in 2015 after enactment of the ABLE Act under the Obama administration. The second proposed regulation was published in 2019 in response to the Tax Cuts and Jobs Act, which made some major changes to ABLE. 

Eligible individuals can now put more money into their ABLE account and roll money from their qualified tuition programs (529 plans) into their ABLE accounts. In addition, some contributions made to ABLE accounts by low- and moderate-income workers can now qualify for the Saver’s Credit.

The new regulations also offer guidance on the gift and generation-skipping transfer tax consequences of contributions to an ABLE account, as well as on the federal income, gift, and estate tax consequences of distributions from, and changes in the designated beneficiary of, an ABLE account.

In addition, before Jan. 1, 2026, funds can be rolled over from a designated beneficiary’s section 529 plan to an ABLE account for the same beneficiary or a family member. The regulations provide that rollovers from 529 plans, along with any contributions made to the designated beneficiary’s ABLE account (other than certain permitted contributions of the designated beneficiary’s compensation) can’t exceed the annual ABLE contribution limit.

Lastly, the final regulations offer guidance on the record-keeping and reporting requirements of a qualified ABLE program. A qualified ABLE program must maintain records that enable the program to account to the Secretary with respect to all contributions, distributions, returns of excess contributions or additional accounts, income earned, and account balances for any designated beneficiary’s ABLE account. In addition, a qualified ABLE program must report to the Secretary the establishment of each ABLE account, including the name, address, and TIN of the designated beneficiary, information regarding the disability certification or other basis for eligibility of the designated beneficiary, and other relevant information regarding each account. 

For more information about ABLE accounts or if you have any questions regarding these regulatory changes, please contact us at or check out our other relevant blogs