Client Market Update Letter (reprint)

Hello to our wonderful clients!

As I'm sure you've seen, the stock market has been quite volatile over the last month and has dropped 10% (which is considered a market correction) since February 19th. We're reaching out to check in and provide a quick summary of what's happening, a bit of historical perspective, and guidance on what to have on your radar in the coming weeks and months. 

What is happening?

• The US stock market is struggling and cryptocurrencies are down as well. Conversely, the international stock market is doing quite well so far in 2025. Here are the numbers:

• The S&P 500 is down about 4.5% year to date. 

• Most of the Magnificent Seven (Tesla, Nvidia, Meta, Alphabet, Amazon, Apple, Microsoft) have dropped quite a bit more than the S&P 500 in the last month and some, like Tesla, have dropped precipitously year to date. 

• Bitcoin is down 13% year to date and Ethereum is down 43%

• The international stock market is up about 9% year to date. 

Why is this happening?

• There are several reasons, but tariffs and inflation pressure triggered by tariffs, geopolitical tension in several regions, and layoffs and chaos in the federal government are all major contributing factors.

• For our clients who primarily work for US tech companies, continued layoffs and decreases in equity compensation for our public tech company clients have caused concern as well.

What is the long view?

• We know that the stock market goes up and down over time, but has historically trended up and to the right. We have no reason to believe that this time around is any different. That said, it's much easier to feel tolerant of downside risk when the market is flat or positive, but when volatility rises and stock prices drop, it can still be unsettling. 

• There have been 56 market corrections (drops of 10%-19%) in the last 100 years or so. Market corrections turn into bear markets (drops of 20% or more) about 40% of the time.   

• We expect the US and international stock markets to perform somewhat differently in any given period. That's why we own both US and international stocks in the portfolios we manage for clients. 

• Although the S&P 500 is down year to date, over the last 10 years average returns have been 13% annually. 

• Although the international market is up year to date, over the last 10 years average returns have been 5% annually. 

• When we look at decade-long periods in the past, like 2000 through 2009, the US market was negative for the decade by about 5% whereas international developed markets were up 12% and emerging markets were up 154% for the decade. 

What is your greatest risk?

• In general, the biggest risk when the market goes down is selling positions when they're down and subsequently missing out on the eventual market recovery. For example, in early 2020 the market dropped about 35% when COVID hit, but by August it had recovered and for the year the S&P 500 was up about 18%. If an investor sold in March 2020 and didn't get back in until September, they would have locked in a permanent 35% loss. 

How can you protect yourself?

1. Keep a fully stocked Emergency Fund. If you feel that a layoff is likely, consider stockpiling excess cash for a transition fund.

2. Keep funds for short term goals out of the market. 

3. If you're nearing becoming work-optional, keep a significant portion of your portfolio in high quality shorter duration bonds so that you can draw from your bond portfolio to support income until equities recover.

4. For long term goals, continue to invest for the long term. Market corrections are opportunities to buy equities at a discount, if you will, so continue portfolio contributions as planned.

5. If you are deploying a large amount of cash into the market, consider whether you might want to dollar-cost-average over time.

6. If equity compensation is a large portion of your annual income (which is the case for most of our late-stage private and public company clients), manage your spending so that decreases in your company stock price won't impact your ability to pay your bills. (This is why we often recommend a lower price point for a home purchase than might otherwise be possible to leave a healthy margin of safety for stock price drops.)

7. If you have RSUs vesting on an ongoing basis, we generally recommend that you continue to sell shares as they vest (although there are exceptions - follow whatever Cyndi or I has laid out for you in our planning work together). This is because your RSUs are ultimately a bonus paid in stock, and we do not typically recommend using your bonus to buy your company's stock. Instead, we recommend using your RSUs to fund your goals or support your cash flow. 

As always, we are here to support you. Please don't hesitate to reach out.

This is being shared for informational and educational purposes only. This is NOT investment advice. Every situation is unique so please consult with a professional about your specific situation to see what makes sense for you.

Yearend Personal Update (reprint)

To my clients…

I don’t often share much about my business or my life with clients, because our work is about you and not about me, but I spent some time at the end of December reflecting on 2020 and planning for 2021, and I wanted to share a few thoughts with you. I hope you don’t mind. ;)

Although I’ve been a Financial Planner for 16 years, I launched my new planning practice in February of 2020, and I couldn’t be more grateful for the work I’ve had the opportunity to do with clients since then. Truly thank you, from the bottom of my heart, for giving me the opportunity to partner with you and help you gain clarity and make meaningful progress towards your goals.

Although 2020 was a heck of a year as a working mom in the midst of a pandemic with two wild boys at home, getting to work with you has been incredibly rewarding and was such a bright spot for me in an otherwise challenging year. There are no words to express just how much that means to me and how grateful I am.

And even though I launched the business right before COVID hit, the business has taken off super quickly and grown much faster than I ever anticipated, in large part due to referrals from clients. Thank you so much for trusting me to take care of you and the people who matter to you.

As I look to 2021, my top priority is to continue to take great care of clients, and serve new clients as well.I served 40 families in 2020, and I have capacity to serve 35 additional families in 2021.In order to do so, I’ve eliminated fintech consulting work(I previously consulted for companies like SoFi, Ellevest and LearnLux), and I’m growing my team.I will close the practice to new clients as needed to protect both your client experience and my commitment to myself and my family to maintain a healthy work/life balance.

So with that in mind, I’d like to formally introduce you to my paraplanner, Cyndi Hall, CFP®.I’ve known Cyndi for more than six years, and I am so honored to have her on my team. She is an experienced Financial Planner and was a phenomenal team member during my years at LearnVest. Cyndi has been helping behind the scenes since the practice launched last year, but she’ll be taking on more responsibilities to support the continued growth of the practice. Cyndi will largely continue to help behind the scenes with planning and operations, but don’t be surprised if she reaches out to you to gather data, help with an account transfer, or get a meeting set up on my calendar.

One last thing to share… If you happen to be curious, I was interviewed recently on a podcast to share my career journey and discuss my approach to business, what I learned from being in fintech, and how I approach financial planning. Give it a listen if you’re interested (or bored while doing the dishes!).

As uncomfortable as it is for me to ask for space in your inbox to talk about what's going on in my world, it felt weird NOT to share it with you, and I didn't want to miss the opportunity to let you know how much you've impacted me and how grateful I am to you.

Happy New Year!!!!

Best, Natalie

Government Programs for the Self-Employed

I’ve spoken to several freelancers, solopreneurs, and small business owners over the last two weeks who either weren’t aware of the government programs available to them, or weren’t sure how to navigate them. From journalists to attorneys to Airbnb hosts to coffee shop owners to daycare providers, I’ve spoken to all kinds of business owners looking for clarity. 

Whether you’re a sole proprietor, an LLC, or an S-corp, there are programs that can help you if your income has dropped due to COVID-19. The three primary programs (although there are others, too) are the Economic Injury Disaster Loan (EIDL) program, the Paycheck Protection Program (PPP), and Unemployment. 

Many of us self-employed people aren’t used to having a safety net, but right now, we actually do. 

Unemployment: Typically, self-employed people don’t qualify for unemployment benefits. But due to recent legislation, we now qualify! And unemployment benefits are higher than they’ve ever been before. That’s because the federal government is increasing unemployment benefits by a flat $600 per week through the end of July! If you qualify for just $1 of unemployment benefits, you get an extra $600 per week. 

Benefits vary from state to state, but in general, if you make less than about $50,000 per year through your business, and your income has disappeared (or substantially dropped) due to COVID-19, you’ll likely make as much if not more on unemployment than you were making previously. Yes, you read that right. 

Paycheck Protection Program: The PPP provides loans to self-employed people that are potentially 100% forgivable. You can borrow up to 2.5 times your average monthly income from last year (up to $100,000/year). So if you made $48,000 last year, that averages out to $4,000/month, which means you could borrow 2.5 times $4,000, or $10,000. Interest rates are super low on these loans, but that’s not the best part. The best part is that as long as you use the loan money to continue paying yourself (and any employees you have), the loan is FORGIVABLE. You don’t have to pay it back! 

Now, there are details to understand and additional requirements for the loan to be forgivable, but this is a great option, especially if you make more than $50,000 annually or want to retain a team member. 

Economic Injury Disaster Loan: The EIDL program provides low interest loans to self-employed people. There’s also a possibility of receiving an upfront grant of up to $10,000 that DOESN’T HAVE TO BE REPAID. But before you get too excited, it appears that the grant amount will be related to the number of employees you have, so if you’re solo, your potential grant is likely much less than $10,000. 

Okay, are you still with me? Hopefully your brain hasn’t turned to mush yet. Here’s where things get a bit more complex… These programs can be combined in some cases, but it takes some planning to stay above board. And to be clear, I’m 1,000% in favor of utilizing programs you qualify for, but I’m completely against bending the rules.  

For example, you might use the PPP loan to continue payroll for yourself for eight weeks, have that loan completely forgiven, and then transition to unemployment. 

Or, you might combine an EIDL loan and a PPP loan to cover different expenses and still be able to have the PPP loan forgiven. 

There’s a lot to think through, but it’s worth the time - I promise! If you need help navigating these programs and figuring out what makes sense for you, or you know someone who needs help, I’m here.