Secret is a product that encourages free thought and honest conversations. Being able to say what you feel, without fear of judgment, is liberating to say the least. Therefore, on National Freethought Day, we would like to highlight a few secrets that demonstrate exactly that and may even inspire you to question a few of your own thoughts.
Secret is a platform that lets people anonymously share their honest thoughts and feelings.
While we believe that discourse is powerful, we work hard to prevent vitriol and bullying on the platform. As October is National Stop Bullying Month, we’d like to share some of the resources that we’ve found are helpful in the fight against online abuse online abuse.
- Cyberbullying Foundation has a great blog that distinguishes types of behavior that are acceptable both online and off.
- The Anti-Defamation League has produced guidelines to provide best practices for responding to cyberhate. We’ve partnered with them, along-side Google, Facebook and Twitter to stop abuse online.
- The Cyber Smile Foundation is focused on teenagers and tackles issues related to web etiquette and legalities.
- StaySafeOnline.org has many simple practices that everyone should implement to stay safe on the web.
If you’d like to learn more about how we keep our community safe, you can do so here.
This guest post was written by Adam Nash, Wealthfront CEO
Most people don’t feel comfortable talking about money, regardless of the fact that a lack of understanding often leads to poor financial decisions. It’s not surprising, then, that some people are turning to anonymous platform Secret in order to ask difficult questions to get the financial input they’re looking for, under the shroud of anonymity. Given Wealthfront’s reputation as an outstanding source of data-driven and actionable personal financial advice, we decided to answer some of these difficult questions that were posted on Secret.
Stock Options & Equity Are Confusing
More and more employees, especially those who work at technology companies, receive some form of equity participation as part of their compensation. Unfortunately, financial education has not kept pace, placing most employees in an awkward situation of wanting to ask questions, but unsure of who or what to ask. The question in the secret below is a great example: to early exercise or not? Once a feature only for a select few executives, more and more companies are offering early employees the ability to exercise their stock options before they vest. Should they?
The subject of stock options happens to be one of the most popular topics we address on the Wealthfront blog. The reason we write about it so much is because our clients consistently have trouble getting simple answers to their questions about how to think about their company stock.
When you early exercise options, you actually give up value. Once you exercise, you will write a check to the company, and if the stock ends up being worthless, you are out the money. At a minimum, the money is locked up, potentially for years, and you can’t get it back in case of an emergency. It turns out the right to exercise, without the requirement to do so, has value.
Why do people early exercise? The short answer: taxes. When you exercise a stock option, taxes can be due based on the difference between the current fair market value of the stock and your exercise price. If you exercise early, when the strike price and fair price are the same, you can avoid those taxes. In addition, the United States currently has a lower tax rate on long term capital gains than on short term gains, if you hold the stock long enough. Exercising early starts the clock ticking early on getting that lower rate.
In the end, employees in general should only early exercise if they have reviewed their tax situation with a knowledgeable accountant familiar with their specific tax situation, they believe strongly in the long term value of the company, and if they can truly afford to lose access to the invested dollars.
If you are interested in learning more about stock options you might appreciate the following Wealthfront blog posts:
- The 14 Crucial Questions About Stock Options
- An Employee Perspective on Equity
- How Do Stock Options & RSUs Differ
- The Reason Offer Letters Don’t Include a Strike Price
- What You Need to Know About Vesting Stock
- The Impact of Dilution
How Long Should You Stay At Your Job
For most young adults in the 20s & 30s, their career decisions will have the biggest impact on their long term financial success. That being said, where do they turn to for career advice without their uncertainties impacting how they are perceived at their employer?
Of course, there is no simple answer to this question. Andy Rachleff, Executive Chairman at Wealthfront, wrote a detailed post on this exact topic. To quote Andy:
At a high level, the decision to stay depends on your happiness, the company’s prospects and your career path. For many people, four years seems to be about the right span of time. It’s no coincidence vesting periods for most companies are four years, but your decision to stay at a job should not be driven by your vesting schedule.
Economics shouldn’t be your only consideration, and while you don’t want to job hop, you also shouldn’t be miserable at work. So much of career success depends on exceptional work, and people tend to over-estimate their ability to excel in their responsibilities when their heart isn’t truly in the role.
Enter the Conspiracy Theories
Americans love conspiracy theories, and when it comes to money, they tend to proliferate in the dark shadows of gossip (and occasionally a blockbuster Hollywood movie.) This is especially true when it comes to taxes.
The truth is, of course, that while there is a never-ending series of attempts to cheat the IRS, no one of quality ethically or intellectually would advocate for them. This question, of course, reflects the idea that households earning $500K or more per year have “secrets” on how to minimize taxes. The truth, of course, is a lot less exciting.
The top strategies that the wealthy use to minimize taxes are hardly a secret. They reflect conscious decisions in the current tax code that are highly unlikely to change quickly. Remember, when you are making long term investment decisions, basing your strategy on loopholes or gimmicks that might disappear quickly is rarely a smart maneuver.
If you look at the investments of the wealthy, however, you will see:
- Intelligent use of tax-deferred or tax-advantaged income products, like municipal bonds. Municipal bonds pay a lower rate of interest than normal bonds, but they also can be free of Federal, State & Local taxes. In some locations, that tax bill is over 53%, making them an unusually good deal for those in the highest brackets.
- Maximize use of the mortgage deduction. Our tax code allows you to write off the interest on mortgages up to $1.1M. That’s a powerful incentive to borrow money cheaply, and invest in stable real estate.
- Maximize the use of tax deferral. Retirement accounts like 401(k) accounts, IRAs, and 529s are all common among the wealthy. Compounding investment returns, potentially for decades, all while deferring taxes to the future, is a powerful way to grow wealth.
- Being smart about realizing taxable investment returns. Short term capital gains taxes are high, over 53% in some locations when state and local taxes are included. Long term capital gains tax rates are much lower. Adopting strategies, like tax loss harvesting, that focus on realizing short term losses, but allowing gains to grow to the long term, are exceptionally valuable.
In short, a lot of the tax strategies the wealthy use are available to everyone, but become more valuable with larger accounts and higher tax rates.
Compensation: The Secret Everyone Wants to Know About
Everyone wants to know about compensation, but unfortunately, the taboos around talking about income in the United States are significant. This leads to a number of problems in the workplace, not the least of which is the issue of individuals figuring out if their compensation is fair.
There are a number of sites, like GlassDoor & Payscale, that will give you some sense of fair salary, but unfortunately they tend to have little to no data about equity.
To help demystify compensation, Wealthfront provides a free compensation calculator for jobs at private company that includes both cash and equity. It’s one of the most popular features of the site, and the data is updated annually.
Don’t Be Afraid to Ask
The first step to taking control of your financial life is to ask questions. It’s unfortunate, but in the United States, you can attend the best schools, even at the graduate level, and still not receive a solid education in personal finance. There is some evidence that Millennials are more comfortable talking about money with their peers, and I hope its true. Find trustworthy and high quality sources of financial information, and put your questions out there.
Have a look at more money secrets here.
Last week, a member of the Secret community asked, “If you’re above the age of 30, what’s the single most important lesson you have learned?” Rather than posting a secret, the OP was looking for the best kept secrets from other people in the community. In the comment section, people posted lessons they have learned over the years, perfect for anyone at any age.
Here are some of the best pieces of advice.
They advised about money.
And about following your heart.
They handed out excellent relationship advice.
They even threw in some extremely practical advice.
And last, but not least they reminded everyone,
Thank you for the laughter, you will be sorely missed.
If you need to reach out to someone, there are resources available.
On this day, 34 years ago, the boy wizard Harry Potter was born. To celebrate this magical day we’ve put together a collection of Harry Potter secrets.
Here are a few of our favorites:
Today’s post comes from Blue Monkey. See the full Parenthood collection here.
One of these things is not like the other – my Instagram post this morning of my beaming children in my newly remodeled kitchen, and my Secret post (also from this morning) about how I cried in the back of a cab as I headed off to my third business trip in two months.
My posts have nothing in common except for the fact that I authored them. I am one mother on Facebook, Twitter and Instagram, and I’m the real me on Secret. Secret has shown me that none of us are being honest about our parenting lives, online.
On Facebook, Instagram, Twitter and even in person, I present the glorious side of my life as a mom – and yes, it can be glorious. The sweet smiles first thing in the morning, the first steps, the first day of preschool – all of it is well documented on my social profiles. The other side – the tears, sleepless nights, confusion, anxiety, – is absent. Well, it was absent – until I started using Secret.
I would never, ever tell you the truth on Twitter about my never ending fears of miscarrying during both of my pregnancies, and I suspect my husband wouldn’t share this type of thought with his network either:
I would never post to my Facebook friends about the endless tears I have shed, wishing I could stay at home with my kids. What if my employees, or my company’s board knew how I felt? I can’t imagine what would happen to my career:
And while this post doesn’t describe my husband (most days), I couldn’t help but identify with it completely:
The thing is, parenting is hard work and it’s embarrassing to admit none of us know what we’re doing, or that there are days we wish we didn’t have to do it at all. Secret has made it easier for me to share what I’m feeling, and even better, see that so many others are freaking out too. No one’s perfect after all.
If you’d like to share your Secret Story and be featured on our blog, please email firstname.lastname@example.org