Your buddy told you the same thing over beers - he read it somewhere, backtested it, hasn’t touched his allocation in two years and won’t shut up about it.

So you did it too.

Low-cost index funds, a rebalance every January, maybe a satellite position for “conviction.” You feel good about this.

And on the investing piece, you probably should.

Here’s the problem.

None of that is a financial plan.
It’s a portfolio. Those aren’t the same thing.

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The Short Version

• Most DIY investors have optimized the smallest piece of their financial life and left the rest untouched

• A plan covers cash flow, taxes, risk, estate, and equity comp - the portfolio is one input, not the whole thing

• Below are 7 questions. If you can’t answer 5 of them cleanly, you don’t have a plan yet - you have a well-managed brokerage account

• None of these require a call with anyone. Answer them yourself first.

Why This Gap Exists

The internet is genuinely good at the portfolio piece. Bogleheads, r/HENRYfinance, every finance podcast you half-listen to on 1.5x - the index fund advice is solid and it’s everywhere.

So that’s where the energy goes.

Meanwhile cash flow, tax structure, estate documents, and risk management sit untouched for years.

The result: people who can recite their expense ratios to the basis point and have no idea what happens to their kids if they both die next month.

The 7 Questions

1. What’s your actual savings rate - calculated, not estimated?

Not “we save a lot.” A number. Take everything that went into retirement accounts, brokerage accounts, and extra principal payments last year, divide by gross income. If you can’t produce this number in under two minutes, you don’t track it closely enough to know if you’re on track.

2. If you couldn’t work for six months starting tomorrow, what happens?

To the mortgage, the savings rate, the lifestyle…. If the honest answer involves disability insurance you haven’t checked in years or don’t have at all, this is the biggest single gap most high earners are carrying and don’t know it.

3. Who inherits what you own right now, today?

This is not what your intentions are but rather what your actual documents say, RIGHT NOW. Most people’s wills and beneficiary designations were set up for a version of their life that no longer exists - before the second kid, before the house, before the net worth tripled.

4. What’s your effective tax rate, and what are you actively doing about it?

Your tax bracket and your effective rate are not the same… you need to know the difference. What are three specific things you did last year to move that number, beyond maxing a 401(k)? If the list is empty, you’re not managing taxes. You’re just filing them.

5. If you have equity compensation, what’s your concentration number?

What percentage of your net worth sits in your employer’s stock, vested and unvested combined. Most people who’ve never calculated this are shocked by it. If you don’t have equity comp, skip this one - but if you do and haven’t run this number, that’s the question with the biggest downside if you’re wrong.

6. What’s the net worth number where your answers to all of this would change?

Not a retirement number. A materiality number - the point where a mistake stops being a rounding error and starts being real money. Most people have no idea where that line is for them, which means they can’t tell if they’ve already crossed it.

7. Can you write your investment strategy in two sentences?

Not the list of funds but he actual strategy - why you own what you own, and what would make you change it. If you can’t write it in two sentences, you don’t have a strategy. You have a collection of decisions made at different times for different reasons that happen to sit in the same account.

What This Actually Tells You

If you answered five or more of these cleanly - genuinely, not generously - you’re ahead of almost everyone reading this. Keep going.

If you couldn’t answer most of them, that’s not a failure. It’s just information. It tells you exactly where the real work is, and it’s very rarely in the portfolio.

Playing the Long Game

The portfolio is the easiest part of a financial plan to build and the part everyone builds first. It’s also the part the internet already agrees on.

That’s backwards.

Cash flow, tax structure, risk, and estate decisions are where the real damage happens - not from a bad stock pick, but from a gap nobody checked. Answer the seven questions before you touch another ETF. The portfolio can wait a week. The gaps can’t.

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Interested in Learning More?

Let’s start with a short, 20-minute conversation to see if there’s an opportunity to improve clarity, structure, or long-term outcomes.

Check out our website.

Upholdings Private Wealth is a registered investment adviser in applicable jurisdictions. Registration does not imply any specific level of skill or training.

This newsletter is provided for informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice. It is not an offer or solicitation to buy or sell any securities or investment strategies.

Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. There is no guarantee that any strategies discussed will achieve desired outcomes.

Information is provided “as is” without warranty as to accuracy or completeness, and opinions expressed are subject to change without notice.

Those nine months taught me a lot. What you gravitate toward. Where the real pain points are. What comes next.

So the newsletter is taking a new turn.

It’s now Your Family CFO, written with my partner Robert at Upholdings Private Wealth. You’ll get the same insights, tools, and tactics we use with our clients every day, so you can work toward putting them to use in your own life.

The goal of a family CFO is to make sure every financial decision in the household works with every other one, so no decision gets made in isolation.

Our promise to you: the actual playbook we run, explained plainly, with something you can act on every week.

The Short Version

• Same Wednesday email, new name: Your Family CFO

• Built around the four areas we run for every client: cash flow, tax and compensation, portfolio, and estate and protection

• Weekly planning content from me, periodic investment insights from Robert

• Written to be used, not just read

  Subscribe now

Why this move?

Most financial content covers one piece. A tax tip. A fund pick. An estate checklist.

Your money doesn’t work in pieces.

Your RSU vest changes your entire tax picture. Your entity decision changes your estate plan. Your insurance sets how much risk you can take in the portfolio.

Nine months of writing made that impossible to ignore. The specific issues, the ones with real mechanics and real tradeoffs, were the ones worth writing. And the decisions that matter most were almost never one person’s decision. They were the family’s.

It’s also how we work with clients. Plan first. Portfolio built around the plan, not the other way around.

That’s what a CFO does. A company has someone whose whole job is capital allocation, taxes, risk, timing, and cash.

Your household probably has no one.

Your CPA sees the taxes. Your brokerage account sees the portfolio. Your attorney sees the documents. Nobody sees all of it.

What to expect

Every issue sits inside one of the four pillars we build every client plan around.

1. Cash flow and life planning: How money moves around your actual life: saving, spending, major purchases, and the annual plan refresh.

2. Tax and compensation: Equity comp, RSUs, options, Roth conversions, asset location, and year-end moves. The area where high earners leave the most on the table.

3. Portfolio strategy: Allocation built around your plan, not a benchmark. This is Robert’s territory, and you’ll hear from him a few times a year on what’s driving markets and how we think about positioning.

4. Estate, protection, and legacy: Documents, beneficiaries, insurance, liability, and charitable giving. The stuff that only gets attention after something goes wrong.

Short, specific, and built so you can act on it that week.

The playbook is ever changing. We’re building this firm in real time, and you’ll see what we learn as we learn it.

What are the goals?

See your finances the way a CFO or financial planner does.

Know which decisions matter, what order they go in, and what each one touches.

Understand the mechanics well enough to act on them yourself, or to ask sharper questions of anyone you hire.

Walk away from every issue with something you can do that week.

Some of you will take this and run with it on your own. Some of you will decide you'd rather have someone run it with you. Either is a good outcome.

Playing the Long Game

The name changed. The thinking didn’t.

A CFO’s job is making sure this year’s decision doesn’t cost you the next ten.

Read the issues to come with one question in mind: what would I do if I were running this household like a company?

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Interested in Learning More?

Let’s start with a short, 20-minute conversation to see if there’s an opportunity to improve clarity, structure, or long-term outcomes.

Check out our website.

Upholdings Private Wealth is a registered investment adviser in applicable jurisdictions. Registration does not imply any specific level of skill or training.

This newsletter is provided for informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice. It is not an offer or solicitation to buy or sell any securities or investment strategies.

Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. There is no guarantee that any strategies discussed will achieve desired outcomes.

Information is provided “as is” without warranty as to accuracy or completeness, and opinions expressed are subject to change without notice.

Equities grew again in the 3rd quarter, despite an awful quarter for bonds:

The Cost of Money

Money is now a lot more expensive. 10 year interest rates jumped from 4.5% to 5.3%. This little jump drove $1+ trillion of markdowns to bond principal. A combination of growing geopolitical instability, somewhat loose monetary policy, and persistent federal deficits are driving long term interest rates higher.

Meanwhile, some of the most historically money dependent companies - OpenAI and Anthropic - continue hunting for more cash. Anthropic’s public offering has slid into November, while OpenAI punted theirs to 2027. Any time the cost of borrowing rises like this, families, like companies, begin hunting for ways to reduce their liabilities.

Your Family CFO

We’re 3 years into building a modern private wealth company. We’ve consolidated our planning and investment insights into this weekly release. Recent highlights:

• You Have Three Months Left to Get a 2026 DAF Tax Break

• Our 2Q26 Letter Named 5 Software Stocks, Up an Average 35% Since

• Why Wealth Creators Have Wealth Managers

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So, Who Can You Trust?

The US Federal Government, the most reliable borrower in the history of the world, is currently paying 5.28% annualized on 7-year treasuries. That’s the highest rate seen in 19 years. If, for example, you invest $100,000 in 7-year treasury in your retirement account, set the dividends to automatically reinvest, you’d see $143,358 in seven years. How many of your current investments can guarantee that type of outcome?

We are in a moment during which investors are allocating enormous capital to AI development. But the hurdle rate for justifying those investments is higher than ever.

Social Impact

Expanding access to education is the best tool we’re aware of to fight against the perpetual widening of economic inequality. This quarter, we again supported Khan Academy.

Robert

Want to discuss your portfolio?

Let’s start with a 20-minute chat to see if there’s an opportunity to improve your long-term outcomes.

Upholdings is a registered investment adviser in applicable jurisdictions. Registration does not imply any specific level of skill or training. This newsletter is provided for informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice. It is not an offer or solicitation to buy or sell any securities or investment strategies. Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal.

By then it’s too late to change anything.

The moves that actually move your tax bill happen in the next 90 days - while you can still do something about it.

Here’s what to look at before December 31.

The Short Version

• Check if your company withheld enough on your stock vests

• Sell your losers before year-end to offset your winners

• Get money into a Roth the back door way, since the front door’s closed to you

• Make sure your Q4 tax payment is actually enough

• Decide on your giving now, not in the last week of December

1) Check Your Stock Withholding

When your company stock vests, they withhold taxes on it automatically - usually 22%.

Here’s the problem. If you’re a high earner, your actual tax rate on that income is probably 32% or 37%. That gap between what got withheld and what you actually owe doesn’t show up until you file your return. By then it’s a bill, not a decision.

Pull up what’s vested this year. Add it up. Compare it to what you’ll actually owe at your real tax rate. If there’s a gap - and there usually is - you’ve got two options. Ask your employer to withhold more from your regular paycheck for the rest of the year, or send in a bigger payment this quarter to cover it.

Either one works. Finding out in April doesn’t.

2) Sell Your Losing Positions

If you’ve got anything sitting at a loss in a regular investment account - not your 401(k), a taxable account - now’s the time to sell it and use that loss to offset gains you’ve had elsewhere this year.

This matters most if you sold something for a profit this year, or cashed out stock from work. The loss cancels out the gain, dollar for dollar, and lowers what you owe.

One rule to know. If you sell something at a loss and buy the same thing back within 30 days, the loss doesn’t count - the IRS calls this a wash sale. If you still want that money invested, buy something similar instead of the exact same thing.

3) Fund Your Backdoor Roth

Roth IRAs are one of the best tools out there - tax-free growth, tax-free withdrawals. Problem is, once you’re earning what you’re earning, you’re not allowed to contribute to one directly.

There’s a legal workaround. Put money into a regular IRA, then convert it to a Roth right away. That’s the “backdoor” everyone talks about.

If your 401(k) plan allows it, there’s a bigger version of this too - putting extra after-tax money into your 401(k) and converting that. Can mean tens of thousands of extra dollars a year in Roth space, and most people who have access to it never use it.

Both of these have to happen before the calendar flips. You can’t go back and do a 2026 contribution in February of next year.

4) Check Your Q4 Tax Payment

Here’s a mix-up that costs people money every year. Filing for an extension gives you more time to file your return. It does not give you more time to pay what you owe.

If your Q4 payment to the IRS is short, you start owing penalties on that gap - regardless of what your accountant does next April.

The safe number to hit is either 90% of what you’ll owe this year, or 110% of what you owed last year - whichever is smaller. Hit that and you won’t get hit with a penalty, even if your final number shifts once your bonus, vests, or other income settles.

Most of what you’re going to earn this year is already known. This is your last real shot to get that number right before it’s locked in.

5) Plan Your Charitable Giving

If you give to charity and you’ve thought about combining a few years’ worth of giving into one lump sum - what’s called “bunching” - Q4 is when you actually make that call. Not the last week of December, when everyone else is trying to do the same thing.

And if you’re planning to give and you’re holding stock that’s gone up in value, give the stock directly instead of selling it first. You skip the tax on the gain entirely and still get the same deduction.

Playing the Long Game

None of this is complicated. What kills people is running out of time to act on it.

Pull your numbers this week - your vests, your gains and losses, your Roth room, your tax payment - and make the calls while you’ve still got a quarter left, not a return left to file.

Daily Tips on 𝕏

Interested in Learning More?

Let’s start with a short, 20-minute conversation to see if there’s an opportunity to improve clarity, structure, or long-term outcomes.

Check out our website.

Upholdings Private Wealth is a registered investment adviser in applicable jurisdictions. Registration does not imply any specific level of skill or training.

This newsletter is provided for informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice. It is not an offer or solicitation to buy or sell any securities or investment strategies.

Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. There is no guarantee that any strategies discussed will achieve desired outcomes.

Information is provided “as is” without warranty as to accuracy or completeness, and opinions expressed are subject to change without notice.

Many times all these life transitions often overshadow the questions surrounding your finances: Am I maximizing my 401(k) match? Did we open that 529 account when baby #2 was born? How is our debt pay down strategy working?

All of us has our own version of this and all of us have received the call from the Northwestern rep telling you how you need this insurance or that. Or from the Morgan Stanley advisor trying to sell you their new investment fund.

Not all of that is wrong but it often is the wrong place to start.

Who We Are

The Short Version

• Most people treat the plan as a preamble to investing - the boring part before the “real” decisions start

• It’s backwards. The plan is the deliverable. Investing is implementation

• Every input that actually drives an investment decision - risk tolerance, time horizon, liquidity needs, tax situation - is a planning output, not a planning input

• Skip the plan and you’re not investing strategically. You’re guessing with better vocabulary

• The industry leads with investments because they’re easier to sell and easier to benchmark. Planning is slower and doesn’t photograph well

Why the industry sells it backwards

Investments are the easy sell.

There’s a return number. A benchmark. A chart that goes up and to the right in the pitch deck.

Planning doesn’t have any of that.

It’s a conversation about what you actually want, priced out in specific numbers, revisited every time life changes - which it always does.

Nobody’s making a glossy one-pager out of “let’s talk about what happens if your marriage ends.” Or “what does retiring at 52 actually cost, line by line.”

So the industry leads with what sells. What sells is the sizzle, not the plan.

The result: most people’s “investment strategy” is a risk questionnaire and a guess.

Aggressive, moderate, conservative - pick one, get a model portfolio.

Nobody asked what the money is actually for.

The plan tells the portfolio what to do, not the other way around

Two people can have identical account balances and need completely different portfolios.

Same balance. Same age, even.

But the money is doing different jobs.

One of them needs this account to cover a house down payment in three years. The other is funding a retirement that’s twenty-five years out and already overfunded by every reasonable projection.

One of these portfolios should look nothing like the other.

You can’t know which is which without the plan.

This is why “should I move 15% into international equities” is never actually the first question.

The first question is what the money is for and when you need it.

Once you know that, the allocation decision gets a lot less interesting. It’s math, not conviction.

I’ve made this mistake in my own decisions too - treating an investment question as the one that mattered, instead of stepping back to ask what I was actually solving for.

It’s an easy trap. The investment question feels active, feels like progress.

The planning question feels slow.

It’s the one that’s actually doing the work.

What the plan actually covers

“The plan” isn’t a single conversation. It’s not even mostly about the portfolio.

• Cash flow - what’s actually coming in, going out, and left over, priced out line by line.

• Taxes - not just this year’s return, but the decisions that compound over ten.

• Estate - who gets what, when, and how much of it goes to the IRS instead of your kids because nobody set it up right.

• Equity comp - RSUs, ESPP, options, the vesting schedule that doesn’t care what else is happening in your life that year.

• Risk management - insurance, liability, the stuff that protects everything else you’ve built.

• Charitable giving - DAFs, CRTs, the structures that actually matter once you’re doing this with intention instead of just writing a check in December.

• Education funding - 529s, UTMA/UGMA, and the real tradeoff nobody names out loud: funding the kids’ future at the expense of your own.

And then, finally, the portfolio.

The portfolio is one piece. It’s the piece that gets all the attention because it’s the one with a number attached to it. The other seven are just as load-bearing, and most people never get asked about any of them until something forces the conversation.

Our Services & Process

Playing the Long Game

So start here, not with the ticker.

Pull the actual numbers. What’s coming in, what’s going out, what’s left over.

Check the boxes that usually go unchecked. Is the 401(k) actually funded. Is there a 529, or is that still just an idea. Is the debt going down on a schedule anyone could name.

Write down what the next liquidity event is - a vest, a bonus, a sale - and what it needs to accomplish before it needs to go anywhere.

Then, talk about the portfolio.

That’s the plan. The investing part is just execution against it.

Daily Tips on 𝕏

Interested in Learning More?

Let’s start with a short, 20-minute conversation to see if there’s an opportunity to improve clarity, structure, or long-term outcomes.

Check out our website.

Upholdings Private Wealth is a registered investment adviser in applicable jurisdictions. Registration does not imply any specific level of skill or training.

This newsletter is provided for informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice. It is not an offer or solicitation to buy or sell any securities or investment strategies.

Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. There is no guarantee that any strategies discussed will achieve desired outcomes.

Information is provided “as is” without warranty as to accuracy or completeness, and opinions expressed are subject to change without notice.

Most people hit that number and assume the Roth conversation is over.

It’s not. There are two more tools built into the tax code for exactly this situation. Most high earners never use either one.

Website

The Short Version

• Direct Roth contributions phase out at $153K-$168K single, $242K-$252K married filing jointly for 2026

• The backdoor Roth gets around the income limit with two IRS forms and zero gray area, if you do it right

• The mega backdoor Roth can move tens of thousands more per year into Roth space, but only if your 401(k) plan allows it

• Most people never check if their plan allows it

• The mistake isn’t skipping the Roth. It’s not knowing the door was still open

1. The Direct Roth IRA

The baseline.

Contribute after-tax dollars. Grow tax-free. Withdraw tax-free in retirement.

$7,500 limit for 2026. $8,600 if you’re 50 or older.

Pros: The simplest retirement account there is. No conversion step. No pro-rata math. No extra forms.

Cons: Once your MAGI crosses the phase-out range, your allowed contribution drops to zero.

Best for: Anyone under the income limit who isn’t already maxing this out. If that’s you, stop reading and go fund it.

2. The Backdoor Roth

Contribute to a traditional IRA with after-tax dollars. No deduction, since you’re over the limit.

Then convert that IRA to a Roth.

The contribution has no income limit. The conversion has no income limit. That’s the entire move. It’s been standard practice since 2010.

Pros: Gets $7,500 (or $8,600) into Roth space every year, regardless of income. Well-established. Nothing gray about it if you run it correctly.

Cons: The pro-rata rule.

If you’ve got other pre-tax IRA money sitting around, a rollover from an old 401(k) is the usual culprit, the IRS treats your conversion as a proportional blend of pre-tax and after-tax dollars. You’ll owe tax on the pre-tax slice.

This is the single most common way people mess this up.

Clear out old rollover balances first, usually by rolling them into a current 401(k) that accepts incoming rollovers.

Best for: Anyone over the Roth income limit with no other traditional IRA balances, or who’s willing to clear them out first.

3. The Mega Backdoor Roth

The largest version of this move.

If your 401(k) plan allows after-tax contributions, separate from your regular pre-tax or Roth deferrals, and allows in-plan Roth conversions or in-service withdrawals, you can contribute after-tax dollars up to the total plan limit.

That’s $72,000 for 2026. Employee deferrals, employer match, and after-tax contributions combined.

For someone deferring the full $24,500 with a modest employer match, that can open up $30,000 to $40,000 a year in additional Roth room.

Pros: By far the largest amount you can move into Roth space in a single year, short of converting existing pre-tax balances, which is a different move entirely.

Cons: Most 401(k) plans don’t offer this.

You have to call your plan administrator and ask. Not assume.

And if the plan doesn’t support automatic in-plan conversion, the after-tax money sits there accumulating taxable growth until you manually convert it. That eats into the benefit.

Best for: High earners already maxing out their 401(k) and backdoor Roth who want more tax-free growth, and whose plan actually supports it.

Which is the real problem. Most people in this position never find out if theirs does.

The Quiet Mistake

Most people above the income limit have never once called their 401(k) provider and asked whether after-tax contributions and in-plan conversions are available.

Nobody’s benefits portal has a banner for it. HR may not know the answer without checking with the plan’s third-party administrator.

This is the kind of five-figure gap that just sits there year after year. Not because anyone decided against it. Because nobody looked.

Playing the Long Game

The backdoor Roth is a two-step process you can finish in an afternoon.

The mega backdoor is one phone call to find out if it’s even on the table.

Neither requires a new strategy. Just someone actually checking.

Call your plan administrator this week. Ask two questions: does the plan allow after-tax contributions, and does it allow in-plan Roth conversions or in-service withdrawals.

If the answer to both is yes, there’s probably real money sitting on the table.

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Interested in Learning More?

Let’s start with a short, 20-minute conversation to see if there’s an opportunity to improve clarity, structure, or long-term outcomes.

Check out our website.

Upholdings Private Wealth is a registered investment adviser in applicable jurisdictions. Registration does not imply any specific level of skill or training.

This newsletter is provided for informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice. It is not an offer or solicitation to buy or sell any securities or investment strategies.

Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. There is no guarantee that any strategies discussed will achieve desired outcomes.

Information is provided “as is” without warranty as to accuracy or completeness, and opinions expressed are subject to change without notice.

Check Us Out

The Short Version

• OBBBA doubled the federal cap on tax-free 529 withdrawals for K-12 tuition - $10,000 to $20,000 per beneficiary, effective this year.

• OBBBA also added new qualifying K-12 expenses: curriculum, tutoring, test fees, dual enrollment.

• Whether your state’s deduction follows that federal change is a separate call each state makes on its own.

• A South Carolina family with three kids at $10,000/year tuition each nets $1,563 back doing this.

Federal vs. State

There are two different systems stacked on top of each other here, and they don’t have to agree.

Federal law decides whether a 529 withdrawal is tax-free at all, and what counts as a qualifying expense - that’s the layer OBBBA just changed.

State law decides something separate: whether you get a deduction for contributing in the first place, and whether that deduction survives if you use the money for something like K-12 tuition.

States aren’t required to follow federal law on this, and plenty don’t. So the same federal rule, applied to the same withdrawal, can land you in completely different places depending on where you live.

What OBBBA Actually Changed

The One Big Beautiful Bill Act, effective for 529s starting this year, did two things federally.

1. It doubled the annual cap on tax-free withdrawals for K-12 tuition, from $10,000 to $20,000 per beneficiary.

2. It expanded which K-12 expenses qualify well past tuition: curriculum and textbooks, tutoring, educational therapy, standardized test fees, dual enrollment costs for kids taking college classes early.

It also opened 529s to postsecondary credentialing programs for the first time: nursing assistant certifications, cosmetology licenses, trade apprenticeships.

None of that touches your state return. That’s a separate decision, and it’s where things get uneven.

How States Differ

• More than 30 states plus DC offer some kind of 529 deduction or credit.

• Nine have no income tax, so a deduction is moot: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, New Hampshire.

• Four income-tax states give no 529 benefit at all: California, Hawaii, Kentucky, North Carolina.

• Most states only deduct contributions to their own in-state plan.

• Nine states deduct contributions to any state’s plan: Arizona, Arkansas, Kansas, Maine, Minnesota, Missouri, Montana, Ohio, Pennsylvania.

But a handful of states either block the deduction outright when the money is used for K-12, or quietly net your deduction against same-year withdrawals so the two cancel each other out and you're left with no real benefit. Neither shows up as a headline anywhere - it's a line item in the state's own tax code or plan documentation, easy to miss until you've already filed.

Check your specific state's plan administrator or department of revenue before you assume this works. It's usually stated plainly, it's just easy to never go look.

South Carolina Says Yes

South Carolina is one of the more generous states on this. Future Scholar, the state’s 529, lets you deduct 100% of contributions from South Carolina taxable income - no annual cap the way some states impose one, only the plan’s lifetime account maximum, which sits well north of $500,000 per beneficiary.

There’s no minimum holding period tied to the deduction either: contribute this month, withdraw next month, same tax year, deduction stands. South Carolina’s 2026 tax reform also collapsed the old bracket structure into two rates - 1.99% on the first $30,000 of taxable income, 5.21% above it - so almost everyone sending their kids to private school hits this limit.

The Math: Three Kids, $15,000 Each

Three kids in private school, $15,000 a year apiece, $45,000 total, paid two ways.

Direct, no 529: write $45,000 in checks to the schools. Nothing comes back.

Routed through Future Scholar first, each kid on their own account since the deduction and the withdrawal cap both apply per beneficiary, not per family:

• Contribute $15,000 per kid

• Deduct $15,000 per kid on the South Carolina return

• Withdraw $15,000 per kid as a qualified K-12 distribution

• Pay each school directly, same tax year

Same three schools, same tuition, same year - $1,563 you didn’t have before, for three contribution forms and three withdrawal requests. Do it every year all three are enrolled and it compounds the way anything recurring does.

Playing the Long Game

Nobody builds wealth by finding one loophole. They build it by not leaving the ordinary ones on the table, year after year, on money they were spending regardless. You’re paying this tuition bill either way. The only question is whether you’re paying it the way that gets nothing back, or the way that does.

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Interested in Learning More?

Let’s start with a short, 20-minute conversation to see if there’s an opportunity to improve clarity, structure, or long-term outcomes.

Check out our website.

Upholdings Private Wealth is a registered investment adviser in applicable jurisdictions. Registration does not imply any specific level of skill or training.

This newsletter is provided for informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice. It is not an offer or solicitation to buy or sell any securities or investment strategies.

Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. There is no guarantee that any strategies discussed will achieve desired outcomes.

Information is provided “as is” without warranty as to accuracy or completeness, and opinions expressed are subject to change without notice.

The order wasn’t a suggestion. Each once could not work in harmony without the one in front of it being right. Miss a step, prioritize them out of order, and there were consequences.

1. Be a good person… above all else.

2. Always try your hardest… how you do anything is how you do everything.

3. Academics come first.

4. Sports and extracurricular activities.

Grades slipped, sports got taken away. Effort slipped, and academics got questioned before a grade even showed it. Have a great game but cocky while doing it, good luck on the car ride home. The sequence protected itself.

I didn’t know it then, but that’s the same sequence that governs building wealth.

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The Short Version

• Four rules, strict order: character, effort, academics, sports. Get the order wrong, and everything below the broken step got pulled.

• Character is the foundation… the honesty that keeps a financial plan from quietly rotting from the inside, invisible until it isn’t.

• Effort is the mechanism… specifically, the willingness to do the unglamorous work before anyone’s watching or rewarding it.

• Academics is the asset you build before you have assets… the earning power everything else eventually gets funded by.

• Sports is the payoff… real, deserved, and only sustainable when funded by a foundation that’s already secure.

Be a Good Person, Above All Else

This came before everything, no exceptions. Not about achievement but about how you treated people, whether you told the truth, whether you did the right thing with nobody watching.

Skip this step and nothing above it holds, even if everything below it looks fine for a while.

The wealth version of this is honesty with your own numbers before it’s honesty with anyone else’s. It’s not inflating a net worth statement by counting illiquid assets as spendable. It’s not quietly hiding a purchase from a spouse, or telling yourself a lifestyle upgrade is “temporary” when it’s really permanent. It’s sticking with a boring, unglamorous plan when there’s no audience to perform discipline for.

Every serious financial mistake I’ve watched someone make traces back to this step getting skipped first and not a lack of intelligence, a lack of honesty with themselves, usually months or years before the damage became visible. Character is invisible on a balance sheet right up until it isn’t, and by then it’s expensive to rebuild.

Always Try Your Hardest - How You Do Anything Is How You Do Everything

This was about effort in the moment nobody was scoring. Not “win.” Not “perform.” Just: give what you have, right now, regardless of whether anyone’s watching or keeping score.

Miss this step and the foundation holds, but nothing gets built on top of it. Character without effort is just good intentions.

This is the step people get wrong most in wealth building, because they hear “work hard” and think it means income. It doesn’t. It means the unglamorous 2% that never gets applause: automating the transfer instead of meaning to get to it next month, actually reading the RSU vesting schedule instead of dismissing the notification at lunch, having the uncomfortable money conversation with a spouse instead of letting it slide another Friday night.

None of that is visible to anyone else. All of it is the entire difference between people who build wealth and people who mean to. The households that get “on track” almost never have a smarter strategy than the households that don’t. They just don’t skip the boring rep.

Academics Come First

Grades came before sports, no negotiation. Academics mattered more and it built the foundation everything else depended on, and unlike a missed practice, you don't get that time back later.

Skip this step, and effort and character are both present but pointed at nothing that compounds. You can be a hard-working, honest person with a ceiling you built yourself.

This is the step financial planning conversations skip past fastest, because it feels finished the moment the paycheck starts. It isn’t. It’s the ongoing investment in your own earning power: the credential still worth pursuing, the negotiation still worth having, the skill that keeps you harder to replace than the person next to you.

Academics was never really about the grade. It was about protecting future optionality before you knew you’d need it. Career capital works identically, and most high earners quietly stop investing in it the moment income starts feeling sufficient which is exactly the moment the compounding stops, even though nothing visibly changes for years.

Sports & Extracurriculars - Last but Earned

Sports came last. It mattered plenty, probably more to me than most of my siblings, but it was the reward layer, conditional on everything built underneath it. Grades stunk, sports got taken away. No appeal.

Fund this step before the ones above it are secure and everything looks fine right up until it doesn’t.

This is lifestyle spending. The travel, the second home, the car that costs more than it needs to. All of it legitimate, all of it fine to want but it’s supposed to be funded last, by a foundation that’s already secure, not funded first on the assumption the rest will catch up eventually.

Most financial stress I see in practice isn’t a spending problem at all. It’s a sequencing problem and a household funding the reward layer before the foundation underneath it can actually support the weight.

Playing the Long Game

Miss a step in our house and the rest got taken away, automatically. No exceptions, no negotiating.

Wealth works the same way, whether or not anyone enforces it for you. Character before effort. Effort before earning power. Earning power before lifestyle. Get the order wrong and the structure gets unstable, even if it takes years to show up on paper.

Most people I work with aren’t undisciplined. They’re just building out of order.

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Let’s start with a short, 20-minute conversation to see if there’s an opportunity to improve clarity, structure, or long-term outcomes.

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Upholdings Private Wealth is a registered investment adviser in applicable jurisdictions. Registration does not imply any specific level of skill or training.

This newsletter is provided for informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice. It is not an offer or solicitation to buy or sell any securities or investment strategies.

Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. There is no guarantee that any strategies discussed will achieve desired outcomes.

Information is provided “as is” without warranty as to accuracy or completeness, and opinions expressed are subject to change without notice.

That’s backwards.

A brokerage account is the one part of your balance sheet that's actually built to be used. Not locked up like your 401(k), not sitting illiquid like your home equity… yours to draw from whenever life calls for it, on your own timeline. Use it, refill it, watch it come back stronger than before. And later, it takes on a second job most people never see coming.

Upholdings' Website

The Short Version

• Your balance sheet has three layers: retirement accounts, home equity, and brokerage. Only one is truly liquid and yours to use.

• The industry tells you never to touch your investments. That advice is right for retirement accounts and wrong for this one.

• A brokerage account isn’t supposed to just grow untouched. It’s supposed to fund real decisions then refill, faster each time.

• The refill speed is the real signal of progress in your 30s and 40s. But the job of the account changes again as retirement gets closer.

• By your 50s, this account stops being a “use it and refill it” tool and starts becoming the bridge that funds your life before retirement accounts are even accessible.

Personal Anecdote

I automate a monthly contribution into my brokerage account, outside of my emergency fund and retirement accounts, so the habit runs whether I think about it or not.

A few years ago, my wife and I pulled from our brokerage account for part of the down payment on our home. I remember watching that balance drop and feeling a flicker of “wait, are we sure about this” even though it was the exact reason we’d built the account in the first place.

Now we’ve got two more draws on the horizon: a small home renovation and an upgrade of my wife’s “mom car”. Neither feels like an emergency, and neither comes with that same flicker of doubt this time because I understand how the refill goes. That's the muscle that is forming. Fund it, use it, refill it, and watch the refill get easier every cycle.

Why “Never Touch It” Is the Wrong Rule Here

The advice to never touch your investments makes sense for a 401(k). It makes far less sense for a brokerage account, because liquidity is the entire point of building one.

A brokerage account that’s never touched isn’t disciplined. It’s underutilized.

The skill isn’t avoidance. It’s knowing the difference between a withdrawal that derails you and a withdrawal that’s the entire reason you built the account in the first place.

What “Using It Correctly” Actually Looks Like — Early On

Fund it consistently. Let it grow. Use it for something real: a car, part of a down payment, a gap year, whatever the moment calls for. Then refill it.

The first refill is usually the hardest. It takes longest, feels the least automatic. But each cycle after that moves faster because your income grows, your habits tighten, and the account rebuilds quicker than the last time you drew from it.

In your 30s and early 40s, that refill velocity is the real metric. Not the peak balance you never touch.

Why the Job of This Account Changes as Retirement Gets Closer

Here’s the part most people miss. The brokerage account you’ve been building and refilling for twenty years doesn’t stay a “car and down payment” account forever. Its role shifts.

Your 401(k) and IRA are locked until 59½, penalty aside. Social Security doesn’t start until your 60s at the earliest. If you want any flexibility to slow down, change careers, or retire before the government says you’re allowed to touch your retirement accounts, the brokerage account is what makes that possible.

This is the bridge years problem, and almost nobody plans for it early enough. The five, ten, sometimes fifteen years between “I’m done working the way I used to” and “I can access my retirement accounts penalty-free” have to be funded by something. For most people who’ve done this right, that something is the brokerage account.

That means the mandate changes. In your 30s, the goal is refill speed. In your 50s, approaching that bridge period, the goal becomes size and stability, building the account up deliberately, not just refilling it back to baseline, but growing it past what you’ve drawn from it historically, because it’s about to take on a much bigger job than a car purchase.

The same account. A completely different assignment.

The Untouched Account Isn’t the Win, and Neither Is the Undersized One

There’s a version of this that looks impressive on paper… a brokerage account that only ever goes up, never gets used, sits there as a number you feel good about.

That’s not optionality. That’s just a bigger number you’re afraid to use.

But there’s an opposite mistake too… treating the account purely as a spend-and-refill tool forever, without ever asking whether it’s being built up enough to eventually carry you through the years before your retirement accounts open up. Optionality early in your career looks like using the account well. Optionality later looks like making sure it’s big enough to do the one thing nothing else on your balance sheet can: fund your life on your own schedule, not the government’s.

Playing the Long Game

The brokerage account isn’t a monument. It’s a tool that gets stronger the more competently you use it and eventually, it becomes the thing that buys you your exit on your own terms.

Build it. Use it. Refill it. Then, as retirement gets closer, stop asking how fast you can refill it and start asking how big it needs to be to carry you through the years nothing else can touch.

That’s not a leak in the plan. That’s the plan working exactly as intended.

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Interested in Learning More?

Let’s start with a short, 20-minute conversation to see if there’s an opportunity to improve clarity, structure, or long-term outcomes.

Check out our website.

Upholdings Private Wealth is a registered investment adviser in applicable jurisdictions. Registration does not imply any specific level of skill or training.

This newsletter is provided for informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice. It is not an offer or solicitation to buy or sell any securities or investment strategies.

Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. There is no guarantee that any strategies discussed will achieve desired outcomes.

Information is provided “as is” without warranty as to accuracy or completeness, and opinions expressed are subject to change without notice.

I get some version of this question almost every week. While directionally it makes sense, inherently almost everyone is framing it the wrong way.

A portfolio can't be good or bad in isolation... it can only be right or wrong for the person holding it. Two households can own the exact same 5 funds and one of them is set up perfectly, the other is one bad year from a crisis.

The Short Version

• A portfolio’s quality is relative to the plan behind it, not the holdings inside it

• The order of operations matters: plan first, portfolio second... most people reverse it

• Risk tolerance is a feelings word. Risk capacity is a math word. Confuse them and you’ll build the wrong thing

• Time horizon isn’t “when I retire”... it’s when each dollar in the account gets spent

• A portfolio built before the plan is decoration on a house with no foundation

You’re Grading the Wrong Test

People evaluate portfolios like report cards. Returns, expense ratios, how many funds, whether it beat the S&P.

None of that tells you if it’s good. An 80/20 growth portfolio is excellent for a 34-year-old with a 25-year horizon and a stable income. The same 80/20 portfolio for a 58-year-old funding retirement in 3 years is a mistake wearing a nice suit.

The holdings are identical. The quality is opposite.

The Portfolio Is the Last Decision, Not the First

Most people build the portfolio before they build the plan. They pick funds, argue about international allocation, debate factor tilts... before they’ve answered the only questions that actually matter:

What is this money for? When do I need it? What happens to my life if it drops 30% next March?

A good portfolio is downstream of those answers. It’s not the strategy. It’s the execution of a strategy that was decided somewhere else, on a different piece of paper, with different math.

If you can’t tell me what a specific dollar in your portfolio is for, you don’t have a portfolio. You have a collection of tickers with good intentions.

Risk Tolerance vs. Risk Capacity

Risk tolerance is how you feel about volatility. Risk capacity is what your actual financial situation can absorb without derailing your life.

They’re rarely the same number, and almost everyone builds around the wrong one.

I’ve had clients with high risk tolerance... they’d tell you they can stomach a 40% drawdown, no problem... and low risk capacity, because they’ve got a mortgage reset in 18 months and one income. Building aggressively for that household isn’t brave. It’s a math error that happens to feel good until it doesn’t.

The reverse happens too. Plenty of high earners have enormous risk capacity... stable dual income, long horizon, no near-term liquidity needs... and they sit in cash because it feels safer. That’s not caution. That’s a decade of lost compounding, disguised as prudence.

Time Horizon Is a Portfolio, Not a Person

“I’m 40, so I’m a long-term investor” is the most common miscalibration I see.

You’re not one investor with one time horizon. You’re several. The money earmarked for a home down payment in 3 years has a 3-year horizon. The money for your kid’s college has a 12-year horizon. The retirement account has a 25-year horizon.

A good portfolio treats each of those buckets differently, because they’re funding different futures on different clocks. A single blended allocation across all of it isn’t simplicity. It’s a shortcut that quietly mismatches risk to purpose.

Playing the Long Game

A good portfolio doesn’t announce itself through performance. It announces itself through fit... it matches your time horizon, respects your risk capacity, and funds the specific life you’re actually building, not a generic one.

Stop asking if your portfolio is good. Start asking if it was built for you - the version today and tomorrow.

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Interested in Learning More?

Let’s start with a short, 20-minute conversation to see if there’s an opportunity to improve clarity, structure, or long-term outcomes.

Check out our website.

Upholdings Private Wealth is a registered investment adviser in applicable jurisdictions. Registration does not imply any specific level of skill or training.

This newsletter is provided for informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice. It is not an offer or solicitation to buy or sell any securities or investment strategies.

Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. There is no guarantee that any strategies discussed will achieve desired outcomes.

Information is provided “as is” without warranty as to accuracy or completeness, and opinions expressed are subject to change without notice.

• Capital expenditures still growing, but more slowly. This quarter, there was not a unilateral commitment to increase capex. Microsoft flatlined commitments, and Amazon grew theirs just 10%. The market rewarded this prioritization of revenue growth.

• Anthropic (Claude) and OpenAI (ChatGPT) are going public. S-1 disclosures for Anthropic are expected in September, revealing unit economics for a foundation model company. OpenAI has filed confidentially but is pushing its listing into 2027.

• Long term interest rates up 0.3%. Inflation is headed back up due to high oil prices. Bonds underperformed in the period from this change.

Largest Holdings

• Mid Cap Equities: Up 8% relative to the S&P’s 5% over the last 90 days. Energy and industrial companies are benefiting from elevated capex spending by larger companies.

• Google: Capital expenditures exceeded operating cashflow driving negative free cashflow for the first time since going public in 2004.

• S&P 500: Microsoft was the top contributor, after being the biggest laggard for several quarters.

• Apple: The stock remains at a historically high earnings multiple. Demand in China and Asia remains strong, but is decelerating quarter-over-quarter.

• Constellation: The company’s rate of acquisitions has recovered, but slow performance in its healthcare segment slowed organic growth from 6% to 3%.

• Adyen: Growth in payment volumes has accelerated for four straight quarters since dropping CashApp as a client one year ago.

Valuation Table

Footnotes

• Earnings Yield is 1-year forward earnings per share divided by stock price

• Revenue Growth based on 2027 analyst consensus estimates, S&P from Factset

• 1 Year Return is the total return including dividends

We remain focused on funds and businesses with durable economics and disciplined capital allocation.

Upholdings

Planning and investment decisions from a modern wealth manager.

Outside of that, the formula was simple. Max the 401(k). Live in a modest four-bedroom house. One family vacation a year, always the Outer Banks. Rarely eat out.

That’s it. That was the whole system. And it worked.

Upholdings' Website

The Short Version

• $100K in the late 90s / early 2000s is roughly $180K–$190K in today’s dollars… same household, same math, higher number required

• Since 2000, housing, healthcare, and education have all grown far faster than income

• Replicating my parents’ exact household costs well past $200K today, before a single vacation or dinner out

• Somewhere in that gap, a lot of families started maximizing for the wrong thing

• The goal was never the number. It was the system and knowing what you’re actually optimizing for

Why It Costs More Now? (The Numbers Since 2000)

A few figures that explain the gap, not feelings about it:

• Housing: since 2000, U.S. home values have climbed roughly 162%, while income has grown only about 78% over the same period. Home prices have moved more than twice as fast as the paychecks meant to cover them.

• Health insurance: the average employer-sponsored family premium has gone from about $6,438 in 2000 to over $25,500 today, a roughly 297% increase. Wages over that same stretch grew a fraction of that.

• Private school: tuition at independent schools has consistently outpaced both inflation and median family income since the early 2000s. Elite-metro day schools now average close to $49,000 a year, up another 7%+ in the last year alone.

• Childcare: a full-time daycare slot now averages over $13,000 a year per child, and has been rising faster than overall inflation every year this decade.

None of that moved because people got worse at managing money. The fixed costs in a family’s budget detached from wage growth right around the time my dad was building his system, and never reconnected. That’s the environment, not a personal failing.

What Replicating That Exact Household Costs Today

Run my parents’ household through today’s numbers, same shape, same choices.

Four kids in private school at the national average is roughly $60,000 a year in tuition alone, before the elite-metro version of that number, which runs double or triple. Add a modest four-bedroom home at today’s price-to-income ratio, one working parent’s full-time income, health coverage for a family of six, and a max 401(k) contribution, and you’re well past $200,000 in household income just to run the exact system my dad ran on $100,000 back then.

That’s not a lifestyle upgrade. That’s standing still.

The Part That Gets Missed

My parents didn’t have a financial plan in the way I’d build one for a client. They had a system: one number to hit every month, automated savings, a hard ceiling on discretionary spending, and a second income stream, the cleaning job, earmarked for exactly one thing they weren’t willing to compromise on.

Most households today have more income and less of that clarity. More is coming in, more is going out, and there’s no equivalent of “this is the one thing we work nights for.”

What We’re Actually Maximizing For Instead

Here’s the part that isn’t about inflation at all.

A lot of households earning well past that $200,000-equivalent still don’t feel like my parents felt back then. Not because the math doesn’t work. Because the money isn’t going toward the same thing.

My parents optimized for one household objective… the kids, the school, the stability, full stop. Almost everything else was cut without debate. Today, a lot of the marginal dollar goes somewhere else first: the newer car, the nicer vacation, the bigger house than the family actually needs, the version of “we’ve made it” that’s visible to other people.

None of that is inherently wrong. But it’s a different objective function, and most people never consciously choose it. They just drift into it, one upgrade at a time, and wonder later why more income didn’t produce more of the calm my parents built on a fraction of it.

My parents weren’t choosing between private school and a nicer car. They’d already decided which one mattered. That decision, made once and rarely revisited, is what let everything else be simple.

The Questions Worth Asking Now

If you want their result these are the questions that actually get you there:

• What does our exact life cost today, priced out line by line, not estimated from a feeling?

• Which one or two things are we willing to work harder for, and which everything-else are we willing to cut without debate?

• Is our spending funding stability for our family, or funding how our family looks to other people?

• Are we automating the number that matters, or hoping what’s left over at the end of the month adds up to enough?

• Are we chasing our parents’ late-90s number, or have we actually calculated and chosen our own?

Playing the Long Game

My parents didn’t have more money. They had more clarity. One income, one modest house, one non-negotiable they worked nights for, and a 401(k) they never touched. Everything else was optional, and they knew it.

You probably can’t run their exact playbook at their exact dollar figure — the math doesn’t allow it anymore. But you can run their actual discipline: know your real number, decide what it’s actually for, and stop letting the car or the vacation or the house quietly answer that question for you.

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Let’s start with a short, 20-minute conversation to see if there’s an opportunity to improve clarity, structure, or long-term outcomes.

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Upholdings Private Wealth is a registered investment adviser in applicable jurisdictions. Registration does not imply any specific level of skill or training.

This newsletter is provided for informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice. It is not an offer or solicitation to buy or sell any securities or investment strategies.

Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. There is no guarantee that any strategies discussed will achieve desired outcomes.

Information is provided “as is” without warranty as to accuracy or completeness, and opinions expressed are subject to change without notice.

That gap is where early retirement actually gets decided.

The Short Version

• Early retirement isn’t a savings problem. It’s an access problem.

• Most of your wealth is locked in accounts built for 65, not 50.

• Five real tools bridge the gap: brokerage, Rule of 55, 72(t), deferred comp, Roth conversions.

• Each one fits a different situation. None of them fit everyone.

• The real skill isn’t picking one. It’s sequencing all five correctly.

1) The Brokerage Bridge

This is the default answer, and it should be.

A taxable brokerage account has no age restriction, no penalty, no waiting period, no IRS form to file. You built it with after-tax dollars, so you can spend it whenever you want, however you want, with zero explanation required.

The math starts with your gap years... the stretch between when you plan to stop working and when your retirement accounts unlock without penalty. If you’re retiring at 50, that’s nine and a half years until 59½. Multiply your annual expenses by that number, adjust for a conservative return assumption, and that’s roughly the brokerage balance you’re building toward.

This is also where most early-retirement plans quietly fail. People spend their 30s and 40s maxing out the 401(k) because that’s what every generic finance article tells them to do, and they arrive at 48 with $2M in retirement accounts and $80K in the brokerage account that’s supposed to carry them for a decade. The 401(k) balance doesn’t matter if you can’t touch it yet.

If early retirement is the actual goal, the brokerage account isn’t the leftover. It’s the priority.

2) Rule of 55

If you separate from your employer in or after the calendar year you turn 55, you can withdraw penalty-free from that employer’s 401(k), not an IRA, not an old 401(k), that specific plan.

Two details trip people up constantly. First, it only applies to the plan tied to the job you just left. If you’ve got three old 401(k)s scattered across previous employers, none of them qualify. The fix, if you’re planning around this rule, is to roll those old plans into your current employer’s 401(k) before you separate so everything sits under the one plan that qualifies.

Second, and this gets missed almost universally: if you’re a qualified public safety employee, police officers, firefighters, EMS personnel, the age threshold drops to 50. That’s a genuine five-year head start built into the tax code specifically for this group, and most public servants I talk to have never heard of it. If this applies to you, it changes the entire shape of your bridge-planning conversation.

3) 72(t)

This is the tool everyone’s heard of and the one most people should treat as a last resort, not a first plan.

72(t) allows Substantially Equal Periodic Payments from an IRA or 401(k) before 59½ without the 10% early withdrawal penalty. It sounds like a clean unlock. The mechanics are where it gets unforgiving.

Once you start, you’re required to continue the same payment schedule for five years or until you reach 59½… whichever is longer. There’s no pausing, no adjusting for a bad market year, no “I don’t need as much this year.” Modify or break the schedule early, and the IRS doesn’t just penalize you going forward, it retroactively applies the 10% penalty to every distribution you’ve already taken, plus interest.

There are also three different calculation methods, the RMD method, fixed amortization, and fixed annuitization, and they produce meaningfully different payment amounts from the same account balance. Fixed amortization and annuitization let you pull more each year; the RMD method is the most conservative and the only one that adjusts annually with the account balance. You’re allowed one one-time switch to the RMD method if your original schedule turns out to be too aggressive, but you can’t switch back, and you can’t switch to a more generous method later.

Treat 72(t) as the tool you reach for when the brokerage bridge and Rule of 55 don’t fully cover the gap but not as the centerpiece of the plan.

4) Deferred Comp

For executives with non-qualified deferred compensation plans, this is one of the most underused levers in early-retirement planning, mostly because the decision gets made years before it matters and then forgotten.

Distribution timing on NQDC plans is elected in advance, often years before you actually separate from the company. Structured correctly, that election can pay out starting well before 59½ with no early withdrawal penalty at all, since NQDC isn’t subject to the same IRS penalty rules as qualified retirement accounts. You just owe ordinary income tax on it when it lands, same as a paycheck.

The catch is timing. These elections typically lock in years ahead of the actual distribution, so if early retirement is the goal, this has to be part of the conversation at the election window and not something you think about after you’ve already decided to leave.

5) Roth Conversion Ladder

If a meaningful share of your wealth sits in pre-tax accounts, this is the tool that gives you the most control.

The mechanism: convert a chunk of traditional IRA or 401(k) money to Roth, either in the years leading up to retirement or during the early retirement years themselves when your income and tax bracket is naturally lower. Each conversion has its own five-year seasoning clock, and once that clock runs out, the converted principal comes out tax-free and penalty-free, regardless of your age.

The advantage over 72(t) is flexibility. You decide how much to convert each year, based on what your income and tax bracket look like at the time. There’s no locked-in schedule, no five-year commitment to a fixed number. If markets have a bad year, you convert less. If you’re in an unusually low-income year, you convert more and bank the tax savings.

This is also why the first few years of early retirement often carry more tax-planning weight than the twenty years of accumulation before them. Low-income gap years are the best window most people will ever get to move money into Roth cheaply.

Playing the Long Game

None of these five tools is the strategy on its own. The strategy is the sequence… which account you draw from first, which one you convert, which one you leave compounding, and which one you hold in reserve for the year the market doesn’t cooperate.

Retiring early isn’t a number. It’s a bridge you build years before you need to cross it.

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Let’s start with a short, 20-minute conversation to see if there’s an opportunity to improve clarity, structure, or long-term outcomes.

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Upholdings Private Wealth is a registered investment adviser in applicable jurisdictions. Registration does not imply any specific level of skill or training.

This newsletter is provided for informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice. It is not an offer or solicitation to buy or sell any securities or investment strategies.

Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. There is no guarantee that any strategies discussed will achieve desired outcomes.

Information is provided “as is” without warranty as to accuracy or completeness, and opinions expressed are subject to change without notice.

Part of that comp package is equity in the company you work for, vesting quarterly. Modest at first, so you don’t think much about them... you let them vest, you let them sit.

Five years go by. You blink, and those “modest” vests have quietly become 70-90% of your entire balance sheet.

You know you’re overconcentrated. You’ve known for a while. Every financial rule you’ve ever heard says to diversify. And you haven’t done anything.

Life is busy, you have no idea where to start, and the tax bill makes you sick to your stomach.

That’s the wrong tradeoff to be making because it doesn’t have to be an all or nothing scenario. There are at least five ways to reduce concentration without writing the IRS a number that makes you sick.

The Short Version

• The instinct to freeze comes from thinking diversification means one big taxable sale when it doesn’t

• Exchange funds let you swap concentrated stock for a diversified basket, tax-deferred

• A structured 10b5-1 plan turns “I should sell some” into an automated, unemotional process

• Direct indexing lets you harvest losses elsewhere in the portfolio to offset gains from the position you’re unwinding

• Charitable vehicles (DAFs, CRTs) can offload appreciated stock without a capital gains hit at all

• Options collars protect against downside while you build a real plan… without selling a share

1. Exchange Funds

An exchange fund pools your concentrated stock together with shares contributed by other investors holding different concentrated positions. In return, you get a proportional interest in the diversified pool. Because it’s structured as a contribution rather than a sale, no capital gains tax triggers when you go in.

Pros: Immediate diversification with zero tax event at contribution. You go from one stock to effectively hundreds overnight. Your original low basis carries over, but you’re no longer carrying single-stock risk while you wait to eventually recognize the gain.

Cons: A mandatory lockup of typically 7 years during which your capital is illiquid. Minimums are steep, usually $500K-$1M+, and funds are only open to accredited investors. You also don’t control what’s in the pool; you’re diversified, but into whatever mix the fund holds, not a portfolio built around your goals.

Best for: Someone with a large, low-basis position who doesn’t need the capital for 7+ years and values immediate risk reduction over control or liquidity.

2. A Real 10b5-1 Plan

Most people think of 10b5-1 plans as a compliance requirement for insiders. They’re also the single best behavioral tool available for reducing a position you’ve been unable to touch.

You set the rules once, sell X shares per month, or when price crosses a threshold, and the plan executes on autopilot. No daily decision, no watching the ticker, no talking yourself out of it because “it might go higher next week.”

Pros: Removes emotion and timing anxiety entirely. Provides insider-trading legal protection if that applies to you. Spreads the tax bill across multiple years instead of one lump sum, which can keep you out of the highest marginal brackets and avoid a single catastrophic tax year.

Cons: You give up the ability to react - if the stock drops sharply mid-plan, you’re still selling on schedule, gains or losses. Doesn’t eliminate the tax, just spreads it. Requires real discipline to set up correctly and stick with; poorly designed plans (wrong price bands, wrong cadence) can undersell in a rising stock or oversell in a falling one.

Best for: Anyone who’s proven to themselves they won’t sell on their own. If your vests have been piling up for years and you haven’t touched them, that’s the diagnosis.

3. Direct Indexing With Tax-Loss Harvesting

As you unwind the concentrated position, you need somewhere for that capital to go. Direct indexing means you own the individual stocks that make up an index, say the S&P 500, rather than a fund that tracks it. That structure creates ongoing opportunities to harvest losses across the portfolio and use them to directly offset the gains you’re realizing as you sell down the concentrated stock.

Pros: Can materially reduce the net tax bill on the unwind, not just once but every year the position is being sold down. Gives you a customized, diversified portfolio rather than a generic fund. Losses harvested can also offset other capital gains elsewhere in your life like a business sale, real estate, etc.

Cons: Only works if there’s market volatility to harvest losses from (a smoothly rising market gives you fewer opportunities). Requires more sophisticated management (and usually a higher account minimum) than a simple index fund. It reduces the tax bill; it doesn’t make it disappear.

Best for: Pairing directly with the 10b5-1 unwind… this is the mechanism that makes the years-long sale meaningfully cheaper, not a standalone strategy.

4. Charitable Vehicles (DAFs and CRTs)

If giving is already part of your plan, or even if it’s just something you’d consider, a donor-advised fund lets you contribute appreciated stock directly. You get a deduction on the full fair market value, and neither you nor the DAF pays capital gains tax when it’s sold inside the fund.

A charitable remainder trust goes further: contribute the stock, the trust sells it tax-free, and you receive an income stream from the proceeds for a set term or your lifetime, with the remainder eventually going to charity.

Pros: DAFs are simple, fast to set up, and give you an immediate deduction plus full tax-free diversification on whatever you contribute. CRTs let you turn a concentrated, non-income-producing stock into a diversified income stream, reducing risk and generating cash flow simultaneously, with no capital gains hit.

Cons: With a DAF, the money is no longer yours as it must eventually go to charity, so this only works for capital you were planning to give away regardless. A CRT is irrevocable and has real setup complexity and cost (legal drafting, trustee, ongoing administration), and the remainder isn’t coming back to your family.

Best for: The portion of a concentrated position you already intended to be charitable with — this shouldn’t be your only tool, but it’s the most efficient one for that slice.

5. Options Collars

If you’re not ready to sell, a collar lets you buy a put (downside protection) and finance it by selling a call (capping your upside), without selling a single share of stock.

Pros: Protects against a significant drop while you figure out the rest of the plan. No sale, no tax event, no basis change. Can be structured at little to no upfront cost by matching the put and call premiums.

Cons: Caps your upside so if the stock takes off, you don’t fully participate. It’s a bridge, not a destination; at some point the collar expires and the underlying concentration is still there. Also requires enough share count and liquidity in the options market for the specific stock, which isn’t available for every name.

Best for: Buying time for someone inside a blackout period or genuinely undecided and needing 6-12 months to build the real strategy without being exposed to a crash in the meantime.

Playing the Long Game

Nobody plans to end up 70-90% concentrated in one stock. It happens quietly, one vest at a time, while you’re busy with a new house, a new kid, a career that’s finally taking off.

The tax bill isn’t actually the obstacle. The false choice between “sell it all and pay up” or “do nothing and stay exposed” is the obstacle.

Every one of these tools exists because someone decided concentration risk was solvable without an all-or-nothing decision. The plan isn’t to eliminate the tax. It’s to stop letting the tax be the reason you never start.

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Upholdings Private Wealth is a registered investment adviser in applicable jurisdictions. Registration does not imply any specific level of skill or training.

This newsletter is provided for informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice. It is not an offer or solicitation to buy or sell any securities or investment strategies.

Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. There is no guarantee that any strategies discussed will achieve desired outcomes.

Information is provided “as is” without warranty as to accuracy or completeness, and opinions expressed are subject to change without notice.

Almost all of it tied back to self-employment tax. We spent time on when, why, and how an S Corp election actually made sense for him plus the implications.

The Short Version

• S Corp elections save on self-employment tax by splitting income into salary and distributions

• The savings don’t kick in until net income clears the cost of running the structure… usually somewhere around $80K

• That split is a decision you make once and then live with for years - make sure you revisit it

• The election has a real deadline and real mechanics, not just a form you check once

• On $450K of net income, the difference between structures is real money but only if the salary number is set right

The Math That Sells It

An LLC taxed as a sole proprietorship pays self-employment tax at 15.3% on all net income, with no ceiling on the Medicare piece. An S Corp lets you split income into a reasonable salary, subject to payroll tax, and distributions, which aren’t.

On $450K of net business income, a straight LLC pays roughly $35,400 in self-employment tax. Elect S Corp status, pay yourself a reasonable salary of $180K, take the rest as distributions, and the combined payroll tax comes to roughly $27,100…about $8,300 back in your pocket before the added costs of running payroll.

That's a real number but it’s also where most people stop thinking about it.

The savings aren't automatic and they show up once net income clears the cost of the structure itself. Running payroll and filing a separate return typically runs $2,000–$4,000 a year. Below roughly $80K in net income, that overhead eats most of the tax savings and you're doing extra work for very little. Above it, the math starts working clearly in your favor and keeps improving as income grows.

What the Pitch Leaves Out

The S Corp isn’t free savings, it’s a trade.

You pick up payroll administration, a separate business return, and a “reasonable salary” that has to hold up.

"Reasonable salary" is what you'd have to pay a stranger to do exactly what you. The IRS has no formula for it, just a facts-and-circumstances test based on comparable market pay for your role, industry, and hours; get caught understating it and you owe back payroll tax plus penalties, not just an amended return. And it's not a one-time number… the salary that was defensible at $150K in revenue can look understated at $600K, because the role and the market rate for it have both changed.

The salary number does more than avoid an audit flag, too. Your retirement contribution room, solo 401(k), a defined benefit plan further along, even your QBI deduction, runs off that same figure. Set it low to maximize today’s tax savings, and you may be quietly capping how much you can put away every year. Set it too high, and you’ve given back the savings you elected S Corp status to capture in the first place.

The Paperwork Nobody Mentions

The election isn’t optional paperwork you file once and forget… it’s a real deadline. You file Form 2553 within two months and fifteen days of the start of the tax year you want it to apply to. Miss that window and you’re waiting until next year.

Once elected, you’re required to run actual payroll, a W-2, withholding, quarterly filings, not just cutting yourself a check when it’s convenient. You also pick up a separate business return on top of your personal one. The election changes how you operate day-to-day, not just how you’re taxed.

So When Does It Make Sense

Boil it down and there are really three questions worth asking, in order.

1. Is net income clearing $80K after the S Corp costs? If not, you’re doing extra paperwork to save less than you’re spending on the paperwork.

2. Can you defend the salary number with real market comp for your role, not just a number that felt safe? If you can’t point to what a stranger doing your job would actually earn, you’re not ready to set one.

3. And has anyone actually looked at that number since you set it? Income changes, roles change, comps change… most owners never revisit the split, which means the number quietly stops fitting the business it was built for.

If you can answer all three cleanly, the election is doing its job. If you’re guessing on any of them, that’s the conversation to have before the next tax season, not after.

Playing the Long Game

The S Corp election was never a one-time form to check off, it’s a structure that has to be set up right, timed right, and revisited as the business changes. Most owners get the “why” and skip the “when” and the “how,” and that’s exactly where the savings quietly disappear.

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Upholdings Private Wealth is a registered investment adviser in applicable jurisdictions. Registration does not imply any specific level of skill or training.

This newsletter is provided for informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice. It is not an offer or solicitation to buy or sell any securities or investment strategies.

Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. There is no guarantee that any strategies discussed will achieve desired outcomes.

Information is provided “as is” without warranty as to accuracy or completeness, and opinions expressed are subject to change without notice.

It was a reasonable instinct. It was also the wrong conclusion.

The mistake he was making, and it’s one I see constantly, is thinking of ESPP as a stock pick. It isn’t. It’s a mechanism. And once you separate those two things, the math makes the decision for you.

The Short Version

• ESPP lets you buy company stock at a discount, typically 15%, and often with a look back provision that makes the real return 20–30%+ annualized

• Most employees either skip it, under-contribute, or hold too long after purchase

• The right move for most people: max enrollment, sell immediately, repeat every cycle

• Selling immediately isn’t pessimism about your company… it’s how you capture the return the mechanism was designed to give you

• This isn’t a stock decision… it’s a cash flow decision

What You’re Actually Being Offered

An Employee Stock Purchase Plan (ESPP) lets you buy company stock at a discount through payroll deductions over a 6-month offering period.

Most plans include a look back provision: at the end of the period, you buy at 15% off whichever price is lower: the opening price or the closing price. That’s the detail most people miss. It means the market working against you still doesn’t eliminate the return.

The discount is the return. The stock is just the delivery mechanism.

The Math, Run Cleanly

Say your stock opens the period at $100 and closes at $110. With a look back, you buy at $85, 15% off the lower starting price. Let’s remember, the actual market value is $110… that’s an immediate 29% return before your company does anything exceptional.

Now run the flat scenario. Stock stays at $100. You buy at $85, sell at $100. That’s still an 18% gain… on a 6-month cycle. Annualized, you’re looking at roughly 32%.

That is not a rounding error. That is a structured return sitting in your benefits portal waiting to be collected.

How the IRS Sees It

When you sell ESPP shares, the tax treatment depends on one thing: how long you held them after purchase.

Hold for less than two years from the offering date and one year from the purchase date and you trigger a disqualifying disposition. The discount you received is taxed as ordinary income. Any additional gain above that is taxed as a short-term capital gain.

Hold longer and you get a qualifying disposition. The tax treatment is more favorable on paper because part of the gain shifts to long-term capital gains rates.

Why the “Better” Tax Treatment Isn’t Actually Better

The qualifying disposition sounds like the obvious move. Lower tax rate. More favorable treatment. Done.

Except the math doesn’t work out that way for most high earners.

To hit qualifying disposition status you have to hold the shares for at least two years from the offering date. That means you’re sitting in a potentially concentrated single-stock position for up to 18 months after purchase. You’re taking on real equity risk to save a few percentage points on taxes.

Here’s what that actually looks like. Say you’re in the 32% bracket. Your ESPP discount on $25,000 worth of stock is roughly $3,750. The tax difference between ordinary income and long-term capital gains on that amount is around $660.

You’re holding concentrated employer stock for 18 months to save $660.

That’s not a tax strategy.

The Three Ways People Get This Wrong

1. Non-enrollment. Some employees skip it entirely… too complicated, never got around to it. This is the most expensive version of financial inertia I see in high-earning households.

2. Under-contribution. The IRS caps ESPP purchases at $25,000 in stock value per year. Most plans allow 10–15% of salary in payroll deductions. Most employees contribute 2–3% and consider themselves participants.

3. Holding too long. You buy at a discount, the shares hit your account, and because you feel good about the company you hold. Now you’ve converted a near-certain gain into a concentrated stock position layered on top of your salary, bonus, and RSUs. All tied to the same employer.

The Play: Max and Sell

For most people in most situations the framework is simple. Contribute the maximum your plan allows. At the end of each offering period, sell the shares immediately. Deposit the proceeds. Repeat.

You’re not making a statement about your company. You’re collecting the return the plan was structured to deliver and then removing the single-stock risk before it compounds into a problem.

The sale triggers a disqualifying disposition, meaning the gain on the discount is taxed as ordinary income. That’s fine. You still came out well ahead, and you no longer own the downside.

Back to our client. He enrolled at the maximum, committed to selling at each period end, and stopped thinking of it as an investment decision. It became a payroll optimization.

Playing the Long Game

The best financial advantages aren’t usually complicated. They’re structural. They reward the people willing to run the math once, make a decision, and execute it without sentiment. ESPP is one of the cleaner examples… a designed return, available every six months, that most high earners are either ignoring or leaving half-collected. The mechanism does the work. You just have to use it.

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Upholdings Private Wealth is a registered investment adviser in applicable jurisdictions. Registration does not imply any specific level of skill or training.

This newsletter is provided for informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice. It is not an offer or solicitation to buy or sell any securities or investment strategies.

Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. There is no guarantee that any strategies discussed will achieve desired outcomes.

Information is provided “as is” without warranty as to accuracy or completeness, and opinions expressed are subject to change without notice.

It's the right question and the honest answer is that most people already have one of the two; they just don't know whether it's the right one for where they actually are now.

A will is where almost everyone starts. The problem isn’t the will. It’s that life keeps moving… income grows, assets accumulate, families get more complicated. By the time most people sit down with us, they’ve outgrown their estate plan without realizing it.

That’s the gap we’re talking about.

The Short Version

• A will and a revocable living trust do different jobs.

• Wills go through probate: public, slow, and court-supervised; trusts don’t.

• TOD and POD designations help but they don’t cover everything, and most people don’t realize what falls through.

• At a certain net worth and family complexity, the trust isn’t optional, it’s the upgrade.

• The right trigger isn’t age; it’s life events (see below)

What a will vs. trust do?

A will tells the court what you want to happen after you die. That’s it.

The court then runs a process called probate which includes validation, creditor notification, asset distribution. This whole process can take 9 to 24 months, cost 2–5% of your gross estate depending on state, and become public record. Anyone can look it up.

A will also does nothing if you’re incapacitated. If you’re in the ICU and can’t manage your own affairs, a will is a useless document.

A trust is a legal container you create while you’re alive. You transfer assets into it. You remain in control as the trustee. When you die, or if you’re incapacitated, a successor trustee you named takes over immediately.

No court. No public record. No waiting.

The trust doesn’t replace your will (you still need a “pour-over will” to catch anything that didn’t get transferred into the trust) but it changes what probate has to touch.

What do beneficiary designations cover?

Transfer-on-death and payable-on-death designations, TOD and POD, are useful tools. They let certain accounts pass directly to a named beneficiary without probate. Retirement accounts, brokerage accounts, life insurance can all bypass the court process when beneficiaries are properly designated.

The issue is that these don’t cover everything.

Not every state allows TOD deeds for real estate. Your LLC interest, S-corp shares, and personal property generally have no equivalent mechanism. And even where TOD deeds are available, they don’t handle incapacity.

There’s also a coordination problem. When assets pass through four different mechanisms (will, trust, TOD, POD) nobody’s checking whether they add up to a coherent plan. The gaps compound quietly over time, and they usually only surface at the worst possible moment.

Why this matters more as complexity grows

At $200K in assets and one bank account, the will-only plan is probably fine. Probate is a nuisance, not a catastrophe.

At $1.2M with a house, a brokerage account, RSUs vesting across the next three years, and two kids under ten, the calculus shifts. Add a second property in another state and you’re looking at ancillary probate: two court processes, two sets of fees, two timelines. Your family is waiting, potentially for years, on assets they need access to now.

The trust solves this. One document. One successor trustee. Assets move.

Time to switch

The question we always come back to with clients isn’t “how old are you?” It’s “has your life outpaced your current documents?”

Most people we sit down with have already cleared two or three of these boxes without realizing their plan hasn't kept up.

The most common version we see

A couple sets up a will in their early 30s. Thoughtful, technically valid, signed in front of a notary. They feel good about it.

Eight years later they’re pushing $2M, they own a place at the beach, and they have two kids who are still minors. The will hasn’t been touched. The trust they talked about never got scheduled. The beneficiary designations on the 401(k) still list a family member and not the spouse.

The will isn’t wrong. It’s just not enough anymore. And the gap between what the document says and what their life actually looks like is where the expensive mistakes live.

Playing the Long Game

A will is where you start. A trust is where you end up when you’ve built something worth protecting. TOD and POD designations are useful tools but they’re not a plan. The goal isn’t the most sophisticated estate document. It’s making sure what you have actually matches the life you’re living now.

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Let’s start with a short, 20-minute conversation to see if there’s an opportunity to improve clarity, structure, or long-term outcomes.

Upholdings Private Wealth is a registered investment adviser in applicable jurisdictions. Registration does not imply any specific level of skill or training.

This newsletter is provided for informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice. It is not an offer or solicitation to buy or sell any securities or investment strategies.

Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. There is no guarantee that any strategies discussed will achieve desired outcomes.

Information is provided “as is” without warranty as to accuracy or completeness, and opinions expressed are subject to change without notice.

Market performance in the 2nd quarter was the strongest in years. Results:

Component shortages in memory and processing drove the most extreme market movements: SanDisk (+191%), Micron (+184%), and Intel (+165%). On any given day, market prices have been swinging in support of, or against, the current AI infrastructure buildout. Dispersion in share prices is higher than normal and we have been trimming the most richly valued securities from client accounts where possible.

Give It Away

When the market’s doing well - high multiples and stable earnings - we recommend investing in your own quality of life. Refurbish a bathroom, take a vacation, or most tax efficient of all, give a highly appreciated stock away to your favorite charity.

If you have yet to choose a charity, donor-advised funds let you donate today, capture the deduction, diversify the position tax-free, and select recipients years later. There are tax efficiencies to setting aside years of charitable giving in a single lump sum.

A Software Story

Siebel Systems dominated customer-relationship-management (CRM) software in the 1990s. Installing Siebel in 1997 meant CD-ROMs and onsite workers to configure Windows-powered machines. Salesforce’s browser-first model displaced that distribution entirely. Today, when one thinks of CRM, Salesforce is the name that comes to mind.

Since ChatGPT launched in November 2022, artificial intelligence has written meaningful amounts of code. Google and Microsoft report more than 25% of new code is written by AI. Investors, fearing every software vendor is the next Siebel, have heavily discounted the category. Below are the changes in EBITDA multiples since ChatGPT’s launch date:

A once beloved category now trades below the S&P 500’s own 14.6x EBITDA multiple. Adyen - a deeply integrated modern payments stack - and Constellation - a conglomerate of multi-decade vertical market solutions - are our two holdings. While we see unbridled risk taking in many AI investments, discounted software offers a comparatively attractive risk-reward.

Social Impact

Expanding access to education is the best tool we’re aware of to fight against the perpetual widening of economic inequality. This quarter, we again supported Khan Academy.

Roman & Robert

Disclaimer: this letter is for educational purposes only. It is not a recommendation to invest in any particular security or strategy, since anything mentioned herein may be unsuitable for some investors. Upholdings cannot guarantee investment results. All investing involves risk, including the complete loss of invested principal. Results above include assets under Upholdings’ discretion net of fees across our private wealth offering. Multiples are calculated against forward estimates and sourced via Koyfin.

In theory, it’s perfect advice. Clean, true, timeless.

The truth is that the the higher the income, the harder it gets. Income doesn’t magically change bad habits, it only further enhances them. That can be catastrophic.

The Short Version

• “Live below your means, invest the difference” is still the best financial advice ever written

• At high income, it’s structurally harder to follow because of complexity

• The implications of not following it hit differently when your lifestyle floor is $20K/month

• Most high earners are one bad year away from a problem they didn’t see coming

• The formula doesn’t change, the cost of ignoring it scales with your income

The Lifestyle Floor Problem

At $80K a year, living below your means is a math problem.

At $480K, it’s a structural problem.

The lifestyle that feels reasonable at your income, the mortgage, the private school, the two car payments, the childcare, the travel, runs $18-$22k a month before you’ve invested a dollar. That’s not reckless. That’s just what your life costs.

The problem is that floor doesn’t flex.

If income drops due to a job loss, a bad bonus year, an equity comp cliff… the expenses don’t drop with it. You’ve built a lifestyle that requires the machine to keep running at full speed. Every month it doesn’t, you’re drawing from your asset pool.

High Income Doesn’t Solve the Problem. It Upgrades It.

There’s a version of “living below your means” that high earners tell themselves they’re doing.

They’re maxing the 401(k). Contributing to the 529. Paying down the mortgage.

That is the bare minimum.

What they often aren’t doing is building real liquidity. Taxable brokerage accounts, actual cash reserves, assets that aren’t locked behind a retirement age or a housing market or a vesting schedule.

The illusion is that income is the buffer but at high income, the lifestyle scales so fast that liquid assets rarely keep pace. And that income… it can be gone at any moment.

What Not Following It Actually Costs

This is where it gets uncomfortable.

At $80K income, failing to live below your means means slow progress. A tighter retirement. Less optionality. Painful but recoverable.

At $480K, the math is different and so is the damage.

A household spending $22K a month with $200K in liquid assets has roughly nine months of runway. If income stops, layoff, a health event, a business that turns, nine months isn’t a cushion. It’s a countdown.

The RSUs that were supposed to be the safety net are locked. The home equity isn’t liquid. The 401(k) comes with a penalty. The lifestyle that felt comfortable at full income becomes a trap the moment income interrupts.

High earners don’t go broke slowly. They go broke fast because the fixed costs are high, the liquid reserves are thin, and the whole structure assumed the income would always be there.

The Formula Still Works. You Just Have to Actually Follow It.

The advice isn’t wrong. The execution requires more infrastructure than a tweet can carry.

At your income level, “live below your means” isn’t about spending less on coffee. It’s about building a household that can survive a bad year without liquidating assets at the wrong time. It’s about knowing your real number, what the machine actually costs, and making sure the gap between income and that number is going somewhere intentional.

The stakes aren’t abstract. They’re denominated in months of runway, years of compounding, and the difference between optionality and obligation.

Playing the Long Game

The formula hasn’t changed. What’s changed is what it costs you not to follow it. At high income, the upside of getting this right is significant. The downside of getting it wrong is just as significant and it compounds quietly until it doesn’t.

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Upholdings Private Wealth is a registered investment adviser in applicable jurisdictions. Registration does not imply any specific level of skill or training.

This newsletter is provided for informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice. It is not an offer or solicitation to buy or sell any securities or investment strategies.

Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. There is no guarantee that any strategies discussed will achieve desired outcomes.

Information is provided “as is” without warranty as to accuracy or completeness, and opinions expressed are subject to change without notice.

I hear some version of this every month. A client looks at a bonus deposit, a commission check, an RSU vest, sees a number different than expected, and assumes the government just took 40 cents on every dollar.

This common misunderstanding leads to bad planning, wrong assumptions about what you owe, and a tax bill in April that feels like it came out of nowhere.

Here’s what’s actually happening:

The Short Version

• Withholding is a deposit, not a final tax bill

• Bonuses, commissions, and RSU vests are ordinary income stacking on top of your salary in the same bracket system

• The “they took 40%” complaint usually combines federal withholding, state tax, and FICA into one misleading number

• The standard 22% withholding is too low for most high earners but the 37% rate can be too high

• Either way, the real math happens once per year when all income is assembled

What He’s Actually Seeing

His employer withheld federal tax on that commission probably at the standard 22% flat rate the IRS requires on supplemental income. Then the state took its cut. Then FICA hit on top.

Stack those together and the check looks 35-40% lighter. So he rounds up, calls it 40%, and assumes that’s his tax rate on commissions.

It’s not. That’s three different withholdings lumped into one complaint.

This is the part almost everyone misses.

Withholding is not your tax bill. It’s an estimated payment; a deposit toward what you’ll actually owe when your return is filed.

Your employer doesn’t know your full financial picture. They don’t know your spouse’s income, your side gigs, your capital gains, or your deductions. They just apply a formula to your paycheck and send it to the IRS.

The real tax bill gets calculated once per year when all income is assembled

How the Tax System Actually Works

The U.S. tax system is progressive. Income fills up brackets from the bottom, one layer at a time.

The first dollars you earn are taxed at 10%. Then 12%. Then 22%, 24%, 32%, 35%, and 37% at the top.

Your commission doesn’t get its own rate. It doesn’t get special treatment. It’s ordinary income… same as your salary, your bonus, your RSU vests.

It just lands on top of the stack.

So if your base salary already fills brackets up to $250K, a $60K commission lands in the 35% bracket. Not 22%. Not 40%. The withholding was a rough estimate. The bracket is where the actual math lives.

The Gap Goes Both Directions

Here’s what makes this tricky. The withholding isn’t just wrong but it’s wrong in different directions depending on where you sit.

If you’re a high earner with a $300K base and a $80K bonus, your employer withheld that bonus at 22%. But your marginal rate is 35%. You’re under-withheld. That gap shows up as a bill in April.

Now flip it. If you’re income gets withheld at 37% but after deductions, charitable giving, and other planning your effective rate on that income comes in lower… you’re over-withheld. That gap shows up as a refund.

Neither outcome means you were taxed unfairly. It means the withholding formula doesn’t know your life. It’s a blunt instrument applied to a precise situation.

The person celebrating a big refund in April? They gave the government an interest-free loan all year. The person shocked by a big bill? They had the use of that money all year but didn’t plan for the settlement.

Same system. Same math. Different side of the gap.

The Whole Picture Matters

The real issue isn’t any single paycheck. It’s that most people evaluate their tax situation one check at a time instead of looking at the full year.

Salary, bonus, commissions, RSU vests, investment income, your spouse’s income… it all flows into one return. It all stacks into the same brackets.

Until you’ve mapped total household income against the full bracket structure, you’re guessing and guessing is how you end up on the wrong side of the gap every April.

Playing the Long Game

Pull up your most recent bonus or commission pay stub. Find the federal withholding line… it’s probably 22%.

Now pull up last year’s tax return. Find your marginal federal rate on the 1040.

The difference between those two numbers, multiplied by every supplemental dollar you earn this year is your gap. That’s the April bill or the interest-free loan, depending on which side you’re on.

If the gap is more than $5K, you have a planning decision to make before December. Not April.

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Upholdings Private Wealth is a registered investment adviser in applicable jurisdictions. Registration does not imply any specific level of skill or training.

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