Matt LeBel Security & personal finance for startup employees

Your Outdated Personal Finance Stack Is Costing You Thousands 💸

The Personal Finance Stack

Your personal finance stack is the collection of tools, banking partners, and investing services you’ve chosen to manage your assets and financial life.

A sample personal finance stack might look something like this:

  • Checking and Savings Accounts: Bank of America
  • Brokerage/Investing Accounts: Merrill Lynch
  • Retirement Accounts: Fidelity
  • Credit Cards: Citi and American Express
  • Asset Tracking and Budget Planning: Mint
  • Identity Protection and Credit Score Monitoring: LifeLock
  • Financial Advisory Services: Merrill Lynch

Nothing too crazy, right? Not so fast.

The average outdated personal finance stack can cost over $2,577/year in opportunity cost and unnecessary fees.

Assuming 5% annual returns, that amounts to roughly $55,500 over 15 years.

Image of fees and opportunity cost compounding annually for 15 years

In this post, I’ll break down the above assertion and examine the dangers associated with the ongoing use of an outdated personal finance stack. In closing, I’ll propose a modern personal finance stack, updated for 2016.

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You probably shouldn't be using Wealthfront or Betterment 💰

You probably shouldn’t be using Wealthfront or Betterment, but not for the reasons you might think.

In fact, arguments against robo-advisors rooted in the hidden costs of compounding management fees or in examining the true value of tax-loss harvesting are clouding the bigger trap that many Millennials fall into.

What’s the trap?

Well-intentioned Millennials are investing meaningful amounts of their income into robo-advised taxable accounts before maxing out the annual limit of their primary tax-advantaged accounts (IRA’s and 401(k)’s) — and the robo-advisors have no incentive to steer them in the right direction.

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How much of your startup options should you exercise? 📈

So you’re leaving Startup Co.

You’ve worked there long enough to hit your “cliff” and have the option to exercise some incentive stock options totaling some dollar amount.

Startup Co. is doing well and growing fast, but it’s not yet clear if a purchase of its stock will turn into an investment generating Facebook IPO-like returns.

Since you’ve probably got 90 days or less to make a decision around exercising your options, here’s a simple framework to consider when deciding how much of your options to exercise.

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Red teaming my iPhone 📱

In the past two weeks, I’ve found myself a few feet away from iPhones being ripped out of commuter’s hands by thieves.

The first attack occurred during a late-night commute. The attacker entered the rear door of a sparsely populated train, ran down the aisle, and took a phone from a woman’s hand seated two rows away from me. He then exited through the front door of the train, onto the platform as the doors closed.

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