Got Extra Cash? Boost Your Portfolio When You Can

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Eric, a tech professional in San Francisco, sold $100k in RSUs and faced a choice: indulge in luxury or invest in his future. With goals like early retirement and financial security, he chose the latter. Are you in a similar position?

If you are a tech professional interested in learning how we can help you claim your financial independence by investing wisely, minimizing taxes, and maximizing your equity compensation, please book a no obligation call here.

Turn your extra cash into long-term wealth while minimizing taxes! Whether you’re managing RSUs or business deductions, this video breaks down smart tax strategies to help you grow and keep more of your money.

Key Takeaways:

Build an emergency fund and pay off high-interest debt
Diversify investments with index funds, ETFs, and stocks
Manage RSUs by selling regularly and planning for taxes

How to Make the Most Out of Your Extra Cash?

Step 1: Assess Your Financial Priorities

Break your goals into categories:

Short-term: Build an emergency fund for upcoming big expenses. Keep enough cash to pay your estimated tax or your taxes next year on April 15, 2025.

Medium-term: Saving for a down payment on a house.

Long-term: Building a retirement portfolio and achieving financial independence.

Step 2: Maximize Tax-Advantaged Accounts

Eric realized he hadn’t fully utilized his employer-sponsored 401(k). He increased his contributions to reach the annual limit of $23,500 (for 2025) and ensured he was taking full advantage of his company’s match.

Benefits:

Immediate tax savings: Contributions reduce taxable income.

Free money: Employer matching is a guaranteed return on investment.

Step 3: Don’t Forget About Debt

Pay off debt with rates over 7-8%: This provides a guaranteed return by saving on interest payments.

Keep low-interest debt: If your mortgage or student loans have low rates, focus on investing instead.

Step 4: Diversify Through Brokerage Accounts

With $80,000 left after securing his safety net and maxing out tax-advantaged accounts, Eric opened a taxable brokerage account.

How We Allocated His Investments?

$30,000 in Low-Cost Index Funds

Eric focused on S&P 500 ETFs and total market index funds to gain diversified exposure to the stock market with low fees.

$20,000 in Sector-Specific ETFs

Being in the tech industry, Eric chose to invest in ETFs focusing on innovative sectors like AI, clean energy, and cloud computing.

$30,000 in Individual Stocks

Eric reserved some portion of the stock for individual stocks.

Note: Avoid over-concentration in a single stock, especially your employer’s stock. A financial advisor near me can help create a balanced portfolio tailored to your goals.

Step 5: Consider Tax-Efficient Investing

Strategic Loss Harvesting: Review your portfolio to identify investments with losses that can be sold to offset capital gains, potentially reducing your tax liability.

Optimize with Tax-Efficient Funds: Consider shifting to tax-advantaged options like ETFs or index funds, which often generate fewer taxable events compared to actively managed funds.

Step 6: Treat Yourself

Money can’t buy happiness, but it can buy a fancy dinner and that’s close enough! Rewarding yourself makes sticking to smart money habits way more enjoyable.

What Makes Tech Professionals Unique?

Stock-Based Compensation

Restricted stock units (RSUs) and stock options often dominate tech professionals’ wealth. Eric learned that managing these assets strategically was critical to long-term success.

Bonus Tip:

Sell RSUs regularly: Don’t let them accumulate, as it exposes you to company-specific risk.

Plan for taxes: RSU sales are taxed as ordinary income, so work with a financial advisor San Francisco to minimize the impact.

High-Income Challenges

As a high earner, Eric faced challenges such as the AMT (Alternative Minimum Tax) and limited access to certain tax benefits. A financial advisor helped him navigate these complexities and optimize his plan.

Next Steps For You

Unsure where to begin? Partnering with a financial advisor can streamline the process and provide clarity for your financial journey. Schedule a call below!

Got Extra Cash? Boost Your Portfolio When You Can

Key Takeaways: