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Equity compensation can be a result of many successful careers, potentially representing a significant portion of overall net worth. We partnered with Bruce Burrows, Managing Director Wealth Management to highlight some of the considerations that employees should think about for their equity awards. But the steps that turn an employee stock purchase plan into wealth requires planning to help realize life goals.
Part One is a seven-step framework1 to help connect plans to dreams through informed decisions... Kind of a focused variations of Socrates’ ancient injunction to “Know thyself!”
There's no right or wrong answer, but each person needs to know what’s important to them.
Excitement of Investing
Thrill of Growth
Family Security (5, 10, 25 years)
Emergency Fund:
Short Term:
Long Term:
A holistic plan for equity compensation recognizes that life is shared with others.
Bruce Borrows | Managing Director Wealth Management
Assets may be in retirement plans, college funds or real estate. It may be in stocks, bonds or cash. It may be in taxable, tax deferred or tax-exempt accounts.
Professionals can not only help prepare the overall plan, but also help make adjustments along the way.
Understand from the outset what makes most sense, such as checking in:
And decide on the scope to focus on for each portfolio check in:
As equity compensation grows, this can become an important part of the overall plan.
Bruce Borrows | Managing Director Wealth Management
As career, family and goals evolve, these seven considerations will shift. So will a good plan. But understanding exactly what equity compensation offers, how it connects to overall wealth and life, and what the framework is for decisions along the way—even without perfect adherence—helps lead to fewer unprepared reactions and potentially better outcomes.
Get in touch with Morgan Stanley at Work to learn how Morgan Stanley’s Equity Award Analysis tool helps further frame some of these important decisions.
1 https://www.cegworldwide.com/
Asset allocation, diversification and rebalancing do not assure a profit or protect against loss. There may be a potential tax implication with a rebalancing strategy. Please consult your tax advisor before implementing such a strategy.
Morgan Stanley at Work, Shareworks, Morgan Stanley Smith Barney LLC, and its affiliates, employees and Financial Advisors do not provide legal or tax advice. Individuals should consult with their tax/legal advisors before making any tax/legal-related investment decisions.
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CRC#4965903 (09/2022)