Compound helps startup founders and employees optimize their wealth through a technology-powered family office (tracking, investing, equity, lending, estate, tax). This lets our clients focus on their passions instead of administrative distractions. We live at the intersection of machine and tax code.
Your stock options represent the right to purchase shares of your company at a fixed price, known as the exercise price. You earn the right to exercise your options over time through a process called vesting, the timeframe of which is stipulated by a vesting schedule. There are two types—ISOs and NSOs—and early-stage companies will typically issue a mix of both to their employees.
The idea of passive index investing is that rather than trying to pick a few companies that you think will do particularly well, you try to invest a little bit into every company in the market. How broadly or narrowly you define “every company” will vary, but the idea remains the same: invest a little into every company so you get market exposure and diversification.
Planning for retirement often feels pointless. You’re young and your startup is taking off — why should you worry about retirement now? There are two concepts that make this planning a no-brainer: compounding and tax-advantaged accounts.
As a startup employee, you likely have extra insights into emerging areas of the economy and even the opportunity to invest in them. Unfortunately, most IRA custodians won’t allow you to invest in these opportunities with your tax-advantaged IRA account. However, by setting up what is known as a “self-directed IRA,” you can use your IRA money to make alternative investments.
When you die, the default outcome is that you and your loved ones pay for the privilege for all your finances to become public record for anyone to view. You can easily avoid this by simply using a trust. Otherwise, your estate is submitted to a process called probate, where the state judicial system will publically gather your holdings, pay your creditors, and distribute the remaining assets (per your will, if you left one; to family members, per the state’s default rules if you did not). This process costs roughly 2-7% of your total probatable assets and delays the inheritance process by 12-18 months. Trusts allow you to bypass the entire probate process and have control over the distribution of your assets after death.