MalcolmEthridge.com

For younger investors coming into a stock market that is defined by the outsized gains of high-growth technology companies resulting from the IPOs of venture-backed decacorns, dividend-paying stocks are often viewed as a thing of the past.

These stocks are mistakenly considered appropriate only for retirees seeking income—not for those still in the accumulation phase of their careers.

While understandable, this perception is incomplete. It reflects a short-term view of investing that completely misses what dividends signal about the underlying businesses that pay them. But when viewed through a more comprehensive lens, dividends are not only a source of income; they are also a byproduct of fiscal discipline and long-term financial strength.

That distinction matters more than most younger investors realize because once a company commits to paying a dividend, it is no longer operating with a startup mentality. As a mature business, it has effectively placed a regularly recurring claim on a portion of its own cash flow that must be met regardless of external market conditions.

Unlike companies that can reinvest every available dollar back into the business, dividend-paying firms must strike a healthy balance. They still need to invest in innovation, expansion, and retaining top talent, but they must do so while preserving enough liquidity to fund those quarterly distributions.

Read more of my latest article at the link below.

For the first time in its 51-year history, Microsoft just announced that it will be offering voluntary retirement to thousands of its employees in the U.S. An estimated 7% of their U.S. workforce will be eligible for the buyouts, which includes personnel whose years of service plus their age totals 70 or more.

While the move by Microsoft may feel uncharacteristic for a firm that has a history of celebrating its long-tenured workforce, it also reflects a practical response to the current market dynamics. Big tech companies like Microsoft have been looking for ways to trim their expenses as they pour hundreds of billions of dollars into building out their AI infrastructure for the future, and reallocate resources toward the next phase of growth.

For those who were not already planning on retiring or actively searching for a new job, receiving such an offer can create some serious anxiety. You will have to weigh several factors before deciding whether accepting an early retirement package is the right move for your personal financial situation.

It is important to think about how you would occupy your time if retirement started tomorrow. While an offer to retire early may initially feel like a burden, it could potentially free you up to pursue something you have always wanted to do but could never seem to find the time.

And if you are married, it is also important to consider how your decision will affect your spouse and any benefits they are entitled to if widowed. These are complex decisions with lasting consequences and should not be chosen hastily.

Rather than shy away from the decision, lean in, put pen to paper, and decide whether you are in a strong enough financial position to do so.

In 2021—the early days of the current bull market—many software companies’ trading multiples seemed untethered from reality. At the time, however, very few shareholders complained that 15%, 20%, or even 25% of annual revenues were being paid out to company employees in stock-based compensation.

Equity grants were framed as a necessary cost of attracting top engineering talent, and buybacks designed to offset dilution were described as a sensible allocation of capital. But as the air has come out of many high-growth software names, and concerns mount that generative AI could commoditize swaths of traditional enterprise software, patience is wearing thin among the investor class.

For years, during earnings presentations, many software companies highlighted non-GAAP metrics that excluded stock-based compensation. The logic was that while stock-based compensation is an expense under traditional accounting rules, it does not represent an immediate cash outflow. Therefore, it should not detract from a company’s underlying operating performance.

But that framing obscures an important second piece of the puzzle.

If your compensation includes stock, this is not something you can afford to ignore. Click the link below to read my full article.

There is a quiet shift happening among affluent retirees. After decades of saving, investing, and watching their portfolios compound, many are arriving at the realization that they are unlikely to live long enough to spend everything they have accumulated.

For some, that realization brings peace of mind. For others, it introduces a new and more nuanced question about the purpose of continuing to hold assets that will almost certainly outlive them.

The most obvious answer has long been to simply pass it down to the next generation in your will. But for families who have accumulated far more than they will realistically need, waiting longer may minimize the impact of that gift overall.

In many cases, gifting adult children a portion of their inheritance now can be far more meaningful than transferring a larger sum to them later on.

One of the most underappreciated forces reshaping this conversation is longevity. Discover why timing may matter more than the amount, in the full article below.

Most taxpayers spend an extraordinary amount of energy trying to shrink their tax bill each year, often without considering how today’s decisions shape tomorrow’s outcomes. The trouble is that too many households reduce the entire tax conversation to “higher is bad, lower is good” without recognizing that certain life events and income levels create rare opportunities to plan ahead.

But sophisticated tax planning is not about reflexively minimizing this year’s bill; it is about managing your exposure across decades. And for married couples—particularly those filing jointly—the 24% tax bracket often represents an amazing opportunity.

In 2026, the 24% bracket for married filing jointly spans from $211,401 to $403,550 of taxable income. That means there is nearly $192,000 of income that can be deliberately “filled” at a rate that is meaningfully lower than the next jump at 32%.

That spread is not trivial. In fact, it is the difference between being in the upper-middle tier of the tax code and crossing into what many consider the true high-income brackets.

Just as investors diversify across asset classes, they should also diversify across tax-deferred, tax-free, and taxable account types so they can control when and which “bucket” they draw from. The 24% years are often the most advantageous time to build that Roth bucket intentionally.

Read the full breakdown at the link below to see why this overlooked tax strategy could quietly make a bigger difference than most high earners realize.

For many senior managers and executives, the idea of stepping off the traditional career ladder to pursue one’s own idea of professional success can be emotionally fraught with fear and uncertainty. The feeling typically presents as a persistent, low hum beneath the surface after one too many board meetings, an added late-night flight, or a growing realization that time has become more valuable than the next job title or slight pay increase.

And whether the goal is to launch a new business from scratch, transition into consulting, scale back to part-time, or retire early, a meaningful career pivot within the next five years demands far more than the commitment to do it.

It requires a series of conversations with yourself, your spouse or partner, and financial advisors to ensure that your exit is strategic rather than impulsive.

Unlike mid-career professionals whose compensation is primarily contingent on salary and bonuses, senior leaders are often tethered to their companies through layers of equity, deferred compensation, and executive retirement plan assets with convoluted dissolution requirements. The complexity that once helped accelerate wealth accumulation can just as easily complicate an exit.

Thus, the executives who most successfully navigate this transition are those who begin planning years in advance.

Read the full blog post below to learn how senior executives can thoughtfully prepare for a career pivot while protecting their accumulated assets and benefits on their own terms.

It would be an understatement to say that exchange traded funds (ETFs) have transformed the way that everyday investors access financial markets.

What was once seen as a way for professional money managers to create thematic bets and add sector tilts to otherwise vanilla portfolios can now be executed with small dollar amounts in any brokerage account and a single ticker symbol.

For investors who do not have the time, training, or inclination to track and trade individual stocks, ETFs offer efficiency among other things. Rather than researching 25 semiconductor companies, you can, for instance, gain exposure to the industry through one fund.

But while ETFs make investing easier, conducting due diligence is critical. In fact, their simplicity and convenience can sometimes lull investors into doing far less research than they otherwise would.

Thematic investing revolves around identifying long-term structural shifts (e.g. artificial intelligence, cybersecurity, clean energy, etc.) and positioning capital accordingly. The challenge, historically, has been implementation.

Imagine an investor who believes artificial intelligence (AI) will reshape global productivity. Choosing the “right” AI stocks requires analyzing earnings reports, evaluating revenue projections, assessing competitive advantages, and continuously monitoring new developments. That in itself is a full-time job.

But an ETF focused on the AI revolution simplifies the process. The fund manager handles stock selection, rebalancing, and portfolio construction, while investors gain diversified exposure to the theme without betting the farm on one company’s ex*****on.

The same principle applies across sectors. Investors seeking exposure to cybersecurity, for example, may prefer a cybersecurity ETF rather than attempting to track dozens of rapidly evolving software providers.

Convenience should not, however, take the place of prudence.

In my latest blog (linked below,) I compare three well-known cybersecurity ETFs to illustrate why looking under the hood matters.

Since the passage of the Tax Cuts and Jobs Act in 2017, the mega “backdoor Roth IRA” conversion strategy has quietly gone from a niche financial-planning technique to mainstream conversation among high-income professionals. Online Search interest in the term has surged, particularly among executives in tech, medicine, and law, as this is the group most likely to be phased out of traditional and Roth IRA contributions based on income.

On paper, the strategy appears straightforward. Retirement savers may contribute tens of thousands of dollars beyond the standard 401(k) deferral limits and can ultimately convert those funds into the Roth account within the plan where funds can grow and compound tax-free. But as is often the case in tax planning, there are various traps lurking beneath the surface that high earners are discovering whenever they execute this strategy incorrectly.

At its core, the mega backdoor Roth strategy exists because of a quirk in how 401(k) contribution limits are structured. For 2026, the employee elective deferral limit is capped at $24,500 for the year with an additional $8,000 catch-up contribution allowed for those 50 and older. But the total 401(k) contribution limit, which combines employee deferrals, any employer match, and after-tax contributions, is significantly higher at $72,000—meaning those who qualify could potentially contribute up to an additional $47,500 depending on employer add-ins.

Some employer plans allow participants to make after-tax contributions once they’ve maxed out their applicable pre-tax or Roth salary deferrals. If the plan also allows in-service withdrawals or in-plan Roth conversions, those after-tax dollars can then be rolled into a Roth account. This is what’s known as the mega backdoor Roth IRA conversion.

Read more to learn how the mega backdoor Roth works, how it differs from a traditional backdoor Roth, and how to avoid costly tax missteps in this recent blog post. www.malcolmethridge.com/blog-feed/the-backdoor-roth-tax-trap-no-one-warned-you-about

If you’ve spent any meaningful amount of time at one company, accumulating RSUs, you already know they can be both a gift and a curse.

On one hand, RSUs can be one of the most powerful wealth-building tools available to employees of publicly traded companies.

On the other, those same shares can quietly compound over time, becoming the single largest source of risk in your overall financial picture.

That's because when you stay at the same company for decades, it can be easy to watch that one stock gradually grow to represent the lion’s share of your entire net worth. And once that happens, it becomes increasingly difficult to imagine parting with said stock as time goes on.

One obstacle in the way of reducing your portfolio’s concentration in a stock is often the hypothetical sting of watching as recently sold shares continue to rise—also known as seller’s remorse.

Having a plan for when and how you will sell those shares well in advance of their vesting date helps minimize the likelihood of suffering such a blow.

To take it a step further, it also helps to have something tangible to do with the proceeds from selling.

In the blog post below, I detail how to develop such a plan.

Within the past year, software stocks have gone from market darlings to all-out pariahs. After years of premium valuations supported by low interest rates, predictable recurring revenues, and the promise of endless digital transformation, much of the sector has experienced a sharp and indiscriminate selloff.

But in some cases, valuations across enterprise software companies have compressed meaningfully, even as the underlying business lines continue to grow, generate positive free-cash-flow, and deepen customer relationships. Now, under the surface, are a few hidden gems that long-term investors might want to bear in mind.

Read my latest blog "Not All Software Companies Will be Taken Out by Artificial Intelligence" here --> https://www.malcolmethridge.com/blog-feed/not-all-software-companies-will-be-taken-out-by-artificial-intelligence