Soaring assets and stocks in the past year have in some cases handed midlevel workers huge windfalls.
Those who have benefited from the market surge typically fall into one of three categories, said Sahil Vakil, founder of personal-finance tech company MYRA: They were given company shares as compensation and those same shares recently boomed; they caught last year’s retail investing frenzy and rode the market to new highs; or they invested early on in cryptocurrency, to great success.
The Nasdaq Composite rose nearly 47% over the past 12 months, and even after a recent pullback, a crypto investor who put $10,000 in
at the end of 2019 could have netted more than $50,000 in gains after bitcoin’s 2020-21 surge.
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In the past year, more than half of Mr. Vakil’s clients have experienced a market windfall. On the East Coast, Mr. Vakil says his clients typically work in the finance and consulting sectors; on the West Coast, most are working in the tech industry. The average household he works with holds $250,000 in assets and falls between the ages of 25 and 45.
Many of these workers may have struggled with stagnating wages and huge student loan debts earlier in their careers. Some worry they’ll mismanage this boon and forever ruin their chance at financial stability.
“These individuals completely feel and understand and recognize the pain of the last year, but now they’re being given an opportunity to come out of that,” Mr. Vakil said. “They’re saying, ‘This is my one chance.’ They’re taking it with both hands. They don’t want to mess it up.”
Here are some tips to manage a sudden windfall.
First, put long-term goals in focus
a 36-year-old tech executive based in New York City, began investing in cryptocurrency, mostly bitcoin and recently ethereum, in late 2019. By the end of 2020, that original investment more than quintupled.
”I want to have enough money where if my family wants to splurge on a vacation, there isn’t anything holding us back,” he said. “I don’t want [student debt] to be an issue for my kids or for anyone in my family.”
He chats about his crypto investments in a group message with other friends interested in bitcoin. To shore up his funds for those future goals, Mr. Gupta is planning to hold on to his bitcoin investments in hope they continue to grow.
”I just know having money sitting in a bank account—that’s not my nature,” he said. “I like to take risks with my money.”
Deal with the feelings
A sudden market windfall in these times can lead to decision paralysis, said
certified financial planner and founder of Flow Financial Planning. She has seen clients wrestle with feelings of elation, fear, guilt and stress.
“From a mathematical perspective, they can now easily buy a home for $2 million, but…