Employee or Freelancer?

This recent Wall Street Journal article is about people who made lemonade: they used the “opportunity” presented to them as a result of the pandemic economy to leave their jobs and start their own small businesses. They have transitioned from being employees to being freelancers.

The interviewees in the article discuss how much more money they are making now versus when they were employees, but they neglect to figure in some very important aspects about being self-employed and the income they earn therefrom. The most important are reporting all of the income that they receive and paying their taxes based on their income; paying into Social Security; and health care for the new business owner and their family. After all of these considerations, the newly self-employed may not really be making as much as they did when they were employees.

Report Your Income

The self-employed need to keep track of their income and expenses so that their income is above the table rather than under the table. It’s nice to get paid a lot of cash for a job but your Federal and State governments are likely owed a percentage of that cash haul. If the party who is paying you is keeping records on their side, it is even more important to keep records and report the income on your side. Otherwise you face penalties and even jail for evading taxes in the event you get audited at some point. Notice that your new job as a self-employed freelancer just got more difficult, as now involves some level of accounting and/or bookkeeping in addition to the skill central to your job. On top of that, filing your taxes also got more complicated. Now you have to file a Schedule C on your tax return and you also have to make estimated payments once every quarter. Perhaps you need to employ the services of a Certified Public Accountant for your tax filing and that would be well-worth the cost. The point is that comparing income you get from freelancing vs. wages you got at your old job is not an apples-to-apples comparison.

Social Security

When you were an employee, you paid into the Social Security trust fund and your employer subsidized your payment. Now, as a freelancer, you can still pay into Social Security but you are not required to do so. My recommendation is to continue to pay into Social Security at the very least until you have vested in your Social Security pension, which is after roughly 10 years of working and making payments in. It is very tempting to keep the 12.4% of your reported income in your pocket instead of paying it to Social Security because it is a lot of money and because you won’t get it back for a long time if you are still a relatively young worker. However, if you are tempted not to pay your Social Security, you probably are also tempted not to save for retirement through an IRA or other retirement account. If so, ask yourself what you really are going to do once you retire to pay for basic necessities. Also, disability insurance is also part of Social Security. What will you do if you become disabled? Without paying into Social Security if you are self-employed, you are taking a lot of chances with your future wellbeing. Once you vest in Social Security it is a somewhat different issue and you can look at your personal Social Security statement (through ssa.gov) and calculate what you would receive by stopping payments vs. by continuing to pay in. However, you at least need to achieve the vesting. 12.4% of your income is a big bite but worth it if you want to have a decent life once you retire.

Health Care

Your health insurance becomes an issue once you quit your job to venture out on your own. You will have to figure out what to do. Here are your most likely options:

  • Keep your old insurance and continue to pay for it yourself out-of-pocket for 18 months through COBRA.
  • Go on your spouse’s plan.
  • Purchase your own plan through your state’s insurance exchange.
  • Perhaps you can purchase a group plan if you have any employees.
  • Consider purchasing a plan through a professional organization that you belong to if such a thing is available.

Health insurance is a costly item that you need to pay for yourself without your employer’s help that you got when you were an employee. It is very important to consider health insurance before you make any decision to jump from being an employee to being self-employed.


I like the enthusiasm that the newly self-employed have, especially the sense of freedom that they now feel that they didn’t feel when they were still employees. However, it is not a simple as thinking you can make a lot more doing your job as a self-employed person than doing it as an employee. There are a lot of other costs that one needs to consider before opting to go it alone. If you are also looking at self-employment, make sure you take all of these other costs into consideration.

Your Core Competency

Perhaps your experience with working during these trying times has been different than mine, but I have found myself and my time being pulled in many different directions, not always to my desires. I start something that I want to do but then I get sidetracked, and then sometimes sidetracked from my sidetrack. All of these tasks require different levels of attention and different personal and professional skills. Soon I have forgotten what I set out to do at the outset and my day is out of control. I find that I get sidetracked more now than pre-pandemic because there have been so many changes in the lives of the people that I interact with on a frequent basis.

Your Core Competency

Though it may not relate directly to your current plight, one way for you to prioritize tasks is to understand your “core competency”, meaning that thing or those things that you are best at. Prioritize and complete the tasks that require you to use your core competency and either delegate out everything else to others or complete them yourself once you get done what you are good at. This is a way to take control of your life when you feel like it is spiraling out of control. Do what you can do and leave the rest to others, if that is possible. Easier said than done.

Financial Planning Example

Understanding your own core competency is the first step in building a good working relationship with a financial planner. Let’s say you are really good at organizing information but not as good at big-picture goal setting or strategizing how to reach your goal. This is a perfect set-up for working with a financial planner because a financial planner needs a set of well-organized bank and brokerage statements as well as tax returns and other pertinent information prior to getting started on the financial plan. The better the information going into the plan, the better the plan will be. You as the client should choose their planner based on the planner’s core competencies, and hopefully they will complement your competency.

What if you aren’t so good with organization but still wish to work with a planner? Perhaps you can delegate the statement-keeping to a spouse or a family member who is a little more organized. It may cost you but the cost would be worth it if it leads to a better financial plan.

Good At Nothing

What if you don’t feel like you are particularly adept at any one part of the financial planning process? Well, at least you are good at recognizing your own shortcomings. In that case, hopefully you are good at getting up and going to work every day. If so, you are also probably good at following directions and completing tasks at work. You really can delegate all of the financial planning tasks. All you have to do is do what the financial planner asks of you. You can still have a good, achievable financial plan without having any real skill in the process. That is, if you work with a good financial planner that you like and trust.

Working During the Pandemic

What about my example of how difficult I find it to complete tasks during this pandemic? How can one use their core competency to feel like they have achieved something while being pulled in different directions? My suggestion is to drill down on what you really believe is your core competency. Rather than think in terms of a specific technical skill (such as writing, art, spreadsheeting, or something like that), take a step back and figure out what personal or interpersonal skills that you like that go into those technical skills. Perhaps you like and are good at relating to people, or you have a good level of focus at a particular time. Use those personal skills as a way to organize and take control of your tasks. You will feel better about yourself and you will accomplish more if you work according to your core competencies.


It is very difficult to keep control over one’s life. I believe this has become even more difficult during this pandemic because people are continuing to work at home and their “work” and “home” lives become blurred. Perhaps you even have children also trying to do their school from home, to complicate matters even more. Being able to understand your core competency is the first step to taking the control that you need. Perhaps you should buy a copy of “Now, Discover Your Strengths” by the Gallup Organization – it is a short read with a quiz just for you to help you determine your core competencies. Or not, but it is very important for your own success to figure out what you are good at if you want to accomplish something.

One Way To Achieve Your Financial Goals

I get a chuckle out of the number of blogs out there that are titled something like this:
“Ten ways to achieve this goal”
“Eight steps you need to take to improve this aspect of your life”
“The Six Best Pieces of Advice I have been given”

Financial Planning is a Process


Blogs that I read about how to write better blog posts suggest using titles such as these that suggest you are going to give your readers a certain number of pointers because these types of titles are good at grabbing the reader’s attention. Fair enough and probably good advice. However, there are a lot of bloggers who seem to use the same playbook, and that makes me chuckle. It also makes me think about how I can do a takeoff on the sameness of these blog titles for my own benefit.

One Way

My businesses are investment management and financial planning. Rather than citing numerous ways, there is really only one way for you to achieve your financial goals. The only way you can achieve your financial goals is to identify what those goals are and to establish a plan to achieve them and stick to that plan until you do. It is a lifetime process that involves getting up and going to work every day, even if your “office” now is in your laundry room. You can and should re-look at your goals every so often as aspects of your life change, and you of course should rebalance your portfolio based on its performance and your future needs. However, the point is that the planning and the achievement of financial goals is a process that you need to work through day by day for the remainder of your life.

Positive Attitude

The process of achieving your financial goals is something that you need to have a positive attitude about because you need it to get through each day. You may have a difficult client or a hard problem to solve at work at a given time, but if your mindset is that you are working through the process of achieving your financial goals every day, then it might help you to have some perspective on life at your workplace.

Ask For Help

What if you need help to figure out what your goals are or should be? What if you are so busy at work or home that you need help with investing and monitoring your investments? I am a Certified Financial Planner® and so I am trained to provide the assistance that you need. You don’t always need to do everything yourself and there is no shame in asking for help. In fact it is best you do so in areas that you are not fully proficient. Please contact me or any other CFP® Professional that you know so that you can get started or re-started toward your goals.


Planning and achieving one’s financial goals is a process that takes every day. Rejoice in that process and take it head on by working with a CFP® Professional so that you can see your goals clearly and that you have a roadmap to get there.


Pfizer’s news on Monday that its coronavirus vaccine candidate achieved 90% efficacy in a phase 3 trial has been well received on Wall Street. The S&P 500 rose over 3% and the small-cap Russell 200 Index was up over 5% on Monday alone. The hope is that the vaccine will enable the economy to return somewhat to pre-Covid normalcy.

Source: Stockcharts.com


That said, not all sectors participated in Monday’s rally. In fact, the Pfizer news was bad for companies whose stock has “zoomed” since the Covid outbreak during the first quarter of 2020. One of the hardest hit on Monday was Zoom Video Communications (ZM). The Zoom technology that enables groups of people, schools, and companies to continue to function through remote video calls and meetings has become synonymous with the Covid world. Most everyone in the US now has experience with Zoom, either through business meetings, classes, social events, remote cocktail parties, or any other reason to get together. Even the 2020 NFL Draft was conducted through Zoom and it was a great success. Zoom is a free app download for users (with an upgraded for-pay option available), which has enhanced Zoom’s appeal and has resulted in widespread adoption for its technology.

Zoom’s rapid adoption rate resulted in an explosion in its stock price. As the chart shows, ZM went from the low $70’s pre-pandemic to a high of about $580 in late October 2020. ZM has since eased off its high and with a 14% decline on Monday it sits at about $420, which is still an approximately 470% increase since pre-pandemic.

Overvalued? Or Buy the Dip?

So, as an investor, what should you do next? The “buy” argument says that the Pfizer vaccine is great but it will take a long time for the vaccine to be manufactured and rolled out nationwide and worldwide, and there could be hiccups along the way. Moreover, even if the vaccine is widely adopted (a question which is open to debate), it is unlikely that everyone will go back to school and work as they had before the pandemic, and a significant portion of the population demand to remain in the cyber world because it will be easier for them in the future. Therefore, Zoom technology use will remain an important and needed part of life for people hereafter. The recent price dip is a great buying opportunity, say ZM bulls.

The “sell” argument is that ZM remains too highly priced even after its Monday pullback. According to finviz.com, ZM has a market cap of over $140 Billion, which makes it the approximately 60th most valuable company in the US, and more valuable than both ExxonMobil and Chevron. Its price/sales ratio is over 100 and its forward P/E ratio is about 170. Perhaps Zoom technology will remain important and even grow if a vaccine is successfully implemented but there is no way Zoom will perform well enough to justify its stratospheric multiple metrics.


As you probably guessed, I am not a ZM bull. My issue is that there are a lot of other technologies that offer a similar experience – products from Google and Microsoft among them. Zoom is great but I don’t see it as a “killer app”. More likely, if its management is smart, they should look to find a buyer now at this inflated price. I see Zoom as an excellent addition to a company like Google. Although Google already has Google Meet, it would really enhance its profile in the videoconferencing space by purchasing Zoom. I don’t see Zoom’s value as a standalone company at this current inflated price, even with its recent pullback.

The Republican Senate

As I write this, mid-day Thursday, two days after the Presidential Election, the winner of the presidential vote is still not fully counted and is likely headed to the courts. It looks like Biden is the winner but it is very close in a number of states and Biden has yet to bust the ball into the end zone. Sounds like the high level of uncertainty that investors loathe. Yet the stock market is way up in the last two days: the S&P 500 Index is up about 4% since Tuesday’s close and the Nasdaq 100 Index is up nearly 7% since then. If, as we are told, investors hate uncertainty, how can it be that the major stock indexes are up between 4% and 7% with the question of who is going to lead our nation still undecided two days after the election?

Mitch McConnell, Republican Senate Majority Leader

The Republican Senate

The stock answer is that “Investors like divided government.” That’s true, and it looks like we will have divided government for at least the next two years. However, I will take it a step further. What investors like about this election is that the US Senate will remain in Republican control, and this will work no matter who ultimately has won the Presidential vote. If President Trump prevails, then it will be at least two and probably four more years of what we have had for the past four, which was, pre-pandemic (and that is a really big qualifier), great for the US economy and great for the stock market. The House of Representatives will remain Democrat-controlled, and so we will have divided government no matter what.

On the other hand, if Joe Biden is proven to have won the Presidency, his and his Democratic Party’s ambitions will be checked by the Republican Senate. Tax increases for individuals and businesses, increased regulations on businesses, aggressive policies to address the environment, all of which investors consider to be anti-business and anti-economic growth, will be much harder to get passed by both houses of Congress if the Republicans continue to control the Senate.


If you believe pre-election polls, the Republican win in the Senate was unexpected. Democrats did flip one net seat, plus, if Biden wins, the Democrats get the tie-breaking vote. However, Democrats were expected to win in places like Maine and North Carolina and they did not, nor did they win in other states where their candidate was behind in the polls. Therefore, the Republican win was a surprise, and one that investors like, if the past two days are any indication.


Last time I wrote that you should not let your political bias get in the way of making good investment decisions. That said, it is easier to make good investment decisions if the environment is in your favor, and that appears to be what you have here for the next 2-4 years. A likely Biden Presidency with its more damaging inclinations being held in check by a Republican-led Senate should result in a relatively inactive legislative session going forward, and investors like that.

Flush It And Forget It

If you make a mistake or if something doesn’t turn out the way you thought it should have, what do you do next? Does the bad result make you think that perhaps you aren’t up to the task? Do you think the cards are stacked against you? Or do you remain confident and move on to the next endeavor unaffected by what just happened? Of course, it is best to move on looking forward with a clear head, but that is easier said than done.

Flush It and Forget It

I’m a sports fan, and this phrase is used by coaches everywhere to get their athletes to focus on the future and not on the past. One manager just used it multiple times in an interview during the recently-completed MLB Playoffs, which is what caused me to think about it in broader terms. You will make mistakes. Something you do will not turn out the way you thought it should have. To be successful in life, even to be able to get up every day and go to work or school or just function in some capacity, you need to develop the ability to move on. Learn from what just happened, of course, but move on nevertheless. “Flush it and forget it” means just what you think it means, in the literal sense.


Moving on after ill fortune could take a number of forms. Let’s take investing as an example. What if you did all of your fundamental financial analysis on a stock and invested at a price that you thought was a good value, but the stock went down? (By the way, this happens all of the time, even to the best). “Flush it” probably means that you should sell the investment and recognize your loss. (I like to sell if the price goes down 10% from where you bought it at). But how do you move on from there? If you are confident in your ability to analyze, then make the same move again on the next stock. If you aren’t confident, then move on by investing in a different way, perhaps by working more closely with a professional adviser or someone else with whom you can develop ideas before putting them to action. Either way, you move on from the bad result.

Hard To Do

It is hard to move on in life after the suboptimal occurs. If yesterday was a bad day at work, it’s hard to get up and want to go back there today – that is, assuming “work” is someplace other than your home office. However, that’s what you have to do in order to earn your paycheck. Moving forward is a learned skill and unfortunately you will likely have a lot of opportunities to learn over the course of your life. Everyone has different ways to move forward, but a common denominator is not to take failure or mistakes too personally. Getting down on yourself will result in a negative attitude and that will result in more failure. Instead, if you can learn not to fault yourself too much and instead blame the fates, then you will be more resilient and in a better frame of mind to undertake the next challenge.


Perhaps this blog is more New Age than most of mine, but the phrase “Flush it and forget it” touches a chord with me. Professional investors are forward-focused in that they buy and sell based on the future prospects of companies. Price/earnings multiples reflect the projected future earnings of companies more than the past performance. Likewise, with your job or with your financial investments and life, you should be future-focused. Dwelling on past mistakes is not healthy and likely will not cause you to achieve your financial goals.