Logan Bennis, RJFS

A business owner thought he had a $2 million retirement plan.

The valuation came back closer to $700,000.

That's a tough discovery a couple years before retirement.

A lot of owners assume the business will fund retirement.

Maybe it will. Maybe it won't. The problem is that many never test the assumption.

They've never had the business valued. They've never asked what happens if they want out in 5 years instead of 15.

A business doing $2 million in revenue isn't automatically worth $2 million.

In many cases, the value comes down to one question:

Could the business run without the owner?

If the answer is no, buyers get nervous and nervous buyers write smaller checks.

The owners with the most options later tend to build two things:

A business that can operate without them. and assets outside the business.

Retirement gets a lot harder when one asset is responsible for the entire plan.

Finding out your business is worth less than expected is disappointing at 45.

Finding out at 65 can change the rest of the story.

A $499,000 rental producing a 3.2% return wasn't on the bingo card.

Your "passive" real estate investment may not be that passive.

There's a home for sale near me in Dunedin for $499,000.

Let's say you buy it outright.

Average rent for a home that size in the neighborhood: $2,950/month. 3 bed, 2 bath.

Assume 90% occupancy.

That gives you:

Gross scheduled rent: $35,400/year
Adjusted for vacancy: $31,860/year

Now subtract:
Property taxes: $6,000
Insurance: $5,000
Repairs/maintenance: $5,000

That leaves roughly:
NOI: $15,860/year

On a $499,000 purchase price, that's about a 3.2% cap rate.

Cap rate is basically the property's income return before debt. It tells you how much cash flow the property produces compared to the value of the home.

So in this example, before financing, closing costs, major repairs, management fees, or your own time...

You're looking at around 3.2%.

For context, the S&P 500 has historically averaged around 10% annually over long periods, with dividends included.

That doesn't mean real estate is bad.

It means the money in real estate is usually made by buying better than everyone else, improving the asset, or operating at scale.

Not by paying retail for a single-family rental and hoping the rent makes the numbers work.

And if you're self-managing, that 3.2% comes with tenant calls, repairs, vacancies, and insurance renewals.

The question is whether a 3.2% return is worth more of your time than the alternatives.

Enjoy a picture of Jada and I!

You're a business owner making $250,000+ and most of your money sits in one checking account, you're probably making things harder than they need to be.

A simple framework I like is having 3 separate buckets:

1. High-Yield Savings Account

This is your emergency bucket. You can have a personal emergency fund and business emergency fund.

The amount depends on how predictable your income is.

A business with recurring revenue may need less cash than a contractor whose income swings throughout the year.

$50,000 piece of equipment dies on you, this is where this bucket comes into play.

2. Brokerage Account

This is your medium-term bucket.

Think:

• Future home purchase
• Paying for a child's wedding or your own wedding
• Business opportunities in the next few years

Want to expand and add a few more trucks to your plumbing fleet in the next few years, save here in this bucket.

3. Retirement Accounts

This is your long-term bucket. Money you likely won't touch for decades.

For business owners with strong cash flow, higher-contribution retirement plans can be worth exploring.

Depending on your situation, a 401(k) with profit sharing and a cash balance plan may allow you to contribute significantly more than a traditional retirement account.

For a profit sharing 401(k) plan, you can contribute a maximum of $72,000 (higher if over 50). But adding the cash balance plan allows you to contribute upwards of $300k, being a real tax saver at that point.

This bucket is not designed to pay for next years taxes or your next truck purchase.

Different goals = Different timelines = Different accounts

Trying to solve every financial objective with one account usually creates more problems than it solves.

Over $100,000 in a 529 account and your kid isn't going to college.

A lot of parents avoid 529 plans for one reason:

They're afraid the money gets trapped if their kid doesn't go to college. That is not necessarily true.

529 plans allow you to change the beneficiary if plans change later on.

Meaning the funds could potentially be used for:
- another child
- a grandchild
- certain apprenticeship programs
- K-12 programs
- Future Roth contributions for your kids retirement

That flexibility is a big reason many high-income families still use them despite the hesitation.

I put together a simple comparison chart showing how:
- 529 Plans
- Coverdell ESAs
- UGMA/UTMA accounts
- A general brokerage investment account

Good reminder that the "best" account depends on the family and their goals.

Happy 529 Day!

Had the opportunity to join Sean Trace on the Growing Money podcast last week.

We had a great discussion around:
-Financial planning for families
-The psychology of money
-Long-term investing
-Protecting assets through insurance and estate planning
-And the importance of financial education

One thing I always try to emphasize:
Building wealth is usually boring — consistency, discipline, and time matter far more than "get rich quick" strategies.

Excited for the episode release soon.

"We'll just sell some stock for the down payment."

Purchasing $1M home and assets are all invested.

I've seen this exact situation play out multiple times

Someone is buying a new home before selling their current one.

Selling investments to cover the gap sounds simple… until it creates roughly $200K in capital gains.

Before pulling the trigger, look at a few other options:

One option is temporarily using IRA funds and rolling them back within 60 days after the home sold.

Client Immediately says:
"So basically… if the house doesn't sell in time, I'm screwed?"

Not exactly. But close enough that you want to be VERY careful with that strategy. Not something most should be doing unless they are 100% sure they will sell the home within 60 days.

Option 2: A Securities Based Line of Credit.

Very simplified:

Borrow against the investment account temporarily
Keep the portfolio invested
Avoid triggering immediate capital gains

Then once the old home sells:
Pay off the line
Move on

Sometimes one conversation beforehand can prevent a six-figure tax mistake.

If you're thinking of purchasing a home, before spending $200k on a tax bill, DM me "HOMEPLAN" and we can walk through it.

A few weeks ago during my first half triathlon, I had a panic attack in the middle of the swim.

Open water. People all around me. Couldn't control my breathing. For a minute, I thought I was going to die lol

This last weekend, I went back and did another one.

No panic attack this time. Stayed calm in the water and actually felt in control the entire swim.

The cool part is the numbers improved too:
-Bike speed was up almost 2 MPH
-Cut transition time by about 6 minutes
-Run pace went from around a 9:30 mile to an 8:30 mile

But honestly, none of those mattered as much as getting through the swim.

Crazy what can change when you just keep showing up!

A young couple in their 30's came into a meeting thinking college would cost around $120k.

The real projection came out closer to $330k.

Using historical college cost increases, that $120k number came out closer to $330,000 by the time their child turns 18.

$120k feels doable but $330k feels like a second mortgage.

Once we mapped it out inside their 529 plan, the conversation changed quickly.

With time on their side and a reasonable long-term growth assumption, they'd need to save around $800/month to potentially hit the goal.

Still meaningful.

But a lot different than feeling like they needed to somehow come up with $330,000 all at once.

Most people are guessing when it comes to college planning.

If you want to figure out what monthly number would put your family on track, send me a message with the word "College" for a one-page 529 breakdown.

This is a hypothetical story and not indicative of any specific situations or client. It is presented only as an example and not intended as investment advice. Investing involved risk and there is no assurance that any investment strategy will be successful.

Found an old sticky note inside my first investing book this weekend.

It said:

"Stocks that rise with interest rates."

Which is funny because I barely knew what interest rates actually were when I wrote it.

The book was Stock Investing For Dummies.

Over 10 years old now.

Back then, I thought investing was mostly about finding the next big winner.

I remember watching the first stock I purchased drop almost 40% in a pretty short period of time early on.

It wasn't because the business disappeared.

I just had way too much money sitting in one position for where I was financially at the time. Which was at $0. Blew up my account.

That experience stuck with me a lot more than any investing book ever did.

10 years later, I think long-term investing is less about being right all the time and more about right sizing the risk your willing to take.

And yes… I'm fully aware of what interest rates are now.

A gift that could cost $140k?

"Should I just gift the property to my kid now?"
Sometimes it creates a bigger tax bill.

Example: You bought a property for $300,000. Today it's worth $1,000,000.

If you gift it, your kid inherits your cost basis.

If they sell for $1,000,000: $1,000,000 - $300.000 = $700,000 That's a $700,000 gain.

At a 20% capital gains rate: $700,000 * 0.20 = $140,000

About $140,000 in tax.

If they inherit that same property instead, they may get a step-up in basis to current value.

Sell it for $1,000,000: $1,000,000 - $1,000,000 = $0 No capital gains tax.

The recent tax law changes kept estate exemptions higher than expected.

So for a lot of owners, the pressure to gift assets early just to avoid estate tax isn't as urgent.

This is the best way I've found to approach it: Before moving assets to the next generation, look at both sides, estate taxes and capital gains.

Read the Raymond James article regarding how the OBBB cleared up some estate planning opportunities.

And of course, always consult your estate planning attorney for any gifting strategies.

No sunset yet raymondjames.com