📱 The scoop on Reddit's IPO

+What to know before you invest & using student loans for a 401(k) match

03/26/2024 Bite-sized money insights across a broad range of topics—from budgeting, taxes, buying a car or home, to investing, equity comp, crypto and more.     Here's the Gist today   Happy Tuesday Origin Member.   Wealth is difficult to define, but we all have our opinions. What do you think the average American considers to be a "wealthy" net worth? A. $1M B. $2.2M C. $5M   Here are the topics for today: Moment of The Week — Reddit's IPO Your "Before You Invest" Check-List Use Your Student Loans For a 401(k) Match     Moment of The Week — Reddit's IPO     What makes Reddit's IPO unique? While in many ways it's just another public company, there are some distinct caveats of Reddit's public offering that make it stand out.   A frozen IPO landscape   Firstly, initial public offerings have been scarce and often unsuccessful for the last two years. 2022's bear market all but froze potential entrants out of the market, a residual impact of 2020 and 2021's market euphoria.    The IPO market set records in both 2020 (480) and 2021 (1,035). In 2020, 55% of those public offerings came via SPACs, and 63% in 2021. These special-purpose acquisition companies have largely fallen face-first into the red since then due to increased skepticism, having also contributed mightily to the market euphoria of that time.    This trend was abruptly brought back down to earth in 2022, a year we saw only 181 companies go public. Despite better conditions in 2023, the market welcomed even fewer newcomers last year at just 154.   Is Reddit thawing out the market?   We've seen 39 IPOs through the first 3 months of 2024, putting us on pace for 156 for the year — about the same as 2023.    But Reddit is arguably the biggest name to go public over the past two years — go ahead, scroll through the list, and find a more well-known brand.    For some companies on the fringe, a name brand like Reddit that also has some controversy around it (and still lacks profitability) may serve as a vote of confidence in IPO conditions.    The unusual aspect of their IPO   Usually, when a company goes public, the vast majority of early shares are reserved for institutional partners and IPO underwriters — Reddit was one of a few public offerings to buck this trend to a degree, offering 8% of their early shares at the IPO price to select groups of Redditors, largely community moderators, without the usual lock-up period alongside.    Reddit took this atypical approach in an effort to show some support and appreciation to its most loyal users, essentially the Redditors who maintain and moderate the platform.    With an IPO price of $34 a share, those early investors are now up a clean 47% over just 4 days of trading.      Your "Before You Invest" Check-List     It's become really easy to start investing. In some ways, this is a great progression, but it also has its shortcomings. With increased accessibility, it's also become much easier to invest quickly, aimlessly, and often without a purpose or in things we don't quite understand.    This ease of access should be mediated with some sound judgment and due diligence that informs our investment decisions. The best way to achieve this is to give yourself an informal "checklist" of sorts to go through before you click buy.    What to watch for   Make sure you understand it: Conduct thorough research on the investment, delving into its historical performance, underlying assets, and potential future outlook. If it involves complex financial instruments, seek guidance or advice from financial professionals. Understanding the investment is crucial for making informed decisions and managing potential risks.     Make sure you're comfortable with the risk: Evaluate your risk tolerance by considering factors such as your financial goals, time horizon, and emotional capacity to handle market fluctuations. Assess the potential risks associated with the investment and ensure they align with your risk appetite. This step helps in avoiding investments that may cause undue stress or jeopardize your financial well-being.   Make sure that there's a reason you're investing in it: Clearly define your investment objectives and reasons for considering this particular investment. Whether it's for capital appreciation, income generation, or diversification, ensure that the investment aligns with your overall financial strategy. Having a clear purpose behind your investment decision helps in staying focused and committed, preventing impulsive actions that may lead to suboptimal outcomes.   Determine the time horizon for your investment, whether it's short-term, medium-term, or long-term. Different investments may be better suited for varying timeframes, and aligning your investment horizon with the nature of the asset can contribute to more effective portfolio management.   Consider Liquidity Needs: Evaluate your current liquidity needs and ensure that the investment allows for flexibility. Some investments may have restrictions on withdrawal, and understanding the liquidity aspects is vital, especially if you may need access to your funds in the near future.   Review Fees and Expenses: Examine the associated fees and expenses related to the investment. This includes transaction fees, management fees, and any other costs that may impact your overall returns. Understanding the fee structure is essential for assessing the true cost and potential impact on your investment performance.   Have an Exit Strategy: Establish a clear exit strategy before entering the investment. Define conditions or triggers that would prompt you to sell or adjust your position. This proactive approach helps in managing potential losses and capitalizing on gains based on your predetermined criteria.     Use Your Student Loans For a 401(k) Match     About 43M Americans can lay claim to student loan debt right now, and there's a good chance that many of those borrowers also have a 401(k) retirement plan.    While it might be tough for some borrowers to make student loan repayments and contribute to retirement simultaneously — 66% said that they had to reduce their retirement contributions to afford their student loan repayments. New legislation from Secure 2.0 brings provisions that allow them to do both.    What's changed?   For qualifying borrowers, making student loan payments can result in an employer match on the amount repaid that goes directly into their employer-sponsored 401(k).   How it works is pretty simple: As an illustration, suppose you allocate 5% of your yearly income to a 401(k); your employer might match that with an additional 5%. With the recent legislation, even if you're directing 5% of your salary to student loans, leaving none for retirement, your employer retains the option to contribute that 5% to your 401(k). For instance, if your annual income is $70,000, this could result in an annual contribution of up to $3,500 to your account.   While it's impossible to discern how widespread this benefit will be given its infancy, it's yet another education benefit added atop the list of recent additions like tuition reimbursement, debt counseling, and more that many employers have adopted over the last 12 months.     💰 Answer: It's B., $2.2M is what it would take for the average American to feel wealthy. (Schwab)   💲 Credit scores fall as utilization rises (CNBC)   🍎🏛️ The implications of Apple's latest anti-trust case (The Verge)   📱 TikTok is now the second most popular social media site in the U.S. (Axios)     How did you like today's newsletter? How did you like today's newsletter? (Please vote only once.)   🔥 Great stuff — keep it up. - 🤔 Alright, but could be better. - 👎 Not my thing.      Blend Financial Inc. dba Origin 177 Huntington Avenue Ste 1703, PMB 50966 Boston, MA 02115-3153     Unsubscribe from this e-mail     Advisory services are offered through Origin Advisory Services LLC ("Origin RIA"), a Registered Investment Adviser registered with the Securities and Exchange Commission and a wholly-owned subsidiary of Blend Financial Inc. DBA Origin Financial. Origin RIA's registration as a Registered Investment Adviser does not imply a certain level of skill or training. The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services. All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. The Origin app is only available to U.S. based members.