Leetown Advisors LLC
Kyle Thompson, MBA founded Leetown Advisors in 2017 as a response to low industry standards with regard to customer service and innovation. Kyle grew up in Des Moines, Iowa and became obsessed with finance as a teen. He went to see an advisor one summer after his first undergraduate internship, but was turned away due to not meeting the advisor's asset minimums. Though he wouldn't enter the industry for several more years, it was an experience he would never forget.
Shortly after finishing his MBA at Iowa State University, Kyle founded Leetown as a means to service clients with no prejudice to age, wealth, or any other metric typically used by the industry.
In his free time, Kyle enjoys reading, writing, and helping others. He volunteers or sits on the board of several local community organizations, and his greatest hope is to leave the world a better place than he found it, and to help others do the same.
MBA, Finance, Iowa State University
Assets Under Management:
The short answer is that the analyst believes the stock is overvalued, and the lower price target better reflects the company's future earnings potential. A stock's price is the sum of all future earnings, discounted back to the present with a discount rate that reflects the risk (uncertainty) associated with the investment. The higher the discount rate, the lower the current price "target". High risk investments require high returns to justify the risk, and are discounted at a higher rate. Therefore, an analyst that sets a price target lower than the market believes that the market is using a discount rate that is too low. Hope this helps!
First off, congratulations on being in such a wonderful financial situation for such a young age. While the traditional advice here would be to max out your 401k, I personally like having more liquid funds available for use before retirement. The obvious answer to this would be an individual brokerage account, which you can contribute to or withdraw from as desired with no penalty. Further, some online brokerages offer lines of credit against your funds at very generous interest rates (some under 3%!), which you can use as a cash management account. I actually run all of my own personal bills through my brokerage line of credit at Interactive Brokers, which itself gets paid through my checking. It sounds more complicated than it is; I really just use it as a low interest/high limit credit card.
Of course, there are downsides to brokerage accounts. They are not tax deferred, meaning you have to pay the taxes on any dividends and capital gains you make in any given year, but you can limit these through tax loss harvesting (selling your losing positions to offset your gains). I hope this helps, feel free to contact me for more info!
Like you, I was given loans in excess of tuition for grad school. This was because my income at the time applied allowed me to take out more financial aid, which is likely the same case with you. You have three options:
1) Give the money back. This is the simplest option because you take on the least debt. This is the route you should probably go with if you are already financially stable and don't need the extra money.
2) Use the extra money as a cushion to pay for living expenses while you are in school. This is what most people do, but this is a slippery slope.
3) Invest the extra money in a taxable brokerage account. When the time comes to start paying back loans, make your payments from this account so that the student loans don't immediately affect your cash flow, possibly allowing you several years for your income to grow and support the payments. This is what I did, and it has worked out very well.
Best of luck!
If your advisor gets compensated to sell products rather than give objective advice, they are not a fiduciary. While there are certainly some commission-based advisors that have a "fiduciary mindset", human behavior is by nature influenced by our incentives. In the case of commissions, advisors are incentivized to give you great service until you finalize the paperwork, but there is no incentive for ongoing service. A fee-only advisor's current and future income is entirely dependent on the quality of service they give you, so are highly incentivized to give you better service. Hope this helps!
If you were you, I would suggest the following strategy:
1) Take 10% of the money and keep it in cash/money market fund to be used over the next 1-3 years for whatever you want (travel, down payment on home, etc).
2) Interview at least 3-5 different advisors and ask them what services they actually offer, whether they are a fiduciary, and what their all-inclusive fee is. Some advisors will only manage your money, while others will do full-service cashflow, tax, and estate planning. Your situation is about to become a whole lot more complex than a typical 24-year old, so I would advise working with someone that will take a holistic look at your financial life.
3) Depending on how your money is invested, you should be able to withdraw 3-5% (annually) of the remaining balance indefinitely. Any more and you risk spending down the money. Any advisor that wants your business should be willing to do a free simple cashflow analysis to see what this would look it (shameless plug: I can do this virtually, and can give referrals to other great advisors).