Search Results

We designed this guide exclusively for Illinois residents with $1M+ in investable assets or an estate with near $4 million or greater in total value. If you own a business, real estate, or a significant investment portfolio, the unique tax landscape in the Land of Lincoln makes proactive planning essential. Illinois is one of only a handful of states with its own estate tax. With an exemption threshold of just $4 million, many families who worked a lifetime to build their wealth are affected without realizing it. We have seen firsthand how a lack of awareness about Illinois’s estate tax, its non-portability between spouses, and its “cliff” estate tax structure can cost families hundreds of thousands of dollars or more that proper planning could have preserved. This guide covers various strategies our team uses to help Illinois clients navigate these challenges; from structuring Credit Shelter Trusts that fully utilize both spouses’ exemptions, to tax-loss harvesting, Roth conversion strategies, and charitable giving vehicles that serve both your values and your tax picture. These are not theoretical concepts. Rather, they are the frameworks we implement for our Illinois-based clients. Disclosure RISE Investment Management, LLC ("RISE" or "RISE Investments") is an investment adviser registered under the Investment Advisers Act of 1940. Registration of an investment adviser does not imply any level of skill or training. This publication is solely for informational purposes and past performance is not indicative of future results. Any description of products, services, and performance results of RISE contained in this publication are not an offering or a solicitation of any kind. No advice may be rendered by RISE Investments unless a client service agreement is in place. Advisory services are only offered to clients or prospective clients where RISE Investments and its representatives are properly licensed or exempt from licensure. All of the information in this publication is believed to be accurate and correct as the date set forth. RISE does not have or accept responsibility or an obligation to update such information. Please note, this article is for education purposes and should not be treated as tax or legal advice. This article is not a substitute for legal or tax advice from your professional legal or tax advisor.

There are multiple ways to own the S&P 500 index including the popular Market Capitalization Weighted (“Market-Cap”) S&P 500 index and the lesser known Equal Weighted (“Equal-Weight”) S&P 500 index. The Equal-Weighted S&P 500 index has begun to outperform the Market-Cap S&P 500 in 2026. The Equal-Weighted S&P 500 index is an effective way to bolster diversification and take advantage of broader market opportunities. Background: Market-Cap vs. Equal-Weight S&P 500 Index Introduction The S&P 500 is the most well-known equity index comprising of the largest 500 corporations in the United States. The most common composition of the S&P 500 is the Market-Cap S&P 500 index which weights each constituent relative to the stock’s market capitalization. Alternatively, the Equal-Weight S&P 500 index assigns an equal weight to each of the 500 constituents.   To visualize the difference between the two indices, here are the top 10 constituents of the Market-Cap S&P 500 index and those same companies’ weightings in the Equal-Weight S&P 500 index. Performance The Equal-Weight S&P 500 index is off to one of the best starts to 2026 versus the Market-Weight S&P 500 index in decades [1]. Despite the recent outperformance of the Equal-Weight S&P 500 index, the long-term relative performance gap between the Equal-Weight and the Market-Cap S&P 500 index is at the largest in decades.   Mean reversion to historical levels would imply considerable relative outperformance for the Equal-Weight S&P 500 index. Rolling Three-Year Relative Performance [2] Long-term outperformance of the Equal-Weight S&P 500 index is primarily driven by greater exposure to smaller companies versus larger companies. The Market-Cap S&P 500 index is overweight the largest companies and is underweight the smaller companies. Financial studies have showed that smaller sized companies outperform larger sized companies over multiple market cycles [3]. Benefits of Equal-Weight S&P 500 Index We observe three main benefits of the Equal-Weight S&P 500 index at the current market juncture.   Disciplined Re-balancing The Equal-Weight S&P 500 index re-balances on a quarterly basis by trimming the positions that have outperformed in the quarter and adding to the positions that have underperformed in the quarter. This mechanism reduces exposure to higher valued larger sized companies and bolsters exposure to cheaper smaller sized companies. Additionally, this disciplined process prevents concentration risk as holdings are re-weighted to the 0.2% target weighting.   Diversification Benefits Exposure to the Equal-Weight S&P 500 index not only significantly reduces concentration risk but boosts exposure to a broader array of industries. The difference in industry exposure of the Market-Cap and the Equal-Weight S&P 500 indices is noteworthy. The Equal-Weight S&P 500 index increases exposure to cyclical industries such as industrial stocks while offering far more reasonable overall sector exposure as opposed to the technology heavy Market-Cap S&P 500 index.   Attractive Fundamentals and Valuations The recent outperformance of the Market-Cap S&P 500 index has solely been driven by multiple expansion as earnings growth over the last ten years is virtually identical [4]. This puts the Market-Cap S&P 500 index at higher risk of multiple contraction. The valuation differential between the Equal-Weight S&P 500 index and the Market-Cap S&P 500 index favors the Equal-Weight S&P 500 index going forward. Conclusion Incorporating the Equal-Weight S&P 500 index in portfolios reduces exposure from Mega-Cap technology stocks and increases exposure to a potentially underweight set of stocks based on industry, size, and valuation. Footnotes [1] Chart of the Week: Year of the equal-weighted S&P 500? Financial Times, as of February 21 st , 2026. [2] The ‘Great Narrowing’: S&P 500 concentration. RBC Wealth Management, as of January 22, 2026. [3] The most referenced study on smaller company outperformance is the Fama-French Three Factor model developed by Universify of Chicago professors Eugene Fama and Kenneth French. [4] 2025 U.S. Value Review Letter. Lyrical Asset Management, as of January 28 th , 2026. Disclosure RISE Investment Management, LLC ("RISE" or "RISE Investments") is an investment adviser registered under the Investment Advisers Act of 1940. Registration of an investment adviser does not imply any level of skill or training. This publication is solely for informational purposes and past performance is not indicative of future results. Any description of products, services, and performance results of RISE contained in this publication are not an offering or a solicitation of any kind. No advice may be rendered by RISE Investments unless a client service agreement is in place. Advisory services are only offered to clients or prospective clients where RISE Investments and its representatives are properly licensed or exempt from licensure. All of the information in this publication is believed to be accurate and correct as the date set forth. RISE does not have or accept responsibility or an obligation to update such information. Please note, this article is for education purposes and should not be treated as tax or legal advice. This article is not a substitute for legal or tax advice from your professional legal or tax advisor.

For many investors, a significant portion of their wealth can become tied to one, or a small number of, stock position(s). This may be the result of long-term investing, equity compensation, the sale of a business, or early investment in a high-performing company. While concentrated stock positions can generate substantial wealth, they also introduce heightened portfolio concentration risk and significant tax considerations.   From a portfolio management perspective, excessive concentration undermines diversification, one of the most reliable tools for managing risk. However, selling a large highly appreciated stock position outright can result in significant capital gains taxes and potentially expose the investor to the additional 3.8% Net Investment Income Tax (NIIT). These taxes can erode a meaningful portion of the wealth created in the stock positions.   The good news is that there are thoughtful strategies available to help investors reduce concentration risk while managing taxes efficiently. Understanding the Risks of Concentration Investors must first understand why concentrated positions warrant attention. When a large percentage of a portfolio is invested in one stock, performance becomes heavily dependent on the fortunes of that single company. Even highly profitable and well-established companies can face market downturns, regulatory challenges, industry disruption, management changes, and earnings volatility. While the stock may have performed exceptionally in the past, relying too heavily on it going forward can expose the investor to unnecessary risk. At the same time, many concentrated positions carry low cost bases due to years of appreciation. Selling these shares can generate sizable capital gains taxes, particularly for investors in higher tax brackets. This creates a natural hesitation to diversify.   The challenge is to balance risk reduction with tax efficiency. Six Strategies to Navigate Concentrated Stock Positions Gradual and Strategic Selling Over Time: One of the most straightforward approaches is to reduce the position gradually rather than all at once. By spreading sales over multiple years, investors can: Manage capital gains tax exposure Potentially remain in lower tax brackets Align stock sales with income fluctuations Take advantage of favorable market conditions   This systematic approach allows investors to steadily reduce concentration risk while maintaining flexibility. In some cases, selling during years of lower income, such as early retirement, can further enhance tax efficiency.   While this strategy does not eliminate taxes, it often results in a lower overall tax burden compared to a large one-time sale that can push the investor’s long-term capital gains tax bracket from 15% to 20%. Tax-Loss Harvesting: Tax-loss harvesting involves selling investments that have declined in value to realize capital losses. These losses can then be used to offset capital gains from selling appreciated stock. For example: Capital losses offset capital gains dollar-for-dollar Up to $3,000 of capital losses can be used to reduce taxable ordinary income each year Unused capital losses can be carried forward indefinitely   When coordinated carefully, tax-loss harvesting can significantly reduce the tax impact of diversifying a concentrated position. This strategy requires ongoing monitoring and a well-structured taxable portfolio, but can be a powerful tool when executed properly.   Gifting Shares as Part of Estate and Family Planning: Gifting appreciated stock to family members or irrevocable trusts can help: Reduce future estate taxes Shift tax implications of future appreciation to heirs Potentially take advantage of lower tax brackets   Annual gift tax exclusions and lifetime exemptions should be used strategically. Additionally, certain trust structures may provide further tax efficiency and asset protection.   It is important to note that heirs typically inherit the original cost basis of the shares, meaning capital gains taxes may still apply when they sell. Regardless, gifting can be an effective long-term wealth transfer strategy when coordinated with broader estate planning. For example, if you have adult children, this strategy can serve a double purpose of transferring wealth, creating more shared experiences with your children, plus potentially reducing estate taxes at the same time. Utilizing Exchange Funds for Tax-Deferred Diversification: Exchange funds are specialized investment vehicles that allow multiple investors to pool their concentrated stock positions in exchange for ownership in a diversified portfolio. Key benefits include: Immediate diversification No capital gains tax triggered at the time of the exchange (in most structures)   However, exchange funds typically come with high minimum investment requirements, long lock-up periods (often seven years or more), and limited liquidity.   After the lock-up period, investors receive a diversified basket of stocks. Exchange funds can be an effective solution for investors with very large positions who want diversification without immediate tax consequences.   Hedging Strategies Using Options: Sophisticated investors may use stock option strategies to manage downside risk while deferring a taxable sale of stock. One common technique is a “collar” strategy, which generally involves buying a protective put option to limit downside risk and simultaneously selling a call option to help offset the cost of the protective put.   This creates a range of potential outcomes where the stock is protected from major losses but may also have capped upside potential.   While collars can be effective risk management tools, they take stock option experience to execute and require careful structuring to avoid unintended tax or regulatory consequences. These strategies are typically implemented with the guidance of financial professionals experienced in derivatives and tax planning.   Donating Appreciated Shares to Charity or Donor-Advised Funds: For charitably inclined investors, donating appreciated stock is one of the most tax-efficient ways to reduce a concentrated position. When shares are donated directly to a qualified charity or Donor-Advised Fund (DAF): The investor avoids paying capital gains tax on the appreciation A charitable deduction is generally available for the full fair market value of the shares donated up to 30% of the investor’s Adjusted Gross Income, subject to additional limitations introduced by recent tax law The charity can sell the stock without tax consequences   Donor-advised funds offer additional flexibility by allowing investors to take an immediate tax deduction while distributing grants to charities over time. For many high-net-worth families, charitable giving becomes a core component of managing concentrated stock risk.   It is important to note that beginning in 2026, the tax deduction benefit of charitable contributions is capped at the 35% tax bracket. For taxpayers in the top tax bracket (37%), the value of their deduction will be roughly 35 cents per dollar donated instead of 37 cents. The Value of an Integrated Strategy In practice, the most effective approach often involves a combination of several strategies rather than relying on just one. For example, a RISE Investments advisor may recommend a combination like the following: Gradual selling over time Paired with tax-loss harvesting Alongside charitable donations And selective hedging for risk management   This coordinated approach allows investors to diversify thoughtfully while keeping taxes under control. However, every investor’s situation is unique. Factors such as income level, tax bracket, investment timeline, charitable goals, liquidity needs, and estate planning considerations all play a role in determining the optimal strategy. Conclusion Concentrated stock positions often represent success. Years of growth, smart decisions, or entrepreneurial achievement. However, allowing a single stock position to dominate a portfolio can expose investors to unnecessary risk that could result in derailment of their financial plan.   At the same time, acting too quickly without considering tax consequences can significantly reduce long-term wealth. With careful planning and the right guidance, it is possible to: Reduce concentration risk Improve portfolio diversification Preserve after-tax returns Align investments with long-term financial goals   In our opinion, proactive management of concentrated positions is one of the most important steps investors can take to protect and grow their wealth over time. A thoughtful, tax-aware strategy can help ensure that the success of yesterday does not become the risk of tomorrow. Disclosure RISE Investment Management, LLC ("RISE" or "RISE Investments") is an investment adviser registered under the Investment Advisers Act of 1940. Registration of an investment adviser does not imply any level of skill or training. This publication is solely for informational purposes and past performance is not indicative of future results. Any description of products, services, and performance results of RISE contained in this publication are not an offering or a solicitation of any kind. No advice may be rendered by RISE Investments unless a client service agreement is in place. Advisory services are only offered to clients or prospective clients where RISE Investments and its representatives are properly licensed or exempt from licensure. All of the information in this publication is believed to be accurate and correct as the date set forth. RISE does not have or accept responsibility or an obligation to update such information. Please note, this article is for education purposes and should not be treated as tax or legal advice. This article is not a substitute for legal or tax advice from your professional legal or tax advisor.

Purchasing your first home is a great time for young adults to begin estate planning. Avoiding probate should be a priority and can be achieved by proper estate planning techniques. When undergoing estate planning, make sure your mortgage and insurance information is up to date. What is Estate Planning? Estate planning is essential to young homeowners. It involves putting together a strategy to manage your financial situation, including your home, in an event of incapacitation or death.   Additionally, estate planning provides guidance into important topics such as healthcare decisions should something happen as well as guardianship to young children. Estate planning ensures asset protection, legacy, clarity, and care for your loved ones, including your children.   Starting estate planning when purchasing your first home is often appropriate as it tends to correspond with other major life events such as having a child or accumulating wealth.   Given your home is likely the single largest asset on your personal balance sheet, ensuring your home is handled according to your wishes is particularly important.     What is Probate and Why Should it be Avoided? Without proper estate planning, upon passing your family would be stuck with the burden of dealing with probate, which is a lengthy, public, and pricey process where a judge oversees the administration of your estate instead of your loved ones. For instance, without proper estate planning, your home may be inherited by relatives that you had no intention of having an ownership interest in the home creating family conflict for an illiquid asset. How Can Homeowners Avoid Probate? There are two common ways in which homeowners can avoid probate.   Revocable Living Trust A revocable trust is a document created to manage your assets, including your home, during your lifetime and distribute the remaining assets after your death as you desire. The trust can be changed during your lifetime as your circumstances change. A successor trustee is chosen and responsible for distributing the assets to the beneficiaries according to the rules of the trust agreement. A successor trustee will also make important decisions on your behalf should your incapacity occur.   Creating a revocable trust allows for bypassing probate and more control over assets to your loved ones, including your children. It is important to not only create the trust but to fund assets such as your home into the trust. This generally involves legally changing the property’s title from the owner’s name to the trust’s name.   Designate a Beneficiary Homeowners that do not have a revocable living trust may opt to designate a beneficiary in the event something should happen. Two common ways to designate a beneficiary include Joint Tenancy with Rights of Survival (JTWROS) and Transfer on Death (TOD) designations. What Happens to your Mortgage Should Something Happen? If there are two or more borrowers on a mortgage and a borrower passes away, the first thing you should do is reach out to the current mortgage servicer. You will have to let them know that a borrower has passed away. If the surviving borrower is able to make the mortgage payments on their own, there will not be any changes to the terms of the existing mortgage. Payments will still need to be made because if the mortgage stops getting paid, the servicer or bank could start foreclosure proceedings.   When you do call the mortgage servicer, they will ask for a certificate of death so make sure you have that handy. If you are unable to afford the mortgage on your own, you could also reach out to the servicer to see if there are any loan modification or refinancing options available to the remaining borrower(s).     Should I Update my Mortgage and Insurance after Estate Planning? After estate planning and closing on your home, you may want to look into mortgage protection insurance and life insurance. Both types of insurance offer financial protection in case you or a loved one passes away.   Mortgage Protection Insurance can help payoff the remaining balance of the mortgage if one of the borrowers passes away. Life Insurance can be used in a variety of ways, including choosing to payoff a mortgage in full in the event of someone passing away.     Conclusion Buying your first home is a major life milestone. It is important to carefully plan for the home in unlikely but possible scenarios such as death or incapacity. Being aware of what happens to your home and mortgage is valuable information to share with loved ones. Authors This article was written in collaboration by Thomas Van Spankeren and Mike Angus . Thomas Van Spankeren RISE Investments M: 708-860-4112 E: thomas@riseinvestmentsusa.com A: 134 N LaSalle Suite 1760, Chicago, IL 606 02 Mike Angus LeaderOne Financial Corporation NMLS #1398541 M: 708-912-9978 E: MikeAngus@leader1.com A: 1111W 22 nd  Street, Suite 620, Oak Brook, IL 60523 Disclosure RISE Investment Management, LLC ("RISE" or "RISE Investments") is an investment adviser registered under the Investment Advisers Act of 1940. Registration of an investment adviser does not imply any level of skill or training. This publication is solely for informational purposes and past performance is not indicative of future results. Any description of products, services, and performance results of RISE contained in this publication are not an offering or a solicitation of any kind. No advice may be rendered by RISE Investments unless a client service agreement is in place. Advisory services are only offered to clients or prospective clients where RISE Investments and its representatives are properly licensed or exempt from licensure. All of the information in this publication is believed to be accurate and correct as the date set forth. RISE does not have or accept responsibility or an obligation to update such information. Please note, this article is for education purposes and should not be treated as tax or legal advice. This article is not a substitute for legal or tax advice from your professional legal or tax advisor. LeaderOne Financial Corporation is licensed by the Arizona Department of Financial Institutions. Mortgage Banker License # - 0918657. The California Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act.  The North Carolina Commissioner of Banks Office. License #L-186257.  The Washington Department of Financial Institutions, License No. CL-12007. An Illinois Residential Mortgage Licensee, MB 6760699.         Corporate Headquarters: 7500 College Blvd Suite 1150; Overland Park, KS 66210, NMLS ID #12007 http://www.nmlsconsumeraccess.org .  Toll Free (800) 270-3416.  This advertisement does not constitute a loan approval or a loan commitment. Loan approval and/or loan commitment is subject to final underwriting review and approval.

If you hold employer stock inside a 401(k) or other qualified retirement plan, taxes can quietly become one of the largest drags on long-term wealth. Most retirement distributions are taxed at ordinary income tax rates, which are often higher than capital gains rates, regardless of how the assets inside the plan performed. The Net Unrealized Appreciation (NUA) strategy is one of the few exceptions to this rule. When applied correctly, this strategy can significantly reduce lifetime taxes. The unfortunate case is that it is also one of the most misunderstood and underutilized planning strategies available.  What Is Net Unrealized Appreciation? Net Unrealized Appreciation refers to the difference between the cost basis of employer stock held in a qualified retirement plan and its current market value. In simple terms, it is the built-in gain on company stock that has accumulated while held inside a retirement account, such as a 401(k).   For example, if you acquired company stock inside your 401(k) for $50,000 10 years ago and it is now worth $250,000, the net unrealized appreciation is $200,000. Under traditional retirement plan rules, that entire $250,000 would typically be taxed as ordinary income when distributed to you throughout retirement. The NUA strategy allows for the $200,000 net unrealized appreciation to instead be taxed at long-term capital gains rates.   Given the significant difference between ordinary income and capital gains tax rates for many investors, this distinction can result in substantial tax savings. How the NUA Strategy Works The NUA strategy involves a special type of distribution from a qualified retirement plan that holds employer stock. When executed properly, it allows the investor to:   Transfer employer stock “in-kind” from the retirement plan to a taxable brokerage account. Pay ordinary income tax only on the stock’s original cost basis at the time of the “in-kind” distribution. Defer taxation on the appreciation until the stock is sold, at which point the gain is generally taxed at long-term capital gains rates. The remaining assets in the retirement plan (such as bonds, mutual funds, or ETFs), are typically rolled into an IRA, preserving tax deferral but still subject to ordinary income taxes when distributed.   Using the earlier example, if the stock’s cost basis is $50,000, only that amount is taxed as ordinary income when the stock is distributed. The $200,000 of appreciation is not taxed immediately. Instead, it is taxed later when the stock is sold, usually at long-term capital gains rates, regardless of how long the stock is held after distribution.   Key Requirements to Qualify for Favorable NUA Tax Treatment The rules governing NUA are strict, and any missteps can permanently eliminate the tax benefit. Several conditions must be met:   The distribution must be a lump-sum distribution. A lump-sum distribution means that the entire balance of the qualified plan is distributed within a single tax year. Partial distributions generally do not qualify. The distribution must follow a triggering event. Triggering events include: Separation from service Reaching age 59½ Disability Death Employer stock must be distributed in-kind. This means the shares must be transferred directly into a taxable brokerage account. Selling the stock inside the qualified plan before distribution disqualifies it from NUA treatment. All other plan assets must be fully distributed. Typically, non-employer stock assets in the plan are rolled into an IRA as part of the same transaction. This maintains the tax-deferred treatment of the non-employer stock assets until they’re distributed in retirement years. Because these rules are unforgiving, professional guidance is not optional. It is essential.   The Tax Benefits of NUA The primary advantage of the NUA strategy is the potential conversion of high ordinary income taxation into more favorable capital gains taxation. For many high earners, Federal ordinary income tax rates can exceed 35%. Long-term capital gains rates, by contrast, are often 15% or 20% at the federal level depending on the investor’s income. The appreciation is not subject to required minimum distributions (RMDs) once held in a taxable account. If the stock continues to appreciate after distribution, post-distribution gains are taxed under normal capital gains rules. From a planning perspective, NUA can meaningfully improve after-tax outcomes, especially for investors with highly appreciated employer stock. This treatment is what makes the NUA strategy so compelling.   When NUA May Make Sense In practice, NUA often makes sense for long-tenured employees of publicly traded companies who accumulated company stock over many years at relatively low prices. That said, NUA is not an all-or-nothing decision. In some cases, only a portion of the employer stock may be distributed using NUA, while the rest is rolled into an IRA to maintain diversification and risk control. The NUA strategy is most compelling when certain factors, such as the following, are present: The employer stock has experienced significant appreciation. The cost basis of the stock is low relative to its market value. The investor expects to be in a higher tax bracket in retirement. The investor is planning to execute a Roth IRA conversion strategy in retirement. The investor plans to diversify the concentrated stock position over time. When NUA May Not Be Appropriate Despite its appeal, NUA is not universally beneficial. Situations where it may not make sense include: The stock has minimal appreciation. The investor expects to be in a much lower tax bracket in retirement. The stock represents an unacceptably large concentration risk. Liquidity needs or charitable goals favor other planning strategies.   It is also important to recognize that once the NUA election is effectively made, it generally cannot be undone. Poor execution can result in higher taxes than a standard IRA rollover. Why Professional Planning Matters The NUA strategy sits at the intersection of tax planning, retirement planning, and investment risk management. While the tax benefits can be substantial, they should never be evaluated in isolation.   Concentration risk, cash flow needs, Medicare premiums, and long-term estate planning objectives all matter. In our view, the best NUA decisions are those that integrate tax efficiency with disciplined diversification and a broader financial plan. Disclosure RISE Investment Management, LLC ("RISE" or "RISE Investments") is an investment adviser registered under the Investment Advisers Act of 1940. Registration of an investment adviser does not imply any level of skill or training. This publication is solely for informational purposes and past performance is not indicative of future results. Any description of products, services, and performance results of RISE contained in this publication are not an offering or a solicitation of any kind. No advice may be rendered by RISE Investments unless a client service agreement is in place. Advisory services are only offered to clients or prospective clients where RISE Investments and its representatives are properly licensed or exempt from licensure. All of the information in this publication is believed to be accurate and correct as the date set forth. RISE does not have or accept responsibility or an obligation to update such information. This article is for education purposes and should not be treated as tax or legal advice. This article is not a substitute for legal or tax advice from your professional legal or tax advisor.

Equities grinded higher amidst strong earnings growth, resilient consumer spending, and looser monetary policy. Fixed income markets signaled appropriate monetary policy, despite labor market concerns. Market conditions favor re-balancing exposure into asset classes such as dividend paying equities.   Fourth Quarter Update Global equity markets grinded higher in the quarter as the Federal Reserve cut interest rates, inflation moderated, and corporate earnings exceeded expectations. Notably, cyclical equities (such as small-cap value equities) contributed to the broader market rally, which speaks to economic resiliency despite labor market concerns.   Short-term interest rates have declined more than long-term interest rates, which caused the yield curve to become positively sloped. A positive yield curve generally implies monetary policy is in an appropriate spot, low risk of a recession, and moderate inflation. Additionally, a positively sloped yield curve is constructive for bank lending, which drove the economic-sensitive financials sector to all-time highs [1]. *Source: Yahoo Finance We believe W all Street forecasts are still too low relative to economic activity. For instance, the Federal Reserve GDPNow prediction for fourth quarter real GDP growth is 2.7%, significantly higher than Wall Street’s average consensus of below 1.0% [2]. Our constructive view on economic conditions was tested throughout 2025, however our base case remains for economic momentum to continue into 2026. Buy Straw Hats in Winter: The Case for Dividend Investing Buy straw hats in winter is a famous quote attributed to 19 th  century investor, Russell Sage. Purchasing assets that are out of favor, cheap, and in low demand can yield lucrative results. While dividend equities have been a recent underperformer, we have long-term conviction in companies that both pay and grow their dividends sustainably. Recent and Historical Performance Equities that have a history of dividend growth and higher dividend yields have recently underperformed companies with low dividend yields. Since 1973, S&P 500 companies that initiate, grow, and pay dividends have outperformed those that do not pay dividends, and especially those that cut their dividends. The outperformance has also come with significantly less risk to the investor. A Buying Opportunity for Dividend Stocks Today? The opportunity set to buy dividend equities is compelling. The recent outperformance of low-dividend yielding equities versus high-dividend yielding equities is unprecedented despite historical outperformance of high-dividend yielding equities.   Mean reversion to historical levels of outperformance would result in high-dividend yielding equities outperforming by  roughly 3.8% per annum on a long-term basis [4]. The current valuation of high-dividend yielding equities versus low-dividend yielding equities is favorable for mean reversion. The opportunity set in dividend investing is also not limited to domestic equities. Our positive outlook on overseas equities, as noted in our 3 rd Quarter 2024 Market Commentary ,  is supported by the generous dividend yield differential between domestic and global equities [5]. Enhance Long-Term Performance: Reinvest Dividends Investors that reinvest dividends can unlock the potential of compounded growth over the long-term. For example, a hypothetical $100 investment in the S&P 500 from 1940 through 2024, with and without dividend reinvestment, is noteworthy. We regularly assess client cash flow needs. For clients without near-term needs, we reinvest dividend payments where appropriate. Important Risk with Dividend Investing Dividend investing does not come without risk. Companies that cut or eliminate dividends have historically produced poor returns and excess risk. Often, an abnormally high dividend yield is a sign of balance sheet stress and a potential for a dividend cut.   A strategy that can reduce the risk of dividend cuts is active management. Actively avoiding companies that have concerns around their dividend policy and focusing on companies with healthy balance sheets and potential for dividend appreciation can reduce risk as well as increase total return and income generation potential. Parting Thoughts As we look ahead to 2026, we believe the investment environment is likely to present meaningful opportunities for disciplined rebalancing and thoughtful portfolio positioning. Market leadership has been narrow in recent years, yet periods like this have historically rewarded investors willing to look beyond what has recently performed best and toward areas where valuations and fundamentals are more compelling.   In a setting where interest rates are declining and income from traditional fixed income is becoming less attractive, dividends can serve as an important and flexible tool. Dividend-paying companies have the potential to provide reliable income, downside resilience, and long-term total return, particularly when dividends are growing and reinvested over time. Importantly, dividend strategies are not solely about income. They can also play a meaningful role in managing risk and enhancing portfolio durability across market cycles.   As always, our focus remains on aligning portfolios with each client’s long-term objectives, cash flow needs, and tolerance for risk. We remain committed to active oversight, prudent rebalancing, and positioning portfolios to navigate both opportunities and uncertainties ahead.   We appreciate the trust you place in us, and we look forward to guiding you through the year ahead with clarity, discipline, and perspective.   Sincerely, The RISE Team Footnotes [1] Data is per Federal Reserve Bank of St. Louis as of December 2025. [2] Data is per Atlanta Fed GDPNow as of January 2026. [3] Average Annual Returns and Volatility by Dividend Policy in the S&P 500 Index (1973-2024) from Ned Davis research and Hartford Funds, March 2025. [4] As of September 2025. Graph is the 20-year annualized return of the highest 20% of stocks by dividend yield minus that of the lowest 20% of stocks by dividend yield. Data is from Federated Hermes and Ken French Data Library. [5] Data is per Federated Hermes as of September 2025. Disclosure RISE Investment Management, LLC ("RISE" or "RISE Investments") is an investment adviser registered under the Investment Advisers Act of 1940. Registration of an investment adviser does not imply any level of skill or training. This publication is solely for informational purposes and past performance is not indicative of future results. Any description of products, services, and performance results of RISE contained in this publication are not an offering or a solicitation of any kind. No advice may be rendered by RISE Investments unless a client service agreement is in place. Advisory services are only offered to clients or prospective clients where RISE Investments and its representatives are properly licensed or exempt from licensure. All of the information in this publication is believed to be accurate and correct as the date set forth. RISE does not have or accept responsibility or an obligation to update such information. This article is not a substitute for legal or tax advice from your professional legal or tax advisor.

Inheriting an IRA can be a mixed experience. On one hand, it may represent a meaningful financial legacy from a family member or loved one. On the other, it comes with a set of complex rules that determine when and how you must withdraw the funds, and the rules have shifted significantly in recent years.   Navigating these requirements thoughtfully can make a material difference in taxes, long-term growth potential, and the flexibility you preserve around your broader financial plan. Here are the key components beneficiaries should understand, along with the practical options available.   1. First, Determine What Type of IRA You Inherited Your obligations depend heavily on the type of account:   Traditional IRA: Withdrawals are taxable as ordinary income. Decisions revolve around timing your distributions to minimize tax drag.   Roth IRA : Withdrawals are generally tax-free. However, inherited Roth IRAs are still subject to distribution rules, even though the original owner was never subject to required minimum distributions (RMDs).   2. Identify Whether You Are an Eligible or Non-Eligible Designated Beneficiary Under the SECURE Act and SECURE Act 2.0, which primarily apply to individuals that passed away in 2020 or later, IRA beneficiaries fall into two broad categories:   Eligible Designated Beneficiaries (EDBs)  - Includes: Surviving spouses Minor children of the deceased (until they reach the age of majority) Individuals who are disabled or chronically ill Beneficiaries not more than 10 years younger than the account owner   EDBs have more flexible withdrawal options and the ability to “stretch” distributions over their own life expectancy.   Non-Eligible Designated Beneficiaries (NEDBs)  – Includes virtually everyone else: Adult children Grandchildren Siblings and other beneficiaries   NEDBs face a more rigid distribution requirement: the 10-year rule , which mandates that the entire IRA account must be emptied by the end of the 10 th  year after the original owner’s death.   3. Understand the 10-Year Rule - The Most Common Scenario Today For most beneficiaries, the rule is straightforward in principle but more challenging in practice. The account must be fully distributed within 10 years from when the original account owner passed away. The nuance is whether annual RMDs apply during those 10 years.   The general framework: If the original owner died before  they were required to begin taking annual distributions, you do not  need to take annual RMDs (although you are still eligible to), but you must empty the IRA by December 31st of the 10 th  year following the original account holder's death. If the original owner died after  they were required to begin taking annual distributions, then you must take annual RMDs during the first nine years of the 10-year period, and the remaining balance of the account must still be fully withdrawn by the 10 th year. To calculate these annual RMDs, you divide the prior year's year-end balance of the account by the life expectancy factor for your age (using the appropriate IRS table). Charles Schwab provides a complimentary Inherited IRA distribution calculator, which can be accessed here .   Finally, it is important to identify if the original IRA owner died before taking their RMD in the year of death. If they did not take their RMD that year, the beneficiary must take the RMD by the end of that year, which is referred to as Income in Respect of a Decedent (IRD). The IRD could face double taxation, being taxable as ordinary income to the beneficiary and subject to   estate taxes if the original owner’s estate exceeds their lifetime tax exemption. However, there is an IRS provision for an income tax deduction that can be claimed for the estate tax paid on the IRD, helping to avoid double taxation. The differing interpretations of these rules have been a point of IRS guidance updates and delays, so beneficiaries should remain attentive to rule adjustments in the coming years. Simply ignoring the rule is a mistake, as it can lead to penalties and a large tax bill in the final year if you have not taken all the money out. 4. If You Are a Surviving Spouse: More Options, More Strategy Spouses receive the broadest flexibility, which opens meaningful planning opportunities:   Option A: Roll the Inherited IRA into your own IRA (Traditional or Roth) This is the most common solution for spouses, particularly younger ones that do not need access to the money right away. If you are an eligible surviving spouse, you can delay RMDs until you reach your own RMD age, and you will be treated as the original owner. This maximizes long-term tax-deferred or tax-free growth. Your RMD age depends on your birth year, due to changes from the SECURE 2.0 Act: Option B: Remain as a Beneficiary of an Inherited IRA This is often used when the surviving spouse is under 59.5 years old but needs access to some or all of the Inherited IRA assets immediately. By going with this option, you will not be subject to any early withdrawal penalty prior to age 59.5 as you would otherwise be if you rolled the Inherited IRA into your own non-inherited IRA.   Once you reach age 59.5 or no longer need to use money from the Inherited IRA, you might consider transferring the inherited assets into your own IRA.   If you go with option B, you must begin taking RMDs in the year after the year of death, or you can delay beginning RMDs until your spouse would have reached RMD age (refer to table above) in the event your spouse did not attain RMD age before the year of death.   Option C: Convert Inherited Traditional IRA assets to a Roth IRA (indirectly) Spouses can roll the Inherited IRA assets into their own Traditional IRA and then complete a Roth conversion. This option is particularly attractive when the surviving spouse expects to be in a higher tax bracket in the future or wants to leave their beneficiaries a tax-free legacy.   Choosing the right path is highly situational and should be coordinated with broader retirement-income and tax-planning strategies. 5. RMD Strategy Matters, Even When You Do Not “Have To Take Them” For non-eligible beneficiaries subject to the 10-year rule, the main question is when to take distributions. There is no one-size-fits-all formula, but several considerations guide the decision: Cash flow needs:  Some beneficiaries need immediate income; others prefer to defer.   Current and future tax brackets:  If you expect your income to rise in the future, taking earlier distributions can minimize your lifetime tax exposure.   Market conditions:  In years of strong performance, taking gains early can reduce the risk of “forced” withdrawals during a downturn late in the 10-year window.   Portfolio allocation:  Coordinating Inherited IRA withdrawals with rebalancing or other accounts can help manage risk and taxes holistically.   Waiting until year 10 may seem convenient, but it can create a lump-sum taxable event that nudges the beneficiary into a higher tax bracket. For many, a more measured approach, such as equal  annual withdrawals, keeps taxes more predictable. 6. Roth IRAs Still Require a Strategy Even though distributions from Inherited Roth IRAs are typically tax-free, the 10-year rule still applies for most beneficiaries. The benefit, however, can be substantial. Allowing the Roth to grow tax-free for the entire decade before distributing it can meaningfully increase the ultimate value received.   For example, take an Inherited Roth IRA with an initial balance of $250,000. Assuming 7% linear growth, someone who waits 10 years before taking a lump sum distribution would end up with over $93,000 of more wealth than someone who took distributions in each of the 10 years. 7. Coordinate the Inherited IRA with Your Broader Plan The right investment strategy cannot be determined in isolation. Inherited IRAs are just one component of a financial picture that might also include: Employer retirement plans Taxable brokerage accounts Roth IRAs Real estate or business interests Charitable intentions Future income expectations Medicare planning   A thoughtful integration of the inherited IRA can improve cash-flow resilience today and reduce long-term tax exposure. This is an area where professional advice consistently adds value, as the rules are complex and occasionally shifting. 8. Be Mindful of Missed RMDs and Penalties If RMDs apply and are missed, the IRS imposes penalties. Fortunately, the IRS often grants relief when beneficiaries take corrective action promptly and file the appropriate forms. Still, avoiding errors upfront saves time, taxes, and administrative burden. Conclusion An inherited IRA carries both opportunity and responsibility. The decisions beneficiaries make, sometimes within the first year, can influence taxes and long-term outcomes for a decade or more. Whether your priority is maximizing growth, smoothing taxable income, preserving optionality, or simplifying your financial life, a clear strategy is essential. Disclosure RISE Investment Management, LLC ("RISE" or "RISE Investments") is an investment adviser registered under the Investment Advisers Act of 1940. Registration of an investment adviser does not imply any level of skill or training. This publication is solely for informational purposes and past performance is not indicative of future results. Any description of products, services, and performance results of RISE contained in this publication are not an offering or a solicitation of any kind. No advice may be rendered by RISE Investments unless a client service agreement is in place. Advisory services are only offered to clients or prospective clients where RISE Investments and its representatives are properly licensed or exempt from licensure. All of the information in this publication is believed to be accurate and correct as the date set forth. RISE does not have or accept responsibility or an obligation to update such information. This article is for education purposes and should not be treated as tax or legal advice. This article is not a substitute for legal or tax advice from your professional legal or tax advisor.

Trump Accounts were introduced as part of the One Big Beautiful Bill passed in July 2025. Trump Accounts are intended to help children start investing early and benefit from long-term equity appreciation. The United States Treasury will add $1,000 to Trump accounts for children born between 2025 and 2028. When the child turns 18, the Trump Account generally follows Traditional IRA rules. What is a Trump Account? Trump Accounts were established as part of the One Big Beautiful Bill (OBBBA) to create a tax-advantaged savings and investment account for children under the age of 18. The parent or guardian opens and manages the account, while the child is considered the account owner. To be eligible, the child must be a U.S. citizen with a social security number. In addition, both parents or guardians must also have a social security number. Who can Contribute to a Trump Account? Children born between January 1st, 2025 and December 31st, 2028 are eligible for a one-time $1,000 contribution from the United States Treasury. Parents, guardians, relatives, employers, and other individuals can also also make combined contributions of up to $5,000 annually. Employers can contribute up to $2,500 for an employee or the employee’s dependent, however employer contributions also count towards the $5,000 annual limit. The $1,000 one-time federal contribution does not count against the $5,000 limit. Additionally, charities may also make qualified contributions to Trump Accounts if given a qualified class of account beneficiaries. For instance, on December 2 nd , 2025, the Michael and Susan Dell Foundation announced they will pledge $6.25 billion to seed 25 million Trump Accounts with $250 each for children born before 2025 that do not qualify for the federal contribution. Philanthropic contributions do not count towards toward the $5,000 limit. What can a Trump Account be Invested in? Trump Accounts must be invested in certain exchange-traded funds (ETFs) or mutual funds that track an American equity index. For example, an ETF that tracks the S&P 500 index would be an eligible investment. What Happens When the Child Reaches 18 Years of Age? Upon age 18, the Trump Account generally follows Traditional IRA rules. Only the child is eligible to contribute to the account after reaching age 18, and they must have earned income to contribute. What are the Distribution Rules for a Trump Account? Children under the age of 18 are not able to take distributions under any circumstances. Once the child turns 18, the Trump Account generally follows Traditional IRA rules. Subject to certain exceptions, if the beneficiary takes a distribution before age 59 ½ , a 10% penalty will apply. When will Trump Accounts Become Available? Trump Accounts will not be available until July 4 th , 2026. The Department of the Treasury as well as the Internal Revenue Service will be providing further guidance on Trump Accounts between now and then. Parents and guardians will be able to file a new online form with the Internal Revenue Service (Form 4547) to establish a Trump Account. Conclusion While certain details of Trump Accounts are still being sorted out, Trump Accounts are likely to provide meaningful savings and growth potential for young children. Incorporating Trump Accounts into financial plans will be a key component to grow legacy value for the next generation. Disclosure RISE Investment Management, LLC ("RISE" or "RISE Investments") is an investment adviser registered under the Investment Advisers Act of 1940. Registration of an investment adviser does not imply any level of skill or training. This publication is solely for informational purposes and past performance is not indicative of future results. Any description of products, services, and performance results of RISE contained in this publication are not an offering or a solicitation of any kind. No advice may be rendered by RISE Investments unless a client service agreement is in place. Advisory services are only offered to clients or prospective clients where RISE Investments and its representatives are properly licensed or exempt from licensure. All of the information in this publication is believed to be accurate and correct as the date set forth. RISE does not have or accept responsibility or an obligation to update such information. This article is for education purposes and should not be treated as tax or legal advice. This article is not a substitute for legal or tax advice from your professional legal or tax advisor.

Leveraged Exchange-Traded Funds (ETFs) seek to amplify the daily return of an index or a single stock, typically by a factor of 2x or 3x. These products have become popular on Wall Street with over 700 leveraged equity ETFs now available. Utilizing leveraged ETFs in a long-term portfolio leads to underperformance and excessive risk.  “Whenever a really bright person who has a lot of money goes broke, it’s because of leverage.” – Warren Buffet What are Leveraged ETFs? Leveraged ETFs are investment vehicles that seek to augment the daily performance of an index or single stock by a certain factor through the use of derivatives and leverage to achieve daily results. These investment vehicles have gained popularity given increased accessibility, market speculation, and social media hype. Leveraged ETFs seek to amplify the return profile of the underlying investment such as by 2x or 3x. Three issuers of these ETFs recently began the process of offering 5x leveraged ETFs.   As of October 2025, there are over 700 leveraged equity ETFs in the United States [1]. The vast majority of those launched in 2025 are in the information technology sector [2].   Source: Bloomberg LP, VettaFi LLC How do Leveraged ETFs Operate? Leveraged ETFs utilize debt and derivatives to attempt to magnify the daily performance of their underlying index. While the leverage can serve to magnify returns when the index is up, it also magnifies losses when the index is down. To demonstrate this, we compare the hypothetical daily performance of a 3x leveraged ETF to that of the underlying index.   Why Do Levered ETFs Underperform Over Long Time Periods? Leveraged ETFs tend to underperform over long time periods for several reasons, including volatility drag, interest costs, and fund management fees.   Volatility Drag Leveraged ETFs suffer from volatllity drag primarily as a result of daily rebalancing and the compounding of returns. Higher volatility rates have a substantial drag on leveraged ETFs returns. Leveraged ETFs must also adjust their holdings on a daily basis to maintain leverage ratios, which leads to selling low and buying high.   To illustrate this concept, here is a hypothetical scenario comparing the cumulative performance of a 3x leveraged ETF to its underlying index assuming substantial downside and upside volatility. Despite the index remaining unchanged after six days, the leveraged ETF significantly underperforms in this example. Interest Costs There is a financial cost of leverage, as deriatives and borrowing are used to create the ETFs embedded leverage. The cost of financing creates a substantial drag on returns over long time periods, contributing to leveraged ETF’s underperformance. Fees The operational costs of managing a leveraged ETF are high. Most commonly referred to as the fund’s expense ratio, the costs are netted from performance and result in lower returns. While net expense ratios vary, the operational costs of a leveraged ETF typically range from 1.0% - 1.5% a year. Low-cost non-leveraged index ETFs typically have net expense ratios of less than 0.25%. Conclusion Despite the increasing popularity of leveraged ETFs, we do not view them to be suitable or advantageous in client portfolio construction. The embedded risks of leveraged ETFs are substantial, and we do not believe the financial community outlines these risks appropriately. We believe investors utilizing leveraged ETFs as part of their long-term investment plan need to seriously reconsider their investment selection. Footnotes [1] BofA Global Investment Strategy and EPFR [2] Bloomberg LP, VettaFi LLC Disclosure RISE Investment Management, LLC ("RISE" or "RISE Investments") is an investment adviser registered under the Investment Advisers Act of 1940. Registration of an investment adviser does not imply any level of skill or training. This publication is solely for informational purposes and past performance is not indicative of future results. Any description of products, services, and performance results of RISE contained in this publication are not an offering or a solicitation of any kind. No advice may be rendered by RISE Investments unless a client service agreement is in place. Advisory services are only offered to clients or prospective clients where RISE Investments and its representatives are properly licensed or exempt from licensure. All of the information in this publication is believed to be accurate and correct as the date set forth. RISE does not have or accept responsibility or an obligation to update such information. This article is for education purposes and should not be treated as tax or legal advice. This article is not a substitute for legal or tax advice from your professional legal or tax advisor.

Mutual funds often distribute year-end capital gains that are taxable at long-term or short-term capital gain tax rates. Purchasing mutual funds in the fourth quarter may leave investors with a surprise tax bill. Investors should review their mutual funds’ estimated capital gains prior to year-end and consider ways to potentially reduce tax burdens. What are the Main Features of a Mutual Fund? Mutual funds are a popular way to access professionally managed equity strategies, usually with the intent of driving outperformance. Mutual funds trade once per day at market close and are priced at net asset value.   Mutual fund managers typically trade throughout the year and build up a net profit on the sale of appreciated securities. Other factors such as shareholder redemptions and tax-loss harvesting may impact the net profit on the sale of securities. Mutual funds are required by federal tax law to distribute net realized capital gains, which tends to happen at year end.   What are Mutual Fund Capital Gain Distributions? Capital gain distributions are the net realized short-term or long-term gains that mutual funds distribute to investors. This results in a potential tax bill at the end of each year, even if the investor does not sell their mutual fund position.   Short-term capital gains are taxed at ordinary income tax rates, whereas long-term capital gains are taxed at the following rates based on the investor’s taxable income: The size of capital gain distributions can vary by fund and year, and it typically ranges from 5 - 10% of the mutual fund’s net asset value. However, certain other factors such as high turnover in the year can lead to much higher capital gain distributions.   When a capital gain distribution is paid, the net asset value of the mutual fund is simultaneously reduced by the amount of the distribution. This results in a lower unrealized gain, or even an unrealized loss for the investor's position, while the investor is still responsible for taxes on the distribution.   Three Ways to Reduce the Tax Burden of Mutual Fund Investing Mutual fund companies publish estimates of their year-end capital gain distributions in advance, allowing investors to make informed decisions about reducing the potential tax burden.   We highlight three strategies that RISE Investments leverages in client portfolios to navigate mutual fund capital gain distributions. 1) Consider Investing in an Exchange-Traded Fund (ETF) Instead Investors can likely avoid capital gain distributions by investing in an ETF as opposed to a mutual fund. ETFs are highly tax-efficient investment vehicles that rarely distribute capital gains. ETF strategies tend to be passively managed and seek to match an index’s performance, unlike actively managed mutual funds that seek outperformance.   ETFs have become popular with investors. According to EPFR Global, roughly $972 billion has flowed into equity ETFs during 2025 [2]. 2) Sell the Mutual Fund Before the Ex-Date An investor may sell a mutual fund prior to the mutual fund’s ex-dividend date (or “ex-date”). The ex-date is the first day the mutual fund trades without the right to receive the capital gain distribution. Investors should consider selling the mutual fund in advance of the ex-date if the tax consequences of selling would be more favorable than staying invested and receiving the capital gain distribution.   Selling a mutual fund prior to the ex-date would likely lead to a more favorable tax outcome than retaining the position if the investor has an unrealized loss on their mutual fund position and the mutual fund is expected to make a capital gain distribution. In this scenario, the investor should consider using the mutual fund sale proceeds to buy an ETF with similar exposure or another mutual fund with similar exposure that has already paid its capital gain distribution. 3) Use Tax-Deferred or Tax-Free Accounts to Invest in Mutual Funds Investors with tax-deferred or tax-free accounts, such as a Traditional or Roth individual retirement account (IRA), may consider using their IRA to hold mutual funds. Although the mutual funds will still pay capital gain distributions, the distributions are not taxable upon receipt. Tax-efficient investments such as ETFs tend to make the most sense to be placed in taxable accounts, whereas less tax-efficient investments like mutual funds are more advantageous to be held in tax-deferred and tax-free accounts. Conclusion Proper planning around year-end capital gain distributions can easily lead to avoiding unexpected tax surprises. There are several proactive steps that can be taken today to minimize tax burdens. Footnotes [1] Does not include Medicare surcharge taxes or state capital gain taxes. [2] Data is as of October 22, 2025. Disclosure RISE Investment Management, LLC ("RISE" or "RISE Investments") is an investment adviser registered under the Investment Advisers Act of 1940. Registration of an investment adviser does not imply any level of skill or training. This publication is solely for informational purposes and past performance is not indicative of future results. Any description of products, services, and performance results of RISE contained in this publication are not an offering or a solicitation of any kind. No advice may be rendered by RISE Investments unless a client service agreement is in place. Advisory services are only offered to clients or prospective clients where RISE Investments and its representatives are properly licensed or exempt from licensure. All of the information in this publication is believed to be accurate and correct as the date set forth. RISE does not have or accept responsibility or an obligation to update such information. This article is for education purposes and should not be treated as tax or legal advice. This article is not a substitute for legal or tax advice from your professional legal or tax advisor.

One of the more commonly misunderstood concepts in investing is the difference between risk and volatility. Many investors assume that a portfolio’s ups and downs define how risky it is, but that is not necessarily true. Understanding the difference between risk and volatility can help long-term investors maintain perspective, stay disciplined through market cycles, and avoid making emotionally driven decisions that can be compromising to wealth building.   Volatility measures the magnitude of how much an investment’s value fluctuates over a given period. We define risk  as the potential for a permanent loss of capital or failing to achieve your long-term financial goals.   Our brains are wired to interpret loss as danger, even if it is only a temporary loss “on paper”.  Thus, we understand that for most, watching the value of an investment drop tends to trigger a powerful emotional response. The media also tends to do a good job at amplifying this perception, with headlines often framing short-term market dips as “risky” events.     Volatility is Temporary High volatility indicates larger, more frequent price swings, while low volatility suggests more stable and gradual price movements.   Volatility to the downside is a reflection of market uncertainty and the market’s “mood”, which can range from fearful to euphoric. That said, volatility can make the stock market feel unpredictable for many investors. Over short periods of time, it indeed is. Prices can swing, headlines can turn negative, and investors begin to question their strategies.   While this can be unsettling, long-term investors must recognize that volatility is temporary and that it has historically paid to stay the course.   Risk: The Potential for Permanent Loss of Capital Investment risk is not about short-term price swings. Rather, it is potential for a permanent loss of capital or falling short of your financial goals. For example:   A company going bankrupt is a risk of total loss. Failing to outpace inflation over time creates risk of outliving your wealth. Panic selling at the bottom of a downturn and missing the recovery results in permanent loss of capital and  results in risk of outliving your wealth.   Volatility and risk can be related, yet volatility alone doesn’t cause losses. If an investor has a well-constructed portfolio of prudent investments, it is the investors’ reaction to volatility that most often causes permanent losses.     Volatility Is the Price of Admission for Long-Term Growth While the S&P 500 has had single-year losses exceeding 30%, it has never produced a negative return over any rolling 20-year period in modern history [ 1 ] . In other words, short-term volatility is the emotional cost investors pay for long-term growth. If markets were perfectly stable, they wouldn’t offer higher return potential than cash or bonds.   Additionally, from 1985 through 2024, the S&P 500 produced an annualized return of 11.68%[1]. When digesting that statistic, a natural inference one may make is that the index delivered a relatively consistent annual return of around 11% -12% over the 40-year period. However, there were only three years over this period that the index returned between 9% and 12%. Similarly, there were five instances where the index lost greater than 9% in a year. Over the long run, volatility tends to smooth out, often rewarding investors that are patient.   Managing Volatility Without Losing Sleep Volatility is an inevitable part of investing, but it does not have to derail your plan and is much easier to tolerate when you expect it.   Here are tips on how to stay steady when markets are not:   1) Focus on Time Horizon, Not Headlines If your goals are years or decades away, daily market noise shouldn’t dictate your strategy. Volatility only matters if you have a very short time horizon and liquidity needs. If you do have a short time horizon, then the stock market may not be the most prudent way to invest the money you know you will need in the near-term.   2) Keep a Cash Reserve Cash can provide stability and peace of mind during downturns. It gives you flexibility to cover short-term needs without touching long-term investments. 3) Reframe Market Swings as Opportunity When volatility rises, quality investments often go “on sale.” Staying disciplined allows you or your advisor to take advantage of those moments rather than fear them. The healthiest way to view volatility is as a feature of investing, not a flaw. It is an opportunity for those who can navigate it and what allows long-term investors to earn higher returns than those who keep their money in cash. Final Thoughts Volatility can understandably make investors nervous, but it does not have to. It is the market’s way of reminding us that growth does not come in a straight line. Risk, on the other hand, is something deeper—the danger of permanent loss of capital or failing to meet your financial goals. By understanding this difference, investors can avoid the trap of reacting emotionally to every market swing and instead stay focused on the bigger picture, following their plan for long-term wealth creation.   A well-built financial plan doesn’t aim to eliminate volatility. It is designed to help you endure it by aligning your goals, time horizon, and comfort level. In the end, success in investing is not about avoiding turbulence. It is about learning how to navigate through it with confidence and discipline. Footnotes [1] Source: NYU Stern: Historical Returns on Stocks, Bonds and Bills: 1928-2024. Disclosure RISE Investment Management, LLC ("RISE" or "RISE Investments") is an investment adviser registered under the Investment Advisers Act of 1940. Registration of an investment adviser does not imply any level of skill or training. This publication is solely for informational purposes and past performance is not indicative of future results. Any description of products, services, and performance results of RISE contained in this publication are not an offering or a solicitation of any kind. No advice may be rendered by RISE Investments unless a client service agreement is in place. Advisory services are only offered to clients or prospective clients where RISE Investments and its representatives are properly licensed or exempt from licensure. All of the information in this publication is believed to be accurate and correct as the date set forth. RISE does not have or accept responsibility or an obligation to update such information. This article is for education purposes and should not be treated as tax or legal advice. This article is not a substitute for legal or tax advice from your professional legal or tax advisor.

You may have come across the recent news of the Buss family selling the Los Angeles Lakers in June 2025 for an eyewatering $10 billion, which is the highest sale price ever for a professional sports team.   The dazzle of “exclusive” private investments, such as investing in pro sports teams, has been luring in billionaires and ultra-wealthy investors for decades. However, over the last decade, adoption of private investments by average investors has risen substantially. Among other factors, the broader adoption has been driven largely by investors’ relentless quest for superior returns.   Considering the Buss family invested $49.5 million to acquire the Lakers in 1979, the return on investment is certainly nothing to scoff at. At the surface, it may even appear to be an outsized return that an average investor could not have achieved.   So the question is – could any investor have generated the same, or an even better, return by investing in public stocks over the same period?     “Exclusive” is Not Equal to Superior As a package deal in May 1979, Jerry Buss purchased the Lakers, the Forum arena, the Kings, and a 13,000-acre ranch in the Sierra Nevada mountains for $67.5 million. Estimates indicate the $67.5M purchase price was made up of: Los Angeles Lakers: $16 million The Forum arena: $33.5 million Los Angeles Kings: $8 million The ranch: $10 million   Since the Kings and the ranch were not part of the recent $10 billion sale, the estimated purchase price for the Lakers is $49.5 million.   Over the 46 years of ownership, the Lakers investment generated a 20,102% total return. On an annualized basis, this equates to 12.2% per year. Alternatively, if the Buss family had invested $49.5 million in the S&P 500 over the same time period, it would have been worth $10.1 billion in June 2025 - roughly the same return the Lakers generated.   While the S&P 500 is a popular U.S. stock market gauge, it is designed to capture the largest 500 companies in the U.S. stock market and gives higher weighting to the largest of companies in the index.   Looking beyond just the S&P 500, if the Buss family had invested only in U.S. large-cap stocks with strong balance sheets, good profits, and attractive prices, the $49.5 million investment would have grown to a whopping $56.5 billion! Annualized, this represents 16.5% per year. Data from 6/1/1979 - 6/30/2025. Source: Avantis Investors. Large-caps generally represent the top 90% of the U.S. market capitalization. "Low Price Multiple" is defined as companies with a high book-to-market ratio [1]. "High Profitability" is defined as companies with a high profits-to-book ratio. Past performance is no guarantee of future results.  While these outcomes may be contrary to what many investors would have expected, the Lakers are just one example in the pro sports world.     Outlier, or Part of a Broader Trend? Leveraging public data and analysis conducted by Avantis, only a few teams from the sample below have not generated a better return on investment than the S&P 500 since their most recent owners acquired them.   Yet, the story is very different if the investment was in large-cap stocks with low price multiples and high profits. Data from the team purchase date through June 2025. Source: Avantis Investors. Past performance is no guarantee of future results. While regular dividends to owners of professional sports teams are not common, it is possible the owners of these teams do receive some amount of dividends. However, due to lack of public data on that we assume no dividends were received. Even if dividends were present, it is unlikely their inclusion would be enough to result in outperformance over high-quality public stocks with attractive valuations.     Conclusion To be clear, we are not implying that pro sports teams or other private investments are poor investments. Rather, the point is that depending on your circumstances and objectives, the opportunity provided by public markets may be all you need to reach your goals.   It is important to recognize that private investments typically come with other characteristics that are not usually mentioned in flashy stories about big paydays. Just because a once inaccessible private investment may become accessible, it does not mean it is destined to generate a superior long-term outcome. Much like championship teams are not built on highlights alone, enduring wealth is not built on chasing flashy or exclusive investments. Footnotes [1] Research by Fama & French (1992, 1993) demonstrates that stocks with high book-to-market ratios significantly outperformed stocks with low book-to-market ratios over the long term. Disclosure RISE Investment Management, LLC ("RISE" or "RISE Investments") is an investment adviser registered under the Investment Advisers Act of 1940. Registration of an investment adviser does not imply any level of skill or training. This publication is solely for informational purposes and past performance is not indicative of future results. Any description of products, services, and performance results of RISE contained in this publication are not an offering or a solicitation of any kind. No advice may be rendered by RISE Investments unless a client service agreement is in place. Advisory services are only offered to clients or prospective clients where RISE Investments and its representatives are properly licensed or exempt from licensure. All of the information in this publication is believed to be accurate and correct as the date set forth. RISE does not have or accept responsibility or an obligation to update such information. This article is for education purposes and should not be treated as tax or legal advice. This article is not a substitute for legal or tax advice from your professional legal or tax advisor.