Open Enrollment 2027: Don’t Just Renew, Review

October 11, 2026 — Sam H. Fawaz

Open enrollment can feel like another task on a busy calendar. But your choices can affect what you spend on health care, how much you save in taxes, and how well your family is protected financially.

Your employer’s open enrollment season lets you select benefits for the upcoming plan year. It often takes place in the fall. Outside this window, you may be limited in changing certain elections unless you experience a qualifying life event, such as marriage, the birth of a child, or the loss of other coverage.

Before renewing last year’s selections, consider what has changed. Your health, family, finances, or employer’s offerings may make different benefits a better fit for 2027.

Pick a health plan that works for you

Look beyond monthly premiums. A lower-premium plan may have a higher deductible, more cost-sharing, or a more restrictive provider network. Higher premiums may be worth it if the benefits better match your expected care.

HMO, POS, EPO, and PPO generally describe provider-network and access rules. A high-deductible health plan, or HDHP, describes a plan design that may also use one of these network arrangements.

Understand networks and referral rules

  • Health maintenance organization (HMO). Coverage generally is limited to network providers, except for emergency care. Many HMOs require a primary care physician to coordinate care and provide specialist referrals.
  • Point of service (POS) plan. Out-of-network care generally is available at a higher cost. These plans usually require a primary care physician and specialist referrals.
  • Exclusive provider organization (EPO). Coverage is generally limited to network providers, except for emergency care. Specialist referrals often are not required.
  • Preferred provider organization (PPO). You can generally see specialists without referrals and receive covered out-of-network care, but you usually pay less within the network.

Confirm each plan’s requirements and actual costs rather than assuming one type is always less expensive.

Understand deductibles and preventive care

A deductible is the amount you pay for certain covered services before the plan begins sharing those costs. Some benefits may be covered beforehand.

Many plans cover eligible preventive services at no cost when you use network providers. However, not every service provided during a preventive visit necessarily qualifies for no-cost coverage.

Consider a high-deductible health plan (HDHP)

HDHPs often offer lower premiums in exchange for higher upfront costs. For 2027, the minimum deductible for an HSA-qualified HDHP is $1,750 for self-only coverage and $3,500 for family coverage. Actual deductibles may be higher.

Certain preventive services may be covered in full before the deductible. Using network providers generally lets you benefit from negotiated rates even before you meet it.

Compare total health plan costs

Estimate each plan’s annual cost by adding premiums to expected care expenses, including deductible payments, copays, and coinsurance. Avoid counting the same expense twice.

Use last year’s care as a starting point, then adjust for anticipated procedures, prescriptions, or family changes. Your employer may offer a comparison calculator.

Also consider the in-network out-of-pocket maximum, which limits your annual cost sharing for covered in-network services. Premiums, noncovered services, and most out-of-network expenses do not count toward it.

If both spouses have workplace coverage, compare enrolling together in one employer plan versus maintaining separate plans. Watch for spousal surcharges and compare the cost of covering children under each plan.

Before enrolling, confirm that your preferred providers are in-network and understand how your prescriptions are covered.

Make the most of a health savings account

If you choose a health savings account (HSA) qualified plan, consider how an HSA could fit your budget. A high deductible alone does not necessarily make a plan HSA-qualified.

To contribute, you generally must have qualifying coverage, no disqualifying additional health coverage, and no Medicare enrollment. You also cannot be eligible to be claimed as someone else’s tax dependent.

For 2027, contribution limits are $4,500 for self-only coverage and $9,000 for family coverage, including employer contributions. Eligible spouses generally share the family contribution limit. Eligible individuals age 55 or older can contribute another $1,000. Each qualifying spouse must make their catch-up contribution to their own HSA. Limits may be reduced for partial-year eligibility.

Contributions through a qualifying employer payroll arrangement generally avoid federal income and payroll taxes. Direct contributions generally provide a federal income tax deduction, but not payroll-tax savings. State income tax treatment may differ.

Withdrawals, including investment earnings, are federally tax- and penalty-free when used for qualified medical expenses. Unspent balances remain yours indefinitely, including after a job change or retirement, and can fund qualified expenses even when you are no longer eligible to contribute.

Expenses generally must be incurred after the HSA was established and cannot be reimbursed elsewhere or claimed as an itemized medical deduction. Keep records to support tax-free withdrawals.

If your finances allow, contributing while eligible and paying current medical bills from other funds can leave more money invested for potential tax-free growth. Consider your cash needs and investment risk before using this strategy.

Save on taxes with a flexible spending account

An employer-sponsored flexible spending account, or FSA, lets you set aside money for eligible expenses. Contributions generally avoid federal income, Social Security, and Medicare taxes, and often state and local income taxes. Your savings depend on your tax rates and eligibility.

Health FSAs

For plan years beginning in 2026, the federal limit on employee pretax contributions is $3,400. Employers may set lower limits. Check enrollment materials for the applicable 2027 amount.

Funds can pay qualified medical, dental, and vision expenses not reimbursed by insurance.

General-purpose health FSA coverage generally prevents HSA contributions while that coverage is in effect. This can include a spouse’s FSA that can reimburse your expenses, even if you never use it.

An HSA-compatible limited-purpose FSA (typically for dental and vision expenses) or a qualifying post-deductible FSA may allow contributions to both accounts. A dependent-care FSA does not affect HSA eligibility.

Dependent-care FSAs

Dependent-care FSAs are not just for child care. They may also cover eligible care for a spouse, parent, grandparent, or other qualifying adult who is incapable of self-care and lives with you for more than half the year. Dependency and work-related care requirements also apply.

You may set aside up to $7,500 annually, or $3,750 if married filing separately, subject to your employer’s plan limit. For married couples filing jointly, the $7,500 limit generally covers combined dependent-care benefits, including employer contributions.

Your tax-free amount may be lower based on your earned income and your spouse’s. Care generally must enable you and your spouse to work or look for work, with special rules for a spouse who is a full-time student or incapable of self-care.

Eligible care can include:

  • Care for qualifying children under age 13, or a qualifying spouse or dependent who is incapable of self-care.
  • Day care, preschool, before- and after-school care, and day camp.

For qualifying adults receiving care outside your home, the person generally must also regularly spend at least eight hours a day in your home.

Overnight camp and kindergarten tuition do not qualify. Expenses paid with tax-free benefits cannot also support a child and dependent care tax credit.

Understand spending deadlines

FSAs generally follow a use-it-or-lose-it rule. A health FSA may offer a carryover of up to $680 for plan years beginning in 2026 or a grace period of up to 2½ months, but not both.

Dependent-care FSAs do not qualify for that carryover provision, although they may still offer a grace period.

Check deadlines for receiving eligible care and submitting claims. Extra time to submit claims does not necessarily extend the time to incur expenses.

Review dental and vision coverage

Next, consider benefits that help manage other expenses.

For dental coverage, compare premiums, deductibles, networks, and your share of preventive services, fillings, and major procedures. The annual benefit maximum limits what the insurer pays, unlike a medical out-of-pocket maximum, which limits your cost sharing for covered in-network services. Check waiting periods, too.

For vision coverage, review exam benefits, eyewear allowances, copays, and how often benefits apply. Compare premiums and expected expenses with what you would otherwise pay.

Revisit your life insurance needs

Consider what your survivors would need for debts, education expenses, and replacing your income. Review workplace coverage alongside individual policies to identify gaps.

Confirm what happens if you change jobs or retire. You may be able to continue or convert coverage, subject to requirements and deadlines.

Review primary and contingent beneficiaries after family changes.

Employer-provided group-term life insurance above $50,000 can create taxable income based on the IRS-calculated cost of excess coverage, not the full death benefit.

Protect your income with disability insurance

Disability insurance can replace part of your income if a covered illness or injury prevents you from working.

Compare the income percentage replaced, maximum monthly benefit, waiting period, and benefit duration. Also understand the definition of disability and any exclusions or limitations.

Benefits generally are taxable when premiums were employer-paid or paid with pretax dollars. Benefits attributable to premiums you paid with after-tax dollars generally are federally tax-free.

Consider whether the amount you would actually receive, together with emergency savings, could support your household during an extended absence.

Explore your other benefits

Some employers offer student-loan assistance through qualifying educational-assistance programs. For 2026, the tax-free limit is $5,250 per employee for combined eligible educational assistance, including qualifying student-loan payments. It is not a separate loan-repayment allowance. Inflation indexing begins in 2027, so confirm the applicable amount.

Other offerings may include long-term care insurance, pet insurance, financial counseling, fitness discounts, and wellness incentives. Compare voluntary insurance with outside alternatives and look for useful programs you may have overlooked.

Make your choices count

Your benefits are part of your financial plan, not just annual enrollment forms. Before the deadline, ask: What has changed? What will each option cost? Where do you need additional protection?

Thoughtful answers can help you choose benefits that support everyday needs and longer-term goals.

Please reach out if you would like help evaluating how your choices fit into your broader financial plan.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss retirement, college, tax, or other financial planning matters, please contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first and has no products to sell. If you are not a client, an initial consultation is complimentary, with no pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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IRS Announces Rare Mid-Year Standard Mileage Rate Increase

September 13, 2026 — Sam H. Fawaz

In an unusual mid-year action, the Internal Revenue Service has announced an increase in the optional standard mileage rates for computing the deductible costs of operating an automobile for business, medical, and moving expense purposes for the second half of 2026. This change was announced in Internal Revenue Bulletin 2026-29. The mid-year change was attributed to recent increases in fuel prices. The standard mileage rate for computing the deductible costs of operating an automobile for charitable purposes is set by statute and remains unchanged.

What are the new rates?

For July 1, 2026, to December 31, 2026, the standard mileage rates are as follows:

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  • Business use of auto: 76 cents per mile (up from 72.5 cents for January 1, 2026, to June 30, 2026), may be deducted if an auto is used for business purposes. If you are an employee, your employer may reimburse you for your business travel expenses using the standard mileage rate. However, if you are an employee and your employer does not reimburse you for your business travel expenses, you are generally not able to deduct your unreimbursed travel expenses.
  • Medical use of auto: 23.5 cents per mile (up from 20.5 cents for January 1, 2026, to June 30, 2026), may be deducted if an auto is used to obtain medical care (or for other deductible medical reasons) if you itemize deductions on your federal income tax return. You can deduct only the part of your medical and dental expenses that exceeds 7.5% of the amount of your adjusted gross income.
  • Moving expense: 23.5 cents per mile (up from 20.5 cents for January 1, 2026, to June 30, 2026), may be deducted if an auto is used by a member of the Armed Forces on active duty to move, pursuant to a military order, to a permanent change of station (unless such expenses are reimbursed). An employee or new appointee of the intelligence community may also deduct moving-related costs if the move relates to a change in assignment requiring relocation. The moving-expense deduction is not currently available to other taxpayers.
  • Charitable use of auto: 14 cents per mile (the same as for January 1, 2026, to June 30, 2026), may be deducted if an auto is used to provide services to a charitable organization if you itemize deductions on your income tax return. Your charitable deduction may be limited to certain percentages of your adjusted gross income, depending on the type of charity, and subject to a 0.5% floor.

How rare is a mid-year adjustment?

Typically, the IRS issues new optional standard mileage rates during the last few months of the year, with the new rates effective January 1 of the following year. Occasionally, however, the IRS announces mid-year changes. This year’s increase will be the fifth mid-year increase in 20 years.

Prior years with mid-year adjustments include 2005, 2008, 2011, and 2022. As with this year’s increase, these prior mid-year standard mileage rate announcements were largely tied to fuel costs.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

Source: Broadridge Advisor Solutions. © 2026 Broadridge Financial Services, Inc.

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Investment Scams Are Getting Smarter-How to Protect Yourself

July 31, 2026 — Sam H. Fawaz

Here’s How Retirees, Active Investors, and Traders Can Stay Protected

You’d think that after decades in the financial services industry, I would have heard of most of the investment scams out there. First in the internet age, and now in the age of artificial intelligence (AI), there are few weeks that pass without me hearing or reading about someone who was scammed out of thousands, if not hundreds of thousands of dollars. I’ve even heard from clients and relatives of clients who have been victims of clever social engineering and grooming. It breaks my heart when I hear about them losing money, especially when there’s nothing they or I can do to help.

Investment scams today are more sophisticated, more personalized, and more convincing than ever. Fraudsters now use impersonation, social media, text messages, and even AI-generated content to create trust before they ever mention an investment. The result is a steady stream of investors being drawn into schemes that often end in pump-and-dump losses, frozen accounts, emotional distress, and, in some cases, follow-on recovery scams.

For retirees, the danger is especially serious because the stakes are often long-term savings and income. For active investors, the risk is different but just as real: scammers know how to mimic market language, trading ideas, and “hot” opportunities well enough to sound credible. Traders face yet another layer of risk because scams often borrow the language of momentum, catalysts, and short-term opportunity.

How these scams begin

Many of today’s investment scams start in a way that seems harmless. You may receive a misdirected text from an unknown number, a friendly message on social media, or an invitation to join an investment group. The message may not even mention investing at first. It may simply ask, “Are you home?” or make another innocent-sounding comment designed to get you to respond.

Once you reply, the scammer begins building a relationship. Over time, the conversation becomes more familiar and more personal. Then, almost naturally, the topic turns to investing. The scammer might mention a relative who trades foreign stocks, a special market opportunity, or a group that shares profitable ideas. The goal is not to make the first message look suspicious. The goal is to create a long enough interaction that trust develops before the pitch arrives.

That trust-building phase is critical. Scammers know that people are far more likely to ignore a warning sign once they feel they know the person on the other end of the conversation. This is why many of these frauds are less about one dramatic lie and more about a slow, carefully managed relationship. It is not surprising that older adults who are lonely, recently widowed, or worried about outliving their savings can be especially vulnerable.

Why retirees are targeted

Retirees are often targeted because they tend to be careful, financially responsible, and interested in protecting capital or generating income. That makes promises of steady returns or “safe” opportunities especially appealing. Fraudsters know how to dress up a pitch so it sounds like a conservative income strategy rather than a speculative gamble.

The language matters. If someone promises guaranteed returns, “risk-free” profits, or unusually consistent gains, that should be treated as a warning sign. No legitimate investment is free of risk, and any claim that something is safe, certain, or protected from loss deserves immediate skepticism.

Retirees can also be more vulnerable to secrecy and urgency. A scammer may say the opportunity is exclusive, limited, or only available for a short time. That kind of pressure is designed to prevent a second opinion from a spouse, adult child, advisor, or friend. The less time you have to think, the more likely you are to act emotionally. Some scammers insist that sharing the information with their spouse or significant other would disqualify them from the investment scam; this is a big red flag.

Why active investors need to be careful

Active investors are not immune just because they understand the markets. In fact, scammers often use market language to appear legitimate. They may talk about small-cap stocks, catalysts, foreign issuers, or breakout potential in ways that sound familiar to people who follow the market closely. They may even reference themes like FDA approvals, short squeezes, or momentum moves.

The danger comes when the story becomes more important than the fundamentals. Pump-and-dump schemes typically center on thinly traded stocks that are easy to move with hype. Fraudsters promote the stock aggressively, drive attention and buying interest, then sell their own shares into the strength. Once the promotional pressure fades, the stock can fall sharply and become difficult to exit.

Active investors should also be cautious with social media groups that promise hot tips or “research communities.” These are often just marketing funnels leading people into private chat rooms where the real manipulation happens. If an opportunity is being framed as an inside track or a limited-circle advantage, that is exactly the kind of setup scammers use to create urgency and exclusivity.

A note for traders

Traders can be especially vulnerable because scams often borrow the language and tempo of short-term trading. A message may talk about a breakout setup, a catalyst trade, a pre-news move, or an “early entry” before the crowd finds out. That language sounds familiar to traders, which is exactly why it works.

The danger is that the scam is not really about trade selection. It is about control of the narrative. Fraudsters may tell you which ticker to buy, when to buy it, and even ask for screenshots of your order confirmation so they can keep the story moving. In some cases, they may add you to a chat room with other people who appear to be active traders, creating the illusion of a real trading community. It’s not.

For traders, the red flags are often behavioral rather than analytical. Be careful if a supposed opportunity requires secrecy, moves exclusively through encrypted apps, or pushes low-liquidity names with a lot of hype and no verifiable research. A real trading idea can withstand scrutiny. A scam depends on speed, emotion, and group pressure.

Traders should also be wary of any “mentor,” signal service, or chat group that claims unusually high consistency with very little drawdown. That is not how real trading works. No one has a perfect system, and anyone promising one is selling something other than market insight. Some might call it snake oil.

Social media, impersonation, and AI

One of the most troubling developments is how well scammers now impersonate trusted names. They may use a celebrity face, a well-known market commentator, or a fake representative from a legitimate firm to create instant credibility. The image alone can be enough to lower a person’s guard before the details are examined.

Artificial intelligence has made the problem worse. Scammers can now generate polished messages, remove obvious grammar mistakes, clone voices, and create realistic-looking images or video. That means the old warning signs, like awkward language or obvious typos, are no longer enough by themselves. A scam can now look and sound much more professional than it did a few years ago.

This is why investors should pay more attention to the structure of the pitch than the polish of the presentation. If the message is built around secrecy, urgency, guaranteed returns, or a move to an encrypted app, the presentation quality does not matter. The red flags are already there.

The biggest warning signs

The same warning signs appear again and again across investment scams. The more of these you see, the more cautious you should become.

Watch for:

  • Guaranteed or “risk-free” returns.
  • Pressure to act immediately.
  • Requests to keep the opportunity secret.
  • Unsolicited investment offers.
  • Pushes to move conversations to WhatsApp, Telegram, WeChat, or another encrypted app.
  • Requests for personal information, money, or cryptocurrency before verification.
  • Celebrity endorsements that cannot be confirmed independently.
  • Advance fees to recover money.

If a stranger is pushing an investment, asking for secrecy, and moving the conversation off the platform, that combination alone should stop the process. You do not need to prove it is a scam in order to step away.

How to verify before you act

The best defense is to verify everything independently. Do not use the contact information, click on the links, or call the phone number contained in the message itself. Go directly to the firm’s website by manually typing it in, via a known app, or a trusted database to confirm credentials and contact details.

For financial professionals and firms, check FINRA BrokerCheck, the SEC’s Investment Adviser Public Disclosure database, and your state securities regulator. If the person or firm cannot be verified, or if the details do not match what you were told, treat that as a serious warning.

It is also wise to confirm legitimacy by calling a known number from an account statement or official website. If a supposed firm representative asks you to click a link in a text, download a new app, or send sensitive information through an unofficial channel, stop and verify first.

If a stranger insists on using their own Zoom or Teams link, be cautious: it could expose your device to malware that may give criminals access to your private information, passwords, or financial accounts. If you cannot reach the person directly through a U.S. phone number, or if their voicemail is always full and their messages keep steering you to a website, do not proceed.

Why talking to someone helps

One of the most effective protections is also one of the simplest: tell someone else you know and trust before you act. Scam artists depend on emotion, speed, and isolation. They want you to decide quickly and privately. The moment you explain the opportunity to a trusted person, you slow the process down.

That pause is powerful. It gives you time to think more clearly, and it gives someone else a chance to hear what you may be overlooking. Many bad decisions sound reasonable in your own head until you say them out loud.

This matters especially for retirees making decisions about income, capital preservation, or distribution strategy. It also matters for active investors and traders who may feel pressure to move fast on what looks like a market opportunity. Good investing is not just about being informed. It is about having a disciplined process.

What to do if you’ve been targeted

If you suspect a scam, gather documentation immediately. Save messages, screenshots, websites, account details, transaction records, and any names or numbers used in the conversation. If cryptocurrency is involved, preserve wallet addresses and transaction details as well.

Then report it as quickly as possible. Notify your broker or financial institution, the SEC, FINRA, your state securities regulator, and the FBI’s Internet Crime Complaint Center. If money has already been sent, timely reporting may improve the chances of tracing the fraud and helping regulators identify related cases.

Be especially careful with follow-on messages that claim they can help you recover your money. Recovery scams often target people who have already been victimized and are emotionally exhausted. If someone asks for a retainer, processing fee, or other upfront payment to return your funds, that is a major red flag.

Final perspective

The biggest mistake many investors make is assuming scams only work on careless people. In reality, these schemes are designed to exploit normal human reactions: trust, curiosity, urgency, fear, and the desire not to miss out. That is why even experienced retirees, active investors, and traders can be targeted successfully. Some well-seasoned financial advisors have been targeted and victimized.

The solution is not paranoia. It is a process. Verify independently, slow down, avoid isolation, and never let secrecy or pressure drive an investment decision. If an opportunity is real, it will still be there after you check it carefully.

Of course, the old adage applies and is always worth remembering:

“If something seems too good to be true, it probably is.”

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

Source: American Association of Individual Investors

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SpaceX, Anthropic, and the Danger of IPO Euphoria

June 15, 2026 — Sam H. Fawaz

The SpaceX (symbol: SPCX) initial public offering (IPO) arrived on Friday with historic scale and an equally historic level of enthusiasm. Within hours of listing, the company approached a $2 trillion valuation, placing it among the world’s largest companies almost instantly.

The stock was priced at $135 and closed its first day of trading near $161, a respectable one-day gain of over 19%. By most measures, the launch was a success.

There’s no question that SpaceX is a remarkable business. The combination of Starlink’s recurring revenue, reusable rocket technology, and its expanding ambitions in artificial intelligence and orbital infrastructure makes it one of the most ambitious enterprises ever brought to public markets.

But investors need to separate two things that often get conflated during moments like this: a great company and a great investment at today’s price.

At over 100x sales, the current valuation embeds not just success, but near-perfection.

What You’re Really BuyingForm S-1 is the basic SEC “go public” document that a company must file before an IPO, laying out its business, finances, risks, and how it plans to use the money raised so investors can decide whether to buy the stock.

A closer look at the SpaceX Form S-1 tells a nuanced story. SpaceX today is effectively three businesses layered together:

  • A strong core: Starlink, generating high-margin, recurring revenue
  • A proven enabler: reusable rockets lowering the cost of space access
  • A set of long-dated bets: Artificial Intelligence, orbital data centers, and space commercialization

A reasonable sum-of-the-parts framework might justify a valuation closer to $1–$1.1 trillion, even after applying a generous premium for Elon Musk’s track record. The gap between that and the IPO valuation represents something very important: a priced-in call option on the future of space itself.

Roughly 30–40% of the valuation is tied not to current earnings power, but to outcomes that may take a decade or longer to materialize, if they materialize at all.

That is not speculation in a negative sense, but it is speculation nonetheless.

The IPO Reality: Liquidity Event First

Only about 4% of shares were floated (offered) in the IPO. The rest remain with insiders, employees, and early investors, many of whom are sitting on enormous gains.

This matters.

The IPO is not primarily about funding rockets. It is, in large part, a liquidity event that allows early stakeholders to sell into peak demand. Public investors are stepping in at a point where much of the value creation has already occurred in private markets.

History shows this is rarely where the best risk/reward entry point exists.

Mega-IPOs and Market History

The pattern is consistent:

  • The largest, most anticipated IPOs tend to debut at elevated valuations
  • Early trading is driven by constrained supply and heavy demand
  • Over time, as stock lock-ups expire and supply increases, prices often normalize

Recent IPO examples reinforce this:

  • Rivian: down ~80% from early highs
  • Coupang: down more than 50%
  • Lineage Logistics: Down about 50% within two years
  • Several recent large IPOs are still below listing prices

Even the “winners” like Airbnb and Snowflake have delivered flat-to-negative returns for investors who bought on day one.

In fact, the majority of recent mega-IPOs have traded below their initial listing price within a year.

Even successful long-term companies often struggle after going public. Tesla, for example, went essentially nowhere for years after its IPO before eventually delivering outsized returns. Facebook also traded below its offering price for an extended period before recovering.

This does not mean SpaceX will fail. It means that the entry price matters.

The key takeaway: timing and valuation matter just as much as the quality of the business.

The Supply-Demand Illusion

Early trading in IPOs can be misleading.

With such a small percentage of shares available, supply is artificially constrained. At the same time, demand is amplified by media coverage, retail enthusiasm, and, in some cases, forced buying from index funds. Underwriters have a vested interest in a successful IPO, so they’ll support the stock price by buying shares for the first few days after the IPO.

This imbalance can push prices higher in the short term, but it is not sustainable. As lock-up periods expire and more shares become available, supply increases significantly, often putting downward pressure on prices.

Tesla, SpaceX, and the Merger Question

One of the most discussed topics right now is a potential merger between Tesla and SpaceX.

Based on the Form S-1, there is no indication that such discussions have occurred at the board level. From a legal and disclosure standpoint, that strongly suggests any transaction, if it were ever considered, is likely years away, not imminent.

That said, the relationship between the companies is real and growing:

  • Tesla supplied over $500 million in energy infrastructure to SpaceX’s AI operations
  • Joint initiatives include chip development and AI-driven systems
  • Tesla has already taken a stake in SpaceX

These are meaningful commercial ties, but they do not equate to a pending merger. For now, think strategic partnership, not consolidation.

Index Inclusion: A Hidden Driver

Another overlooked dynamic is how quickly SpaceX could be added to major indexes.

Nasdaq’s new “fast entry” rules could force inclusion into the Nasdaq-100 within weeks, potentially driving billions in passive buying. At the same time, S&P maintains stricter profitability and seasoning requirements, which could delay inclusion there.

This creates a new dynamic:

  • Short-term demand driven by index flows
  • Long-term uncertainty around sustained institutional ownership

It also raises a broader issue: index rules themselves are evolving in response to companies like SpaceX, Anthropic, and OpenAI.

Despite its size, SpaceX is not immediately eligible for inclusion in the S&P 500 index due to profitability and trading history requirements. While some indexes may add it quickly, others will not. That distinction matters, as index inclusion can drive substantial institutional demand.

Investors should not assume automatic or immediate support from passive investment flows.

Sector Classification Matters More Than You Think

The S&P 500 is divided into eleven sectors, each with different “weights” in the index. Where SpaceX ultimately lands, Communication Services, Industrials, or even a revised sector structure, will influence how capital flows into the stock.

  • The Communication Services sector is the most likely home, driven by Starlink
  • The Industrials sector reflects legacy aerospace perception
  • The Technology sector is possible, but would further concentrate an already dominant sector

This is not just academic. Sector placement affects ETF and mutual fund flows, institutional allocations, and ultimately valuation support.

A Broader Message for Upcoming IPOs (Including Anthropic and Open AI)

What we are seeing with SpaceX is not an isolated event. It is part of a broader trend:

  • Larger companies are staying private longer
  • Public investors are gaining access later in the lifecycle
  • Valuations reflecting peak optimism at the point of entry

We are seeing similar enthusiasm building around other potential IPOs, including companies like Anthropic and OpenAI. Anthropic, OpenAI, and other AI-driven IPOs are likely to follow a pattern similar to SpaceX’s.

This is a recurring cycle in the markets. Investors become eager to “get in early” on transformative companies, fearing they may miss the next Amazon or Google. But by the time a company reaches the public markets today, much of the explosive growth has already occurred in private hands.

The public market often receives a more mature company, at a valuation that already reflects high expectations.

The risk is not that these companies are poor businesses. The risk is overpaying at the moment of maximum narrative strength.

A More Disciplined Approach

None of this suggests avoiding these companies altogether. SpaceX may very well be a dominant force for decades. The same could be true for leading AI firms.

However, discipline is critical:

  • Avoid chasing first or second day excitement
  • Let valuations normalize over time
  • Watch how the stock behaves after lock-up periods lapse
  • Focus on risk-adjusted entry points rather than headlines

There is often a far greater opportunity after the initial hype fades and price discovery becomes more grounded.

Final Thought: Patience Over Participation

The most important question is not whether SpaceX succeeds. It very well may.

The question is whether buying into the initial excitement offers a favorable risk/reward tradeoff.

History suggests that it rarely does.

There will likely be a time when SpaceX, or companies like Anthropic, offer compelling entry points. Those opportunities tend to emerge after the hype fades, after supply increases, and after valuations are tested by reality.

Until then, discipline matters more than enthusiasm.

Although the fear of missing out is a powerful motivator, there is another saying in the investing and trading business:

It’s better to be out of a stock and wishing you were in, than being in a stock wishing you were out.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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What’s Going on in the Markets-May 31, 2026

May 31, 2026 — Sam H. Fawaz

It’s the end of May, and stock markets continue to demonstrate remarkable strength. The S&P 500 and Nasdaq indexes both reached record highs on the last trading day of the month (Friday), capping off a powerful May in which major indices gained between 2.5% and 11%. Notably, only Bitcoin and gold declined during the month, and year-to-date, Bitcoin remains the only major asset class down double digits, while bonds are modestly negative.

Since the March 30 intraday low, the S&P 500 index has rallied approximately 20%, marking the strongest nine-week winning streak on record. While last week’s gains were relatively modest, they were sufficient to extend this historic run.

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A Rare and Powerful Rally

This type of sustained advance is uncommon. Since 1950, there have only been 10 similar streaks, and just two in this century. Historically, these periods are often followed by short-term consolidation (sideways movement), typically driven more by marking time and sector rotation than by sharp price declines.

More importantly, forward returns following these streaks, over periods ranging from one month to one year, have generally been positive. These types of environments have not typically marked major market tops or the beginning of bear (downtrending) markets.

That said, it is reasonable to expect a near-term pause, pullback, or correction. After such an extended run, some degree of consolidation would be healthy. This should not be confused with an imminent bear market; longer-term conditions still support higher equity prices, and I expect the indexes will be higher by year’s end.

Liquidity, Artificial Intelligence, and Expanding Opportunity

Several structural forces continue to underpin the market:

  • Artificial intelligence remains a dominant investment theme, driving capital spending, earnings growth, and investor enthusiasm.
  • A wave of high-profile IPOs, including SpaceX and Anthropic, has the potential to attract new capital to public markets.
  • Corporate earnings have broadly exceeded expectations, reinforcing confidence in equity valuations.

At the same time, speculative behavior has re-emerged. Recent trading activity suggests increased risk-taking, with rapid money rotations between stocks and heightened momentum-driven flows. This reflects abundant liquidity but also introduces fragility if sentiment shifts.

The Macroeconomic Backdrop: Mixed Signals

While markets are strong, economic data presents a more nuanced picture:

  • New home sales declined 6.2% month-over-month, with inventory rising to a 9.4-month supply, well above the 4–6-month range considered balanced. Affordability remains a key constraint.
  • Consumer confidence edged lower, with households increasingly reducing discretionary spending and delaying large purchases.
  • Inflation, as measured by the PCE Index (Personal Consumption Expenditures), is re-accelerating. Headline PCE rose to 3.8% year-over-year, while core PCE (which measures the prices U.S. consumers pay for goods and services excluding food and energy) increased to 3.3%, both well above the Federal Reserve’s 2% target.

Consumer sentiment just hit an all-time low of 44.8 in May, with current conditions and future expectations both collapsing to record pessimism.

This is the first time since 1953 that all three (overall, current, and future) sentiment measures have simultaneously set new lows, making today’s mood historically bad. Consumers feel worse about both their present situation and their outlook than at any point in roughly 75 years of data. They’re especially worried about long-run inflation, the rising cost of living, and deteriorating personal finances. If these attitudes lead households to cut back on spending, it could weigh meaningfully on the U.S. economy and, eventually, on stock prices.

These divergences highlight an important principle: the economy and the stock market often move on different timelines. While portions of the economy, particularly lower- and middle-income consumers, are under pressure, corporate earnings and investment, especially in artificial intelligence, remain robust.

The Federal Reserve: No Immediate Safety Net

Markets have, at times, relied on the assumption of a “Federal Reserve Put”, the idea that policymakers will step in to support asset prices during periods of weakness. That assumption is less reliable today.

With inflation still elevated and the labor market relatively stable, the Federal Reserve has limited flexibility to cut rates aggressively. Any expectation of rapid easing may be premature. As a result, markets could be vulnerable to disappointment if policy remains tighter for longer. A small rate hike in the next 12 months would not be surprising if inflation remains sticky.

The new Federal Reserve Chairman, Kevin Warsh, has his work cut out for him.

Oil, Geopolitics, and Expectations

Recent declines in oil prices have supported stocks by easing inflation concerns and lowering yields. Much of this optimism is tied to expectations of a potential U.S.–Iran agreement and increased global energy supplies.

However, markets may have already priced in much of this positive outcome. If oil prices stabilize or decline less than expected, or if geopolitical developments take longer to materialize, equities could face a “sell-the-news” reaction.

The Week Ahead: A Critical Test

The coming week is dense with catalysts and could set the tone for the market’s next phase.

1. May 2026 Monthly Jobs Report (Friday June 5)

Economists expect approximately 90,000 new jobs, with an unemployment rate near 4.3%. Markets are looking for a “Goldilocks” outcome-a strong enough to confirm economic stability, but not so strong that it reignites inflation concerns or pushes interest rates higher.

2. AI Conferences and Commentary

Events such as Computex Taipei, Microsoft Build, and the Snowflake Summit will keep AI at the forefront. Investors will be watching for signs that demand is broadening beyond semiconductors into software, infrastructure, and enterprise applications.

3. Federal Reserve Signals

Federal Reserve speakers and the Beige Book will provide insight into inflation, labor markets, and regional economic conditions. Any shift toward a more hawkish tone could challenge current market optimism.

4. Key Earnings Reports

Companies reporting earnings this week include Broadcom, CrowdStrike, Hewlett Packard Enterprises, Medtronic, Palo Alto Networks, and several major retailers (see below). These results will help determine whether earnings strength is broad-based or still concentrated in a narrow group of leaders.

5. Consumer Health Indicators

Retail earnings and updates, including from Dollar General, Ollie’s, Signet Jewelers, Victoria’s Secret, Macy’s, Ulta Beauty, Five Below, and Lululemon, will offer a clearer picture of consumer behavior. Spending remains intact but increasingly selective.

What Matters Most Now

The market remains in a bullish uptrend, supported by earnings growth, AI-driven investment, and resilient economic activity. However, conditions are becoming more balanced:

  • Valuations are higher.
  • Expectations are elevated.
  • Positioning is more crowded, particularly in technology and AI-related names.

For the rally to continue, incoming data must validate current optimism. That means stable employment, contained interest rates, and continued strength in earnings and AI demand.

Bottom Line

The primary question is no longer whether the market is strong—it clearly is. The more important question is whether it can sustain that strength amid a heavy calendar of economic data, policy signals, and corporate results.

If markets continue to absorb news constructively, maintain leadership, and attract buyers on pullbacks, the path higher remains intact. However, if positive developments trigger selling, or if interest rates rise, it would signal a transition from momentum-driven gains to a period of consolidation.

Investors should be prepared for near-term volatility while recognizing that the broader trend remains quite constructive.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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What’s Going on in the Markets May 17, 2026

May 31, 2026 — Sam H. Fawaz

Editor’s Note: This is a reposting of a video that mysteriously disappeared from May 17 2026.

What’s really driving this stock market surge, and can it keep going? View my short video here.

In this week’s update, I break down the powerful rally we’ve seen since the March 30th lows, with the S&P 500 up 18% and the NASDAQ soaring 28% in just a month and a half. Earnings have been nothing short of impressive, with nearly 90% of companies reporting strong results. But there’s a twist: inflation is starting to creep back up, and that could change the Fed’s next move on interest rates.

I’ll walk you through what this combination of strong earnings and rising inflation means for your portfolio, why I expect some short-term “backing and filling” after this parabolic run, and why I still believe 2026 is shaping up to deliver solid double-digit stock market returns. 

If you want a clear, no-nonsense view of where the market stands right now and where it may be headed next, you’ll find this video worth your time.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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Mandatory Roth Catch-Up Contributions Begin in 2026

January 31, 2026 — Sam H. Fawaz

For nearly a quarter century, employers have offered their retirement savings plan participants age 50 and older a valuable opportunity: the chance to make additional catch-up contributions to their plans.¹

Thanks to the SECURE 2.0 Act passed in 2022, that opportunity became even more valuable: Employers may now allow plan participants aged 60 to 63 to contribute more than their other catch-up-eligible peers through “super catch-ups.”

In 2025, the standard plan contribution limit was $23,500. Participants ages 50 to 59 and 64 and older in 2025 can contribute an additional $7,500, while those ages 60 to 63 can contribute an additional $11,250.

However, SECURE 2.0 also included a provision requiring catch-up contributions to be made on a Roth basis for certain high-earning employees. In September 2025, the IRS issued final regulations on these mandatory Roth catch-ups, which will take effect this year.

The Big Picture

In most work-based savings plans, employees can make catch-up contributions and contribute on both a pre-tax and a Roth after-tax basis.² While pre-tax contributions reduce the proportion of a participant’s paycheck that is subject to current income taxes, Roth contributions allow participants to potentially build a tax-free nest egg for the future. Withdrawals from Roth accounts made after the account owner reaches age 59½ are tax-free, provided the account has been held for at least five years; other exceptions apply.

Pre-tax contributions can be especially appealing to high earners, who may contribute as much as possible (up to plan limits) to maximize the opportunity to reduce current taxable income.

However, pre-tax contributions also reduce federal tax revenue. That may be why legislators included a provision in SECURE 2.0 requiring catch-up contributions for those earning more than $145,000 to be made on a Roth (post-tax), rather than a pre-tax basis. Initially slated to take effect in 2024, that provision was delayed until 2026 to allow the IRS to finalize rules and employers to modify their systems and plan documentation accordingly.³

The Details

In September 2025, the IRS issued final regulations stating that the new requirements generally apply to contributions in taxable years beginning after December 31, 2026. The IRS further stated, “The final regulations also permit plans to implement the Roth catch-up requirement for taxable years beginning before 2027 using a reasonable, good faith interpretation of statutory provisions.”⁴ Many industry observers interpret this language to mean that employers will be expected to begin implementing the new provisions in 2026.⁵ ⁷

To determine whether an employee exceeds the $145,000 threshold, employers will use Federal Insurance Contributions Act (FICA) wages listed in box 3 of the employee’s W-2 form from the previous year. In other words, to comply in 2026, employers will use 2025 W-2 forms. The rule does not apply to those who do not have prior-year W-2 wages, such as the self-employed.⁶ ⁸

The new rule applies to standard and super catch-ups in 401(k), 403(b), and 457(b) plans; however, the new Roth mandate does not apply to SIMPLE plans or the special catch-up contributions permitted in 403(b) and 457(b) plans. Plans that do not offer Roth contributions must either add a Roth feature or disallow high earners from making catch-up contributions.⁷ ⁹ ¹¹

Tax and Retirement-Savings Impacts

High earners who may be subject to the new rule might want to review their tax-planning and retirement-savings strategies soon. Although Roth contributions can provide substantial tax benefits in the future, eliminating the pre-tax catch-up contribution could have a surprising impact on income tax planning during the 2026 tax-filing season.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

1) CNBC, January 4, 2017
2) PLANADVISER, October 1, 2025
3) IRS Notice 2023-62
4) IRS, September 15, 2025
5) Society for Human Resource Management, accessed October 2, 2025
6, 8) Plan Sponsor Council of America, September 30, 2025
7, 9, 10) Slott Report, September 22, 2025
11) ADP SPARK blog, accessed October 2, 2025

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New Year, New Account: How the 2026 Kids’ IRA Could Jump‑Start Your Child’s Retirement Savings

December 31, 2025 — Sam H. Fawaz

Beginning in 2026, a new type of tax-advantaged account for children, informally called “Trump accounts”, will become available. These are a special version of traditional IRAs designed to give kids an early head start on long-term retirement investing, with seed money from the federal government and, in some cases, additional funding from private donors.

Important: Rules are new and still evolving. Final forms, portals, and implementation details may change before these accounts launch. This overview is for general information only and is not personal tax or investment advice.

What is a Trump Account?

  • A Trump account is essentially a traditional IRA for a child under age 18 who has a Social Security number.
  • The accounts were created under the federal “One Big Beautiful Bill” and will take effect for tax years beginning in 2026.
  • Although they follow many of the same tax rules as traditional IRAs, there are essential differences in who can contribute, how the accounts are funded, and how distributions work.

Who is Eligible and How Do You Opt In?

  • Each eligible child must be opted in by a parent or guardian; accounts are not automatically created.
  • The U.S. Treasury will set up the basic account framework for each eligible child, but parents must actively open/activate the account.
  • To opt in, parents will either:
    • File new Form 4547, or
    • Enroll through a federal online portal once it is available.
  • As of now, only a draft Form 4547 has been released, and the online portal is not expected to be available until mid‑2026.

Government and Private “Seed” Contributions

Trump accounts are unusual because they can receive funding from multiple sources, including the federal government and specific qualifying organizations.

$1,000 federal contribution:

  • The federal government will contribute $1,000 to each Trump account opened for children born after 2024 and before 2029.
  • Parents must opt in (via Form 4547 or the portal) to receive this contribution.
  • Additional $250 for lower‑income ZIP codes:
    • Michael and Susan Dell have pledged $6.25 billion to fund additional contributions for 25 million children ages 0-10 who live in ZIP codes with a median income below $150,000.
    • Eligible children in those areas will receive an additional $250 in their Trump accounts.
  • These government and qualifying organizational contributions:
    • Are not taxable to the child.
    • Don’t create a cost basis in the account (they are treated more like pre‑tax contributions inside a traditional IRA for tax purposes).

How Much Can Be Contributed Each Year?

In addition to the federal and qualifying “general” contributions, families and employers can add their own money:

  • Up to $5,000 per year can be contributed to a child’s Trump account until the child turns 18.
    • This annual limit applies to all contributions combined (parents, relatives, employers, etc.).
    • The $5,000 limit will be indexed for inflation each year after 2027.
  • Of that $5,000 annual limit, up to $2,500 may be contributed tax‑free by an employer of either the parent or the child (if the child has a job).
  • Contributions can be made by:
    • Parents or guardians.
    • Grandparents or other relatives.
    • Other individuals who wish to help fund the account.
  • Key tax point:
    • No one gets an income tax deduction for contributing to a Trump account.
    • Qualified general contributions by governments or 501(c)(3)s, employer contributions, and the federal $1,000 contribution do not create a cost basis in the account.
  • Timing restriction: Contributions cannot begin before July 4, 2026.

Investment Rules and Distribution Basics

These accounts are intended to be long‑term, stock‑based retirement-savings vehicles for children.

Investment options (before age 18)

  • Until the child turns 18, Trump account funds may be invested only in:
    • Certain stock mutual funds, or
    • Exchange‑traded funds (ETFs) that track an index of primarily U.S. companies (for example, an S&P 500 index fund).
  • The goal is to keep investment choices simple, diversified, and aligned with long‑term growth.

Withdrawals and taxes

  • Before age 18:
    • Distributions are generally not allowed while the beneficiary is under 18, with limited exceptions to be clarified in regulations.
  • Starting at age 18:
    • Once the beneficiary reaches 18, distributions are taxed similarly to a traditional IRA:
      • Withdrawals that represent cost basis (after‑tax contributions) are generally not taxable.
      • Withdrawals of earnings (growth, income, and pre‑tax contributions) are taxable as ordinary income in the year withdrawn.
    • Before age 59½, taxable portions of distributions may also be subject to a 10% early distribution penalty, unless an exception applies (e.g., certain education expenses, first‑time home purchase, or other qualifying events under IRA rules).

Rollovers

  • A Trump account may be rolled over, in or after the year the beneficiary turns 18, to:
    • A traditional IRA for the same beneficiary, or
    • Certain other qualifying retirement accounts (subject to future guidance).
  • This allows the account to transition into the standard retirement system once the child is an adult.

Planning Considerations for Families

For many families, especially those who do not currently max out other tax‑advantaged plans, Trump accounts may offer:

  • A federally funded start for a child’s retirement savings.
  • A structured way for parents, grandparents, and employers to add to long‑term savings.
  • Investment in low‑cost, diversified stock index funds with decades to grow.

At the same time, because:

  • Contributions are not deductible,
  • Investment choices are restricted before age 18, and
  • Rules around basis, taxation, and penalties mirror traditional IRA rules,

it will be essential to coordinate any Trump account funding with your broader retirement and education planning, as well as with Roth IRAs, 529 plans, and regular taxable accounts.

Kids’ IRA or UTMA/UGMA Account?

Some leading financial planners have noted that Trump accounts may not always be the best way to save for children.

One key critique is that while these accounts offer tax deferral, they do not provide tax‑free growth as a Roth IRA does. Instead, contributions are after‑tax, and much of the growth is eventually taxed as ordinary income when withdrawn in adulthood, similar to a non‑deductible traditional IRA.

By contrast, a simple taxable custodial account (UGMA/UTMA) can often take advantage of the kiddie tax and favorable long‑term capital gains rates, allowing families to realize gains periodically at low or even 0% tax rates and to step up basis over time. This can leave the child with more after‑tax wealth than a Trump account, even if the account values look similar on paper.​

Advisors also note that flexibility favors traditional custodial accounts.

UGMA/UTMA assets can be used for a wide range of goals once the child reaches majority: education, starting a business, a first home, or other needs, without early‑withdrawal penalties.

Trump accounts, on the other hand, are subject to retirement‑style rules: access is constrained, withdrawals before age 59½ can trigger penalties, and distributions are generally taxed as ordinary income.

Taken together, the ordinary‑income taxation, lack of a true tax‑free “Roth‑like” benefit, and tighter withdrawal rules are why some experts still prefer straightforward taxable custodial accounts as the primary savings vehicle for many families, using Trump accounts (if at all) as a supplemental tool rather than the core strategy.​

Get in touch with us if you’d like help evaluating whether a Trump account makes sense for your family and how it fits with your existing financial planning. The next step is to review your situation and your current saving priorities.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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Understanding Invesco’s Aggressive QQQ Proxy Push

November 12, 2025 — Sam H. Fawaz

Several clients have written to me inquiring about the barrage of calls, emails, and messages from Invesco regarding the ETF QQQ’s push to gather proxy votes. Here’s an excerpt of one client’s question and my response (greatly expanded for this article):

“…not the most consequential message you’ll receive this year, but my curiosity has been piqued … by the campaign from Invesco QQQ to cast a proxy vote. I’ve never seen anything like it – the mailings, the calls, and so on – for a process that, in my experience, has always been ultra-routine and pretty meaningless for someone like me. Can you explain, and do you have any advice?”

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Here’s how I responded

Regarding the campaign, you’re not alone. Many clients have noticed the unusually intense campaign from Invesco regarding the proxy vote for Invesco QQQ, and you’re right that it stands out from what’s usually a routine process for most fund shareholders.

Early on, my business partner suggested that I write and send an email to clients about this. Not realizing the intensity of Invesco’s push, I decided we didn’t need to, which turned out to be a mistake. In all my years in the business, I’ve never seen or heard of any company launching such an intense and aggressive proxy gathering campaign.

Here’s what’s really going on

Invesco is proposing to convert the ETF QQQ from its current structure (a unit investment trust, which dates back to the earliest ETFs) into a modern, open-ended exchange-traded fund. The primary rationale is to enhance flexibility, oversight, and reduce costs. Specifically, if shareholders approve, the QQQ expense ratio would decrease by 10% (from 0.20% to 0.18%), resulting in tens of millions of dollars in yearly savings across the fund. Importantly, this change won’t impact QQQ’s strategy, holdings, or tax characteristics, nor will it change the fund’s manager or its index-tracking approach.

The reason you’ve gotten multiple mailings and calls? Invesco requires a high level of shareholder participation: by law, converting QQQ’s trust structure requires more than half of all shares to be actively voted “yes.” Unlike typical votes where non-responses are ignored, in this case, non-votes count as “no” votes—which is why the fund is spending so much to encourage participation and obtain a quorum. With so many retail investors holding QQQ, this is a true logistical challenge.

Details of the push

  • Three separate proposals must all pass: shareholders are voting on three linked items: conversion from a unit investment trust to an open-ended ETF, associated changes to the management/advisory structure, and the creation of a board of directors. If any proposal fails, none of the changes will be implemented.​
  • Non-votes count as “No” votes: Unlike routine proxy votes, shareholders who do not respond are counted against the proposals, making high participation essential.​
  • Shareholder benefits include:
    • Lower expense ratio (from 0.20% to 0.18%, estimated savings ~$70 million/year).​
    • Enhanced governance via a new board overseeing the fund for the first time; greater reporting and transparency, including summary prospectuses and semi-annual reports.​
  • No change to investment objective, index, or tax treatment: The fund will continue to track the Nasdaq-100® Index. The conversion is a tax-free event for shareholders.​
  • Huge outreach effort: Invesco is spending an estimated $40 million on proxy solicitation to ensure quorum, highlighting the unusual scale and importance of this campaign.​
  • Record date: August 15, 2025. Only shareholders of record as of this date are eligible to vote.​
  • If approved, conversion is likely to happen by year-end or early 2026.

Potential downsides of shareholder approval

  • Increased Operational Flexibility Means More Managerial Discretion: The move to an open-ended fund structure allows Invesco and its new board greater latitude in making changes, such as fee adjustments or introducing derivatives, that previously required more restrictive oversight under the unit investment trust (UIT) format. This future flexibility depends on the intentions and discipline of the board and managers, and could shift if there’s turnover in leadership.​
  • Invesco Begins Collecting Direct Management Fees: The new format allows Invesco to collect a “unitary management fee” that the trust structure previously didn’t permit. This creates an incentive to grow profits and, potentially, alter expenses down the line, despite the initial fee reduction.​
  • Board Compensation and Governance Costs: A nine-member board will be introduced, which adds an additional cost layer (director compensation and overhead) that could offset some savings or shift incentives compared to a strictly trustee-based approach.​
  • Liquidity Risk in Market Downturns: Open-ended funds may be forced to sell portfolio assets at unfavorable prices if a large number of investors redeem shares during periods of stress, potentially impacting performance. The UIT structure allows shares to trade among investors without requiring the sale of underlying assets, a mechanism that some investors value for stability during volatile times.​
  • Shareholder Risk in Securities Lending: Invesco may expand its securities lending activities under the new structure, and any resulting risks or losses would be borne directly by shareholders, not by Invesco.​
  • No Guarantee Future Fees Will Remain Lower: While initial projections indicate a 10% reduction in the expense ratio, future changes to fee schedules are possible under the new open-ended structure, subject to board approval.​

While many see these risks as manageable, they should be evaluated alongside the promised benefits. It’s important for shareholders to understand both sides before casting a vote.

What major institutional holders think

Major institutions that hold QQQ have generally leaned in support of the conversion vote, viewing the restructuring as beneficial for both operational efficiency and cost reduction. However, the fund has an unusually large retail investor base, making institutional votes influential but insufficient to guarantee passage, which is why Invesco has mounted such an aggressive campaign.​

  • Institutional Sentiment: Proxy advisory firms and ETF strategists have publicly supported the move, highlighting reduced expense ratios, improved governance via a new board, and enhanced transparency as positives for shareholders. Major institutional holders—including major brokerage platforms, asset managers, and pension funds—are widely expected to vote in favor due to these clear-cut advantages, as their own portfolios will directly benefit from fee savings.​
  • Voting Weight: Institutions typically vote their shares, but approximately 40–50% of QQQ ownership is held by retail investors, and a majority of the outstanding shares must vote “yes” for the conversion to occur.​
  • No Institutional Opposition Spotted: As of now, there is no reported campaign of institutional opposition to the change; the proposal is seen industry-wide as a modernization step that aligns QQQ with other large ETFs.

What I think

This change appears to be designed to benefit shareholders by offering lower costs and greater transparency. Despite the potential downsides, it is unlikely to introduce major surprises or large additional risks.

If you agree, I’d suggest voting in favor; however, you won’t be at any disadvantage if you simply ignore the campaign—the fund will continue regardless. Invesco’s push is simply a matter of meeting the voting threshold they need.

Timing of the vote postponed

The original QQQ conversion proxy vote was scheduled for October 24, 2025. After failing to reach a quorum at the original meeting, the vote was postponed to December 5, 2025.

It sounds like the phone calls, emails, snail mail, and text messages will continue for a few more weeks. Or as they say, “the beatings will continue until morale improves.” Maybe casting your vote will stop all the messages. In any case, it’s worth a try.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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The High Ground: Why AI Will Never Replace Human Financial Planners

October 22, 2025 — Sam H. Fawaz

Introductory Note: I was inspired to write this based on a recent rant by one of the fathers of the financial planning profession and author of “Inside Information”, Bob Veres. I’ve used his rant (with his express written permission) to expand on this topic.

Every few months, the same headline resurfaces—“Artificial intelligence (AI) won’t replace human financial planners.” It’s meant to reassure, but perhaps we should also ask: why does this declaration keep needing to be made?

These forecasts of inevitable obsolescence have circulated through our profession for decades. We heard them when the first planning programs rolled out in the early 1980s. We heard them again in the 2010s, when “robo‑advisors” promised efficient algorithms would do the same work for a fraction of the cost. Today, with artificial intelligence reshaping industries from law to logistics, we’re told—yet again—that technology will soon do it all… but “not yet.”

My position is simpler: not ever.

Am I being naive or perhaps ignorant of where AI is headed? Perhaps.

Many don’t know this, but the roots of the “geek” in my financial planning moniker, “themoneygeek,” stem from my strong interest and decades-long professional background and expertise working in technology as a software product manager, technology consultant, and educator.

I got my start in the financial planning profession by first consulting with other financial planners on their technology architecture needs to get that proverbial foot in the door. So, as a self-declared technogeek since the 1980s, I have some credibility when making this statement.

What Technology Really Does Best

Let’s be clear—technology is not the enemy of good advice. It’s an amplifier. AI‑driven tools can already integrate real‑time market data, automate rebalancing, flag tax‑loss harvesting opportunities, model cash flow across multiple scenarios, and surface insights about spending or risk that would take hours to identify manually.​

A fee‑only fiduciary who embraces these tools can deliver faster answers, cleaner reporting, and deeper analytics. In that sense, technology actually gives human advisors more leverage to serve their clients—just as earlier innovations like portfolio management and financial planning software once did.​

But algorithms can’t build trust, navigate life events, or calm a shaken client during a market shock. A spreadsheet doesn’t hear the fear in someone’s voice. A chatbot doesn’t see a spouse’s expression at the thought of retiring early or funding a child’s education.

The True Frontier of Advice

The maturation of our profession has always followed an upward path—from product sales, to planning, to personalized professional advice. The next step is coaching: helping clients clarify what they truly want from this one precious life they’ve been given.

That process involves conversations about purpose, family, trade‑offs, and meaning—topics that no predictive model can quantify. Many clients, given the tools, still won’t set priorities or pursue their deeper goals without a trusted nudge from a human advisor. They’ll plan for others before they plan for themselves. And that’s where the real value of our work lies: helping people live their money, not just manage it.​

Where the “High Ground” Lies

The safest territory from automation is not in number‑crunching but in connection—the human partnership that turns goals into action.

Technology can see patterns. Only people can see you.

Artificial intelligence will make planners faster, smarter, and more efficient—but never replace the relationship that gives planning its meaning.

So rather than defending our values against technology, let’s stand firmly on higher ground:

Empathy. Context. Coaching. Accountability.

Those are the edges no algorithm can reach.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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