Hope you're having a great week! Here are the money topics for today's edition. Let's get right to it.
🔎 A debit card is the safest payment solution. 🔎 Used cars are not always better value than new cars. 🔎 Life insurance isn't for everyone. CRYPTOCURRENCIESIs bitcoin the future or wild speculation?
With the US government continuing to print cash, many are worried about inflation and the knock-on effects. As a result, there's been a lot of chatter about cryptocurrencies and in fact, many are pouring money into them. The question is: should you? Crypto pundits are vouching for bitcoin because of the high level of government spending. The latest stimulus package contributed to a new rush into cryptos. As prominent Silicon Valley angel investor Naval Ravikant puts it, "Bitcoin is insurance against politicians." He goes on to say that the Treasury will never be able to raise interest rates again because it will go bankrupt if it does so. But wait, is bitcoin a proven and trusted strategy? Well, the short answer is not yet. And some would go as far as to say it's "speculative" because of all the risks associated. A few of those risks include extreme price variability, systems risk, potential fraud, and inability to recover a forgotten password. What's more... there is a significant regulatory risk for cryptos. Janet Yellen, the new US Treasury Secretary, asserted that bitcoin supported finance terrorism, money laundering, and malign activities that threaten US national security. And she promised to look closely at how to encourage their use for legitimate activities while curtailing illegal uses... did she mean regulation? You know she did. Our take: if you're contemplating crypto investing, take it slowly. One coin at a time. If you're going to dip your toes, try a proven marketplace like Coinbase to start. Cryptocurrencies are bets, and we don’t know what the future holds for them. If you invest in a company that delivers products, you can expect that it will still be there in the future. In the case of cryptocurrencies, you can’t apply the same reasoning. INVESTINGBye-bye mutual funds?
Did you know that the first modern-day mutual fund was created nearly a century ago in 1924? Today, US mutual funds hold $18 trillion in assets, and it's no secret that US investors love their mutual funds. But... there is a Millennial in town, and it'll be celebrating its 28th birthday this year. It's called the ETF (short for an exchange-traded fund). It offers several advantages that a mutual fund cannot match, and some would say is the future of investing. Let's take a closer look. ETFs disrupted traditional mutual fund fee structureThe first barrier ETFs had to overcome was the lack of load and distribution charges, which traditional Financial Advisors historically heavily relied on to get comped. But the reality has since changed. These days, financial advisors increasingly avoid shares that contain sales and distribution charges, favoring instead institutional classes of mutual funds and ETFs. ETFs' tax-advantage and tradability are key features mutual funds can't replicate. While distributing income similarly to mutual funds, ETFs create and redeem shares "in kind," which reduces capital gains. And you can trade them any time during market hours just like stocks! Fast & furious innovationAt first, ETFs were exclusively passive stock funds fully replicating a market index. Over time, they've broadened to other asset classes, sectors, weighting methods, and now actively managed options. In fact, the fastest-growing ETFs are actively managed—think ARK funds. Even mutual fund stalwarts such as Capital Group, the parent company of American Funds, are now getting into the ETF business. Trading powerhouses on the street—Robinhood and Public—don't even offer mutual fundsMillennials and Gen Zs are not even thinking about investing in mutual funds unless it's within the confines of their retirement savings accounts. In the foreseeable future, mutual funds will remain a mainstay of 401(k) plans, because 401(k) recordkeepers still can't figure out how to handle ETFs. But the direction is clear—ETFs are taking over! TWO TRUTHS AND A LIECan you guess which one is the lie?
👍 Used cars are not always better value than new cars (truth). If you're using a loan to purchase a vehicle, buying a new car may actually be a better value, particularly if you're getting a rebate and a low interest rate, and if you're planning to keep the car for a long time. Also, additional costs such as insurance and maintenance can add up over time—you never know what you're getting with a used car. 👍 Life insurance isn't for everyone (truth). Life insurance is a terrific risk-mitigator for some and an incredibly poor investment for many others. Those who've accumulated enough wealth can forgo paying for life insurance. If you don't have life insurance through work and you know you need one, you may want to check out Bestow (you can get an offer online in about 5 minutes without a medical exam). 👎 A debit card is the safest payment solution (lie). The notion that using a debit card is far safer than many other payment options is now totally antiquated. Even though debit cards are protected by the FDIC, to an extent, and are more easily recovered than lost cash, credit cards are safer: they offer zero liability for fraudulent purchases, making them the safest bet. ✨ TRENDING ON FINNY & BEYOND[Finny Learn]: What is an ETF? Take this 5-minute bite-sized, quiz-based lesson to learn the basics. [Women in ETFs]: Women in ETFs is a global organization for people interested in the industry to join, connect, and be inspired! We know first hand they're the real deal. It's free to become a member. [CNBC] The beef with Credit Karma credit cores. Check out your Credit Karma score—and make sure it's not overinflated. [Finny Discussions] Which small-cap value ETF should I choose if I'm a long-term investor? That’s it for today. If you’ve enjoyed today’s edition, please invite your friends to join Finny. Have a great rest of the week! The Finny Team
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Thursday, January 28, 2021
₿ The case for bitcoin?
Tuesday, January 26, 2021
👀 Overlooked traits of millionaires
👀 Overlooked traits of millionaires+ 5 hacks to keep you motivated to meet your financial goals
Happy Tuesday! With January coming to a close and so much going on already, we're dedicating today's edition of The Gist to financial wellness, health, and motivation. Before we jump right in, to ensure you are getting The Gist every Tuesday and Thursday, please do move us to your primary folder (Gmail) or add us to your VIP (Apple Mail) or favorites (Outlook)! 🙏 Here are the money topics for today:
FINANCIAL GOALSHow to stay motivated to meet your goals?
February is fast approaching and many of us are already craving a nice... neck massage! But, before you do just that, take a quick read of the cool hacks from fellow Finny community members on how to meet your financial goals this year. 5 hacks to motivate you to meet your money goals💡 Find an accountability buddy to keep you in check. Better yet, announce your goals to family and friends so they know not to invite you to any activities that would cost a lot of money. You'll create some pressure that way and wind up being more motivated to stay on track. 💡 Take a bite-sized approach towards the goals you want to tackle. Coming off of a stressful year where many of us may not have been able to complete a single goal, it's best to take it step-by-step. It's also a lot easier to make progress when you're taking small bites. 💡 Gamify your goals to boost your motivation. Consider something like a six-month "savings challenge" or a one-month "spending freeze" with your friends, family, partner, or co-workers. Adding some competition and fun towards saving more, spending less, or paying off debt can go a long way without it feeling like work. 💡 Trust your gut to course correct and get back on track. If something feels off, more often than not, it likely is. Think you're paying too much interest on your credit card? You probably are. 💡 Habit-stack by building new good habits on top of your existing ones. The biggest outcomes in life seldom happen out of the blue. They are usually the result of our habits and consistent actions ingrained in our everyday routines. The framework is: every time/after/before I [current habit], I will [new habit]. Here's an example: "every time I buy something on Amazon, I'll put $10 into my savings account."
ACHIEVING FINANCIAL FREEDOMOverlooked behaviors of millionaires
When you hear people talk about building wealth and becoming a millionaire, you likely hear more often about aspirations and dreams than actionable steps they are taking. The typical millionaire is portrayed as a fast-car-driving, designer-clothes-wearing wheeler-dealer who loves showing off their money. “This couldn’t be further from the truth,” say, Chihee Kim and Milan Kovacevic, co-founders of Finny, who in their careers have met many millionaires of various walks of life. So what’s the anatomy of a typical millionaire? Here are the five most overlooked millionaire behaviors they observed. Spending disciplineMost millionaires avoid status objects and lifestyles like the plague. They typically spend significantly less than they earn (e.g., take the subway instead of a black car). They also think ahead about their major expenses and make sure they aren’t over-extending themselves. Always be investingWhat happens if you make $100K a year and spend only $30K? You invest the rest! Also, have a long-term mindset and let compounding do its job. Millionaires also focus on investment strategies that maximize non-taxable and minimize taxable income. This allows them to continue building up their earnings over time. Investing in proven, but boring strategiesMillionaires tend to avoid hot shiny stocks, fancy options and instead direct most of their money towards ‘boring’ investments such as low-cost index funds and real estate. When they decide to invest in something off the beaten path, they spend a lot of time researching it and invest only the money they can afford to lose. Hard workAbout two-thirds of millionaires work between forty-five and fifty-five hours per week, well above the average. They also tend to sleep less (about 8 hours less a week) and rise early, based on a Business Insider study. Getting up early in the morning to tackle the top three things you want to accomplish in your day sets you up for success! Constantly be learningMillionaires don't settle with what they have or who they are today. They work hard to build skills for tomorrow. The wealthy also tends to think more, oftentimes in isolation, and spends more time focusing on personal growth. For example, they read 5.5 hours a week on average—vs. 2 hours a week for the average American. Think you already have these millionaire traits? Then check out your net worth using this tool from Personal Capital—you may be surprised by what you’ll find out! SPONSOREDIs weight loss one of your New Year's resolutions?
Beware of the unintended effects here folks. We say so because one of Finny's co-founders, Milan Kovacevic, lost over 15 pounds and had this extra step in his stride. We all thought something must have been off, and sure enough, he started fist-pumping, elbow bumping, and grinning from ear-to-ear. But hey, this is exactly the kind of stuff that happens when you're feeling good about yourself! And it's all thanks to Noom! A Noom year for a Noom youNoom makes it super easy to change your eating habits by focusing on 3 super simple approaches: ️☀️ Learn at your own pace—what to eat, why you make the choices you do, and how to build new lasting habits. ️☀️ Accommodates to your lifestyle—Noom includes your favorite foods and existing schedule in a way that's not overwhelming. ️☀️ Supportive one-on-one coach + Noom community to help you succeed and stick with it. And for those money geeks thinking ahead and about healthcare costs... Did you know people suffering from chronic and pre-chronic conditions have incremental healthcare costs of $500 - $12,000 per year? Over 70% of adults have at least one such condition, and almost half have two or more! Noom has already worked with over 45 million users to help them take control of their health-related habits. Want to try Noom for yourself?
✨ TRENDING ON FINNY & BEYOND[Medium] How to use habit-stacking to be financially free by Finny Co-founder, Chihee [Bloomberg] Global Covid-19 vaccine tracker [Finny] Top bond mutual funds searched on Finny: SPAXX and FZFXX That’s it for today. If you’ve enjoyed today’s edition, please invite your friends to join Finny. Have a great rest of the week! The Finny Team
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