July 05, 2022

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TOGETHER WITH

Good day to you. Can you guess what percent of US savers have no clue what amount they need to save to retire at their target age? a. 33%, b. 43%, c. 53%. Follow the wave 🌊 below for the answer.

Here are today's finance & investing topics:

The realities of 5G technology
A rude awakening is coming to your 401(k) statements
Clean up your online spending

TECHNOLOGY

The Realities of 5G Technology

5G technology is, you guessed it, 4G’s successor, because what else would we call it? It’s the 5th generation mobile technology standard and has been under development for over a decade now. And although service providers started to roll it out back in 2019, it’s still in its early stages within the consumer market.

Simply put, the 5G mobile network is expected to have exponential effects on global digital connectivity and power the rise of things like self-driving cars, smart devices/technology, unlimited and high-speed data transfer, and future consumer tech. The idea is that 5G will be playing a major role within businesses across the spectrum and likely have a hefty impact on the economy going forward.

The progress

It all started with the first generation or 1G back in 1979. Then in the early 1990s, 2G introduced SMS text messaging and digitally encrypted messages which culturally shifted the way people communicated. The original social media was then born, with 3G playing a big role in allowing these social networks to become as popular as they did.

From there, we saw the refinement into and release of 4G networks across all major providers, and this is what we’ve been using for a decade now. That is until 5G began to creep in across the globe with initial network launches in 2019 and 2020.

Industry & investment insights

Jack of all trades: Network providers expect 5G to play a big role in countless sectors of the economy, and influence the way we work in a variety of roles. Examples include the obvious like manufacturing, energy and utilities, healthcare, finance, and even agriculture and more.
The numbers: According to Qualcomm, 5G’s full economic impact will be felt by 2035. In that time, Iit’s expected that 5G technology will add $13.1 trillion of global economic output, 22.8 million jobs, and $265B of global 5G R&D annually.
For providers: As for service providers, another study conducted by Ericsson suggests that by the year 2030, ISPs could expect to collect $700 billion in additional revenue thanks to “enterprise” and B2B transactions using 5G.
The future is already here: Data from January let us know that global sales of 5G capable smartphones has already surpassed that of their 4G counterparts, with China leading the way at 84% 5G penetration.
A big role in Web3 too: 5G is poised to play an important role in the development and progress of the proposed Web3 and the future of the internet. The network capacity and low latency provided by 5G allows us to bring to life many of the ideas included in this concept, and should prove to be vital.
5G ETF investing ideas: Defiance Next Gen Connectivity ETF (FIVG, passive), First Trust Indxx NextG ETF (NXTG, passive), Esoterica NextG Economy ETF (WUGI, active)

And the current reality for consumers? With 5G just passing its 2-year anniversary market, 5G may have launched where you live, but you probably haven't really noticed. If you do get 5G service, you’ll need a 5G phone to pick up the signal. And though 5G promises improved speeds over its prior version, you may not have really noticed the blazing speeds just yet.

Take this related lesson on this topic and earn Dibs 🟡 while you're at it:

Active vs. Passive Investing

Investing Basics

1 mins

RETIREMENT PLANNING

A Rude Awakening Is Coming To Your 401(k) Statements

If you have a 401(k), you’re no doubt accustomed to receiving your account statement online or in your mailbox if you’re an old school record keeper. It’s usually nothing special, and these statements just provide routine insights into the basics of your account and its value over time.

However, that’s about to change due to some new legislation that passed in the US in 2019 finally being enacted.

What’s new exactly?

As your second quarter statements begin to roll in any day now, you’ll notice a new section called “lifetime income illustrations” that will bear out how much income you would expect to make in retirement based on your current balance.

In other words, instead of just seeing a lump sum account balance number on your statement, you’ll start to see the monthly income you would get from your current account balance in retirement.

Why this matters

It’s an attempt by US policy makers to reframe how Americans think about their retirement savings. The idea is that a lump sum may give retirement savers a false sense of security they have enough saved for retirement. For example, a $125,000 account balance seems great until you see that it’s more like $500 or $600 per month in retirement.

What to make of this new information

Do this for all your retirement accounts: Your 401(k) statement is just now doing what we should all already be doing on our own, calculating how much income our nest egg will produce for us, and the amount we’ll need to have enough in retirement. The new illustrations don’t account for retirement savings accounts outside of your 401(k) or Social Security benefits. If you haven’t already done so already, start now, and include any other retirement accounts you own. Leverage free online retirement income calculators from your work retirement plan sponsor or other providers like AARP or the American Institute of CPAs.
Use it as a guide not gospel: There will undoubtedly be many savers who are surprised at just how thin their account gets spread when the balance has to span years. Use this new statement as a wake up call and a guide, not only to save more if necessary, but also just to make sure you’re on the right pace. Think about how much of your prior salary you want to replace in retirement—focus on the outcome versus the pile of money in your account.

MONEY TIPS

Clean Up Your Online Spending

From hidden subscriptions to shopping online, you're probably spending way more than you realize. Without physical bills or regular reminders, it's easy to forget about what we're spending and how.

🩺 Schedule a subscription intervention

Go through your credit card bill, and see who is charging you.
Go to your app store settings and make sure you monitor what you've signed up for or if there's a free trial about to end.
Keep a list or spreadsheet for your subscriptions. Sometimes these recurring payments are monthly; other times, they can be annual. Yes, those $5 or $10 charges may seem small. But do you know how many subscription services you're actually using? Streaming apps alone can easily come out at around $900 a year or $80 a month.
💡 Tooltip: If you prefer to automate the tracking of your subscriptions and expenses, consider a budgeting tool like Tiller Money (for google sheets geeks) or YNAB (user-friendly).

🤝🏽 Share, negotiate or take a break from accounts

A surprising number of payments, such as cable, car insurance, credit card annual fees and interest rates, and cellphone service fees are negotiable. Sometimes you can lower these fees with a simple phone call.

💡 Tooltip: If you don't want to do this yourself across a dozen or more services, an example of a super easy tool for this is Truebill—they will negotiate most bills on your behalf and take a cut of the savings they find and negotiate for you.

Sharing your subscriptions or pausing your accounts if you're on the fence can also be a great way to bring your expenses down.

🥕 Comparison-shop on delivery apps

Before shopping for groceries or ordering delivery, compare prices between different apps, compare the delivery fees, and other service fees. But if possible, order from the restaurant or grocery store directly. They'll get a larger share of the profits instead of a crushing third-party fee.

🌎 Bring your cloud storage bills down to earth

Figure out how much storage you actually need, audit your Amazon, Google, Apple, Dropbox, and Microsoft storage, and cut your costs. You're probably paying so much more than you actually realize because you likely signed up for multiple services when you ran out of space.

🔥 TODAY'S MOVERS & SHAKERS

Roblox (+8.5%) stock is up after a nearly 70% decline in 2022; growth is expected to accelerate in 2022, especially as the metaverse further develops; the stock is rising in the absense of any company-specific information
Crocs (+5.1%) as the casual shoe maker's stock is upgraded to a "buy" rating by Loop Capital
Tesla (-3.3%) as deliveries fall nearly 18% in Q2 following their China factory shutdown (TechCrunch)
Bitcoin (-4%) to $19,422.20 (1D)
Ethereum (-4.6%) to $1,097.32 (1D)

This commentary is as of 7:30 am PDT.

🌊 BY THE WAY

🤔 Answer: a) 33% of US savers have no clue what amount they need to save to retire at their target age, according to Finance Buzz. Here's another resources on how to calculate if you're on track to retire (Visual Capitalist)

💳 If you're paying off your credit card bills and are looking to do that at a lower interest rate, check out Tally. Find out if you qualify—no hard credit pull required. (Tally)
🔋 How to invest in EVs—here's an interesting guide (IBD)
🚗 ICYMI. Tax credits for going electric (Finny)
🏝️ Finny lesson of the day. If you're new to the workforce and not sure why you should even be investing for retirement when it's so far out, please take this micro-lesson on the topic:

Saving for Retirement & Why It Matters

Retirement Planning

8 mins

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The Gist is Finny's twice-a-week (Tues & Thurs) newsletter covering personal finance & investing insights and money trends. Finny does not offer investment and stock advice or endorsements. The Gist content team: Austin Payne, Chihee Kim.

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