Bitcoin Can Collapse Completely, Says Agustín Carstens, Former Secretary of The Treasury

This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process.

At the height of the cryptocurrency boom, the manager of the Bank for International Settlements (BIS) , Agustín Carstens , warned about the dangers of investing in them. The former finance secretary warned that Bitcoin is increasingly vulnerable and could completely collapse .

Yesterday, January 27, during the policy seminar of the Hoover Institution , the Mexican economist said that Bitcoin is a speculative asset, not money .

“Investors should be aware that Bitcoin can completely crash. Scarcity and crypto alone are not enough to guarantee exchange, “ explained Carstens , adding that Bitcoin is increasingly vulnerable .

The also former governor of Banco de México , affirms that central banks must control the issuance and management of digital money . Consider that they have the financial structure to guarantee the stability of the cryptocurrencies .

“For digital money to exist, the central bank must play a fundamental role, guaranteeing the stability of the value, ensuring the elasticity of the aggregate supply of said money and overseeing the general security of the system. Such a system must not fail and cannot tolerate serious errors , ”Carstens said

pic.twitter.com/18523AdPeg– Bitcoin (@Bitcoin) January 29, 2021

The BIS manager said that other private stablecoin projects, such as Facebook’s , are more credible than Bitcoin , but need to be regulated.

“In general, private stablecoins cannot serve as the foundation for a sound monetary system ,” he said. “But to remain credible, they must be strictly regulated and supervised. They must build on the foundations and confidence that the existing central banks give them and, therefore, be part of the existing financial system .

For now, many countries are targeting Central Bank digital currencies (CBDC) . In fact, 86% of major central banks are actively exploring CBDCs , according to a recent BIS survey.

Carstens indicated that national CBDCs would be used in various ways, such as the transmission of monetary policy and the management of interest rates. He explained that they should be complementary to the existing cash system , as completely replacing all bank accounts and cash with digital money is “undesirable” and “unrealistic .”

By: Entrepreneur en Español Entrepreneur Staff

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Sam Dolke

00:00 Intro 00:28 Halving and Support explained 03:34 Analysis of the previous Bull run 05:31 Analysis of this Bull run 06:42 How to counter Pullbacks 09:00 Conclusion 10:15 Outro Bitcoin is now worth more than 41k and it just keeps on climbing. But is this growth sustainable? Is a pullback, correction or crash in front of our door? Unfortunately timing the market is impossible but we can look at historical data and trends to get a general idea of the possibilities. In this video we’re going to do a technical analysis and look at previous trends.

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14 Tips To Meet Your Financial Goals In 2021

Who among us isn’t ready to bid good riddance to the year 2020? The pandemic has upended life across the globe and that includes creating financial chaos and stress for people of all walks of life. The good news is that 2021 is just around the corner. The bad news is that there will be pandemic fallout to deal with in the year ahead, and that could mean a continued rocky ride for your personal finances.

That doesn’t mean postponing or eliminating financial plans and goals altogether. And it doesn’t mean 2021 will be a bust. Instead, you’ll need to be more focused, savvy, and strategic about money goals in the coming year, which is why we asked financial experts across the country to weigh in and provide tips and insights about how to prosper financially in 2021 despite all the uncertainties that lie ahead.

Related: 19 Smart Ways to Get Through a Recession

Create a Rolling Budget

In times of uncertainty, it’s a good idea to create what’s known as a rolling budget, which is a budget that’s dynamic and changes throughout the year. This type of budget typically focuses on the near term, rather than the long term.

“You can’t always foresee every stumbling block in your financial future, so make sure to keep your budget bendable, not only judging the numbers you see at the moment but also make room for the surprises,” says Roy Ferman, founder and CEO of Seek Capital. “Keep a rolling budget and forecast that accounts for potential fluctuations — positive or negative.”

In other words, budget in a way that accounts for multiple real-world scenarios, says Ferman, creating a plan A, B, C, and possibly even D. “You want each plan fully mapped out as if it was plan A to keep you on top of any discrepancies. Allow yourself to come up with different variations, and allocate for those variations.”

Establish More Than One Stream of Income

Depending on how you define the data, anywhere from 20 million to 30 million people were unemployed or had their income affected by the pandemic, says Marco Sison, financial coach for Nomadic FIRE. To help protect yourself against the impacts of unemployment or reduced income, it’s a good idea to establish multiple streams of income.

“If one job or income stream is cut off, you still have other sources coming in to live off of,” says Sison. “Ideally, these income streams are passive: dividends, rental property, digital side businesses. If your hours get cut, or you lose your job, you can reduce your expenses and live off your side hustles without tapping your emergency fund.”

Budget for Saving

Warren Buffett has been quoted as saying “If you want to make saving a priority, take a look at how you budget. Do not save what is left after spending; instead spend what is left after saving.”

If you truly want to make saving a priority, particularly amid challenging economic times, you cannot plan to simply set aside what is left over, says Robert Johnson, a professor of finance, at Creighton University’s Heider College of Business. “You don’t successfully build wealth by simply taking what you have left after all your expenses,” says Johnson. “We accomplish what we prioritize. Prioritize savings and invest those savings. Saving should be a line item on your budget.”

Develop an Investment Policy Statement

Anyone who makes investments should create what’s called an investment policy statement (IPS) and follow it, says Johnson at Creighton University. “An IPS is a written document that clearly sets out an investor’s return objectives and risk tolerance over that investor’s relevant time horizon, along with applicable constraints such as liquidity needs and tax circumstances,” explains Johnson. “The whole point of an IPS is to guide you through changing market conditions. It should not be changed as a result of market fluctuations.”

Avoid Credit-Card Debt

Credit-card debt is a slippery slope in the best of times. And when the economy is uncertain, it’s best to avoid using credit cards as much as possible. “It’s never advised to spend money you don’t have via revolving lines of credit. And psychologically making purchases via most credit cards makes us a lot less frugal and undisciplined,” says Adem Selita, CEO and co-founder of The Debt Relief Company. “Considering that interest rates are near all-time lows, paying 20% or more on credit-card debt is a terrible financial decision to make.”

Clear Outstanding Debts

One more note about credit-card debt, if you’re able: Wipe out all existing debt. That will be the biggest favor you can do yourself in terms of meeting financial goals in 2021 and laying the groundwork for success (and beyond), says David Meltzer of East Insurance Group. “Chip off your debt bit by bit by paying off a small portion each month,” says Meltzer. “And do some belt-tightening on your spending for the time being. Take a look at your expenses and see which ones you can let go, and which ones you need to minimize, in order to help clear debt.”

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Streamline Your Budget

Study your cash flow, both your income and expenses and outline a realistic household budget, says Meltzer at East Insurance Group. “Your expenses should be exclusively necessities like house bills, groceries, food, mortgage, insurance, and savings,” says Meltzer. “There’s no room for gym memberships and Netflix subscriptions on a tight budget. Most importantly, keep track of your spending. At this point, each cent counts.”

Consider Living Below Your Means

While you’re busy outlining your month-to-month budget goals for 2021 and paring back your spending, you might consider establishing a plan to live well below your means.

“By spending less than you earn, you open up funds to put into a savings account for emergency situations, such as a pandemic, or the loss of a job,” says Mason Miranda, credit industry specialist for Credit Card Insider. “The more you save now, the more financially stable you’ll be later when a crisis hits. Depending on your goals and how much you can save, you could even avoid going into debt and pay for large purchases in cash.”

Prioritize Your Goals and Be Realistic

Prioritizing all of your financial goals allows you to put them into specific categories based on which goals you want to meet first, says George Birrell, CPA and founder of TaxHub. You’ll also want to set a realistic time frame for meeting those goals amid the uncertain economic landscape.

“Setting a realistic timeframe is very important,” says Birrell. “If you set a timeline for one year, but your expenses don’t allow for meeting that timeline or you don’t have the capacity to put in extra work to earn more, you’re not going to reach that goal. Look at it objectively and realistically.”

Set Milestones Toward Larger Goals

Think of a milestone as a smaller goal that helps you get to your larger goal, says entrepreneur Thierry Tremblay, CEO founder of the online database software company Kohezion.

“They are like guideposts on the trail — smaller tasks that you can do to help you stay in line with your overall goal,” says Tremblay. If you fail at various points along the way when pursuing financial goals, think of it as an opportunity to gain valuable insights about things that work and don’t work, says Tremblay. “When you move on to the next goal you’re trying to accomplish, you have an advantage because of the things you’ve learned from your failure,” adds Tremblay.

Start With What You Have

Financial advisers often recommended setting aside three to six months’ worth of income in an emergency fund, which can seem overwhelming if you’re living paycheck to paycheck as many are right now, says Emma Healey, family finance and budgeting expert and founder at Mum’s Money. Rather than giving up on establishing an emergency savings altogether in 2021, simply start smaller.

“Start with what you have. Even if you can only spare $5 a week, stashing it aside to help pad out your budget when times are tough,” says Healey. “It is a decision you’ll never regret. Add more as you can, but the most important thing is to start.”

Automate Your Savings, Debt, and Bill Payments

It’s hard to spend money if you’ve already sent it somewhere else, says Chelsie Moore, CFA and director, wealth management and financial planning for Country Financial. Create automatic debt payments, bill payments and automatic transfers from your checking account to your savings account.

“A little bit adds up over time,” says Moore. “Automatic payments may help you avoid late payment penalties, which are a waste of money, and automatic savings can add up without effort or feelings of sacrifice.”

Meeting your financial goals in the best of times can often be challenging. But when the world is topsy-turvy it can be even more perplexing trying to figure out how to accomplish your goals once you’ve defined them. A personal finance professional can help you navigate the uncertainty and plot a path to success.

“Seek the advice and guidance of a financial professional who has the expertise to assist you,” says Tracey Bissett, CFA and president of Bissett Financial Fitness. “The best way to find one is to seek recommendations from someone you trust and then interview potential advisors to find the best fit. You should feel comfortable talking to the professional and asking them questions.”

Be Kind to Yourself

It’s important to remember as you embark upon 2021, and any year for that matter, that financial fitness is a lifelong journey. “Take small, imperfect actions daily to increase your financial knowledge and movement towards your goals. If you make a misstep, be kind to yourself and get back on track,” says Bissett.

By: Mia Taylor

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THE BROKEN WALLET

I don’t believe in resolutions, but I do believe in goals. Ready to make 2021 a good year financially? If you need a little “goal” inspiration, here’s a look at 21 money goals for 2021 that can empower your finances. Don’t forget to SUBSCRIBE, LIKE AND COMMENT: https://www.youtube.com/thebrokenwallet Start investing with Acorns today! Get $5 when you use my invite link: https://acorns.com/invite/JDCS44 Open a CIT Bank Savings Builder Account and Grow Your Money Faster Use my referral link to get started: https://fxo.co/9yAC Looking for an automated investment service? Open a Wealthfront investment account and get $5,000 managed for free for life. Use my referral link: https://invest.wealthfront.com/broken… Would you rather pick your own investments? If so, join Robinhood and start investing today! Use my referral link and get one free share of stock: https://join.robinhood.com/valench9 LET’S CONNECT: » Blog: https://the-broken-wallet.com » Twitter: https://twitter.com/thebrokenwallet » Instagram: https://www.instagram.com/the_brokenw… START YOUR OWN BLOG: REGISTER YOUR DOMAIN, CHOOSE A WORDPRESS THEME AND GET HOSTING WITH A FEW CLICKS *Bluehost (self-hosting): http://www.bluehost.com/track/thebrokenwallet FILMING GEAR: *Sony A6400 with 18-135mm Lens: https://amzn.to/38eBa6A *RODE VideoMic Pro+ w/Rycote Studio Boom Kit: https://amzn.to/2XvqyxC *Studio Lights: Neewer 2 Piece Bi-color 660 LED Video Light and Stand Kit: https://amzn.to/3alFbYi *FlexiSpot VICI Electric Quick-Install Height Adjustable Desk EC9 Series: Get $15 OFF – https://bit.ly/3jv18Z5 TAGS #frugallivingtips#moneygoals#moneygoalsfor2021

The Interest Rate Volatility And Inflation Hedge ETF: An Interview With Fund Manager Nancy Davis

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Nancy Davis founded Quadratic Capital Management in 2013 and manages the portfolio for the firm’s Interest Rate Volatility and Inflation Hedge Exchange Traded Fund. Forbes Senior Contributor William Baldwin outlined her career and the establishment of this novel ETF in this September, 2019 article.

After the extraordinary volatility of all markets in March of this year, I wanted to follow up with Quadratic and see how the fund with volatility in its very name had managed those historic few weeks. Nancy agreed to answer a few questions and here’s how it went:

John Navin: What’s stagflation? Why should investors be concerned now?

Nancy Davis: Stagflation is an economic condition in which slow economic growth (or even contraction) occurs simultaneously with rising prices. I’m sure there’s a better definition but that’s pretty close.

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Stagflation is a disastrous outcome for investors. Higher prices coupled with lower growth is a potentially terrible environment to generate positive real returns. With the virus curtailing economic activity while simultaneously disrupting and altering supply chains around the world, we could see prices for many goods rise even as the economy slows.

Policy changes that result in reductions of international trade or immigration could also be catalysts for stagflation.Investors might hope that a large bond portfolio would provide some protection in this stagflation environment, but stagflation could be difficult for holders of fixed income instruments.

Bonds could be just as likely to sell off as equities, foiling the popular “risk parity” strategy.

Quadratic Interest Rate Volatility And Inflation Hedge ETF daily price chart:

Navin: With oil prices in deflationary mode, how might inflation arise anyway?

Davis: The decrease in oil prices create a onetime deflationary shock. It is not recurring. We may see rising prices in other parts of the economy as supply chains are disrupted. Rising food prices are one example that come to mind. I’ve read about potential shortages of meat and dairy products, for example.

An economist would say that a reduction in supply should lead to a rise in the market-clearing price. Trade tensions and economic policies that prioritize national self-sufficiency could also contribute to inflationary pressure. I’m not making a prediction on inflation.

Our products don’t need a hyper inflationary environment to perform well. I believe we are among the top 5% of all ETFs in performance year to date and there’s not a lot of inflation right now.

Quadratic Interest Rate Volatility And Inflation Hedge ETF weekly price chart:

Navin: Without giving away secrets or getting too technical, how do you construct an ETF for stagflation?

Davis: In a period of stagflation, one could expect increased volatility, rising prices and higher inflation expectations. IVOL’s TIPS and options might do well in stagflation if the interest rate curve is likely to steepen and volatility increases in such an environment. We certainly do not hope for a stagflation scenario in the US, but, under such an interest rate scenario as described, IVOL’s portfolio may help.

Navin: What’s the market for your ETF? ? Mutual funds? Ordinary investors?

Davis: We have a diverse group of investors in IVOL. We have seen other fund managers use the fund.

IVOL is also an ESG fixed income fund. The ETF is an inflation protected bond strategy that is innovative and unique. We embody democratization of financial markets by providing access to inflation expectations for our shareholders.

TIPS only give you the CPI basket – it’s today’s inflation basket per the US government. Whereas IVOL gives you CPI with TIPS and the enhancement with inflation expectations given that the yield curve is largely a result of investor’s expectations for inflation in the future.

Also IVOL maybe a potentially attractive addition to a portfolio looking for diversification during a time when many other holdings may have behaved very similarly.

Navin: Average daily volume of your ETF is 47,000 shares. This is relatively low. What are your plans, if any, for increasing liquidity?

Davis: The secondary market liquidity is an important number to watch, but it does not properly reflect the underlying liquidity of the ETF. As the fund grows, I expect the secondary market liquidity to improve over time.

Institutional investors can achieve ample liquidity in IVOL. One can access massive liquidity by using the primary markets in ETFs. It is called “NAV based creates” or “NAV based redeems” for buys and sells respectively. That way investors execute their order in the primary market at the NAV (similar to a mutual fund).

I have been in the industry since 1998 but was not aware of this “technology” for trading until I learned about ETFs. And keep in mind that the fund is less than a year old.

Navin: Your ETF experienced the volatility that hit all markets in March. What’s different about “interest rate volatility?”

Davis: We have long been advocates for owning volatility, but IVOL is not a standard “long vol” product. An investor who is convinced of the benefits of owning volatility still has other decisions to make. Market commentators (and even sophisticated investors) often lump all long volatility into the same bucket. IVOL is one of the few ETFs available today that use interest rate volatility instead of equity volatility.

Equity volatility is generally limited only to options on US equities.One of the major drawbacks of any option is the negative carry. All options suffer from time decay and decline in value as time passes, all else being equal. But interest rate options have one factor that makes them different from equity options: the concept of rate roll down.

In the interest rate market, the forward rate can be significantly different from the spot rate. In the case of the options held by IVOL, whenever the interest rate curve is upward sloping, then the rates roll down could be positive and might improve the carry of the options.

This means that under these market conditions, the interest rate options owned by IVOL could have their negative time decay mitigated partially or completely by the roll down in the interest rate curve.

Of course, the inverse would also be true: if the curve is downward sloping, then the rates roll up would be an additional hurdle for the options. Historically, the curve has had a positive slope most of the time, making the positive roll down more frequent than the negative roll up.

Navin: A classic inflation hedge has been gold. Why might your ETF be an improvement over the barbarous relic?

Davis: No one gets paid coupons or dividends to own gold. It actually has storage costs which are a drag on the long run performance. This is probably OK when interest rates are very low, like now. But I would rather own things that don’t cost me money to own them. I don’t want to predict the future and anything could happen, so it is always advisable to have a diversified portfolio. Gold could be a piece of a portfolio.

I do not hold positions in these investments. No recommendations are made one way or the other.  If you’re an investor, you’d want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor.

Follow me on Twitter or LinkedIn.

My Marketocracy work is profiled in The Warren Buffetts Next Door: The World’s Greatest Investors You’ve Never Heard Of by Forbes Investments Editor Matt Schifrin. I’m a graduate of the University of North Carolina.

Source: https://forbes.com

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Stagflation is an economic condition with persistent high inflation combined with high unemployment and relatively stagnant demand for products. ————————————————————— Subscribe for new videos every Tuesday! http://bit.ly/1Rib5V8 Dictionary of Economics Course: http://bit.ly/2t8PNGR Additional practice questions: http://bit.ly/2JPjeby Ask a question about the video: http://bit.ly/2M2VVHP Help translate this video: http://bit.ly/2t8aqmK

Five Ways To Buy Something You Can’t Afford

“If you can’t pay for it in cash, you can’t afford it.” “If you can’t buy it twice, you can’t afford it.” You’ve probably heard one of those aphorisms. The point is that even if you’re paying with a credit card (for the convenience or the cash back or travel rewards), if you can’t cover the cost of something with available cash, you can’t afford it and shouldn’t buy it.

While that is generally true, it’s not always practical advice when you, or someone you love, really needs something that neither your paycheck nor savings can cover. It’s also not realistic, since most Americans spend money on things they don’t need.

But you didn’t click on this article for a debate on whether Americans spend too much.

Today In: Money

Nope. You want to know HOW to pay for something you can’t afford to pay for in cash now.

I’ll cover five options: old-fashioned layaway; newfangled point-of-sale financing; credit cards; saving for what you want to buy; and selling stuff you already own, but don’t want as much as what you plan to buy.

1. Old-fashioned Layaway

Growing up, I only heard about layaway during the holiday season when major department stores advertised their Christmas layaway programs. Now, the fintech community has transformed this option, as I’ll discuss next.

But first, it turns out the traditional Christmas layaway is alive and well at Walmart, the world’s largest retailer by sales. And now is the time to get started. Layaway works like this at Walmart: You go to a store, collect your intended gifts,  go to a special Layaway counter, put down a deposit of at least $20 or 20% (whichever is more), and make additional payments whenever you’re in the store.

Walmart requires all items be paid off and picked up by December 10, 15 days before Christmas. There’s no interest charged. If you decide you don’t want a purchase after all, you can get a refund, usually minus a cancelation fee. That fee can be steep: 20% of the purchase price or $20, whichever is greater. (But Maryland, Ohio, Rhode Island and Washington, D.C., don’t allow a cancellation fee, while Alabama caps it at $25 and North Carolina at $50.)

If you’re shopping for a major appliance, Sears offers a layaway program year-round online and in its stores. The plan includes a $10 or $20 service fee and a set payment term of 8 to 12 weeks. If you want to cancel a Sears layaway contract, you have to go to the store to do it.

2.  Newfangled Point-of-Sale Financing

The basic principle of old-fashioned layaway is that you don’t get the item until you have finished paying for it. If your refrigerator or washing machine is broken beyond repair, you don’t want to wait 8 or 12 weeks for a new one.

With newfangled point-of-sale financing (it’s primarily available online, but sometimes in stores, too), you get the item now and pay over time. Essentially, you’re taking out an instant personal short-term loan that is tied to the purchase of a specific item or service.

QuadPay, Klarna and Sezzle allow you to pay for an item in four interest-free payments. Forbes Fintech 50 member Affirm offers interest-free financing from a small number of retailers that subsidize financing (among them Peloton, Warby Parker and Casper), but generally charges interest rates ranging from 10% to 30% (based on your credit score) for other purchases. Affirm’s longest loan term is 48 months.

Often, these fintech financing offers only become apparent when you go to check out a purchase online. But you can also plan ahead. For example, Affirm offers a list of merchants who offer its service in each category. Plus, it allows you to find out in advance how large a purchase it will finance for you. Affirm gives you this number, it says, without making a “hard inquiry” on your credit record, meaning it won’t affect your credit score, the way applying for a new credit card likely would.

When you buy something financed by Affirm, however, both your loan and your payments are reported to the credit bureaus, meaning timely payments can help your credit score and late payments will hurt it.

Separately, while Amazon’s credit cards may be better known, the behemoth of online selling also offers its own point-of-sale installment payment plans on certain (usually higher-dollar) purchases.

Read more:  Fintech’s Version of Layaway Explodes Online

3. Credit Cards

Like point-of-sale apps, credit cards allow you to get an item upfront while you pay the costs over time. “When you swipe a credit card, you are taking out a loan,” warns Tiffany “The Budgetnista” Aliche, a budgeting expert and financial wellness advocate. But unlike point-of-sale financing, it’s not a one-time loan with a set payoff date. The lure and danger of credit cards is that they provide so-called “revolving” lines of credit that you can use as long as you keep the account open and in good standing.

The credit card company doesn’t care what you’re buying with the credit line. (By contrast, companies like Affirm use algorithms that actually take the item you’re purchasing into account when deciding whether to green-light a loan.)

Before reviewing ways to use your credit card, here’s a bit of basic, yet very important, information on credit cards. Most credit cards are unsecured, meaning that if you don’t pay the lender back for the purchases you made, then they can’t take possession of those things. Lenders will likely send you notices requesting payment. If that doesn’t work, they will send your account to collections and report your delinquent account to the credit bureaus, hurting your credit score and ability to do things like get a mortgage or rent an apartment.

Some banks and credit card issuers offer secured credit cards, which are credit cards that require a deposit in order to use them. These are great for building credit and improving your credit. But they do not work if you do not have enough cash to cover the deposit amount.

So back to unsecured credit cards. Your credit line comes at a price known as the annual percentage rate (also called the purchase rate) and it’s based on your credit history. Individuals with good or excellent credit can borrow at lower APRs than individuals with bad credit.

Read more: The Forbes Guide To Credit Cards

But sometimes–often when you take out a new credit card and sometimes when you receive a special offer from an existing one–there’s a promotional period that allows you to buy something and take months to repay, without owing any interest.

If you’re in a rush to buy that new washing machine, you might be able to buy it with a credit card you already have and then apply for a new card with an attractive balance transfer offer.  Typically, there may be a fee for this transfer. But not always.

For example, the Chase Slate credit card is currently offering new customers a 15-month 0% interest rate for new purchases and balance transfers. Plus, there’s no fee for balance transfers during the first 60 days after you open the card. Be careful: If you don’t pay off your balance within those 15 months, you’ll be stuck paying an interest rate of between 16.99% and 25.74%.

Read more: How To Make A Balance Transfer Card Work For You

The 10 Best Best Balance Transfer Credit Cards

Credit cards are an option for buying something you can’t afford to pay for with cash—but an option that should be approached with extreme care. It’s easy to let a credit card balance sneak up on you (just ask this Millennial who accumulated  more than $30,000 in credit card debt) particularly if you carry the card around and begin to use if for everyday expenses, as opposed to the one-time purchase of an expensive item (e.g. the washing machine) you need now.

Read more:  The Best Way To Pay Off A Credit Card Debt 

4. Save Your Coins

In the wise words of rapper Wiz Khalifa, “Surround yourself with people who help you save money, not spend it.” It’s not clear in what ways Khalifa and his friends save a few hundred dollars, but there are plenty of ways you can save money toward a goal.

The most basic and traditional way is to open a savings account. You can even incorporate your friends in this process: ask them if they’d like to refer you to their bank for any referral bonuses for the both of you. For example, if a TD Bank customer refers a friend who opens an account,  each gets a $50 bonus.

Of course a $50 bonus shouldn’t lead you to open a savings account with a noncompetitive rate. With the growth of high-yield online savings accounts, it’s easier than ever to find an account with a good interest rate.

You’ve found a high rate. Now, get a plan to save for that big purchase you can’t finance from current cash flow. Let’s say you have a friend’s out-of-town wedding next year. Calculate the costs of travel, the outfit you’ll need, the wedding gift and anything else that factors into it. Then divide the total expense by the number of months or weeks you have until the date you need to be ready to purchase those things.

Once you’ve figured out how much to set aside into that savings account every month or every week, consider setting up automatic transfers from a checking account to a savings account so you don’t have to think about it. (And if your bank doesn’t offer that kind of service, consider finding a new one.)

More reading: Three Good Reasons To Switch Banks And How To Do It

Another behavioral suggestion to reinforce your savings comes from Aliche, who observes that “inconvenient money gets saved.” She suggests making your savings account difficult to withdraw money from. In other words, it’s harder to save money when it’s easy to transfer money back into your checking account for happy hour or an impromptu shopping spree.

“I had to make my money inconvenient so I opened up an online-only bank account. I just put my savings there–not checking, no debit card, just savings. It is impossible for impulse buys,” Aliche says. Banks usually take a day or more to transfer your money to other banks. Within that 24- to 36-hour period the impulse to buy something might pass.

Another behavioral trick to boost your savings: roundup options. A roundup is a feature wherein you accumulate more savings by automatically transferring over loose change to your savings account. Some banks like Bank of America have this feature. If your bank doesn’t have this, then consider a roundup app like Acorns, Qapital, Digit or Chime. These apps work with third parties, meaning a partner bank that you provide personal identifying information to. (They do this so they can offer FDIC insurance on your savings, since they’re not banks themselves.)

5. Sell Stuff

Way back when, if you needed to raise cash from your stuff, you had to go to the pawnshop or stage a garage sale. Both might be seen as signs of financial distress. Now, however, there are more ways than ever to sell surplus items online and living with fewer material things can be seen as a savvy lifestyle choice.

More reading: The Joys Of the Minimalist Life In Retirement

How Decluttering Her Home Changed This Young Mother’s Entire Life

Since the heyday of eBay, there’s been a surge of platforms for neighbors and strangers to sell stuff to one another. Some platforms allow you to sell for a set price, while others allow users to bid on your items. Sites like LetGo, Craigslist, Ruby Lane and Facebook Marketplace allow you to unload unwanted furniture and decorative knickknacks. When it comes to your wardrobe, top options include PoshMark, thredUP, The Real Real, Kidizen and Tradesy.

More reading: Life After Forever 21. How To Reduce Your Personal Cost Per Wear

Once you’ve gathered intel on your salable items,  decide how you’ll sell them. Would you prefer to sell them yourself on sites like Poshmark and Craigslist or sell through an online consignment shop like The Real Real?

Before snapping Instagram-worthy pics of your things, there are a few things you should do to prepare. First, edit what you’re going to sell. Things in good condition and better do well on these platforms. Anything less than good condition should be recycled or trashed.

Second, research the price range of your item. The item likely will not go for what it originally cost, especially after you’ve used it—unless it’s a limited edition collectible.

Aliche’s sister picked up a Hermès scarf for $2 at a thrift store. (The old-fashioned kind.) While she had been shopping for a scarf to tie around her head at night, she decided to take this scarf to an Hermès in Short Hills, New Jersey, and get it authenticated. It turned out to be a limited-edition design worth upwards of $1,000. She sold it on Poshmark.

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Asia is a personal finance writer for the Money and Markets team at Forbes. She’s based in New Jersey. Before joining Forbes, she reported for Financial Advisor magazine and also wrote for The Cranford Chronicle, NJ.Com and ThePopBreak.com. She also spent two years teaching English as another language in Shenzhen, Guangdong, China.

Source: Five Ways To Buy Something You Can’t Afford

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Investing 101 FREE ebook: http://theminoritymindset.com/get-ric… SUBSCRIBE for the latest videos *NEW VIDEOS EVERY WEEK* SC @M2JaspreetSingh http://www.TheMinorityMindset.com Instagram: http://www.Instagram.com/MinorityMindset Facebook: http://www.Facebook.com/MinorityMindset What Can You Afford? Budgeting For Wealth | Minority Mindset – Jaspreet Singh What’s up everybody my name is Jaspreet singh & welcome to the Minority Mindset’s Finance Friday. What’s affordable mean? If you got $200 in your bank account can you afford a $200 pair of shoes? It depends who you ask If you haven’t watched my previous video on budgeting, you should watch it so you know how to allocate your money once you start making it. But now you have some money in your bank account what do you do? If you want to buy luxury things, meaning things that you don’t need, Yo Jaspreet I need these new $200 shoes No remember my rule of 5. If you can’t buy 5 of them, you can’t afford one of them. If you want to buy a $100 pair of shoes and you don’t have $500 saved up, you can’t afford it. What’s the point of doing this? It forces you to live below your means. It forces you to save for something bigger, something to invest it, something that will make you more money. Make the sacrifice now so you can live bigger tomorrow. And listen, just because a sales person says you qualify for something more expensive doesn’t mean you can afford it. I briefly was a real estate sales agent for people who wanted to buy and sell their homes. We were paid based on the value of the home, the more the home costs the more we get paid. The same worked with banks, bank loan officers are often paid based on the value of the loan. Now although the bank officer and the real estate agent have to look out for your best interest, they aren’t doing anything illegal by approving you for the highest amount possible. So it’s in the bank officers best interest to get you the biggest loan as possible so they get the biggest paycheck. And it is in the real estate salesperson’s best interest to sell you the most expensive home so they get a big check. These people don’t have to deal with the consequences If you end up buying something that’s a little too expensive for you. You have to be the one in charge and know what your budget is. Don’t rely on sales people because their interest isn’t always the same as yours. And its not just houses and mortgages. Payment plans are becoming more popular for everyday items. Appliances, furniture, electronics, even our cell phones. I’ve said this before but it is nearly impossible to build wealth when you are constantly making payments to pay off things that you can’t afford. This year, Forbes reported that 63% of Americans, 63% don’t have enough funds saved up to cover a $500 emergency. Don’t be the majority. Put in the work and the sacrifice now so you can live better tomorrow. If your goal is to build wealth, you have to start living below your means. If you can’t buy 5 of them, you can’t afford one them. I know it’s hard, but you will set yourself up to stand out from the majority. #ThinkMinority #MIH #Budgeting http://www.TheMinorityMindset.com This Video: https://youtu.be/HRRrBrF7jRA Channel: https://www.youtube.com/c/MinorityMin… Based in Detroit. Jaspreet Singh

Now That Commissions Are Free, Here’s How To Avoid The Big Costs Of Investing

TRADE FOR FREE! NO COMMISSIONS! Sounds too good to be true? Well, it is and it isn’t. Allow me to explain.

Within the past few weeks, a slew of brokerage firms reduced the rate their customers pay for online stock and ETF trades. In fact, they reduced them to dust. Interactive Brokers (IB) started it. Schwab joined in. Then, the cavalry arrived. Many of the largest firms followed suit in different forms. They joined IB, Schwab and the many robo-advisors who have offered free trading for a while.

What does it all mean for you?

Let’s start with the simplest part. Whether you trade your own accounts, or a professional advisor manages your assets, there is a very good chance your costs to execute trades has been reduced. It might even be zero.

However, that does not mean that investing is now “free.” It never was. Now, I know what you are thinking. You don’t use mutual funds, and you don’t use ETFs. So, your returns are not reduced by those “expense ratios” that are embedded in managed funds. If you buy and sell individual stocks, that is true.

You may also point out that you have most of your assets in tax-deferred accounts, such as an IRA or your 401(k) plan. Again, you are correct in assuming that you will not be taxed on those assets until you take them out or reach age 70 1/2. So far, investing sounds pretty darn inexpensive to me!

Today In: Money

The real costs of investing

One of the most frustrating things to me after more than 3 decades in the investment business is how quickly people jump at the chance to get something for “free” without considering the whole picture. Zero commissions on stock and ETF trades is just the latest example.

Trading, execution (how good a price you get when you place an order with a brokerage firm), and expense ratios get all the hype in the “race to the bottom” that is today’s big Wall Street.

Taxes…and how Wall Street tries to make them exciting

Taxes get some respect as a cost to reckon with. However, here too, the industry (especially the Robo firms) has created unnecessary drama by touting something call “tax loss harvesting (TLH).” This is something many of us in the field have done religiously for taxable client accounts for years. And we have done so with a focus on each client’s specific tax situation.

Now, firms will put your account on an automated system that hyper-actively swaps you from one security to another similar one, in order to generate a constant stream of tax losses. These can be posted against gains to reduce your tax bill. Great in theory.

TLH does not mean TLC

However, from the live examples I have seen, these TLH programs crowd out some very good investment strategy work. This would take an entirely separate article to explain. Perhaps I will post one.

For now, suffice it to say that in some instances, investment firms are charging an extra fee for something that is potentially overkill. That same service can be done more carefully and inexpensively as custom work for each client. It is just one of those things that you need to be aware of.

In an era of zero commissions, these for-profit firms are not going to find other ways to profit. In no way am I saying they don’t provide a helpful service. Just don’t get caught up in the hype.

Money market rates…also going to zero?

For example, the interest rate paid on money market funds at brokerage firms is, shall we say, in a bear market. That is, the rates are plunging. This is because brokerages are returning to one of their most profitable business, now that short-term interest rates have popped up from 0%.

For example, if T-bills yield 1.50%, you would hope that the money market fund that is used to sweep cash in and out of when you trade would pay somewhere in that range. Check carefully. Many firms have dropped those rates so that they are way, way lower than T-bills.

Cash management: the new tool in your toolbox?

That does not mean that it is a bad deal for you. If you trade actively, and don’t hold a high cash balance anyway, your interest in dollar terms is quite tiny to begin with. But if this is not the case, perhaps you are better off sharpening your skills as a “cash manager.”

I know I have done this in the accounts I manage over the past year. There are ETFs that invest in short-term, high-quality bonds like Treasuries. And, now that there is no commission cost to trade them through many firms, they may be worth considering as a money market surrogate.

The BIG cost of investing that gets too little attention

Drum roll, please…its lousy performance in down markets. Or, as David Letterman said, its all fun and games until someone loses an eye. So, amid all of the excitement about how little it will cost you to “play the market” with no trading costs and low expense ratios, there is still an issue. If the stock market drops 20%, 30%, 40% or more, you had better have a plan.

And, the plan can’t be to figure it out on the fly. Ask the folks who were suddenly faced with that in 2000 and 2007, the winds shifted. We all want to get our “fair share” of the ups. But when markets freak out and $20 of every $100 you had in your portfolio can potentially vanish in a few weeks (as stock index funds did around this time last year), lack of risk-management becomes the only cost that matters.

To try to put a bow on this cost discussion, consider the following if you have $500,000 to invest, and you are not a day trader, nor a straight buy-and-hold investor:

* The cost of 40 trades a year used to be about $5 each. That’s $200 a year you saved, with commissions going to zero.

* You switched to index funds from active funds, and maybe mixed in some stocks. Let’s say that shaved your portfolio expense ratio from 1.00% to 0.20%. You saved $4,000 on that $500,000 portfolio.

* Taxes: you generated capital gains of $30,000, but used TLH to knock that down to $10,000. Assuming a 30% tax rate, you saved $6,000 in taxes. This is getting better and better!

Minimal risk-management: the market fell by 20%, and you escaped with “only” a 18% loss. But that’s still a $90,000 decline in the portfolio! If you had practiced risk-management using some of the techniques I discussed in recent articles (tactical positioning, options, inverse ETFs, etc.), you might have kept that loss to half that.

Naturally, everyone’s situation and objectives are different. However, the key is to recognize the relative impact of the different types of investment “cost.” In the examples above, the cost of trading was well under 1%. The impact of expense ratio was a bit under 1%. TLH helped (assuming you had gains to offset with losses), to the tune of just over 1%.

However, risk-management can be “worth” well over 1%. That’s the point, and what you should focus on when evaluating your total “cost” of investing.

Comments provided are informational only, not individual investment advice or recommendations. Sungarden provides Advisory Services through Dynamic Wealth Advisors

To read more, click HERE

Follow me on Twitter or LinkedIn. Check out my website or some of my other work here.

I am an investment strategist and portfolio manager for high net worth families with over 30 years of industry experience. A thought-leader, book author and founder of a boutique investment advisory firm in South Florida. My work for Forbes.com aims to break investment myths and bring common sense analysis to my audience. Connect with me on Linked In, follow me on Twitter @robisbitts. Visit our website at http://www.SungardenInvestment.com.  What do you think? I welcome your questions and feedback at rob@sungardeninvestment.com. For more on this and related topics, click here.

Source: Now That Commissions Are Free, Here’s How To Avoid The Big Costs Of Investing

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https://www.sbmoneytips.com/ Learn the first secret of successful investing with Part I of our three-part series! *** Did you know that the average individual investor does worse in the stock market than the market itself? In other words, if you just held a broad index fund and did nothing but hold on until you hit retirement you would do better than most. It turns out that the problem has nothing to do with a lack of market savvy or anything like that. Instead, it has everything to do with human emotions. Once you learn the enemy you can master it! So let’s take a quick look in the mirror and get acquainted with our opponent! The first secret is simply to invest as soon as you can. Don’t sit on the sidelines! Start now and let compounding do the heavy lifting over time. Make the effort to learn something new: like how to set up an account and put some money to work. Either do it on line or call one of the big brokerages. You’ll be richly repaid for your efforts! The next secret is to avoid being too conservative when investing for long-term goals. Many people are reluctant to invest in the stock market because they are afraid they’ll lose money. And they’re right – they will! But allow enough time and the results come back to the long term averages. Take a look at this chart showing the S&P500’s results from 2007 through 2015. That drop in 2008-2009 was pretty terrifying – I know! I personally lost over a third of my money in it! And it was really uncomfortable. But look what happened after that. It took several years but the market came back and is now well above where it was before the great recession. The right thing to do is to stay the course. Invest when you have money to do so and only sell when you need the money. This is really important. Hang on when you’re in the middle of one of these lurches and don’t sell or change your game plan.
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