Don’t Ignore Crypto but Proceed with Caution

It seems people either love crypto or hate it; there’s no in-between. And that’s understandable. With so many “junk” coins on the market and scam artists out there, deciphering what’s worth your time and what isn’t can be challenging. That’s why you shouldn’t ignore crypto but proceed with caution.

Crypto: The Year That Was

Whether you’re a crypto lover or hater, you can’t ignore the results of Bitcoin in 2023. Bitcoin made a stunning comeback, surging over 150% for the year. Congratulations to the Bitcoin enthusiasts; it’s time for your victory lap. Ethereum also had a phenomenal year with a return of over 80%. These are heavyweight returns, and if you’re still on the fence about crypto, it might be time to get off the sideline.

How to Play Crypto using the Stock Market

Investing in cryptocurrencies doesn’t always mean direct purchases. Stocks closely tied to Bitcoin and other cryptocurrencies, like Coinbase, Marathon, Riot Platforms, Microstrategy, and Grayscale, outperformed Bitcoin in 2023, some with returns over 300%. Additionally, the SEC just approved eleven Bitcoin ETFs providing the opportunity to invest in Bitcoin directly through the market.  This news recently broke and we’ll watch how the market reacts before making any moves.

While I may not be a crypto enthusiast at heart, being a stocksavvy dad, I firmly believe that cornerstone crypto assets like Bitcoin and Ethereum warrant diligent research and consideration as valuable additions to your overall investment portfolio.

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Invest in Yourself

In the pursuit of financial success in 2024, the best investment remains, the one you make in yourself.  It’s an investment that pays lifelong dividends. Here are a few ways to do just that:

Immerse Yourself in Knowledge

Expand your horizons by immersing yourself in a world of knowledge. Read books, listen to informative podcasts, watch educational videos – the options are endless. Whether it’s personal finance, entrepreneurship, or a skill relevant to your career, continuous learning is a pathway to growth. A book I highly recommend that will make you a better investor is “One Up on Wall Street” by Peter Lynch.

Are you the “Dumbest” person in the room?

Make it a priority this year to connect with individuals who have achieved the level of success you aspire to. Don’t shy away from being the least knowledgeable person in the room. Surrounding yourself with smarter, like-minded individuals can provide invaluable insights, inspiration, networking opportunities, and fast-track your journey to success.

Put your Knowledge to Work

Applied knowledge is power. Since we focus on stocks here, let’s engage in a practical exercise that combines learning with investment potential. Each week, choose a company that interests you and dedicate a minimum of 20 minutes per day for a week to learn about it. At week’s end, evaluate if it’s a promising investment opportunity. Check out my post here to view some basic stock metrics which will help guide your review process.

By investing time and resources in yourself, you not only enhance your skills and knowledge but also unlock your potential for remarkable success in 2024 and beyond. Remember, the best investment you can make is in your personal growth and development.

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Estate Planning

As a stocksavvy dad, securing your family’s financial future goes beyond investments. Creating a will and estate plan is a crucial step in ensuring your loved ones are well taken care of in your absence.

Protect Your Assets

A well-thought-out estate plan ensures that your assets, including investments and property, are distributed according to your wishes. This prevents potential legal disputes and ensures your family receives what you intended for them.

Appoint Guardians:

If you have children, a will allows you to appoint guardians who will take care of them if something were to happen to you and your partner. It provides peace of mind knowing your children will be in capable hands.

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Tax-Efficient Investing: Keep More of Your Profits

Let’s dive into the world of tax-efficient investing because I want you to keep more of your hard-earned money and give less to the government plus Uncle Sam has always been a shitty uncle.

Long-Term vs. Short-Term Investments

Understanding the difference between long-term and short-term investments is crucial, especially in the realm of investing and stock trading.

Holding stocks for a year or longer qualifies them as long-term investments. The benefit? Profits from selling these stocks are subject to lower capital gains tax rates, a tax break for your investment gains.

Stocks owned for less than a year fall into the short-term category. The downside? Gains are taxed at your regular income tax rate, often much higher. Be cautious before selling short-term investments, and remember that strategic selling of your losing positions can offset gains, a practice known as tax harvesting.

Tax-Advantaged Accounts: Your Secret Weapon

Now, let’s explore your secret weapons – tax-advantaged accounts. These accounts provide valuable tax benefits to help you grow your wealth more efficiently.

Roth IRA: This individual retirement account allows you to contribute after-tax dollars. The beauty of a Roth IRA is that you won’t pay taxes on your withdrawals in retirement, which means all your investment gains are tax-free. It’s a fantastic option if you expect to be in a higher tax bracket during your golden years.

Traditional IRA: With a Traditional IRA, you make tax-deductible contributions, lowering your current taxable income. However, when you withdraw the funds during retirement, you’ll pay income tax on both your contributions and the investment gains. This makes it an attractive choice if you anticipate being in a lower tax bracket after retirement.

401(k): Many of us are familiar with the 401(k). This employer-sponsored retirement plan allows you to contribute pre-tax dollars, effectively reducing your current taxable income. Many employers sweeten the deal with matching contributions, which is essentially free money toward your retirement. I wouldn’t turn down a matching contribution but be sure to keep an eye on the fees associated with your 401(k) and understand where your money is invested.

Effectively managing your finances and investments can help you retain more of your earnings, bringing your financial goals within reach. Remember, while minimizing taxes is essential, always comply with tax laws and consult a professional for guidance on implementing these strategies or any tax-related decisions. Stay savvy!