Understanding the Risks and Benefits of Cryptocurrency

Cryptocurrency has been around for approximately 11 years now when Bitcoin first hit the scene, and though the initial boom of excitement has faded somewhat, it remains a popular investment choice for many individuals looking to supplement or diversify their financial portfolios. Some are even adding cryptocurrency assets into their retirement portfolio in pursuit of growth and to produce extra income for their golden years.

Cryptocurrency still has exciting potential, and it is a relatively easy form of investing, even for those without much knowledge going into it. But it is not without its pitfalls, and understanding the risks of cryptocurrency investing is an important thing to consider when purchasing cryptocurrency yourself.

What Is Cryptocurrency?

In simple terms, cryptocurrency is a type of digital currency that is made secure using cryptography, most commonly blockchain technology. It differs from both traditional currency and electronic currency in many ways, making its use somewhat confusing for many people.

Cryptocurrencies can exist without the backing of a central governing body, which makes them theoretically free from manipulation by a federal government or similar agency. That is one aspect of cryptocurrency’s use that appeals to many. Its use of cryptography allows for transactions to be extremely secure and less vulnerable to fraud and hacking, unlike banks and other institutions which use a central agency for control and accuracy.  At this time, the leading crypto names are Bitcoin, Ethereum, Ripple, Litecoin, and Theta, and the market values of these five ranges from $200 billion for Bitcoin to approx.. $600 million for Theta.  These different cryptos have different functions and use.


What makes cryptocurrency riskier than some other types of investments is the newness of the industry. With cryptocurrency still a newcomer in the world of finance, its regulation is not as established as other forms of financial services.

The legal status of cryptocurrency has different definitions in different areas. Depending on where you are located, it can be considered an asset, a product, money, or property. Even though cryptocurrency has been in the picture for around 10 years, regulation of the industry is not fully established and is the subject of much debate.

In the United States, various government agencies are still fighting for control; the US Securities and Exchange Commission sees cryptocurrency as a security, the Internal Revenue Service views it as property, and the Commodity Futures Trading Commission thinks of it as a commodity.

Due to the lack of consensus on both defining cryptocurrency and regulating it, cryptocurrency can be a risky investment. Its longevity is not yet established, and many places still do not accept cryptocurrency as a valid form of payment.

High Volatility

The cryptocurrency market is volatile, and quick shifts can lead to sudden gains or losses with very little warning. It is not out of the question for cryptocurrencies to suddenly rise or drop by hundreds or even thousands of dollars within hours. And with new types of cryptocurrency entering the market regularly, there is always a risk of discontinuation or a hard fork, which is a radical change to a protocol in a network that makes a transaction and blocks valid or invalid. Hard forks can often trigger substantial price volatility around that event, another risk for investors. To invest in cryptocurrency, you need to be prepared to deal with extreme fluctuations in price and the loss of potentially thousands of dollars at a moment’s notice.  Of course, the reason why you might consider devoting a small portion of your growth portfolio to cryptos is because they also offer explosive upside potential, and many people still recall the significant number of new “crypto millionaires” from the big run-up in 2016-2017.

Limited Trading Opportunities

Unlike other types of investment assets, cryptocurrencies can only be traded in a limited number of venues, just like stocks.  Generally, if you want to purchase or sell a cryptocurrency, you must do so through a cryptocurrency exchange, as you do with stocks. Depending on the type of cryptocurrency you are looking for, your choices might be even more limited. Some cryptocurrency exchanges cater to only a few cryptocurrency types, so if you have a more obscure type, selling it could be difficult.

Security Concerns

Because cryptocurrency is an online asset, it can be vulnerable to hacking and fraud if you are not careful. Scams using cryptocurrency are abundant, and exchanges that support trading of cryptocurrency are vulnerable to being hacked. If that happens, your cryptocurrency might simply be gone, and you will have little to no recourse available to get it back. For this reason, many investors who buy and hold cryptocurrency use a ‘cold storage’ option, also known as a digital wallet, in which you can store cryptocurrency offline in a secure device.

Consider Your Risk Tolerance

Any good financial advisor will likely tell you never to invest more money than you can afford to lose, and this is especially true when it comes to investing in cryptocurrency assets. Because of the high volatility of the market, your level of risk will also be relatively high. Carefully consider your risk tolerance before investing in cryptocurrency and be sure to consult a financial professional if you are not certain about how to proceed. The more diverse your portfolio, the more secure your investments are likely to be, so you should invest only a small portion of your assets in cryptocurrency. That will protect you from any significant fluctuations and volatility in the cryptocurrency market while still offering you a chance to make a profit, as the adoption of various cryptocurrencies in the economy and daily commerce grow.

4 Easy Steps You Need to Know to Save for Retirement

Retirement planning is a long process, and it can be intimidating for many people. The vast majority of workers, in fact, have not taken even the most basic first steps to begin planning for their eventual retirement. However, the process can be more straightforward than you think. There are a few easy steps you can take today to put yourself on the road toward a successful retirement that will allow you to live the lifestyle you want in your later years. Keep these planning steps in mind and watch out for a few pitfalls, and you can have the retirement you’ve always wanted.

Know the Purpose of Your Retirement Plan

Many think of retirement planning as synonymous with just one major goal: saving. Though building up your savings is certainly crucial, that shouldn’t be the only goal of a retirement plan. More broadly, your retirement plan should help you establish consistent revenue streams that will carry you through retirement without running out of funds. Ideally, that amount should be enough to maintain your lifestyle as is, without significant cutbacks, and supply you with enough money to offset unexpected expenses, whether they’re medical (such as a surprise surgery bill) or family-related (for example, helping a child financially while they are going through a divorce).

How Much Will You Need?

To determine how much you’ll need to retire comfortably, it can be helpful to calculate your monthly expenses, then add more to account for expenses that occur less frequently or irregularly—such as replacing an appliance, buying new tires for your car, and so on. If you’re younger and not yet approaching retirement age, you can use a simple rule of thumb and assume that you’ll likely need about 80% of your pre-retirement income to maintain your current lifestyle. However, consider that this may not hold true for every person. If you want to change your lifestyle during retirement, that may also require you to change your plan. Keep in mind your travel plans and family expenses, and be sure to consider medical expenses, as they are a frequently overlooked aspect of retirement planning for many.

As you get closer to retirement age, it’s helpful to track and record your monthly expenses to get a better idea of what you actually need. Retirement planning is not a once-and-done process. Your progress toward your goals and your plan itself should be reassessed throughout your life, from the time you begin saving right up until you start drawing your first retirement benefits. Any time your financial status changes significantly—for example, if you get a major raise, experience a divorce, have a child, or receive an inheritance—is also a good time to reassess your retirement plan.

Determine Your Sources of Income

Once you have a basic idea of the lifestyle you’d like to have during retirement and you have an approximate estimate of expenses, the next step is to look at all of your potential income streams to make sure you have enough. These include things like distributions from your retirement savings accounts (like 401(k)s or IRAs), pensions, Social Security benefits, annuities, and equity in your home. Though you might think of retirement as a time when you never have to work again, many retirees find it prudent to take on a small part-time job, and some even enjoy the change of pace and the chance to work again.

Another benefit of continuing to work after retirement is that it can help you stretch your money even further—it both reduces the number of years you’ll have to rely on your savings and gives your investments more time to grow before you start making withdrawals. A part-time job may also provide the cushion you need to delay claiming your Social Security benefit for a few years. This can be a good strategy for some people, since your benefit will increase each year you wait to claim it past your full retirement age, up until you reach age 70.

Don’t Forget Your Estate Plan

Estate planning is a separate aspect of retirement planning that is sometimes overlooked, and it typically requires expertise from different types of professionals, like lawyers or accountants. Your estate plan can help prevent those in your family from experiencing any financial hardships after your death and ensures that your assets are distributed in the way you want. This process also generally involves your life insurance plan and some tax planning. For example, if you want to leave certain assets to charity or your family members, there are tax implications involved. A professional experienced in estate planning can help you determine if it would be best to distribute assets as a gift or through the estate process.

It is never too early to start creating a retirement plan. In fact, many experts will tell you the earlier you begin planning, the better. With a plan in place, you can approach your retirement with confidence, not stress and worry, knowing that your needs and those of your family will be met.

Why You Need to Continue Financial Planning after You Retire

When people consider their finances, the most common things they focus on are saving for retirement, maximizing their current finances, saving for major purchases, and paying down debt. But there is an additional area of financial planning that tends to be overlooked: post-retirement financial planning. Many people see retirement planning as a process that ends the day they retire. The common assumption is that once you retire, you don’t have to think about financial planning anymore.

Unfortunately, that is not true in today’s world. People are living longer than ever, which means that you will likely need to save more money before you’re ready to retire. It also means that your finances during retirement will be stretched and tested more than ever and that you’ll have to keep planning for the future well into your retirement. Here are some of the ways that post-retirement financial planning can help you, with a look at what things you should be watching out for in terms of finances.

Unique Financial Challenges after You Retire

Though many view their retirement as a finish line, it’s also the starting line for post-retirement financial planning. There are several issues you may encounter during retirement, including chronic illness, the death of your spouse, an unexpected need to support your adult children, and plenty of others.

Even though it’s impossible to plan for every scenario, not planning at all is a big mistake. Any of these unexpected expenses could be the one that derails your retirement, making it so you outlive your retirement funds. By working with a professional financial planner with experience in post-retirement planning, you may be better able to achieve the retirement lifestyle you want while maintaining your financial health for decades.

Long-Term Health Concerns

One of the most obvious financial concerns after you retire is the cost of healthcare. Longevity has continued to increase over the years as healthcare has improved, meaning that most people are living well into their 80s today. But though you may be able to enjoy more years with your loved ones, this also means you are more likely to experience serious chronic health conditions, physical disabilities and mobility challenges, or simply the burden of poor health as you grow older. Planning for this possibility can help ensure your finances are not devastated by the expense of long-term healthcare and unexpected medical bills.

Many retirees who live well into their 80s and 90s find themselves unable to care for their own basic needs and must consider hiring live-in care or moving to a nursing home or similar facility. According to the US Department of Health and Human Services, 70% of 65-year-olds will require some type of long-term care; women typically require care for longer periods of time than men (likely due to their longer lifespans), and 20% of 65-year-olds will require care for more than five years. 

Unfortunately, the cost of this type of long-term healthcare can be staggering. Genworth conducted a nationwide survey in 2019 that found that the monthly median cost for a home health aide was $4,385 ($52,620 per year); for nursing home care, the average monthly median cost was $8,517 ($102,204 per year).

Given this fact, you may want to consider purchasing long-term care insurance, which provides for certain personal and custodial care expenses in your own home, services that are typically not covered by Medicare plans. Starting this insurance while you are still young may help you save on premiums, but it can still be prohibitively expensive for some people.  There are also certain life insurance policies that include riders for chronic illness expense funding (tax-free) that may be more efficient than the traditional long term care policies, which usually do not return any money to you or your loved ones if you die peacefully in your sleep, never having needed to use the policy.  The newer life policies will provide your beneficiaries with a full tax-free death benefit if you do not use the policy for long term care needs and expenses.

Effective Health Insurance

Many retirees assume that Medicare will cover all of their medical expenses during retirement, but this is rarely true. Some important types of healthcare, like dental coverage, are not covered in basic plans and require expensive add-ons. You will want to take a close look at your health insurance coverage with a financial planner to see exactly how you are being covered and where the gaps exist. This can help you make decisions about purchasing additional insurance during retirement or saving specifically for health expenses.

Family Expenses

When considering your expenses in retirement, you’re probably already considering your lifestyle and travel plans, but don’t forget your family. Many retirees want to be able to financially help their children and grandchildren in times of need. For example, you may want to help your adult child get back on their feet after a divorce, or help pay for a grandchild’s education. It’s important to consider the impact this may have on your finances. Plan in advance for unexpected expenses so you can help your family if you want, without having to worry whether you can afford it.  You may also wish to look into a regular tax-free gifting schedule for loved ones while you are alive and have the means.

Work with a Planner

Remember, retirement is not a finish line—it’s the start of a new phase of financial planning! You should not stop planning for your finances once you reach your retirement. In fact, the years immediately after you stop working may be the time you need a financial planner the most. Reach out to a planner well before then to start creating a plan for your income, investments, and benefits, along with the potential healthcare and other major expenses you may run into. A good financial planner can help you balance required withdrawals, investments, and other sources of income to ensure you can live your ideal retirement lifestyle and still have money for unexpected expenses.

5 Mistakes to Avoid When Planning for Retirement

Investing can sometimes appear to be a daunting task that many Americans would rather not attempt. In fact, only about 55% of Americans have actually invested in the stock market, and that number has remained fairly stable over the course of at least the last decade. While investing might seem intimidating, it is an essential way to ensure that you will have what you’ll need for a comfortable retirement. It might be a mistake to try and rely solely on other assets. With the help of a good financial planner, you can obtain solid guidance on how to invest your money. If you’re going at it alone without an advisor, you should keep in mind these common investing mistakes that could potentially have repercussions when it comes to your retirement savings.

Having No Plan at All

For many people, the most common investing mistake that they make is not having any plan at all for their investments. While saving is certainly a good first step in planning for retirement, it would be a mistake to depend solely on your savings to carry you through retirement. For all but the wealthiest people, there must come a time when your accumulated assets become oriented toward the generation of income for retirement expenses. Assets in various accounts are not income-they are assets! Unless you build intentional and lifelong income streams ( using investment vehicles specifically designed for income), you can deplete too much capital in a prolonged low interest rate environment, or in negative market cycles.  Compounding works both ways.  If you are relying solely on mutual funds or stocks for your retirement income above and beyond Social Security ( and a pension if you will have one) there is a very real danger that your withdrawals in down market years will make it much harder to recover, and hasten the possibility of running out of money.  Instead, you should consider the first step and make additional plans to have safe and secure investment accounts that can help to supplement your savings during retirement. Otherwise you may find yourself stuck with significantly less retirement income than you may have expected.

Placing Too Much Trust in Your 401(k)

Having a 401(k) available to you is a great step forward in saving for retirement. But again, just like you should not rely solely on your savings accounts, you should probably not depend on your 401(k) alone to get you through retirement. When it comes to many 401(k)s, you as the account holder do not have much control over how the investments are chosen, leaving you to rely solely on whatever strategy the fund manager chooses for asset allocation. If you like to be hands-on with your investments, you may want to look into some additional retirement accounts that offer you a bit more freedom in terms of how you can invest your money. Additionally, although much of the appeal of the traditional 401(k) is the ability to save money pre-tax, these accounts are subject to taxes at your current income level when you begin to withdraw the funds. Depending on your financial situation, that could mean you will pay a significant amount in extra taxes during retirement.  Since every dollar coming out of a 401k or IRA rollover is taxed as ordinary income, these withdrawals can also make your Social Security taxable as well.  Converting these funds to ROTH status over several years will eliminate or possibly greatly reduce the taxes due on your Social Security, and also shelter all of that money from all future tax increases that may come down the road.

Failing to Diversify

In any type of investment strategy, but particularly in regards to your retirement savings, it is important to develop a portfolio that can withstand fluctuations in the market and remain stable in spite of some expected volatility. This means that you will want to ensure that your investment portfolio is “diversified,” meaning that your investments should be spread across different asset classes and types of investments. You will want a mixture of US stocks, Treasury securities, foreign stocks, real estate, and other items, such as precious metals and natural resources, in which you have an interest. This act of diversifying your portfolio will help to protect your accounts from fluctuations in the market in one specific area.

Not Reassessing Your Strategy

At various points in your life leading up to retirement, you will need different kinds of investment strategies. Many experts advise that the most aggressive investment strategies should be undertaken early on in your life when you still have time to make up losses. As you approach retirement age, your portfolio should slowly become more conservative in order to protect your savings from potential downturns in the market. One mistake that people often make with their investment and retirement accounts is not taking the time to reassess their investment strategies every few years or so. Doing so will help to ensure that your investments are working for you in the best way possible, no matter what your stage of life. As mentioned above, under the “Having no plan at all” section, for almost all people, there needs to be a period of transition from a pure accumulation and long term growth focus, to more of a preservation of capital and income generation focus, in the last few years before your retirement.

Timing the Market

Timing the market involves trying to sell various investments at their highest value and buying them when they are at their lowest, thereby cashing in on higher returns. However, trying to time the market can be extremely tricky, and if you guess wrong, it could cost you thousands out of your savings. Instead of trying to do so, a better investment strategy is to save for the long term.  While adopting a long term focus is imperative ( many retirements today will last 20-30 years or more), a simple “buy and hold” strategy can be deadly if you go through a prolonged period of market underperformance, and you need to take withdrawals for living expenses and lifestyle desires in retirement. For example, the S&P 500 Index first reached the 1500 level in January of 2000, and then did not return to that level until March of 2013-a period of 13 years and 3 months of a 0% return, before fees and any withdrawals! While these long periods of poor performance are not common, they can occur at any time, and most people cannot afford to wait through a 10-15 year period to just break even, or to take needed income. The solution is to devote a significant portion of your accumulated retirement assets ( whatever amount you do not want to go risk going through a 5 or 10 or 15 year period of poor returns with) to a principal-protected vehicle or vehicles that will provide income for you, for as long as you live

Saving for retirement is essential, and investments can certainly help you to achieve your retirement goals. If you have not yet done so, consider working with a financial planner who can help you to develop an effective strategy to save for retirement. Financial planners can not only serve as an invaluable resource when you’re trying to decide how and where to invest your funds, but they can help to increase your chances of achieving the retirement that you’ve always wanted.

Financial Planning for Major Life Events: What You Need to Know

For many people, financial planning may not appear to be an absolute necessity. However, anyone can benefit from a bit of financial planning to improve their finances, particularly in terms of major life events. Certain monumental events in your life can benefit from the advice of a financial planner. If you are approaching one of these events, here is more information about how you can adjust your financial plan to best suit your future finances.

Establishing a Financial Plan

The first step toward improving your finances is to establish a basic financial plan, which would include a detailed look at your expense budget and income sources, including any ability to save money above and beyond your expenses. But it is important to keep mind that your financial plan should have some flexibility in order to accommodate changes in your life. You will need to make a point of reassessing your financial plan before and after important life events in order to ensure that they still meet your needs and help you on the path toward achieving your financial goals.

Getting Married (Or Divorcing Your Spouse)

Couples are waiting longer than ever to tie the knot in today’s world, and with that delay in getting married comes more complex finances. If you wait to get married until you are in your 30s or even later, you and your partner will likely already have a substantial financial base involving multiple bank accounts, credit cards, and maybe even retirement accounts. Prior to your marriage, you might consider working with a lawyer to put a prenuptial agreement together, particularly if either you or your partner is entering into the marriage with children or substantial investments. While this notion may not be romantic, it can protect you financially. Not every couple chooses to combine their finances, but if you do decide to do so, it could turn into a complex process that could benefit from working with a financial planner.

Similarly, if you are going through a divorce, there are a number of important financial considerations that will need to be handled, such as updating your will, ensuring that your investments are protected, and changing your insurance policies, and beneficiary designations on various accounts or policies. These tasks should be handled by a financial professional in order to protect your interests, save time, and avoid mistakes.

Starting a Family

Having children can prove to be an expensive proposition, not only in regards to the immediate costs such as hospital bills, prenatal care, and baby clothes but also with regards to future costs such as college tuition. If you plan to have a baby is in the future, it is worth discussing your finances with a financial planner in order to ensure that you have a healthy financial plan in place prior to having a child. You will need to update and adjust your will and insurance policies and make sure you have planned for new expenses, which are all things that a financial professional can help you to navigate. In addition to these immediate expenses, it may be a good time to start a college savings fund for your new child, particularly when you consider the cost of a college education today.

Obtaining An Inheritance

If you receive an inheritance from a family member, it is unquestionably a major event that you should discuss with a financial planner. You will want to ensure that you minimize the tax consequences that receiving an inheritance can bring, particularly if it is in the form of a lump sum. A financial professional can provide you with guidance in handling this sudden influx of cash so that you can put it to good use for your own personal financial situation. They can advise you on how to adjust your spending habits and provide you with advice on where to invest your money.

Starting Your Own Small Business

Starting a small business can mean significant changes to your financial situation, as well. You should try to work with an accountant or financial planner who has experience in dealing with small businesses or with the particular type of business you are in so that you can obtain relevant advice for the specific size and type of business you are starting. A significant amount of time will be required to decide on the structure of your business, to register a name, and to obtain an employer identification number (EIN) for tax purposes. Depending on the eventual size of your business, you might also need to look for an attorney and accountant and financial planner.

Approaching Retirement

While you have hopefully been preparing for retirement long before you approach retirement age, it is absolutely critical that you consult with a financial professional as you approach retirement. An advisor can help you to maximize your investments and manage the transition to income production for life-which will replace all or a good part of your earnings from your job. Tax planning is also critical for most pre-retirees.  It can also prove helpful to meet regularly with a financial planner in order to reassess your retirement savings, particularly during your peak earning years (typically during your 40s and 50s, although it can be different). Mismanaging your assets during this critical time could prove detrimental to your overall retirement savings. A financial planner can help you to reassess your investments, create a budget, and determine how much you will need in order to achieve the retirement that you want.

Important Aspects of Retirement Planning You Need to Know

As the average life expectancy in the United States grows, retirement planning should change along with it. For most people, retirement will last for several decades beyond what used to be common. With that increased life expectancy comes increased costs, particularly as people approach the end of their lives. There are a number of expenses that retirees need to ensure that they have worked into their retirement savings plans. Otherwise, they may find that what they have saved is not sufficient. Here are a few of the more important aspects of retirement planning that you should consider now before you reach retirement and how to calculate the amount you may need.

Consider Downsizing to a Smaller Home

Once you retire, you might discover that your home is too large for your changing needs. Due to the high cost of owning a larger home, it might be in your best interest to sell your home and downsize to a smaller one in order to save on day-to-day expenses. Selling a home, especially one that you have lived in for a long time and may have even raised your children in can be an emotional undertaking, causing many retirees to think twice. But that larger home can end up presenting many challenges as you continue to age. You might find that as you grow older, stairs become more difficult for you to manage, which could be a problem if you live in a multi-story residence. Additionally, unless you can afford to hire a maid, cleaning a very large home might be too difficult for you, especially if you have any health concerns. Then, of course, there are the financial costs of a larger home. Insurance, maintenance and upkeep, and property taxes can all put a significant strain on your fixed retirement income.

The Rising Cost of Health Care

One important aspect of retirement that you may not currently be considering is the rising cost of maintaining your health and caring for yourself or your spouse when health issues become a bigger problem. Many people are not aware of the limitations of Medicare plans, which can lead to some surprise expenses down the road. Without enough money set aside to take care of unexpected medical costs, you might find that your retirement savings aren’t going as far as you initially thought they would. This is another area where extended life expectancy comes into play. The longer you live, the more struggles you are likely to have with your health, and that will result in increased medical expenses.

You may also want to work in the cost of end-of-life care into your retirement plan.

Although it is not a pleasant thing for most people to think about, the truth is that end-of-life care may become a reality for nearly 70% of adults turning 65, at least according to LongTermCare.gov. The same site estimates that the average cost of a private room in a nursing home nationwide is around $7,698 per month, a cost that can be lower or higher depending on where you live. For example, in large metropolitan areas, that cost might be much higher, as much as $13,000 a month.  If a chronic illness or long-term care event does, unfortunately, enter the picture at some point, where would that “extra” $80-120,000/year come from?!  If there is not a plan in place, it is quite possible to accidentally impoverish a healthier spouse, or to tun out of money, or to burden loved ones to a very significant degree.  In fact, often a family member interrupts their career or life in order to help out in a chronic illness situation, and the non-financial consequences associated with that can be painful as well.  Having a plan that creates a large new income stream in the event of a long term care event would allow family members to hire and manage the care, rather than providing it themselves. 

Stretch Your Savings And Consider Your Lifestyle

An important aspect of planning for your retirement involves thinking about the type of lifestyle you want in your golden years. Will you be spending most of your time at home and with your family? Or do you plan on traveling around the world? These are important considerations when you decide where you want to spend your retirement money. Some retirees choose to continue working at a part-time position during retirement in order to help stretch their retirement funds even further. Consider what your monthly expenses will be, including the cost of food, utilities, rent or mortgage payments, health care expenses, and any other costs. Be sure you are setting aside enough money to cover travel if that’s something you plan on doing and ensure that you have other funds available for emergencies or other unexpected costs.

Once you have those monthly costs calculated, you can work backward and determine what amount you need to have in your retirement account. That may change as you get closer to retirement, so it is extremely important that you reassess your retirement savings every few years. You do not want to deplete your retirement savings too early, because after those investments run dry, you must rely on Social Security. Unfortunately, Social Security benefits don’t generally provide enough income to cover basic living expenses.

Consult A Professional

These are just a few of the aspects that you will want to consider when planning for your retirement. Consider consulting with a financial planner when reassessing your investments. They can help you to manage your investments and examine whether your retirement savings accounts are sufficient and can last you through what could turn out to be quite a lengthy retirement.

Cryptocurrency Debit Cards: What You Need to Know

The cryptocurrency industry has grown rapidly over the past several years, and the idea of digital currencies is becoming an accepted part of the financial mainstream. More people than ever have heard of digital currencies. Many who might not have considered such a thing in the past are beginning to feel more confident about actually incorporating them into their financial portfolios.

As people become comfortable with cryptocurrencies, banks and other large financial institutions have begun to take notice, with some trying to develop their own cryptocurrencies as well. One of the newer ways that cryptocurrency is trying to enter the mainstream is through the use of cryptocurrency debit cards, though so far, the plans have been somewhat less than successful.

Here is what you need to know about what might be on the horizon if cryptocurrency debit cards do enter the mainstream market.

The Cryptocurrency Evolution

Over the last several years, cryptocurrency has experienced some significant changes. It has gone from humble beginnings as a medium used in transactions (two pizzas were traded for 10,000 BTC in the first cryptocurrency exchange) to a digital asset seen more as an investment than a true system of payment in transactions.

However, the role of cryptocurrency may be starting to shift again to be more in line with its original mission to function as an electronic cash system for transactions. So, will the next step be a cryptocurrency debit card? And does cryptocurrency really need to be used as a payment method to be adopted more thoroughly into the mainstream?

Cryptocurrency Cards: The Problems

The move into debit cards for use with cryptocurrency has long been a goal of many in the industry. Some of the traditional market’s most important players have been showing interest in the possibility for some time now. But the road to cryptocurrency debit cards has not always been smooth. In fact, just a few months ago a scandal in this marketplace rocked the financial industry.

Wirecard, long viewed as a potentially dominant player in this subset of the market, suddenly became the subject of controversy when news of the initiation of insolvency proceedings broke in June. The German fintech group filed for insolvency, admitting that the 1.9 billion euros (or $2.1 billion US dollars) it had claimed was missing from its accounts did not exist.

This was more than just a financial failure, however. Long-time company auditor EY even noted it seemed to be an ‘elaborate and sophisticated fraud.’ Markus Braun, the former CEO of Wisecard, was arrested and is now suspected of market manipulation.

Less recently, in 2018, the digital payment solutions provider WaveCrest was forced by Visa to immediately close all of the prepaid Visa cards it had issued, citing non-compliance with membership regulations. These incidents show some of the problems with regulation in the cryptocurrency space. Additional companies are likely to come under fire in the years to come for their business practices. Such problems are also a hindrance to the growth of the industry and its adoption into the mainstream.

Can Cryptocurrency Cards Work?

Credit cards and debit cards are some of the oldest ‘new’ financial technologies in the industry. Today, they are a common part of our daily lives, but when they were first introduced, they represented a revolutionary concept. It should come as no surprise then that the two main players in the traditional credit card market have begun looking for ways to get involved in the cryptocurrency space.

Both Mastercard and Visa, giants in the credit and debit card space, have expressed interest in improving technology and expanding into this new market space. Mastercard recently announced a partnership with Wirex, allowing it to issue a new digital payment card on the Mastercard network. Visa recently published a blog post detailing its interest in partnering with top blockchain players and expanding its technologies.

Even those uninterested in cryptocurrency in the past, like PayPal, have begun to enter the cryptocurrency space. In a partnership with another top player in the fintech industry, Venmo, Paypal is making moves to allow customers to purchase Bitcoin through its site and through the companies’ mobile apps. 

There are financial experts, though, who don’t believe cryptocurrency cards have a place in the industry. After all, the banks already pay these payment processing companies for the opportunity to issue cards, along with many other intermediaries that collect some form of payment along the way.

These extra expenses are part of the reason that non-traditional payment companies are entering the race to create a cryptocurrency card. But that doesn’t mean Visa or Mastercard couldn’t take the current options and make them work for cryptocurrency. Perhaps we will indeed see a cryptocurrency debit card soon.

A Look at Financial Planning for a Recession: How to Survive

In times of economic uncertainty, you might wonder how best to plan for your financial future. Where should you be investing your money, and what types of strategies will serve you best to help you maintain your finances and prepare for a potentially worsening situation?

No matter your situation or the state of the economy, financial planning is always a good idea. But investing in some financial planning can be particularly helpful in ensuring you’re able to hold on to your wealth and keep it secure during times of financial hardship. How can you adjust your finances now to protect against recessions in the future?

How do we define a recession?

The National Bureau of Economic Research defines a recession as a significant decline in economic activity felt throughout the entire economy. To be considered a true recession, this economic decline must persist for more than just a few months, and it must be noticeable in various segments of the economy, including employment, real income, GDP, wholesale-retail sales, and other areas. A true recession does not only affect one part of the market, and it does not bounce back quickly.

Causes of a recession can vary, but the primary trigger is typically a period of uncertainty that causes a drop in spending and purchasing. A recession can have a snowball effect on the rest of the economy, causing people to lose their jobs and homes. If you are lucky enough to avoid these direct consequences, you might still find that other aspects of your finances, like investments or your retirement accounts, may suffer.

Have a plan

financial planning

The simple truth is that having any kind of plan to prepare for a recession will put you ahead of most other people. Those without a plan are more prone to either over-react or under-react to changing market conditions, make short-term decisions, and second-guess themselves, which wastes valuable time and potentially causes more mistakes. Have a plan in place before a recession comes along so that you won’t have to spend time coming up with something when you could be implementing that plan instead. 

Bump up your savings

When planning for a potential recession, the first step is always to bump up your emergency savings fund. During an economic downturn, cash is important, especially because investments and other sources of income may not be reliable. Experts generally recommend that you keep at least six months of expenses on hand in your emergency fund, so that you could cover all of your essentials during that time period—your mortgage or rent, utilities, food, household expenses, insurance, and long-term financial obligations like loan payments.

Take some time to calculate how much you will need for a six-month fund so that you have a goal to aim for. Keep in mind that it will take time to build up an emergency savings fund, but having one in place is essential for weathering a recession and coming out ahead. After meeting your six-month goal, you might aim even higher and try to save at least one year in expenses. The healthier your emergency fund, the better you will fare during a recession, especially if the worst happens and you lose your job.

Eliminate high-interest debt as soon as possible

Though relying on loans and credit cards is sometimes necessary and even useful in certain circumstances (such as buying a home or using a credit card for the rewards), debt can be difficult and expensive to manage during a recession. If your financial situation is already somewhat limited, high-interest credit card debt can feel almost impossible to manage. An important way to prepare for a potential recession is to start paying down that high-interest debt as soon as possible. This can reduce your monthly expenses and allow you to save more in your emergency savings fund at the same time. 

Invest for the long term

When examining your investment portfolio, it is important to remember that many investments are long-term rather than short-term. The biggest mistake people make with their investments during a recession is trying to predict the market. If you’re preparing for a recession, take a “buy and hold” approach to your stocks—plan on owning those stocks for at least five years or more. Doing so will help protect you from some of the volatility that can occur in the short term during an economic downturn.

It’s also critically important to examine the diversity of your portfolio. Try to spread your investments out across many different types, mixing up stocks, bonds, fixed income funds, and other assets like real estate investment trusts (REITs) and exchange-traded funds (ETFs). There are several asset classes that often do not follow stocks and bonds movements, such as precious metals and commodities. Adding these asset categories for portfolio diversification is a key tool to minimize risks, and smooth out the cycles. 

Be ready

Trying to predict the timing of a recession is nearly impossible, although you can bet that one will occur at some point. There have been multiple recessions since the Great Depression in the 1930s and two in the last 20 years before the current coronavirus-related recession.

The prospect of dealing with the financial implications of a recession can be intimidating and even frightening. Keep your emergency savings fund healthy and minimize your high-interest debt, and remember that your investments should be aimed at your long-term gain. With these tips in mind, you can navigate the stormy waters of a recession and emerge unscathed, or in very respectable shape.

A Look at the Evolution of Cryptocurrency

Recently, cryptocurrency has moved into the spotlight. Nearly everyone has heard of cryptocurrency at this point, and many have developed an understanding of some of the aspects of how it works. Most have heard of Bitcoin, and even more have heard of other alternative cryptocurrencies that exist today, such as Litecoin, Ethereum, and Ripple. While many people have become familiar with cryptocurrency, it often seems as though these virtual currencies came out of thin air and suddenly burst on the scene. The truth is that these digital coins had a colorful history prior to becoming more widely known.

The Potential to Transform the Financial World

While the innovations used to produce cryptocurrency are still relatively new, this technology has significant potential to change the financial world as we know it. Often, it has been viewed as a positive development that could become a significant part of our future. The earliest ideas for a digital currency emerged in the 1980s, with many developers and other innovators proposing concepts for a form of currency that would exist strictly in the digital sphere. While none of these ideas ever came to fruition, they did inspire continued investigation into making such a currency happen.

By the 1990s, several potential digital currencies were developed, coinciding with the general tech boom at the time. Systems that were developed included DigiCash, Beenz, and Flooz. It is important to note that all of these early cryptocurrency systems chose to use a Trusted Third Party system. What this means is that the companies behind these various cryptocurrency systems were used to verify and facilitate transactions.

The Emergence of Bitcoin


Many years later, in 2008, a white paper was published under the alias of Satoshi Nakamoto. While the true identity of Satoshi Nakamoto is not known—and it is possible that it could be a single programmer—most believe that a group of programmers operates under this alias. A white paper is a type of technical document that is created to explain a scientific project of some kind. In this case, the white paper was titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” Around the same time that this paper was published, the domain name bitcoin.org was purchased, and the software used to mine Bitcoin was also released for the first time. By the following year, 2009, Satoshi Nakamoto sent some Bitcoin to another person, effectively launching the first digital currency.

What Makes Bitcoin So Unique?

The primary difference between the way that Bitcoin worked and the attempts at earlier versions of cryptocurrency was demonstrated in its use of a decentralized network to verify transactions, bypassing banks and other third parties. The decentralized network made for a more secure process and a true person-to-person payment method. The updated level of security solves a problem that has been present ever since the first digital currencies were developed. In order to prevent the possibility of duplicating transactions, a new type of transaction ledger emerged: a distributed network.

While the modern-day distributed networks were created in the 1960s and 1970s, using them for verification purposes in a transaction ledger is what makes the blockchain technology that forms the core of Bitcoin so unique. Unlike traditional methods of processing credit card payments—in which one computer on a distributed network is responsible for the verification of financial transactions—with Bitcoin, the blockchain technology distributes the responsibility for verification across the entire network.

For security purposes, this makes it nearly impossible to duplicate or change transactions, as the information is contained and verified across the entire network in multiple locations. Every block on the hypothetical chain contains information about financial transactions, along with a unique identifier, as well as the information contained on every other block on the chain before that one. It is this method of distributing information and verification among the distributed network that helps to make Bitcoin secure.

Other Coins

After Bitcoin burst on to the scene, other types of cryptocurrency soon followed, giving us currencies such as Litecoin; Ethereum; Ripple, Dash, and even Theta, which is a potential game-changer in the market of skyrocketing data and video demand. Today, there are more than 2,000 different types of altcoins on the market that people can buy and sell in various marketplaces, as well as use as an investment or to make purchases. As for the future of digital cryptocurrencies? While it’s difficult to say what the future will hold exactly, it certainly seems as though these digital forms of payment may indeed be around for the long haul.  For the speculative or aggressive growth portion of someone’s portfolio, a smattering of cryptocurrencies could yield great results over time.

What You Need to Know about the First Meeting with Your Financial Planner

When it comes to your finances, there is a significant amount of planning involved if you want to meet long-term financial goals. It is for this and other reasons that many people choose to work with a financial planner to help them establish and achieve their goals.

Financial planning isn’t just for those who are already wealthy, either. In fact, you’d be missing out if you dismissed the idea of a financial planner simply because your net worth isn’t extremely high. Planning your finances is part of what can help you achieve that wealth, so getting started with a financial planner could be the best thing you ever did for your own personal finances.

If you’re meeting with a financial planner for the first time, there are a few things you should know, and a few things you should remember to bring with you. Here’s what you need to know:

Set Goals before You Go

Finance planning

Even before you decide to hire a financial planner, your first move should be to establish goals for yourself. You could create goals for different categories, including short and long-term goals. This can help you with deciding exactly how to divide up your finances. Long-term goals might include buying your first home or saving for retirement, while short-term goals could be as simple as paying off some excess credit card debt.

Another approach is to think about what you would like your finances to look like in one year, five years, and then ten years from now. Whichever method you choose, the important thing is to be clear with yourself about what you want to achieve, that way you can give your financial planner an idea of how to get started.

Bring These Financial Documents

Probably the most important document you can bring along to your first appointment with your financial planner is your tax return. Tax returns are a good source for your financial planner to see the full picture of your finances, including income, deductions, medical issues, mortgages, etc.  Most planners will also want to talk with you about your future tax outlook, especially if you are close to, or in retirement, as there are several strategies and steps that can be taken to improve your future tax situation, and potentially insulate you from any future tax increases.  

You will also want to bring any recent statements for your accounts. This includes any retirement accounts (401(k)s, IRAs, etc.), bank accounts, life insurance policies, mortgage accounts, and any debt statements. It’s important that your financial planner is able to get an accurate picture of your finances, both with your income and your expenses.  Also, recent Social Security benefit statements and pension estimates, if applicable, are important items for any projected retirement income planning.

This full picture, including all debt and spending habits, will help your planner see where your money is going now, and help you to find other places you can put your money to help you achieve your goals. Knowing your debt and income will help them make appropriate recommendations for your situation.

Bring a Budget or Be Prepared to Create One

If you have a budget already, make sure you bring it. However, if you don’t yet have a budget in place, bring your credit card and debit card statements and your bank statements. That way, your financial planner can get a sense of how your money is being spent now.

By looking through these documents, they can help you create a budget that will work for you in your current financial position and that will help you reach your financial goals. A good budget will include your fixed and variable expenses and take into account savings goals for the future. But in order for it to work for you, it needs to be practical and realistic.

For example, deciding to cut back on your amount of takeout for the month is more realistic than cutting it from your budget completely. You will be more capable of sticking to your budget if it realistically reflects your current situation and values.

Interview the Planner

Choosing a financial planner is an important decision. You should interview two or three financial planners before choosing one. Your financial planner should make you feel comfortable enough to share information about your life and finances, and you should feel confident in their credentials and decision-making.

It is probably best if your financial planner has a similar investment strategy as you. It can also be helpful if they often work with clients in your position. A planner specializing in retirees might not be the best choice if you are in your early twenties and just starting to establish your finances and goals. Likewise, someone working mostly with young couples working to buy their first home might not be a good fit for a couple ready for retirement.

Meeting with a financial planner is your opportunity to ask questions. Find someone who is sympathetic to your financial situation and who has practical ideas for helping you achieve your future goals. This will become an important relationship for you, so you will want someone you trust and have confidence in to help you in your financial journey.

A Look at Cryptocurrency as an Investment

Cryptocurrency is swiftly becoming a well-known aspect of our daily lives. Many people expect that it will only become more ubiquitous in the future, potentially evolving into a viable “digital money” alternative to physical currency.

As it grows in popularity, people are looking at new ways to incorporate cryptocurrency into their finances. For many people, cryptocurrency presents a new opportunity to add diversity to their investment portfolios, even including it in their retirement savings.

Perhaps you have been considering adding cryptocurrency to your own retirement portfolio. Here is a bit more information about what you need to know before getting started with cryptocurrency investments.

There Are Many Different Types of Crypto Currency

There are a number of different types of cryptocurrencies available, with more being developed every day. Some of the most well-known varieties of cryptocurrency today are Bitcoin, Litecoin, and Ethereum, but there are hundreds more available as well.

Though blockchain technology and Bitcoin are very closely related, not every cryptocurrency on the market uses a blockchain. However, most of them do use some form of a decentralized ledger and cryptography to prevent against fraud.

Before choosing a cryptocurrency to invest in, be sure you do your research so that you understand just how your chosen cryptocurrency works and what it was created to do. Different cryptocurrencies have different purposes, and it is always wise to stay as informed as possible about your potential investments.

Why Invest in Cryptocurrency?


So, why would you choose to invest in a cryptocurrency anyway? Most financial advisors would encourage you to diversify your portfolio in order to get the most out of your investments. That is because putting all of your finances in one asset class can be a recipe for disaster if that particular opportunity goes south.

Suppose all your money is invested in just one stock on the stock market. What happens if the market takes a downward turn and your stock begins to lose value? You could end up losing everything, and many do if they have not diversified their portfolios. Similarly, what if you invest exclusively in stocks and there is a stock market crash?  Different asset classes can fall asleep and underperform for extended periods of time. For example, stocks regularly go through a “lost decade” or more.

Financial advisors typically suggest a mixture of stocks, bonds, mutual funds, ETFs, and other types of investments, such as precious metals, for the most well-rounded approach to investing. When you use this diversification strategy, you likely won’t lose as much money in the event of a market downturn.

Cryptocurrencies are yet another strategy you can use to diversify your investments. If you’re looking for a new type of investment, then purchasing some cryptocurrencies might be worthwhile.

Remember though, that just like any other type of investment, it’s important to approach cryptocurrencies with caution. Never invest more money than you can afford to lose, as it’s nearly impossible to predict how any one investment might perform.

It can be tempting to put a lot of money into cryptocurrencies, especially in light of the memories of overnight millionaires that invested in Bitcoin early. Though you might be hoping for a repeat of that scenario, it’s not likely. Keep your investments to an amount you can handle losing if it goes badly.

Getting Started

Once you’ve decided to invest in cryptocurrencies, you may be wondering how to go about purchasing them. There are a few options that can allow you to buy different cryptocurrencies. The most popular way to purchase cryptocurrencies is through a cryptocurrency exchange.

Many different exchanges exist, and most do charge fees for purchases or withdrawals, often a percentage of the purchase price. Check around to different cryptocurrency exchanges to find the options that work best for you.

If you are looking for a specific cryptocurrency, know that not all exchanges carry all types. Be sure to double check that the cryptocurrency you are hoping to purchase is offered before joining an exchange.

You can also go through a traditional broker to purchase cryptocurrencies, though those are not as common yet as cryptocurrency exchanges. The first investment broker in the mainstream that allowed for the buying and selling of cryptocurrencies was Robinhood, though more now offer that service today.

Robinhood charges no fees for trades in cryptocurrencies, just like in its stock-trading platform. Tradestation and eToro are two other options. Many other traditional brokers have announced plans to start offering cryptocurrency trades in the future.

If you want to buy and hold cryptocurrencies in an IRA or ROTH IRA, you will need to find a custodian who will allow or offer that as a choice.  At this time, the larger IRA custodians, such as Fidelity, Vanguard, Schwab, and TD Ameritrade do not offer cryptos as an investment choice. There are a number of so-called “Self-Directed IRA” custodians who do, however.

After purchasing your cryptocurrency, you will need to decide how you’re going to store it. Typically, people store cryptocurrency either in hot or cold wallets. Hot wallets are much easier to access but are generally considered to be less secure than cold wallets. Many exchanges that host hot wallets have been vulnerable to hackers in the past.

A hot wallet stores cryptocurrency with an exchange or third-party provider, accessible easily through the internet or through a mobile app. Cold wallets, on the other hand, are small portable devices that are encrypted, allowing you to download, store, and carry your cryptocurrency with you.

Cryptocurrency could be a great addition to your investment portfolio but consider carefully before making your purchase.

Steps in the Financial Planning Process: What You Need to Know

We spend a lot of our lives planning, from trips and vacations to how to decorate the living room. But there’s one area you should be focusing on if you haven’t already, especially if you want a secure financial future: financial planning.

You may be thinking that financial planning is only for the very wealthy, but you’d be wrong. A financial plan can help anyone achieve their financial goals, both for now and for the future. If you’re interested in creating a financial plan, you should know a little about the process.

Certified financial planners (CFPs) practice according to guidelines set up by the Certified Financial Planner Board of Standards, following a code of ethics and standard practices. For most certified financial planners, getting a financial plan started for a client involves these main steps:

1. Identify Your Goals

The first step of any effective financial plan is to establish goals for yourself. Are you saving for retirement? Trying to pay down debt? Purchasing your first home? All of these can contribute to how you see your future finances and help you or your professional financial planner create a workable plan for you.

Goals Target

If you do decide to work with a professional, this is also the stage at which you will establish your relationship. You will talk with your financial planner about your goals, financial views, and anything else that might be relevant to helping you achieve financial success.  It is important to have the eventual plan in writing, so that you have “a track to run on” so to speak, and so that changes can be made to the base plan over time, as your personal circumstances change.

2. Gather Data

Once you’ve established some goals, it’s time to gather data. This can include several aspects of both your personal and financial information. You’ll need to tally your income, expenditures, and any assets or liabilities so you or your financial advisor can get a good picture of the current state of your finances.

Additionally, this is a chance for you to better understand your feelings about investments and money management. What is your personal risk tolerance? What’s your policy on investments? All of this information will help you to rank your priorities appropriately, making it easier for you to decide where to allocate your funds.

3. Analyze the Data

After collecting all that data, it’s now time to analyze it and figure out what it means for your finances. For example, if you are planning on purchasing your first home, you can take a look at your current financial situation and the amount you are saving right now.

With a timeframe in mind, you can calculate the end amount you will have for your down payment. Is it enough? If your projections don’t show that you will meet your goals, you can make adjustments!

4. Develop the Plan

Now that all of these introductory steps are completed, it’s time to create an actual plan for your finances. If you are working with a professional financial planner, they will help devise solutions that can work best for achieving your own specific financial goals. The key point in this phase is the word ‘develop,’ since there will be adjustments required throughout this process.

You will need to be able to adapt your plan depending on your individual situation. There are many options and numerous variables that must be considered, and not every strategy will work for every person. Make sure you leave room to keep your plan flexible as your needs change; that way, if your goals shift, you can adjust your plan accordingly.

5. Implement and Monitor the Plan

Once your plan is all set and ready to go, it’s time to implement! For many people, putting a new financial plan into practice can be the most challenging aspect of the process. Like any new endeavor, it will take dedication and discipline, but the efforts will be well worth it as you get closer to your goals.

Additionally, it is important to remember that as you move through life, your situation (and therefore your goals) may change. Financial planning must include the monitoring of your finances and personal situations. Otherwise, you might not be getting the most out of your plan.

When working with most professional financial planners, monitoring and adjusting of your plan will be considered a standard part of their practice. But if you are working on your own, then you need to ensure that you make any necessary adjustments.

Whether you work on your own or with a professional, you can use these steps to help you create a financial plan that can work for you both right now and in your future. If you haven’t started planning for your financial future yet, get started today.