Understanding the Global Financial World

I began learning about personal finance when I was twenty-five. That’s where I’ve been focused for the past twenty years. Learning about wealth building within the US economy. Stocks, real estate, precious metals, currency trading, building your income, etc. Recently over the past two years, I’ve been spending some time reading and learning about world politics and global finance. The journey has been very eye opening.

As I’ve spent more and more time talking with people about their money, I’ve come to realize how little people really know about what is going on in the financial world both here at home in the US and in the global financial world. Things that affect the well being and futures of themselves and their families. Things that are already in motion. Are we prepared?

Take for example what is called the “dollar hegemony.” In more common terms, the dollar’s dominance as the world currency by which all other countries do business with each other. The dollar has been the dominant form of exchange for decades. It has propped up the US economy and allowed a majority Americans to enjoy a very prosperous lifestyle. However, did you know that several other countries are positioning to challenge the dollar’s dominance in global finance?

China has been acquiring gold since since at least 2009 in an effort to position the Chinese Yuan as an alternative for global trade and settlements between nations. Russia also has been acquiring gold in a bid to divest off the western banking system and alleviate risk to their economy as a result of US and western sanctions. In late 2017 and 2018, China conducted testing of their oil exchange conducted in gold backed Chinese Yuans. This article by Brookings Institution provides a glimpse into the current state of the Chinese vs. US oil markets.

This is just one example of how global financial developments will affect us as Americans.

The 2008-2009 Financial Crisis

The average American doesn’t understand what really happened during the 2008-2009 financial crisis and how it was different from previous financial crises that the United States has faced.

During previous financial crises such as those faced in the early 1900’s, 1930’s and 1940’s, insolvent banks were allowed to fail. In other words, “unhealthy” banks were allowed to fail, and “healthy” banks survived. While there were some losses to the general public as the financial system rebooted itself, the system repaired itself and continued. Bad debt was dealt with and the system healed.

In the 2008-2009 financial crisis, all banks were bailed out by the Federal Bank and ultimately the American Taxpayer. Losses were mitigated and the overall debt remained. The amount of overall global debt increased with the bailout of the banking and other financial institutions.

According to James Rickards in The Road to Ruin, the additional national and global debt load that was incurred in 2008-2009 has still not been “unwound” in 2016. It is this debt load and still accumulating debt load that will make the next financial crisis even more catastrophic to the US and global financial system.

Little Known Facts of Financial History

I’m a rather young 47 years old. I remember the gas crisis of the 1970’s where my parents waited in line for rationed gasoline, and I remember discovering that someone had siphoned the gasoline out of my parents’ cars during the evening. Now I have experienced and lived through the financial crisis of 2008-2009. However, I’ve never lived through the United States government confiscating personal property as it did during the financial crises of the 1930’s.

On April 5, 1933, less that one month after being sworn in as President of the United States, FDR put into action Executive Order 6102 requiring with limited exceptions that all gold held by U.S. citizens be surrendered to the U.S. Treasury. Oh, and let’s not leave out the fact that any citizen that failed to comply would be met with imprisonment.

So this begs the question, “will the government confiscate assets again during a future financial crises?”

Is Your Interest Piqued?

You may be asking how all this may affect your financial future? I don’t have all the answers, but I’m searching.

The financial elites control the global and national financial systems. It’s all connected through the IMF (International Monetary Fund) and other entities. By looking into the past and learning about the global financial world, you get a glimpse into what the future will hold during any future financial crises. It is much better to be prepared than unprepared during a financial crisis. One of our many mistakes is to believe the illusion that everything will continue in a healthy and stable fashion. History shows us that financial instability is a norm of the financial system, but many of us live our lives as if the “party” will never end.

If you’d like to learn more about the global financial world, check out James Rickards The Death of Money and The Road to Ruin to get you started.

 

 

 

Finally! New Book Cover is Finished!

I never realized how hard it would be to write and finish a book when I started in May 2017, but finally, it’s done! The book copy is done. The cover is done. Now it is prepping for print!

Truly writing a book is the project that never seems to end. It seems like things just keep coming up to do or redo that keep you from finishing the job. Thankfully, I had some good friends and professional support in my editor, Anna Floit of The Peacock Quill, and my publisher, Morgan James Publishing. I can’t imaging trying to write a book on your own without some help!

During my writing, it was fun to hear about the different ways people write books. Some plan books out for years. Some just start writing. Some come up with an outline and then get to work. After writing my first book, I believe there’s not a right or wrong way to write a book. There’s just the way that you do it, and that is one of the things that makes it special. For my book, I crafted an outline using the chapters. After coming up with a list of chapters I wanted to write, I thought about what I wanted to include in each chapter. Some of the original chapters didn’t make the final cut. I’ll probably include them in another book someday.

I was very apprehensive after finishing the first draft in early July 2017. That’s when it was time for phase 2, get feedback from one of my very close friends. I gave him my book in early July 2017. When August arrived, it was time to touch base with him again to see what he thought. The anticipation of what he might say was nerve wracking! Did he like it? Would he think it was bad? What if he told me to throw it in the trash and start over? I vaguely recall the conversation, but one part of our discussion I remember very well. I asked him, “Is it worth writing?” He answered, “Yes. You’ve got a lot of work to do, but it’s worth writing.” His reply was all I needed to keep going on my book. Just that little boost of affirmation gave me the energy and confidence I needed to keep moving forward.

It’s been thirteen months since our conversation, and finally the book is done. Soon it will be heading to the printers. It seems so surreal.

The Book Wrap

This particular week I’m very excited because the book’s wrap has been completed. The book wrap includes the front cover, the binding, and the back cover. This is one of the last steps of production before the book is ready for the bookstores. With each completed step, I can feel the reality of my first published book and with it, the hope and excitement of being able to help people with it’s financial teaching.

The book cover process was pretty straightforward for me, and I was very happy that the publisher liked my cover concepts. I’ve heard many horror stories about publishers not really doing a good job on book covers for the authors and the authors not being satisfied with their covers. In my case, I’m very happy. I was able to present a mockup to the publisher and they quickly came back with several covers to review. After several revisions and tweaks, we ended up with a finished cover. The book wrap, binding and back cover, needed to wait until all of the writing was finalized so that we knew the page count of the book. This week, the final version came back, and well, see what you think. Comments welcome!

I present to you the book wrap for The Millionaire Choice, Millionaire or Not. You Can Choose.

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Announcing My First Book: The Millionaire Choice

It’s been just over a year since I start writing my first book. Officially, I began writing Wednesday evening, May 24, 2017 while sitting on my apartment patio overlooking the mountains in Salt Lake City. It was an inspiring view. Perhaps I was a little ambitious since I wanted to have it finished and printed by December 31, 2017. I tend to be a little optimistic and naive at times.

While I planned to write a book at some point in my life, I didn’t plan on doing it now at age 47. However, looking back over the past year, it was the perfect time. I recently left a premier job where I worked for 15 years ending my career at the executive level. I then took a brief 1 year break to buy some real estate and explore some new opportunities. When May 2017 rolled around, the timing just felt right, and our family was in a good financial spot. And with that setting, I began formulating a plan for my book, a book about money and helping people shape their financial future.

Writing the Book

I’ve been a student of personal finance since I was 25. Studying and working in the financial industry for 20 years led me to write a book on personal finance. Not much of a surprise since my expertise is in the personal finance space.

As I continued thinking about the money problems people are facing, I really wanted to come up with a way to turn the personal finance industry upside down. There are a lot of people doing great work, but it still seems like we’re barely scratching the surface in financial literacy and education. About 10% of American households are millionaire households. That means 90% of households have a net worth of less that one million dollars. In simpler terms, there are roughly 110 million American households and about 10 million millionaire households according the the US Census. However, that doesn’t tell the whole story. Many Americans net worth is far less than one million dollars. In fact, many Americans net worth is less than $100,000. I think that is terribly sad.

After wrestling through various titles, I landed on The Millionaire Choice: Millionaire or Not. You Can Choose. I believe becoming a millionaire is a choice. Whether or not we become millionaires is based on the life and financial choices we make.

As I began writing the evening of Wednesday, May 24, 2017, I felt compelled to write with urgency. During an overnight layover in Denver on my Friday evening flight home to Nashville, I spoke with my wife about the book and the progress I was making. Somewhere during the conversation, the idea of completing the book in 30 days came up. At the time, that seemed like an impossible task considering our work and family circumstances. However, occasionally circumstances change and amazing can things happen.  In June 2017, I penned 60,000 words and completed 90% of the book’s first draft. Yea. I was shocked too!

Now one year later and after several revisions, multiple reviews by friends, family and other professionals, the manuscript for my first book is finished and off to the publisher. I never imagined writing a book was so difficult!

Inside the Book

In The Millionaire Choice, I share my story of growing up in a financially messy home where money struggles were common and a lack of good financial knowledge and habits reigned. At age 25, I began to change.

I was 25 years old when I realized I was headed into a financial disaster if I didn’t change, so I began studying money. After about 90 days, I realized that I could become a millionaire by the time I turned 40…if I made the right financial choices. That was when I made what I call The Millionaire Choice and formed my own personal millionaire plan, my plan to become a millionaire. Hence the purpose and goal of my book, The Millionaire Choice. To inspire and help people become millionaires regardless of their family background or financial circumstances.

The backbone of The Millionaire Choice are the 10 Keys of the Millionaire, the 10 principles that helped me to break my family’s generational cycle of financial mismanagement and become a millionaire by age 40.

For now, it’s available now for pre-order on Barnes and Noble, Amazon, Books-A-Million and other bookstores. The official store date is November 13, 2018. You can learn more about my upcoming book at themillionairechoice.com.

My Inspiration for Writing The Millionaire Choice

During my time in the financial world, working for two different personal financial education, and talking with people, I learned a few things that both saddened and challenged me.

I realized that there are entire segments and people groups in our country that aren’t receiving the financial training and education they need. Why? The reason is simple. They don’t have money. Businesses can’t make money off of broke people, and so very little effort is being made to help the people who need financial education the most. I don’t have all the answers, but I hope that I can make some small difference to help those in need of financial help and education.

I’m excited to be able to help people get their finances in order. Although our family has been able to break the cycle of financial mismanagement, so many of the people I meet are not there yet. They need guidance, help and encouragement.

In time, I really would like to find a way to turn the personal financial education industry upside down to help all those who need and want it. It’s not just about a book or making money. It’s about making a difference in the lives of others, transforming families, and changing the world.

 

 

Silver and Gold. An Interesting Scoop.

I have to admit that I’ve never been big on gold or silver investments. Historically, the stock market has been a much better investment over the long haul that silver or gold, but there are times when silver and gold make sense in your investment portfolio. Let’s take a look.

According to Wikipedia from 1970 to 2010, gold’s growth was 3,792% while the Dow Jones Industrial average was 1,280%. That makes gold look like a very good investment tool! However, from 1975 to 2010, the Dow Jones outperformed gold 1,259% to 929%, and depending on the day, gold is actually down around 7% from it’s $1,410 value in 2010. Gold peaked around $1,800 in January 2011. Now trading around $1,300, that represents a 27% decline in value.

Now what about silver? In 1970, silver was valued at $1.63 per ounce. In 2010, silver’s valuation had grown to $20.19, a 1,138% gain per Wikipedia. Those numbers however, only tell part of the story. In January 2011, silver’s value peaked near $50 per ounce. Today, silver’s valuation fluctuates around $17 per ounce. That’s nearly a 65% decline in value from it peak in 2011! But still, if you had purchased at just the right time, silver would still be a viable investment tool, and you may have benefited from it.

As a savvy investor, investing in silver or gold appears to be an inferior investment tool compared to the S&P or the Dow Jones. However, there are times when silver or gold do make sense in an investment portfolio, and if you are looking deep enough for the right signs, you may just be able to benefit from buying some silver and gold. Perhaps one of those is upon us now.

Sometimes the best investment decision is to follow the leaders. In this case, the leaders are some very well known players in the financial world. Let’s start with Russia and China. Russia and China have both been acquiring gold at the state level as they both move away from US Dollar holdings, according to Bloomberg.com. You can see the aggressive acquisition of gold by both Russia and China with the Official International Gold Holdings.

Another major player to watch is JP Morgan Bank which has aggressively been acquiring silver since 2010 and now holds the largest ever quantity of silver reserves in history. In 2014, this article at the Market Oracle was published related to JP Morgan’s acquisition of silver naming them as the largest silver holder in history. It is estimated that JP Morgan may be sitting on as much as 700 million ounces of silver. So you have to ask why? Considering silver is down 65% from it’s high in 2011, JP Morgan stands to make a bundle as the prices return, but you may do well to think that they may know something that we do not.

The last indicator is to see what billionaire investors are doing like Warren Buffett. In recent years, we’ve seen Buffett buying up infrastructure and energy. Another way to look at this is that he is buying up transportation of goods and oil, which is a commodity similar to silver and gold. Buffet has in the past been a silver buyer himself to hedge against market collapses when he acquired 129 million ounces of silver and held it from 1998 to 2006.

So while I’m not an avid gold and silver buyer myself, the signs are all around us that power players are preparing for something, and we would be wise to pay attention.

Primer on how to buy silver

Tips on buying gold

Great silver and gold vendor

 

Danger. Economic Turmoil Ahead. Be Prepared.

I’m going out on a bit of a limb here to highlight some financial stuff and economic signs that aren’t being covered in the news, but I think it’s necessary. As I bring this stuff up with people in my circles, they are unaware. These things are happening around us, and many people are going to be caught off guard.

The Economic Signs

Last year, I read one of Jim Rickards’ books called the Death of Money. Jim is a former financial analyst for the CIA along with many other qualifications. While Jim included quite a bit of useful information, there were a couple of things that really stood out to me.

  1. Jim highlighted that America came off the gold standard in the early 1970s. That is when our money ceased to backed by gold or any “asset.” However, Jim also highlighted that Russia and China have been working to accumulate gold. I’ll speak more on this later.
  2. In the early 1970s, the US dollar was setup to be the “World Reserve Currency” by an agreement with OPEC to price oil in USD. That has helped to cement the United States as the world power that it is. It is what has allowed America to impose sanctions to such “wayward nations” as we saw fit…mainly to strong arm America’s or the western countries enemies.
  3. Since the Bush administration and more specifically during the Obama administration, have accumulated mountains of debt. In additions to this debt, the US Government and Federal reserve have printed trillions of dollars. This has served to greatly destabilize the value of the USD. Interestingly enough, we have not fully seen the repercussions of this yet which will be mass inflation.

The Death of Money was published in 2014; I read it in 2017. In the book, Jim made several projections which are now coming true.

  1. Russia and China are accumulating gold for the purpose of challenging the USD as the world reserve currency. Without adding too much detail, it is estimated that the top four gold holding entities are 1) the European Union with 8,500 tons, 2) the US with 6,500 tons, 3) China reported 4,500 tons (estimated to be much more), and 4) Russia with 1,500 tons.
  2. China along with Russia would provide an alternative for international trade by allowing oil to be traded with the Yuan, now a gold backed currency.

Normally, projections like this get forgotten over time, however, both of these projections have now come true. In early 2018, China opened oil trading based on the Yuan (Bloomberg.com) thus challenging the Petro Dollar as the only world reserve currency. Iran, Venezuela and other countries are beginning to use the Yuan for international commerce as well. Other news sources covered it as well, RT.com

Cementing the challenge to the US Petro Dollar, Russia is in talks with Saudi Arabia about production agreements that could last 10-20 years. Reuters.com Now this may actually be a good thing as oil and gas prices would stabilize over longer periods of time allowing the world economy to experience less volatility on several levels.

The other big piece of information I have for you is a series of articles related to JP Morgan Chase Bank. In 2011, JP Morgan Chase began acquiring silver. Lots of it. On the books, they’ve acquired 150+million ounces of silver. Unknown, it’s estimated they may have acquired as many as 500 million ounces of silver. By the numbers, that’s about 5,000 tons and $2.5 billion in silver or it could be 15,600 tons and $8.2 billion.

So now you have Russia, China, and JP Morgan Chase all acquiring huge amounts of precious metals (silver and gold) beginning around 2009. You have to ask, “who else might be acquiring large amounts of precious metals? Why?

In reading Jim Rickards’ book about the coming economic collapse and the death of money, he made projections that have now come true, and now we see JP Morgan Chase following one of Jim’s recommendations to protect wealth. Coincidence? I don’t think so.

Okay. So What Now?

So what should we do? I wish I had all the right answers, but I don’t. What I can do though is continue to learn and prepare as best I can.

  • I’ve recently purchased Jim’s latest book, Road to Ruin and I’m eager to see what other nuggets he has for me.
  • Don’t hold too much cash. Inflation causes your cash to lose value. During hyper inflations cycles, it loses value fast.
  • Buy some silver. How To.
  • Buy some gold. How To.
  • Stick with solid financial principles. Pay off your debts. Don’t waste your money.
  • Don’t be too heavy in stocks. Economic turmoil could cut the stock market by 1/3 to 1/2. Diversify your wealth to protect yourself.

Historically, I’m not a silver or gold buyer, but now I am. Gold and silver have not been great investments when compared to the S&P, real estate or other investment options. However, during an economic upheaval, you’re not looking for investment returns. You are looking for financial stability and protection. Gold and silver have been present in the global financial system for over 3,000 years. The USD has existed for a little over 200 years which exceeds the lifespan of typical fiat currencies which is about 27 years.

How Just $10,000 Can Turn Kids into Millionaires

As a father of six kids, yes six, it is my responsibility to teach my kids how to manage and multiply their money. Most parents, like mine, taught me how to work, make money and spend it. They did not teach me how to manage or multiply my money. I had to learn how to do that on my own, and thankfully, I did learn.

Now, it is my responsibility to pass on what I’ve learned to my children. Hopefully, since they are learning about money as children and not as a twenty five year old as I did, they will be much more successful with their money. If I do a good job teaching them, they may be able to become millionaires as well, and we can keep building family wealth and our ability to help other people in need.

Lately though, I’ve been thinking a little differently. Sure I can teach my kids how to manage and multiply money. They may even become millionaires, but what if there was a way I could virtually guarantee they would become millionaires. And, I could do it for just $10,000 per kid.

Well, it turns out, that idea isn’t so far fetched. I first got the idea last year while out on a walk in downtown Salt Lake City. I’m sure it was a chilly evening since March is usually cold in Salt Lake. After a bit of work and pondering, the idea started to have legs, and it is continuing to evolve.

Now you may be thinking, $10,000 can’t make someone a millionaire. And, you would be dead wrong. In fact, $10,000 can make someone a multimillionaire, if you start soon enough. The problem is, we all wait too long to get started on our investing. Many Americans wait well into their 30s or 40s to begin investing and saving for retirement. While it’s better late than never, the real opportunity to build wealth needs to start much sooner especially if you are going to turn $10,000 into a $1,000,000.

I know it sounds little like magic or hocus pocus, but it really just boils down to time…and economic and political stability. Let’s indulge ourselves a bit by assuming economic and political stability will exist in the future. Then we just need to concern ourselves with what happens when we invest $10,000.

According to Investopedia, the average growth rate for the S&P 500 dating back to 1928 is 10%. At 10% growth, it takes money about 7.2 years to double your money, which allows us to multiply our money like this over a 70 year period.

  • Initial Investment: $10,000
  • 7 years: $19,487
  • 14 years: $37,975
  • 21 years: $74,002
  • 28 years: $144,210
  • 35 years: $281,024
  • 42 years: $547,637
  • 49 years: $1,067,190
  • 56 years: $2,079,651
  • 63 years: $4,052,651
  • 70 years: $7,897,470

Now, why did I use a 70 year period for this example? The answer is simple. Because if you put $10,000 into an investment fund the year a child is born, allows it to grow in this manner. The number years mirror the child’s age. Are you getting the picture yet? $10,000 in an S&P Index Fund could become $1,067,190 by age 49 based on historical returns.

Now I know that sounds like a long time however, based on statistics, the average population life expectancy worldwide is approximately 70 years. In theory even with economic downturns, $10,000 will turn into $1,000,000 within a person’s lifetime between 49 and 70 years. If everything goes well, $10,000 could even make a person into a multimillionaire. So let’s look at the chart a bit differently based on age.

  • Initial Investment at birth: $10,000
  • Age 7 years: $19,487
  • Age 14 years: $37,975
  • Age 21 years: $74,002
  • Age 28 years: $144,210
  • Age 35 years: $281,024
  • Age 42 years: $547,637
  • Age 49 years: $1,067,190
  • Age 56 years: $2,079,651
  • Age 63 years: $4,052,651
  • Age 70 years: $7,897,470

Time for some questions.

  • “If you could make your kids into multimillionaires, why wouldn’t you?”
  • “How would it change a your child’s thinking if they KNEW they were going to be a millionaire?”
  • “If money were not an issue, what would your children and grandchildren do to help others? How much good could they do?”
  • “If there were more millionaires, with good hearts and values, how would our world change?”

I came from financially challenged family. The idea of being a millionaire was not in my head nor in my vocabulary. The possibility of being a millionaire was a foreign concept to me. At age 25, that all changed, and along with it how I thought about money and myself. The perception of who I would become grew together with the possibilities of what I could accomplish in life.

Now, I have six children. My oldest is headed of to college in the fall. My youngest is six. I look forward to how they will use the principles and the money they will be empowered with to help others in need and to change our world for the better.

With a bit of work and vision, it’s possible to change the financial outlook of our families, our children, our country and the world. Now what will you do? A great option to start is with a Vanguard S&P Index Fund.

Fiat Money vs. Cryptocurrency

We are definitely living in a very interesting time in history on many levels. While the world is itself in a period of turmoil and change throughout the Middle East and Europe, the financial industry is also undergoing significant change. Unlike what is happening overseas, which is somewhat visible to the American public, what is happening in the financial world is much less visible to Americans. I’m talking about cryptocurrencies including Bitcoin, Ethereum, Litecoin and the other 1,500 altcoins (an altcoin is an alternative cryptocurrency to Bitcoin).

While I’ve known about cryptocurrency as far back as 2010, I didn’t take the time to learn about it. As I’ve learned more about the cryptocurrency industry over the past year, I’ve become more fascinated with it and the potential it represents to the financial and commerce world. However, whenever speaking with the vast majority of my associates, I’m reminded how little most people know about cryptocurrency.

When something new like cryptocurrency is introduced, there is a period of denial and ignorance for most individuals. Cryptocurrency is very different from what we already know about silver, gold and fiat currencies like the United States dollar. Because of this “new idea”, it will take time for the majority of people to accept that a different form of currency is not just coming, it has arrived.

The creation of cryptocurrency is not very different from the creation of any other currency in ancient history. The only difference is that it is digital instead of tangible. Once you learn more about the different types of monies used throughout history including beads, coins, silver, gold, paper, and more, it is not as difficult to realize that we’re seeing yet another evolution of the monetary system. One that eliminates a primary problems with fiat currencies, counterfeiting. If you’d like to read up on the history of money, head over to Wikipedia or PBS.org for a lesson.

Now, what about Fiat vs. Cryptocurrency? Since the creation of Bitcoin in 2008/2009, cryptocurrencies have been under attack by established monetary, investing and business leaders. Every year since its inception, “experts” have predicted the demise of Bitcoin and cryptocurrencies roughly 10+ times per year. You might say in the words of Mark Twain, “The rumors of my death have been greatly exaggerated.” Cryptocurrencies have survived repeated assaults against their viability and legitimacy. This isn’t going to stop any time soon, but in the end, a lot of people will be eating crow when it comes to cryptocurrency as a viable financial tool.

While the US dollar is the dominant form of currency in the world today, I think we can all get distracted from the reality that worldwide, government currencies come and go over time. The US dollar will not remain dominant forever. Currencies also go up and down in value based on the current economic situations. For you money nerds out there, you might enjoy looking at the changing value of the dollar historically or versus other currencies. Inflation eats away at the value of fiat currencies like the US dollar.

While some may say that the argument is fiat currency vs. cryptocurrency as the title of this article suggests, the real question is “will cryptocurrencies like bitcoin and others play a role in the financial markets long term?” Don’t be suckered into the argument of fiat currency vs. cryptocurrency. That’s not the real question on whether or not cryptocurrencies will survive long term or make a viable investment asset. Very smart people fall into varying degrees of beliefs on both sides of the question.Only time will prove who is right.

With the emergence of ecommerce, did we see retail stores disappear completely? No. After 20 years, ecommerce finally surpassed the $300 billion mark in 2015. By comparsion, the entire retail segment for the United States stands around $4.7 trillion for 2015. Ecommerce has it’s place in the market, but it hasn’t come close to replacing the entire retail chain. Cryptocurrencies will likely serve a similar role in the financial space for the near future. They won’t replace money entirely anytime soon, but they will fill a very needed role.

Those who believe “cryptocurrencies are here to stay” are investing and making a lot of money. Those who believe “cryptocurrencies are going to fade away” may well find themselves using cryptocurrency to make purchases in the future and like all the other previously missed investing opportunities, they’ll regret missing this one.

 

Cryptocurrency Headed Up. Are You In?

Confession. I’m a tech guy and financial guy. I started my career as a manufacturing/mechanical engineer, then in 2001 switched careers to a internet-website-tech-business entrepreneurial role eventually becoming CIO then COO of a $100+ million business. Cryptocurrencies starting spinning up in 2009 with Bitcoin, and I missed it. Fortunately, it’s not quite done yet.

With every new industry innovation there is the cutting edge (bleeding edge as some call it), then come the early adopters, then come the late adopters, then come the laggards. So where are we with cryptocurrency? We’re moving from the cutting edge into the early adopters phase. How do I know that? Simple. More press. More adoption. More use cases. More money. For example:

  1. Banks have started testing. The banks are late to the game, but they will catch up fast. If they don’t, they will be obsolete, and they will be gone…or at least lose a huge chunk of business.
  2. Corporate CEOs are beginning to back it.
  3. Use cases are expanding

I could go on like this for pages and pages, but you need to look it up yourself. Crypto Coin News is a great source.

So back to ARE YOU IN? Yes, we missed the big money and opportunity during the cutting edge, but we also avoided the risk that any new industry innovation brings. I’m okay with that. Now however, we are in early adoption phase. Returns will probably be less, but still good. Risk is lower…the proof of concepts are done, the use cases are growing, and adoption is growing. A great opportunity, with less risk…but still risk.

The question you face now is will you be an early adopter and make money, or will you be a late adopter and laggard who just uses cryptocurrency to purchase things?

People Say Bad Things About Crypto

Smart people have been saying bad things about crypto since 2009. It’s going away. It’s going to fail. It’s a ponzi scheme. It’s not backed by anything. Let me answer these things for you in sequence.

  1. It’s going away. It’s going to fail. It’s a going away. It’s a bubble.
    People who don’t get it, say it. So far, many of the naysayers have changed their tunes. A few examples of people who have changed their tunes.

  2. It’s a ponzi scheme. It isn’t backed by anything.
    • This one makes me laugh a bit. Pull a dollar out of your pocket. Now look at it and ask yourself, what gives that value? You’re answer should be “you.” You believe that dollar has value so it does. Along with you billions of other people believe that dollar has value, which is what makes it valuable.
    • Let’s dive a little deeper into economics. In the 1970s, the United States abandoned the gold standard. That’s right, your dollar’s value is not tied to gold. While you can buy gold with your dollar, as long as someone will give it to you, you can’t get gold from the government.

      Also in 1970s, the United States struck a deal with the middle east to price oil in dollars. All oil in the world from 1970s until this year, 2018 was bought and sold in US dollars. This made the dollar the global currency. Countries bought and sold goods in US dollars because it was tied to gold. However, that is about to change.

      What most people don’t know is that China, Russia and a few other countries are tired of the Western elite bankers “BS” and strong arm economic tactics (i.e. sanctions). China, Russia and others have been accumulating gold with the intent of breaking the Petro-dollar. Beginning in 2018, China will open their own oil trading exchanges based on the Chinese Yuan. The Yuan will be tied to gold. Russia and China are the first two countries to begin international trade on this new financial system. Gone are the days of the US sanctioning Russia because Russia isn’t following the Western “agenda”. I think this is a good thing since the west has essentially been starting wars for its own economic benefit. I.e. Iraq war, Libyan war, Syrian war, and the recent Turkish coup attempt. Note that Russia stepped in to stop the Western agenda in Syria.

      Now that you know, China and Russia are valuing their countries money against gold. Why does this matter?

    • The United States and Western Central Banks (run by the central bankers, Rothchilds, etc.), have been printing money and the people and government of America have been accruing massive amounts of debt. As the new Yuan financial standard comes online, the western fiat monies (tied to nothing), will begin to fail. This is much sooner than you might think. Yes, a financial collapse is coming. When? Sooner than you think.
    • Our government is roughly $20 trillion in debt, depending on who you talk to. However, when the numbers get that large, can anyone truly be right? So I ask you again. People believe our money has value because it is backed by our government. However, our government is bankrupt. The pin just hasn’t popped the balloon yet. It’s coming. Once that happens, all perceived value of the US dollar will disappear. The system will be dead and then we will have to rebuild.
    • I said all of that for this purpose. What is the value of the dollar? Perception. What is the value of cryptocurrency? Perception? What is the value of gold and silver? Perception. We as a people ascribe value to things. We determine the value. When enough people perceive something has value, it becomes value. When enough people want something, it has value.

      Cryptocurrency is growing in value right now because people perceive it has value. In truth, cryptocurrency is as valuable as gold because the people believe it to have value. For example, 1 bitcoin is priced around $10,000. 1 ounce of gold is priced around $1,300. Essentially, 1 bitcoin is worth 8 ounces of gold.

In my opinion, it is we the people that give value to anything whether it be gold, silver, fiat currency like dollars, or cryptocurrency. However there is one very big difference between crypto currency and the dollar. Central Banks and the government control the value of the dollar. The people control the value of cryptocurrency. Personally, I’m much more comfortable with people controlling the value of their currency. However, Governments and the Central Bankers will not give up that power easily.

Volatility of cryptocurrency will eventually settle down as we move out of the early adopters phase and into mass adoption. Stay tuned. It’s guaranteed to be an interesting ride.

 

Cryptocurrency 101. Real Deal or Not.

I’ve been interested in personal finance and building wealth since I was 25. It’s now 2018, and I’m 47. My fascination with learning about money started when I realized I made $39,000 in 1995, but somehow ended up $16,000 in debt. WTH? For 22 years, I’ve been learning about money. How to make it. How to save it. How to multiply it.

Now, we have a new development in the financial world, and depending on who you talk to, the jury is still out on if cryptocurrency will be a total bust or the biggest thing to hit the financial world since gold. I’ve been studying cryptocurrency more lately. While some form of digital currency has been around in various forms for over 20 years, the latest iteration came into being with Bitcoin in 2008/2009.

As I’ve gotten deeper into bitcoin and cryptocurrencies, I’ve realized that the resources are very scattered and it can be very difficult to make sense of it all. It shouldn’t have surprised since the industry is still so new. As with any new industry, it takes years, even decades for the industry and knowledge to mature. Cryptocurrency is still very much in its infancy and early stage development.

During my learning process, I came across a group of individuals who are launching a cryptocurrency hedge fund. As a financial guy and business entrepreneur/executive, I decided to help them pull some of the details together for their business, which should be launching in the next 90 days. As a result of my efforts, we’re putting together some resources to help explain and simplify cryptocurrency. We’ve coined this explanation and getting started steps “Cryptocurrency 101.”

Cryptocurrency 101

Cryptocurrency History and Foundation

The current iteration of cryptocurrency began in 2009 following the financial upheaval brought about by the banking industry and traditional monetary practices. While modern cryptocurrencies are a more recent innovation in the financial sector, it is important to recognize that historically, the digital and cryptocurrency concept began much earlier in the mid-1990s.

In the mid-1990s, DigiCash was founded by David Chaum. Since that time, multiple other iterations of digital currency models have had their run including egold, prepaid cash cards, and PayPal. All of these prior contributions helped in the development of digital payment systems and commerce finally bringing the latest innovation to market.

In 2008, the Bitcoin paper was released by Satoshi Nakamoto. With the release of the bitcoin, the idea of a decentralized currency was launched. While Bitcoin was the first in this generation hence the reason it is called a “1st generation cryptocurrency”, many others have followed it. They are referred to as “alt coins” or “alternative coins.” With bitcoin being the “1st generation coin”, these alt coins are classified as “2nd generation” and “3rd generation” cryptocurrencies. Currently, there are over 1,500 cryptocurrencies.

More on the foundation of crypto currencies…
https://en.wikipedia.org/wiki/History_of_bitcoin
https://en.wikipedia.org/wiki/Cryptocurrency
https://www.moneycrashers.com/cryptocurrency-history-bitcoin-alternatives/

The Market Problem and Innovation

Technologists and entrepreneurs have attempted to bring digital currency to market since the 1990s. The financial problems of 2009, pushed one individual, a.k.a. Satoshi Nakamoto, to publish the Bitcoin papers.

Problem #1 Centralized Banking

The centralized banking and currency system which governs the finances of most countries had nearly collapsed. Engineered inflation and debt by the financial powers in the global economy had nearly brought the world to a devastating financial impasse. In the end, it was the people’s tax money that bailed out the banking and financial sector from their failures.

Problem #2 Trust Based Slow Transactions

In addition to widespread financial mis-management by the banking sector, the financial industry had yet to undergo any of the major innovation that other industries had experienced from technology. This is best seen in the clearing process for transactions.

Payment processing for small transactions could take days to clear while larger business or international transactions could take weeks. It is time for innovation in the financial sector. Discrepancies among the transactions required manual processing to clear up, and a certain amount of loss is acceptable as part of the process. The result is a banking industry charges $1.7 Trillion per year in transaction fees just to move money around the world while collecting interest on the money during the hold and transition times.

Both of these market problems are addressed with the cryptocurrency innovation. First, a decentralized network of computers handles the management of the currency, who owns it and which transactions are taking place. This removes the need to use the banking industry as a “clearing house” to track ownership of funds. Peer to peer transactions without the need of a “middle man.”

Secondly depending on the currency, transactions take place in a matter of seconds rather than hours, days or weeks with the current banking system. Near instantaneous transactions is the goal. It should be recognized that the crypto currency technology is still in its infancy and developing. As more users and transaction load are applied to specific cryptocurrencies, like Bitcoin, the limitations of the technology are shown. Hence the need for more advanced “alt coins” technology. Bitcoin is a 1st generation cryptocurrency. Ethereum, Litecoin and others are second generation currencies, and as a result, address some of the design flaws of bitcoin including transaction speed.

Virtually every industry has seen innovation changes from the technology age.

Communications innovations like email, text, and video conferencing.
Retail with ecommerce and Amazon.
Marketing industry with the advent of search engines, Google and Facebook.
Music with Napster followed by Pandora, Spotify, and iTunes.
Entertainment and video with online streaming.
Travel industry with Expedia, Travelocity, Priceline, etc.
Hotel and Vacation lodging with Hotels.com, AirBNB, VRBO, and Booking.com.
Transportation with Uber and Lyft.

Each of these industries underwent extreme innovation makeovers. It is now the banking and financial industries time to undergo the same type and level of innovation. While we have not seen the final developments in the cryptocurrency space, there is one thing that most experts agree on…cryptocurrency is here to stay.

The Cryptocurrency Market

As of late, Bitcoin has dominated the industry and news, but other coins are now rising up to fill their place in the cryptocurrency space. Since Bitcoin, over 1,500 crypto currencies have been created and are in different stages of maturity.

Bitcoin has seen substantial growth in value since it’s inception in 2009. The last several years have seen it increase in value causing many to classify it as a new asset class. With its increase in value and growing adoption as a medium of exchange, Bitcoin has paved the way for the new wave of alt coins and their growing valuations.

Bitcoin Annual Valuations per Coin
December 31, 2017 – $12,622
December 31, 2016 – $967
December 31, 2015 – $429
December 31, 2014 – $317

2017 was a monster year for crypto currency growth and valuations. Bitcoin’s value grew over 1,000%, while Ethereum experienced nearly 10,000% growth and Litecoin saw almost 5,000% growth. Other cryptocurrencies experienced significant growth as well.

Bitcoin has come to be called “digital gold” by many people as it has become the primary medium of value and exchange in the cryptocurrency space. Much like gold was a primary medium of exchange for transactions over the last 3,000 years. Ethereum has taken on the title of “digital silver” as it has been the second most valuable cryptocurrency for an extended period of time. Both of these currencies are considered “trusted” and as such are the primary methods for obtaining other cryptocurrencies for speculative investors.

Many investors are familiar with “IPOs” or “Initial Public Offerings.” However, investors are not as familiar with “ICOs” or “Initial Coin Offerings.” Initial Coin Offerings companies to raise funds for their projects without all the regulation of an IPO. It also allows investors to get in early on a new development project. The speed and fervor surrounding these ICOs is very reminiscent of the .com days from 1998 to 2002. This comparison has caused many financial minds to call Bitcoin and the cryptocurrency space a “bubble”, while other entrepreneurs disagree with the comparison instead saying that we are witnessing the birth of something new in the financial sector the potential of which we do not yet fully understand. In any case, there will continue to be development in the cryptocurrency space and its full effects on the financial and commerce markets are yet to be fully seen or understood.

Many exchanges have been created as the space has expanded including gemini.com, coinbase.com, gdax.com, bittrex.com, hitbtc.com, kraken.com, binance.com, and more.

For a list of exchanges, visit https://www.cryptocompare.com/exchanges/#/overview

Getting Started with Cryptocurrency

To get started with cryptocurrency you have to decide which type of user you are: 1) Investor, 2) Miner, or 3) User. Let’s review.

Investors – want to benefit from the newly developing cryptocurrency space by making money through investing in the projects. This can be done through the ICO, trading for coins on one of the exchanges or investing through a cryptocurrency fund and letting someone else do the investing for you. The investing types could be classified as “Do It Yourself” or “Someone Do It for You.”

Miners – many of the cryptocurrencies allow “mining.” Mining is when people use their computers to expand the cryptocurrencies network. The specific cryptocurrency mined rewards the miner with coins for helping the network expand to serve the users.

Users – As adoption continues to grow in the merchant community, users continue to shop and buy things at a greater rate with bitcoin. In fact, there are some things online now that you can only buy with bitcoin. ATMs are also being put in across the world. They are more common today in Europe than America. In 2018, we expect to see larger online merchants and communities being to work cryptocurrency into their systems.

Cryptocurrency Investment Funds

For the average investor, a cryptocurrency investment fund is the way to go. In a speculative and volatile investment like cryptocurrencies, it is important to lower your risk through a good investment strategy. A cryptocurrency investment fund allows you to benefit from a “diversification strategy” by investing in multiple cryptocurrencies.

The fund managers are responsible for staying ahead of the development and growth curve by staying on top of the latest developments in the cryptocurrency markets. With an investment team working full time to analyze the market for the best opportunities, the probabilities of achieving a positive return are increased. However, there are no guaranteed returns on cryptocurrency investing.

Cryptocurrency funds will charge you a “management and growth” fee for their services and responsibilities to grow your funds.

Solo Investing

As cryptocurrency is a newly developing industry, cryptocurrency fund investment options are limited. It has only been in the last 2 years that a more significant number of funds have been created. The majority of investing in cryptocurrency has been done through individual investing. Solo investing can carry more risk especially for the inexperienced investor. Even a seasoned stock market investor can have problems with the highly volatile cryptocurrency space.

To get started solo investing, you will enter the market by purchasing one of the top 2 crypto currencies, BitCoin or Ethereum, through coinbase.com or gemini.com. You will then need to transfer your Bitcoin or Ethereum to one of the exchanges. On the exchange you will trade your cryptocurrency for another cryptocurrency of choice.

The transfer and trading process is a delicate and somewhat “dangerous” in that a typo can cause several irreversible problems.

During the transfer process you could lose your crypto currency if you mistype the deposit address. Cryptocurrency is a “digital asset.” If you lose it, it’s gone. Cryptocurrency is stored in “wallets” or “holding accounts.” As you move your currency to the exchange you are moving your funds from one wallet to another. A typo at this stage means that you sent your funds somewhere else. At that point, your funds will be irretrievable.

Once inside the exchange you will begin the trading process, trading your coins for other coins that you believe will generate growth and a return for you. During the trading process, it is possible to enter a purchase amount that exceeds the current value of the coin you are purchasing. It is like buying something at a premium; you could “overpay.” This possible error is not unique to cryptocurrency, but it is inherent issue with the currency trading systems in general. Be especially careful when doing your own currency trading.

Crypto Mining

Cryptocurrency mining is the backbone of many of the cryptocurrencies. It is viable way for the newly launched coin based businesses and projects to get access to the infrastructure they need to expand without spending their precious capital. It is also a great way for the community and supporters to get involved with the project.

Crypto mining began on a smaller scale with bitcoin and hobbyists, but has now grown to include major enterprise operations. “Mining Rigs” as they are called, range from relatively low cost home computers to computers design specifically for mining costing $2,500 to $15,000. Mining operations are generally located in homes, offices, basements, or warehouses filled with tens to thousands of these specifically designed computers. Miners are paid “rewards” for their mining services which are either Bitcoin payments or payment in the coin they are mining.

Solo mining vs. Pool Mining

As mining has grown it has been more difficult for entry level miners to keep up. In the earlier days of Bitcoin, Ethereum, and other coins, solo mining was possible. As the difficulty of the mining as increased with the size of the network, pool mining surfaced. Pool mining allows an individual to join a group of miners where they can work as one group to continue solving the mining algorithms. Each new miner increase the power of the mining pool. Pooled miners share in the rewards by being issued “shares” of the mining reward. For the more difficult mining operations, this is the only way to get in.

For newer coins, it is still possible to do solo mining and obtain rewards in the coin you are mining. However, the risk is that the coin mined may not be successful long term which means it has little or no value during the time of the mining. However, if it does turn out to be successful, the miner would be able to sell his coins for a nice profit since he obtained a significant amount of them at a relatively low cost.

Cryptocurrency mining resources are available online.
https://www.cryptocompare.com/mining/guides/#/overview
http://www.minergate.com

Last Thoughts

Now back to the title of this post, “Cryptocurrency. Real Deal or Not.” Personally, I believe cryptocurrency is here to stay. In 10 years, cryptocurrency may not look like it does today, but we will likely look back in hindsight and say it was the biggest innovation in the financial world of the last 100 years (or longer).

Resources

Coin Market Cap – https://coinmarketcap.com/

Crypto Coin News – https://www.ccn.com

Chris Dunn – https://chrisdunn.com/

 

Earn Money. Spend Money. Save and Invest Money.

Money can be a complicated thing, but many times we just over complicate it. If you want to be successful with money, it’s really comes down to just 3 things. The three things are how much money you earn, how much money you spend, and how much money you save and invest.

If you pay attention to those three “money metrics”, you’ll do just fine. The problem is that most of us don’t pay attention to any of those metrics, and that’s why most of America is broke. It’s also why so many people end up relying on social security.

Even successful career people don’t pay attention to these metrics, and consequently, they end up squandering years of wealth building opportunity. What do I mean? Well, for most of us college graduates, we enjoy seeing our incomes grow substantially from the time we graduate college through the first 20 years of our careers. However, as our incomes grow, so do our spending habits. We raise our expenses to match our income, and there goes our wealth. Bye bye millionaire potential.

I was on that path when I got out of college. I made $39,000 on my first professional job out of college, but somehow I ended up $16,000 in debt. What?! How the hell did that happen? Fortunately, that was my wake up call, and I made some drastic changes. For starters, I got money smart. I learned everything I could about money because obviously I didn’t know jack. I read Kiplinger’s magazine. I read Smart Money magazine, and a host of other things I can’t recall. That was 20 years ago. It changed me. It transformed my financial future. After I got money smart, I decided I wanted to be a millionaire. I was 26 and decided to become a millionaire by the time I was 40. I made it.

The funny thing about goals and plans. They often don’t work out exactly as you plan, but many times you still hit your goal. I hit my goal, but my path was a little different than I planned. That’s okay. For anyone wanting to become a millionaire, the place where we start is often the same. Get money smart. Then pay attention to how much money you earn, how much money you spend, and how much money you save and invest.

These were all keys elements to my millionaire plan when I was 26, and they’re still part of what I teach today. For anyone who aspires to be a millionaire, they apply to you too.

  1. Pay attention to how much money you earn. Always work on ways to increase how much you earn. If you’re stuck in a job that limits how much you can make, you need to look for other ways to make money, and that may include finding a new job. Don’t let yourself get stuck at an income plateau. If you make $50,000 a year, set a goal and look for ways to boost that to $100,000 a year. If you make over a $100,000 a year, set a goal and look for ways to boost that to $200,000 a year. You can do it. Almost anyone can do it.Early in my career my goal was to make more, but work less. I started out working 60+ hours a week and making $39,000 a year. I was able to lower my hours down to 45 a week an raise my income to $47,500, but I was stuck at an income plateau. Shortly after that, I changed jobs and saw my income soar into six figures plus. I’m sure glad I made that change. It was a key piece of the puzzle on my millionaire journey.My world was rocked recently when I met a new friend. I was about 36 or 37 by the time I had earned $1 million as an adult. It took me about 10 years to earn my first million dollars. Then recently I met a new friend. He rocked my paradigm. He was 22 without a college education when he earned his first $1 million. Ouch. He beat me by at least 14 years.

    Are you “income stuck?” Change it. Get unstuck. Do it today.

  2. Pay attention to how much money you spend. Don’t let your spending habits kill your ability to build wealth. Big ticket items like buying new cars on debt can cost you hundreds of thousands of dollars in future wealth. But bad daily spending habits like eating out can cost you just as much if not more. Take a look at your spending habits and learn to make better decisions. Keep your lifestyle under control until you’ve built your wealth, then you can really enjoy a more relaxed and cushy lifestyle. It’s worth it.If you’re not doing a spending plan, do one. Spending plans and budgets are a pain, but the results are worth it. If you’re not the type of person to run a tight budget, then do a “spending audit” and make adjustments. I guarantee you’ll find money (and your future wealth) slipping through your fingers. Do an audit. Find the problems. Make a adjustments. Every wasted dollar you find can help you build future wealth and help you with your millionaire goal.
  3. Be aggressive with your saving and investing. Many of us are so busy living life that we make excuses for not saving and investing more. The reality is so many of us are afraid of what we don’t know that we just avoid it. Sadly, we’re just too lazy to learn more so that we can get comfortable with it.Many of the people I talk to are clueless about investing tools, the stock market, or real estate. Real estate and the stock market are two of the primary investing tools available to us for wealth building, but very few of us take the time to learn more about them. As a result, we fail to leverage them, and that’s a perfect recipe to stay broke.How much should you save and invest? Well that’s really up to you. If you want to be a millionaire, which is the lowest goal you should set for yourself, you need to account for your age and create your millionaire plan. For most people, $10,000 a year is a good number to hit the millionaire goal in a respectable time, but you still need to account for you age. However, if you want to be an over achiever, keep pushing yourself to do more. Whatever the case is, get started ASAP with whatever  you can do and keep pushing yourself to grow it. Can you do $100 a month this year? Set a goal to double that next year, and then double it again the next year. If you can double that $100/month investment each year for 5 years, you’ll be investing $1,600 a month in 5 years. That’s $19,200 per year! That will add up quickly, and make you a millionaire pretty quickly.

Once you get “money smart” you’ll be better equipped to develop your own Millionaire Plan and build wealth for you and your family. If you don’t have a financial coach, you should get one soon. It’s good to have someone smart to talk with about money and building wealth.

Once you have built your wealth, life gets even more fun. You’ll be better equipped to help other people in need, and it is so rewarding. You can be a millionaire.

Great books/resources to read:
I Will Teach You to Be Rich by Ramit Sethi

Good Financial Cents website by Jeff Rose