Newscrypto, bitcoin, Technology News, investing
Jan 12, 2024 09:00 AM EST
The largest generational wealth transfer in human history is upon us, but I don't think anyone is ready.
Baby Boomers, the generation of people born between 1944 and 1964, are expected to transfer $30 trillion in wealth to the younger generations over the next few years.
Meanwhile what makes this monumental transfer different than the rest - besides the grandiosity of it - is the state of the world.
The old way of doing things is dying. Financial institutions are failing. Conspiracy theories permeate even the most stoic of minds. And the government is full of clowns, charlatans, and tricksters hellbent on preserving their status, not helping the middle and lower classes.
Trusting in these archaic financial dogmatism is not wise. In short, no matter how much (or little) you make over the next decade, all of it is at risk from external forces or your own lack of financial literacy.
This is what you should know to prepare yourself during these uncertain times.
The spray and pray approach to investing does not work. You shouldn't be using a shotgun to invest in companies, you should be using a sniper rifle.
Diversifying to a degree is smart, but don't buy up 10 or 20 penny stocks or low market cap cryptocurrencies expecting them to be your lottery ticket out of poverty. As Peter Thiel, the co-founder of PayPal says, it's immoral to treat companies like lottery tickets.
"I think the real reason people spray and pray in their investing, is that they're lacking in any conviction, and perhaps because they're too lazy to really spend the time to try to figure out which companies what companies are ultimately going to work." - Peter Thiel, Founder of PayPal
During his first 100 days Joe Biden unsurprisingly broke several promises including his campaign platform to relieve student loans. In addition, he wants to increase the amount of IRS employees to audit middle-class Americans. Thanks Joe!
Do not rely on the government for anything.
The saddest part of US policy-making is everything gets politicized.
It's hard to know what is and isn't true or an outright lie.
My sister received unemployment last year after coming down with COVID-19 in April. She was recently told by agents she'd have to pay all $10,000 of it back because she wasn't qualified despite losing her job. They didn't care that she had statements proving she was hospitalized.
As the Russian physcist Andrei Sakharov once said, "Do not trust governments more than governments trust their own people."
Roth IRAs offer a unique tax advantage when compared to a 401(k): You can withdraw your money in retirement tax-free.
That means, your money will be growing 5-7% annually, and you can withdraw every penny tax-free when you're older.
Assuming you earned a 6% return, it would take you a little over 41 years to hit the million-dollar mark if you maxed out
Also, Triple-tax Advantaged Health Savings Accounts are a much better investment than 401(ks) because they are triple-tax advantaged. This means you receive pre-tax advantages, tax-free interest, and tax-free payments for qualified medical expenses.
Here's a simple little guide to better explain HSAs:
The current financial system is beyond repair. Historically speaking this makes sense. Whenever a country has converted to fiat currency - money that isn't backed by anything other than belief in it - it has failed or unleashed currency debasement which is what's happening right now.
A new system is emerging.
It's called cryptocurrency.
More than two-thirds of the Millennial say they preferred Bitcoin to gold as a safe-haven asset. And Gen Z owns the most crypto out of any other group.
Why?
Because in the highly inflationary environment we're in assets with the highest potential to grow make the most sense. If you aren't beating the inflation rate you're losing money each year.
Besides, if the 2008 financial crisis happened right when they were beginning adulthood. I wouldn't trust our financial system either.
Bitcoin's greatest strength is that you do not need to trust anyone in this financial system. It's trustless and uncensorable.
Cryptocurrency will have a direct role to play in the great wealth transfer. The question is, which one of them? My money is on Ethereum and Bitcoin.
In summation, this is what you should look out for as substantial amounts of money changes hands with younger generations -
If you feed off the corpse that is traditional finance you will burn through any sort of wealth you acquire right now. This isn't a time for beginners. But that's alright. If you accept your place as a lifelong student you can overcome any turmoil in the market.
Brace yourselves. We're in for a bumpy ride.
Related Article: Bitcoin ETFs Threaten Coinbase Market Share Despite Company's Record 2023 Performance
The team at The MoneyTimes consists of passionate financial enthusiasts, but it's important to clarify that we are not certified financial advisors. While we strive for accuracy and present information based on thorough research, we strongly recommend that readers conduct their own independent research and consult a professional financial advisor before making any investment decisions. Nothing contained in this publication should be interpreted as investment advice.