Categories
Money

Next Generation Money Management

We will discuss next generation money management for both new and seasoned investors, including how investing works and the basics of managing money. We will also discuss the various terminology for what a wealth manager is. Wealth managers can also be known as “financial planner”, “wealth advisor”, financial advisor” and “wealth manager.”

Which Generation Are You?

According to the Pew Research Group, there are several generations that come after the baby boomers. These relatively new investors should be considering their long-term financial goals for the future. For example, millennials are the group of people born just before the beginning of the year 2000, or the new millennium. In addition, Millennials were born roughly between the years 1981 and 1996. They precede Generation Z (1997-2012) and they came after Generation X (roughly 1965-1980).

Achieving Next Generation Money Management

Navigating the world of investment and finance grows more complicated and difficult each year. Learning how to manage taxes, create wealth, manage investments and estate planning can be a daunting task. It’s much simpler and easier to depend on the expertise of a wealth advisor to accomplish financial goals. Contacting a professional wealth advisor simplify next generation money management for you. More on that later.

Investment Types

There are a number of different types of investments that are available for investors to choose from. Moreover, technology of the 21st century has made it easier than ever to choose many different investment options. For example, global wealth management investments can include things like stocks, bonds and real estate. In addition, there are many new investment opportunities like cryptocurrency and micro investing.

Types of Investments for Next Generation Money Management:

  • Stocks
  • Bonds
  • Mutual Funds
  • Retirement
  • Real Estate Trusts (REITs)
  • Real Estate (Land/Homes)
  • Annuities
  • Precious Metals (Gold, Silver, etc.)
  • Cryptocurrency (Bitcoin)
  • Insurance

Investing 101

Take Control of Personal Finances and Dollar-Cost Averaging

Learning about investing doesn’t have to be complicated. Once you establish your goals and how much money that you want to invest each month, you can then determine what kind of investments you wish to make. However, every adult should learn to budget, save money and pay off debt first. If you have a family, it is critical that you begin planning your financial future.

Many investors use “dollar-cost averaging” as a part of their investment strategy. Dollar-cost averaging is simply dividing up the amount of money you have to invest over a longer time frame. This investment methodology means that you invest the same amount of money each week or month, no matter if the market goes higher or lower. Dollar-cost averaging takes the emotion out of buying stocks.

Learn more about investing in our article, Financial Planning Process.

What is Your Level of Risk?

Active Versus Passive Investing; Aggressive Versus Conservative Investing

First, the major categories of investment include active management or passive management. For example, a portfolio manager can determine what investments are in your fund and make decision for you using passive management; however, active management means that you reserve more control of your investments and perhaps you even use online services to trade individual stocks on a daily basis.

Second, you must determine if you are an aggressive or a conservative investor. Aggressive investing is utilized by those who want to take more risk and capture greater returns. This type of investing is considered acceptable for younger investors and for savvy investors who want to dedicate a small portion of their portfolio to higher risk. Conservative investing is a lower risk style of investing. Returns tend to be lower than the aggressive style, but come with lower risk. This style is best for those that desire lower risk and those who are getting closer to retirement age.

Diversify Investments

One important tool in your next generation money management tool box is to diversify. No one can predict the future to know what investments will do well and which ones will fail. As a result, we can improve our odds of success in investing my diversifying our investments. Diversification of investments means spreading your money over different investment sectors. For example, you may want to have some stocks, bonds, real estate and precious metals in your investment portfolio.

Tax Considerations

Another consideration for next generation money management is how tax is managed. Some investments will inherently have higher tax implications than others. In many cases, timing is important when the asset is sold in determining how it is taxed. The level of taxation of an asset can impact your return on investment. For example, if you purchase a home, fix it up and flip it for a profit, it will be taxed at a higher rate than if you simply bought a home and lived in in for a few years.

Next Generation Money Management

Retain Assets and Grow Wealth for Future Generationsmillennial wealth management

Navigating the world of investment and finance grows more complicated and difficult each year. Learning how to manage taxes, create wealth, manage investments and estate planning can be a daunting task. It is much simpler and easier to depend on the expertise of a wealth advisor to accomplish financial goals. Contacting a professional wealth advisor simplify next generation money management for you.

Whether your family is new to investing or you are simply managing assets passed down through generations, generational money management is important. Next generation money management allows families to not only retain wealth and assets, but also grow their portfolio for future generations.

When wealth is held and passed on through a family, issues such as taxes, legal considerations and investment knowledge must be utilized for maximum efficiency. Failure to navigate next generation money management correctly could result in reduction or loss of assets and wealth to taxes, inflation or even investment mismanagement.

When approaching next generation money management, families should retain the services of a financial advisor who is experienced, knowledgeable and has the family’s best interest at heart. Here are some examples of “financial advisors” that you may encounter when seeking next generation money management.

Wealth Advisor

A wealth advisor is a general term for a person who provides advice to families for how to invest and manage money. There are several terms for money managers who help people manage their money and assets. These terms include “wealth advisor”, financial advisor”, “wealth manager” and “financial planner.” We will discuss the differences between each of these titles and why it matters.

Why Do Families Need a Wealth Advisor?

Navigating the world of next generation money management grows more complicated and difficult each year. Learning how to manage taxes, create wealth, manage investments and estate planning can be a daunting task. It is much simpler and easier to depend on the expertise of a wealth advisor to accomplish financial goals.

Wealth Advisors Are in High Demand

The US Census Bureau data indicates that there are over 73 million retirement-age people in the United States currently. This number will reach a crescendo in 2030 when all baby boomers reach retirement age. This group of retirees will require assistance with managing their wealth and estates. In addition, working-age Americans will also need help with their finances, paying off debt, retirement, and taxes. As a result, it is more important than ever for individuals to take control of their own investments for a secure future.

What is a Wealth Advisor?

A Wealth Advisor Assists High Net Worth Families with Managing Investments and AssetsFinancial Planning and Budgeting

In general, a wealth advisor can be a financial planner or a financial advisor. A wealth advisor may be an expert in the field of finance, with professional certifications and degrees. In contrast, a wealth advisor may also be less experienced.

A wealth advisor can assist individuals, businesses and families with implementation and management of strategies for managing wealth. In many cases, they focus on helping high-net worth clients with things like establishing goals and values, creating a legacy and wise investments.

Some of the topics that a wealth advisor can advise families on include:

  • Investment Strategy
  • Short and Long-term Investment Planning
  • Debt Management
  • Saving and Budgeting
  • Estate Planning
  • Retirement Planning
  • Tax Management
  • Insurance
  • Wealth advisors

Wealth Manager

A subsection of a wealth advisor group, a wealth manager aids high net worth families manage their assets. Moreover, the name is frequently synonymous with wealth advisor or financial advisor. In many cases, a wealth manager offers the same services to clients as a wealth advisor does. However, a wealth manager focuses on wealth management for families.

Typically, a wealth manager deals with high-net-worth individuals and families. The discipline combines several personal finance areas into one group. In addition, the intent of a wealth manager is to grow and preserve individual and family wealth over long periods or generations.

Financial Planner

A Loose Group of Financial Professionals Who Represent Different Industries

“A financial planner is a qualified investment professional who helps individuals and corporations meet their long-term financial objectives. Financial Planners do their work by consulting with clients to analyze their goals, risk tolerance, life or corporate stages and identify a suitable class of investments for them.”–Investopedia

In short, financial planners are a group of individuals from different industries, like banking, insurance, and tax. They help families create a plan for long- and short-term goals. Moreover, financial planners come from different backgrounds and may not have financial expertise like financial advisors or wealth advisors.

Certified Financial Planners (CFP) must study and understand industry accounting and investing principles. Frequently, a CFP must be familiar with software tools and technology related to next generation money management.

Financial Advisor

True Financial Advisors Are Certified Professionals Who Act as Fiduciaries to Clients, Unlike Salesmen

The term financial advisor is one of the broadest terms when describing professionals who give advice regarding money management. They are also sometimes called “investment advisors.” In many cases, the term “financial advisor” is a substitute term for “wealth advisor”, “wealth manager” and “financial planner.” However, there is a difference between the terms.

A financial advisor is considered a true professional in the financial industry. For example, they may be required to pass board exams and have a financial education from an accredited institution of higher learning or university degree. Finally, if the advisor is working with the public at large on issues such as next generation money management, they are required to hold a Series 65 license.

Series 65

The Series 65 license is administered by the Financial Industry Regulatory Authority (FINRA). To pass the Series 65 exam, you must gain expertise in topics such as state and federal securities laws and finance rules. In addition, financial advisors must learn about fiduciary obligations and ethical standards relating to clients.

Another license that some financial advisors acquire is Series 7 Certification. Candidates must past the Series 7 exam to qualify for the certification to work with clients in the next generation money management industry.

“A candidate who passes the Series 7 exam is qualified for the solicitation, purchase and/or sale of all securities products, including corporate securities, municipal fund securities, options, direct participation programs, investment company products and variable contracts.”–FINRA Website

Caveat Regarding Advisors and Planners

Beware of Professionals Who Receive Sales Commissions – You Get What You Pay Forbudgeting tips for beginners

One of the ways in which these professional advisors differentiate themselves is how they receive compensation. Some professionals charge an hourly rate for their time or as a fee in the form of a percentage of the account size, whereas others may receive payment through sales commissions or financial incentives.

Note that commissions or incentives may create conflict with what is in the best interest clients. For example, if your financial planner receives sales commissions on buying/selling stock in your account, he/she may be inclined to more frequently trade stocks in the account. As a result, frequent trading benefits the professional through sales commissions; however, you may be the loser in the end as portfolio performance takes a back seat to trading.

Next Generation Money Management Wrap Up

As you can see, there are several differences among the financial professionals and some of the other terminology used in their industry. Many of these professionals assist people with wealth management strategies, however there are some differences. Hopefully, this understanding helps you navigate the financial advisement world better.

Read More:

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Retirement Planners

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Real Estate Market Predictions

Why Saving Money is Important

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Best Gold Coins to Buy

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Value Investing Books

How Much Savings You Should Have at 40

Disclaimer:

It is important to note that Piggy Bank Coins does not provide financial advice. We do not endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals and some equities.

In addition, The Federal Trade Commission (FTC) requires that Piggy Bank Coins disclose to readers that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. Moreover, we try our best to keep things fair and balanced, to help you make the best choice for you.

 

Categories
Economy

Four Stages of the Business Cycle

There are four stages of the business cycle: expansion, peak, contraction and trough. We’ll look at these and other cycles and draw some conclusions about the economy and how you can plan for the future.

Experts Have Discovered That Economic Events Happen in Cycles. The Seasons, the Planets and Human Life Itself Are Cyclical

Before we get to the details of the four stages of the business cycle, let’s discuss more about economic catastrophe. Unfortunately, the American Great Depression and the COVID-19 shutdown of 2020 were catastrophic events. Yet, some very intelligent researchers have determined that much of what we experience in our lives revolves around cycles.

The sun and the moon follow a cyclical pattern that is predictable. In addition, the earth’s movement through the universe and its relationship to other stars is part of a greater cycle. But here on earth, there are many more cycles.

The life of a human being is part of a cycle. You are born, you become a youth, then middle aged, followed by elderly life and death. Our season are cyclical: Fall, Winter, Spring and Summer. Researchers have discovered that our economy is cyclical as well. Oddly enough, the four stages of the business cycle are closely related.

According to Investopedia, the four stages of the business cycle are as follows:

“The four stages of the economic cycle are also referred to as the business cycle. These four stages are expansion, peak, contraction, and trough.” -Investopedia

The Four Stages of the Business Cycle: Expansion, Peak, Contraction and Trough

Expansion occurs when the economy is growing. Prices begin increasing, more people are working. Businesses grow and make more money, hire more workers and pay better salaries. The workers tend to spend more money, buying cars and houses, passing money along through the economy. Most participants in the economy benefit and see more money in their bank account.

The peak of the business cycle is the highest point. It occurs when expansion reaches its maximum. For example, employment in the economy is considered full, prices increases are beginning to look like inflation. Many people will have borrowed great deals of money for bigger houses or more things. The stock market is usually at an all-time high.

During a contraction economic growth begins to slow down. Inflation (price increases) begin to slow down as well. In addition, unemployment may begin to increase and more people find themselves out of the workforce. The stock market may level off or even begin a correction or retracement. New housing starts may decrease during this time period.

The trough is the low point and may also be called a “recession” or a “depression.” People begin to worry about personal finances. Unemployment is higher, borrowing money is more difficult and people struggle to make ends meet. The stock market may be in a bear market trend either going down or flat. Jobs are scarcer and the real estate market is tight.

Economist Ray Dalio and the Economic Machine

Ray Dalio, an economics expert from Bridgewater Associates, has created some really intelligent free videos on understanding the 4 stages of the business cycle. He also is the author of the book, “Principles.” Dalio is really good at simplifying economic ideas and helping you understand why things happen as the do.

How the Economic Machine Works by Ray Dalio

Why You Need to Know About the Four Stages of the Business Cycle

During the up Cycle the Economy Flourishes; During the Down Cycle the Economy Suffers

It’s important to understand the basic concept of economic cycles because cycles go up and down. The economy bounces back and forth between growth and recession. In down cycles, money is tight, banks are reluctant to lend money, economic growth slows down and people don’t spend as much because they have less money. However, in up cycles, people spend more, banks lend more money, the economy grows and unemployment is low.

There are many investments in the economy that are affected by the economic cycles, such as the stock market, real estate prices and even commodities prices like gold and silver. As a result, financial planners and investors must be proactive in planning for changes during the four stages of the business cycle.

The American Economy is in a Down Cycle in 2020

In 2020, the economy is passing through a down cycle. We are probably somewhere between contraction and trough in the four stages of the business cycle. As a result, unemployment is high, it is becoming more difficult to borrow money and yet the stock market is at an all-time high. Money managers have to make tough decisions about re-balancing portfolios with stocks, bonds, precious metals and even cryptocurrencies.

stages of the business cycle

What You Can Do to Thrive and Protect Yourself

The Secret to Winning in the Four Stages of the Business Cycle: Budget, Save Money & Invest

When life is cyclical, it simply means things go up and then they go back down. The pattern repeats itself in a cycle that goes on forever. Moreover, in the natural world, animals are aware of the cycle of the seasons. For example, squirrels have the natural instinct to bury acorns during the summer and build their nests to prepare for the bitter cold of winter.

In many ways, the four stages of the business cycle operate much like that in the animal kingdom. Although humans no longer depend on instinct to survive, we can still use our higher brain function to make decisions. If we know that the economic cycle goes up and down, then sometimes we will have more money and other times we may have less money. Following this logic, it makes sense for us to save money during the times that we have more money. When we learn ways to save money on a tight budget, we are better prepared to weather the storm of bitter economic times.

Write Down Your Goals

If you want to be retired, living on a beach in Costa Rica in 20 years, then you need to write that down as part of your goals. We recommend creating a notebook, journal or even a spreadsheet where you list exactly what you have planned for the future. This serves two purposes. Writing down your goals makes what you want explicitly clear. It gives you a starting point and also provides you with the details that you will need to determine how you will reach your goals.

The second purpose of planning out your financial goals on paper (or electronically) is that you are signaling to the universe what you want. History has proven that the psychology of desire and intention is a powerful tool in accomplishing goals. Understanding the four stages of the business cycle can help you achieve your financial goals as well.

Review Your Goals Regularly

Once you’ve written down what you plan to accomplish through your goals, you should return to the goals frequently to review them. Some people even find it helpful to place a copy of the written goals in a location near them where they see the goals daily, like on your bathroom mirror or near your workspace. It can also be helpful to visualize your goals through imagery. Is one of your goals to own a beach house? Place a picture of the beach house that you want on your wall. Again, the power of intention is great and tends to help you focus your energy on exactly what you want.

Create a Budget

Now that you have established your goals, it’s time to create a budget. Budgeting requires a great deal of self-discipline, so if you don’t follow your budget, then it can wreck your plans! When you create a budget, start by writing down in detail what your expenses are each month.

Spreadsheets are great for budgeting, but not required. There are also budgeting apps to choose from that can be helpful. For now, you need to know where you spend your money. Provide as much detail as possible when listing your expenses. You may find it helpful to review past bank statements and receipts.

Once you have an idea of where you spend your money each month, it’s time to take a hard look at your budget and cut some expenses. Many people find making cuts to spending a difficult task. But making cuts now will help you reach your financial goals quicker.

Living Below Your Means

After cutting your expenses down to the bear minimum, you should be living below your means (hopefully). Unfortunately, living below your means is a philosophy that most people don’t follow these days. Living below your means requires that you spend less than what you make. For example, if your take home pay is $1,500 per month, then living below your means is only spending $1,000 per month.

The extra money that you have from living below your means will serve two purposes. At first the extra money will be used to pay down debts quickly. Getting ahead requires that all debt be paid off first. Secondly, after the debt has been paid off, you will then use the positive cash flow to fund your emergency fund, savings and investments. Each of these is part of your net worth and the buffer between you and poverty. The more you can grow your savings and investment, the simpler and easier life gets.

Pay Off All Debts

Before you can start saving money, you must pay off all debts. Now that you’ve established your budget, cut personal spending to the bare minimum. You will take extra money that you have leftover in your budget and use it to pay down debts. Create a list or accounting of your debts, the corresponding balances and interest rates that you maintain. Use this information to help you keep track of your progress as you pay down debts.

If you are young and just starting out, hopefully your debts are minimal. Having minimal or no debt when you begin your journey toward wealth creation is a huge advantage. Paying off debt can take years and a great deal of sacrifice. So, if you have little or no debt, congratulations! For the rest of us, it’s time to get to work paying off debt.  

The Shocking Truth About Saving Money

According to a December 2019 article by GoBankingRates, approximately 70% of Americans have less than $1,000 in savings!

This is a shocking statistic that shows how access to credit cards and lending have dominated our society. Unfortunately, Americans have adopted the idea that borrowing money for most things is normal. Yet, just a few generations ago in the early 20th century, people learned the hard way during the Great Depression that borrowing can lead to financial ruin. Having no savings puts you in a dangerous financial place.

Make Saving a Habit

Saving is a habit that can be learned over time and simply requires discipline. Become determined to reach your financial goals. Your personal determination to win at the money game will help you develop the discipline to save.

In addition, develop good habits of saving money. In the classic personal finance book, “The Richest Man in Babylon” by George Clason, the author implores the reader to set aside at least 10% of your earnings. This is a great rule of thumb for saving and investing because removing only a fraction of your income each month will likely not even be noticed or missed. Yet, this small amount of money is the seed needed to grow wealth.

Create an Emergency Fund

The first thing to do when you have paid off debt is to start saving for an emergency. Many people think that saving for an emergency is not necessary, until life proves them wrong and an unexpected event happens. Unfortunately, we all have emergencies during life: job loss, medical issues, natural disasters, home repairs, car problems, etc. Life is expensive and it pays to be prepared.

At a minimum, you want to have at least $1,000 in your emergency fund. In reality, your emergency fund should cover 3-6 months of expenses. For most people this number should probably be between $5,000 – $20,000. Keep in mind that in the worst case scenario you want to be able to pay all your bills and eat for 3-6 months, in the event that you lose your job.

Invest 10-15% of Income

Once you’ve fully funded your emergency fund, you can start investing. And if you have made it this far, then congratulations! You are ahead of the pack and well on your way to wealth building.

As stated previously, we recommend that you invest 10-15% of your income monthly. The earlier that you get started saving and investing, the better off you will be in the long run. In fact, the most powerful tool that will be working for you during investing is compounding interest, and it works like magic. How do you turn $1,000 into $62,000? The answer may be simpler than you think.

Wrap Up: the Four Stages of the Business Cycle

As you can see, understanding the four stages of the business cycle is critical in understanding how investing works. Knowing the parts of the business cycle makes investing and managing money clearer and reduces the chances that you lose money over time.

Read more:

How Much Was a Dollar Worth in 1960?

Is It a Good Time to Buy Stocks?

10 Things to Know Before Starting a Budget

Best Investing Books of All Time

How to Become a Millionaire from Nothing

Questions to Ask a Financial Advisor

Why Saving Money is Important

The Best Budget App

US Dollar History: How the Dollar Became the World Reserve Currency

How Much Savings You Should Have at 40

Ways to Save Money on a Tight Budget

Real Estate Market Predictions

Options Trading for Dummies

Disclaimer:

It is important to note that Piggy Bank Coins does not provide financial advice. We don’t endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals and some equities.

In addition, The Federal Trade Commission (FTC) requires that Piggy Bank Coins disclose to readers that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. Moreover, we try our best to keep things fair and balanced, to help you make the best choice for you.

Categories
Cryptocurrency

Cryptocurrency Investment Strategies

Many cryptocurrencies are rising higher and higher. Bitcoin is near its all-time high of $60,000 and many experts predict it will soar much higher in price. Although we can’t advise you on what you should invest in, we will share some cryptocurrency investment strategies that others have used. In addition, we will discuss what cryptocurrency is and some future predictions.

Fifty years ago, investing was simple: stocks, bonds and real estate. However, today the investment process has become much more complicated. Moreover, there are an infinite number of investment choices that can be difficult to understand. One new investment is Bitcoin and cryptocurrencies.

It seems clear that the future is bright for Bitcoin and Ethereum, as well as several other cryptocurrencies. We will discuss why these cryptocurrencies deserve serious consideration as a part of your cryptocurrency investment strategies. In addition, we will also briefly discuss some other cryptocurrencies worth noting.

Cryptocurrency Investment Strategies Summary

In some ways, investing in cryptocurrencies is like investing in stocks. Retail stock investors simply open a brokerage account like E-Trade or Robinhood, link their bank account and begin buying shares. Your cryptocurrency investment strategies will be similar. You can open a trading account at a cryptocurrency on-ramp brokerage firm like Coinbase or Gemini, link your bank account, and then begin purchasing cryptocurrency.

In general, cryptocurrency investment strategies include investing in the top 10 coins, such as bitcoin and Ethereum. In addition, investors may choose to make a play to capture gains through more risky altcoins that are not well known yet. Finally, traders may also invest in stable coins to offset some risk in the portfolio.

Another angle for cryptocurrency investment strategies is to consider passive income in crypto. Many exchanges and brokers, such as BlockFi, now offer investors the option to earn passive income on their investment by sampling holding cryptocurrency in an online account. For example, BlockFi offers up to 8% returns on some cryptos, which is quite significant.  This is a simple portion of some traders’ cryptocurrency investment strategies that is low risk and earns significant returns.

What is Cryptocurrency?

Cryptocurrency is a digital asset. Payments occur between individuals on the internet. In addition, the best cryptocurrency uses cryptography to secure transactions on a network. Block chain technology is part of what makes the network secure. Miners use powerful computers to solve advanced equations in order to earn Bitcoin or other cryptocurrencies. Finally, mining makes the distributed ledger network secure. In addition, it ensures that transactions are complete. As a result, no one can cheat the system.

What is Block Chain?

The block chain stores data on a public database. The blocks of information include transaction data, participant data and distinguishing data. Moreover, each block of data stores thousands of transactions under cryptographic lock and key. A network of computers operates the blockchain. They make the network run and keep it secure by solving algorithmic hashes. The network computers earn cryptocurrency for their work. Finally, the bitcoin block chain technology uses a distributed ledger. Bitcoin’s network security hinges on the distributed ledger that the network participates in.

Bitcoin: A Peer-to-Peer Electronic Payment System Created by Satoshi Nakamoto

Bitcoin is an open-source, block chain-based technology that was designed as a peer-to-peer payment system. It is designed to be a decentralized electronic payment method that can be conducted semi-anonymously among individuals. Bitcoin is digital cash. Many consider Bitcoin to be one of the best cryptocurrencies to invest in.

It uses block chain technology to maintain its function. For users to send and receive bitcoin, the block chain depends on miners. Computers are used by miners to complete complex calculations which build blocks on the block chain. As a reward, the miners receive Bitcoin as payment when each block is completed.

Bitcoin was introduced to the world in 2009 by Satoshi Nakamoto in a 9-page white paper entitled, “Bitcoin: A Peer-to-Peer Electronic Cash System.” Bitcoin was the first cryptocurrency to experience widespread use and adoption. However, its use case has evolved over the years from a peer-to-peer payment method to a store of value model. Many Bitcoin users hold bitcoin much like you would hold silver or gold in an investment portfolio.

Reasons Why Bitcoin Is Included in Cryptocurrency Investment Strategies

  • Exponential growth and adoption since 2009
  • $240 Billion market capitalization
  • Proven electronic payment method
  • A store of value much like gold
  • Deflationary money – only 21 million Bitcoins
  • Replaces the US Dollar as World Reserve Currency
  • Reasonable privacy
  • Independence from banks and governments
  • Border-less payment system
  • Low fees
  • Meets all the requirements of the definition of money

Ethereum: A Block Chain Project That Uses Smart Contracts to Power Other Projects

Ethereum is another powerful cryptocurrency that should be included in any trader’s cryptocurrency investment strategies. It is an open-source, decentralized block chain project. Second, Ethereum is a smart contracts platform. Additionally, it provides open access to money, via the Ether cryptocurrency coin (ETH), and technology, exemplified by the thousands of applications that are operating on the Ethereum network. The ETH coin of Ethereum is second only to bitcoin in market capitalization.

Like Bitcoin, Ethereum is a Proof of Work consensus system. This means that powerful computers all over the world are continuously solving complexed equations in order to build blocks on the Ethereum block chain. Whichever machine or miner solves the problem quickest, completes the block and receives a reward as payment: ETH coin.

Although Ethereum shares some features with Bitcoin, such as being able to make peer-to-peer transactions, they serve different purposes and audiences. Bitcoin was the original decentralized payment system. As a result, banks do not manage payments. Ethereum’s primary purpose is to serve as the core block chain on which newer projects operate.

Ethereum uses a payment system for ETH. In addition, it implements smart contracts which allows entirely new projects to run on top of the Ethereum block chain. For example, in November 2017, the decentralized application “CryptoKitties” was launched. It is a digital collecting and trading app of virtual felines that works on Ethereum. As a result, Ethereum may be one of the best cryptocurrencies to invest in.

Reasons Why Ethereum May Be One of the Best Cryptocurrencies to Invest in

  • Industry leader in smart contracts
  • Widespread use and adoption
  • $200 Billion market capitalization
  • Home of block chain decentralized applications (dapps)
  • Well established decentralized payment network
  • Serves as the block chain base for hundreds of projects
  • Independence from Banks
  • Borderless Payments
  • Low Fees

Other Cryptocurrencies to Consider

Here are some other cryptocurrencies that are worth looking at more deeply. Although Bitcoin is the most dominant and most secure cryptocurrency, there are many other cryptocurrencies that have strong security and strong use case value. A cryptocurrency investment portfolio may include other cryptocurrencies.

Cardano (ADA)

Named after Gerolamo Cardano, a 16th century Italian polymath, the Cardano project began in 2015. It is an open-source software project. Moreover, it innovates the design of cryptocurrency. Cardano has a long-term plan called the Road Map. Cardano’s most notorious feature is its implementation of peer-reviewed research. Research and peer review are a part of project development. It has a $35 Billion market capitalization.

A team of academics, researchers and developers managed Cardano. They focus on solving cryptocurrency problems. Moreover, Cardano doesn’t focus on one use case scenario for cryptocurrency; instead, it appears to be tacking many problems at once, such as currency, proof of stake, smart contracts, scalability, security and even scripting. In addition, Cardano uses the delegated proof-of-stake method to maintain the network functionality. This is different because it is more efficient for electricity consumption. Cardano is definitely one to watch if you are looking for one of the best cryptocurrencies to invest in.

Monero (XMR)

Created in 2014 from a fork in the Bitcoin block chain, Monero is a privacy coin. Monero uses what it calls an “obfuscated public ledger” which makes transactions of Monero private. Moreover, Monero is a tested privacy payment method. The project has longevity and a working record of privacy.

Monero gets a bad reputation at times. For example, it has been used on the dark web as an illegal payment method. However, it should be noted that paper currency such as the US Dollar can also be used for illegal purposes. Privacy for legal transactions is an important aspect for money and Monero is the foremost privacy cryptocurrency on the web. Monero is definitely one of the best cryptocurrencies to invest in for those who love privacy.

XRP (XRP)

XRP is a currency that operates on a digital payment platform known as RippleNet. The company known as Ripple operates XRP. The currency is not technically a cryptocurrency and doesn’t operate on a block chain. Instead, XRP is a centralized, distributed ledger technology. XRP is an engineered payment system. It is a new competitor to the SWIFT payment system. The SWIFT system is used in international banking.

Chainlink (LINK)

Developed in 2017, Chainlink is a decentralized network that connects smart contracts with real world data. Furthermore, the Chainlink decentralized oracle network is operated by node operators. In addition, operators that maintain nodes are paid LINK cryptocurrency. The nodes connect the system like links in a chain. Chainlink runs on the Ethereum network and plays a critical role in execution of smart contracts. It is one of the new rising stars of the cryptocurrency revolution and one of the best cryptocurrencies to invest in.

Polkadot (DOT)

Another new rising star in the cryptocurrency space is Polkadot. The Web3 Foundation created Polkadot. Its primary function is to facilitate the operation of block chains together. The DOT coin functions in three ways: staking, bonding and networking. Finally, Polkadot contains special tools like specialization, scale and inoperability which act as catalysts between block chains.

Binance Coin (BNB)

Binance coin is a utility token that is one of the highest market cap coins in the industry. It is used to pay for Binance exchange fees. In addition, it also helps power the Binance decentralized exchange (DEX). The Binance coin is a deflationary coin. It is burned frequently by Binance. Part of the reason that BNB is so popular and successful is due the success of the Binance exchange. Binance is definitely a strong consideration when looking for one of the best cryptocurrencies to invest in.

Cryptocurrency Investment Strategies in 2021

Recently, Bitcoin has traded as high as 60,000 per Bitcoin. It peaked in price around approximately $20,000/Bitcoin in late 2017. Bitcoin has been on an upward trajectory lately and has neared its all-time high on several occasions. There are many analysts who believe it could go much higher. But even more importantly, Bitcoin and other cryptocurrency may break the banking chains that imprison us today. And it’s no longer a conspiracy theory to discuss cryptocurrency. Respected investors are taking it seriously like never before and many believe that Bitcoin should be a serious part of anyone’s cryptocurrency investment strategies.

Future Predictions of Bitcoin and Ethereum Prices

Reputable Investors Foresee Exponential Growth in Bitcoin and Ethereum Markets

It seems clear that in 2021, Bitcoin and Ethereum will begin the next phase of expansion and adoption. Many investors have included cryptocurrency investment strategies in their portfolio.

As a result, the price of both cryptocurrencies will likely go much, much higher. These are certainly important when determining the best cryptocurrencies to invest in.

Anthony Pompliano and Max Keiser, two well-known investors in the Bitcoin space believe that Bitcoin price will exceed $100,000 in the next few years. Other investors like Mike Novogratz and Chamath Palihapitiya believe Bitcoin price is destined to go even higher to levels like $400,000 and $1,000,000, respectively.

As for Ethereum, investors are optimistic about its future price as well. Because Ethereum’s market capitalization is only $40 Billion, there is much room for growth. Continual adoption of Ethereum by institutional investors could easily lead to a $200 Billion market capitalization, equating to a $1,500 ETH price. Investors such as Nigel Green and Blockfyre co-founder Simon Dedic predicted much higher prices ($2,500 – $9,000) for Ethereum in the future.

It should be noted that several of the investors mentioned are worth Billions cumulatively and have a clear track record of investing in markets. As a result, their predictions should be seriously considered.

Bitcoin Continues to Grow

There are a couple of things to understand about Bitcoin growth. First, Bitcoin is growing in popularity and use worldwide. Users are adopting Bitcoin as a store of value like gold and using it as a payment method in places where banks don’t exist. Second, Bitcoin is growing in price.

When users began mining Bitcoin on laptops in 2009, it had little value. Yet today 1 Bitcoin can be exchanged for $12,000! Around 2020, billions of Dollars of institutional money began to flow into cryptocurrency investment.

Examples of Institutional Money Investments in Bitcoin:

The list of investors and cryptocurrency investment continues to grow each day. When considering some of the best cryptocurrencies to invest in, look at what professionals invest in as well.

Bitcoin Exchanges and More Information

Hopefully this article has given you some ideas about the best cryptocurrencies to invest in. When making investing decisions it is important to do your own research and determine for yourself what is a good investment.

In addition, there are many exchanges that can be used to purchase cryptocurrency. Binance, Gemini, Kraken, Coinbase and so many more. Please do your research if you decide to invest. There are many scams in the crypto industry that are searching for an easy mark. If you want to learn more about Bitcoin and cryptocurrency, there are more articles by Piggy Bank Coins below.

Cryptocurrency Investment Strategies Wrap Up

Clearly,cryptocurrency investment strategies are a part of many wise trader’s portfolios. Cryptocurrencies are no longer a taboo subject among investors. As a result, many traders that have not formulated cryptocurrency investment strategies may find themselves missing out on big gains.

Read More:

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Disclaimer:

It is important to note that Piggy Bank Coins does not provide financial advice. We don’t endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals and some equities.

In addition, The Federal Trade Commission (FTC) requires that Piggy Bank Coins disclose to readers that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. Moreover, we try our best to keep things fair and balanced, in order to help you make the best choice for you.