Finance

To Boost Crypto, Break The Federal Grip On Americans’ Financial Rights

Published

2 hours ago

August 19, 2024

To Boost Crypto, Break The Federal Grip On Americans’ Financial Rights

Senator Patrick Toomey (R-PA) listens while Senator Cynthia Lummis (R-WY) speaks during a press … [+] conference on crypto currency legislation on Capitol Hill as the Senate moves toward a vote on infrastructure funding August 9, 2021, in Washington, DC. – US lawmakers on Monday laid out a $3.5 trillion budget framework, calling it the “most consequential” social spending plan since the 1930s, and launching what are expected to be tough congressional negotiations over the programs it covers.The 10-year budget blueprint pushes Congress towards the next step in President Joe Biden’s ambitious vision for his first term in office, following on the heels of the $1.2 trillion infrastructure plan, which the Senate is expected to approved Tuesday before sending it to the House of Representatives. (Photo by Brendan Smialowski / AFP) (Photo by BRENDAN SMIALOWSKI/AFP via Getty Images)

AFP via Getty Images

Despite the efforts of a few members of Congress, U.S. cryptocurrency policy remains a mess. For years, the Securities and Exchange Commission, most federal banking agencies, and many members of Congress have been outright hostile toward crypto.

But due to several new proposals, many crypto supporters are hopeful this hostility will fade. Over the last few weeks, Sen. Cynthia Lummis (R-WY), former President Donald Trump, and presidential candidate Robert F. Kennedy Jr., all announced proposals for the U.S. to create a bitcoin reserve.

Given the sad current state of U.S. crypto policy, however, it is doubtful these kinds of proposals would get things on track. Still, they provide a great opportunity to have a more fundamental conversation about how to improve crypto policy. To paraphrase my colleague George Selgin, there’s surely a good policy somewhere between the status quo and these reserve proposals.

And it’s vital that Congress finds it.

Crypto enables new forms of digital payments, where users can bypass traditional third-party intermediaries, such as banks and broker-dealers. In other words, it allows for person-to-person electronic transfers of digital assets, including money.

In theory, allowing people to spend money electronically in ways resembling how they’ve been spending cash shouldn’t be controversial, especially in America. Nonetheless, this feature, along with the potentially disruptive nature of crypto, has proven too much for politicians to overcome.

Some people don’t like that crypto is a competitive threat to companies in the traditional payments industry. Others don’t like that it’s a threat to the existing anti-money laundering regime. (That’s an especially big problem because the federal government has drafted traditional financial institutions to act as an extension of law enforcement.) Other critics see bypassing these systems as a threat to the U.S. dollar itself.

The specter of these threats has made it difficult to develop sound cryptocurrency policy, but there are two basic principles—principles that have been foundational to the United States—that can help Congress address these concerns.

The first one relates to the Fourth Amendment to the U.S. Constitution, which protects Americans against warrantless searches and seizures by the government. Thanks to the Bank Secrecy Act and its many amendments, Fourth Amendment protections have been all but eliminated when it comes to Americans’ financial records. The BSA gives law enforcement warrantless access to Americans’ financial records when they use a bank or any other financial institution.

Rather than adapt to the technology, many policymakers want to force crypto to adapt to a system that was designed to work with financial intermediaries. But crypto often upends the traditional role of intermediaries, thus forcing Congress to deal with how it has used those intermediaries to end-run the Fourth Amendment.

Many members of Congress (and the financial industry) now view the Fourth Amendment as a relic, somewhere between overly burdensome and an afterthought, unapplicable to modern America. But the Fourth Amendment was never supposed to be perfect. It represents, instead, the necessarily imperfect balance between the competing interests of individuals’ financial privacy and the government’s ability to gather evidence of a crime.

Reaffirming Americans’ Fourth Amendment rights, as Congress should do, would not be a license to commit crime. It would simply mean that law enforcement must demonstrate probable cause to a judge before accessing Americans’ financial records, just as they do for other searches.

The second principle—limited government—dictates that people, not government officials, are generally the best judges of which economic transactions are in their own best interest. Yet, the federal government now dictates which methods of payments are acceptable, which special institutions may facilitate those payments, and how those institutions may operate. Some members of Congress even want cryptocurrency banned because it doesn’t fit into this government regime.

The principle of limited government also answers the critics who see crypto as a threat to the U.S. dollar. The federal government is not supposed to be the provider of Americans’ money precisely because governments tend to debase currency. The U.S. government is supposed to refrain from debasing people’s money, and to protect people’s right to use money as they see fit. The government is not supposed to control every aspect of how people use their money or even what they use for money.

Critics of crypto assume that the government’s existing monopoly on money issuance maintains the dollar standard itself, but that’s incorrect. The prevalence of the U.S. dollar grew when gold and silver were recognized as money, and it does not depend on a specific type of paper currency or digital entries. The prevalence of the U.S. dollar derives from the country’s relatively strong legal and economic systems, especially as they pertain to protecting individual property rights.

Many advocates of cryptocurrency are frustrated because the federal government has failed to uphold these limited government principles and debased the currency. Americans now have effectively one choice for money, and even the person-to-person transfer of that currency is now highly regulated and surveilled.

So, it makes sense that so many crypto proponents are cheering on these reserve proposals in the hope that they will gain wider acceptance for Bitcoin. Unfortunately, these proposals do not directly address the underlying problems that have kept U.S. crypto policy such a mess.

Cryptocurrency will remain of limited use until Congress pares back the overly invasive regulatory framework that currently governs U.S. financial markets. To do so, Congress need only reaffirm the importance of the Fourth Amendment and a limited government.

Click to comment

Finance

Top 5 mantras for millennials to achieve financial freedom

Published

9 hours ago

August 19, 2024

Press Room

Top 5 mantras for millennials to achieve financial freedom

By 2030, millennials and Gen Z together will make up more than 50 per cent of India’s population. Known for making sound financial choices, millennials are much more advanced. When it comes to millennials, their investments in mutual funds, stocks, real estate and other assets are at an all-time high, for them a cookie-cutter method does not fit well and when it comes to financial protection – they opt for multiple options to put the method to madness. In the midst of the digital age’s relentless surge, millennials find themselves at the forefront of an era characterised by unprecedented connectivity and information access.

Achieving financial independence remains crucial for personal empowerment and long-term security. It allows individuals to pursue their passions, retire early, and handle unexpected challenges without financial stress. In today’s rapidly evolving digital era, leveraging technology and innovative financial tools can simplify this journey.

Let’s explore some of the top mantras to follow on this road.

Start early & invest regularly

Don’t wait for the perfect moment to begin investing—start your personal finance journey with your very first paycheck. While the retirement age has stayed the same, life expectancy has increased, necessitating a larger corpus to support a longer life. Additionally, many of us aspire to retire by 50 to pursue other interests, making early planning essential.

Consider this: if you start investing ₹5,000 per month at age 25, you could accumulate a corpus of ₹1.76 crore by age 55, assuming a 12 per cent annual return. However, if you delay and start at age 35, you’d need to invest ₹17,500 per month to reach the same amount. A 10-year delay can triple the amount you need to invest monthly. Investing early leverages compounding and the time value of money. When you’re young, you can take on more risks, benefiting from high-risk assets like equities and mutual funds.

Create multiple sources of income

Diversifying your income streams can protect you against job loss and economic downturns, while also accelerating wealth accumulation. Consider options like freelance work, side businesses, rental properties, investments in stocks or mutual funds, and passive income sources such as dividends or royalties.

During unforeseen circumstances like sudden medical emergencies, layoffs, or unexpected major expenses, having a financial safety net can mean the difference between a temporary setback and a lasting crisis. Experts recommend saving 12 months’ worth of living expenses to ensure adequate coverage.

Digital banking apps facilitate this by enabling seamless fund transfers and automated savings plans, making it easier to consistently allocate money to an emergency fund. These tools also offer features like goal tracking and notifications to help maintain regular contributions.

Eliminate debt strategically

Start by listing all your debts, including credit cards, loans, and any other liabilities. Prioritise them by interest rates, focusing on high-interest debts first, as these cost you more over time. One effective strategy is the “avalanche method,” where you pay off debts with the highest interest rates first while making minimum payments on others. Alternatively, the “snowball method” involves paying off the smallest debts first to build momentum and encourage continued progress.

Consider consolidating debts to secure lower interest rates and simplify payments. Additionally, create a realistic budget to free up extra money for debt repayment. Avoid accumulating new debt by using cash or debit for purchases instead of credit cards.

Insurance – a big must!

Before making any investment, ensure that you have adequate life and health insurance coverage. As your liabilities increase, so should your coverage amount. Prioritising insurance safeguards your financial stability and provides a safety net for unforeseen circumstances, allowing you to focus on growing your investments with peace of mind. Purchasing life insurance at a younger age offers the benefit of lower premiums, which remain constant throughout the policy term. Younger millennials too find term insurance appealing because of its simplicity and affordability, coupled with the digital era which equips them with real-time financial data, market insights, and most importantly – investment tools that can assist in making informed decisions for insuring safety and security.

All that being said, India’s millennials are still relatively new to the concept of achieving financial freedom and its imperative for them to have a roadmap in place. India has the youngest population globally. So, if our youth is financially secure, it means India’s future is also safe.

Published 19 August 2024, 01:01 IST

Finance

Millennial Entrepreneurs: 4 Financial Policies We Want Under a Trump Administration

Published

17 hours ago

August 18, 2024

Press Room

Millennial Entrepreneurs: 4 Financial Policies We Want Under a Trump Administration

EDWARD M PIO RODA / EPA-EFE / Shutterstock.com

Millennial adults represent a generation that is going through a lot of milestones and “firsts” in their live. This can be a wedding, the birth of a child, the purchase of a home or a new job. In turn, they are also facing specific financial challenges, which, combined with inflation and high rates, can be difficult to navigate.

Check Out: These Are America’s Wealthiest Suburbs

Read Next: 7 Reasons You Must Speak To a Financial Advisor To Boost Your Savings in 2024

When it comes to millennial entrepreneurs, they have an additional set of business and financial challenges to face and said that there are certain policies that they would like to see under a Donald Trump administration. Here are some of them:

Earning passive income doesn’t need to be difficult. You can start this week.

Easing Regulations

Most millennials are in their prime earning years and have been hit doubly hard by the pandemic and inflation impacting their earning power, said Brenda Christensen, a self-made millionaire and CEO, Stellar Public Relations.

Learn More: States Whose Economies Are Failing vs. States Whose Economies Are Thriving

In turn, she said that a Trump presidency would likely reduce inflation by easing regulations on business with savings passed down to consumers.

In addition, Christensen — who worked with Trump while working in PR for The Taubman Company — said that he’s a calculated risk taker and understands the business world implicitly, including entrepreneurship where millennials are in large numbers.

“For example, during his previous administration, his policies reduced burdens on businesses by eliminating taxes and other restrictions, such as loosening FINRA [Financial Industry Regulation Authority] rules which benefitted not only the tech sector and VC [venture capital] funding but overall economic growth,” she added.

Regulation That Makes it Easier to Access Financial and Investing Tools And Broader Use of Crypto

“I think we are living in too much of a top-down, centralized financial system. The cost of investing is too high for a huge percentage of the population, especially for millennials and Gen Z folks,” said Rebecca Liao, CEO of Saga, who also served on Hillary Clinton’s foreign policy team for her 2016 presidential campaign, responsible for Asia trade and economic policy.

As Liao noted, many of them are working part-time or gig jobs that don’t feature 401ks and other automated investment systems for their retirement and most don’t contribute to Roth IRAs.

In turn, she argued that one financial policy Trump could implement is regulation that makes it easier to access financial and investing tools.

“Crypto is one of the tools for decentralizing our economy and providing fairer, more readily available tools for access to novel financial products that, in turn, are likely to experience relatively greater upside, albeit with more volatility along the way,” she added, noting that making investing in the broader crypto realm more permissible and compliant would be a solid step in the right direction.

Other experts echoed the sentiment saying that this cohort needs crypto friendly policies.

“There are thousands of entrepreneurs developing ideas with world-changing potential using blockchain. They won’t stop, they will simply choose a country with the friendliest policies, where they will make a lot of money and employ a lot of people,” said Mel Gelderman, CEO and co-founder at token.com.

Regulation Helping Consumer Sector Millennial Entrepreneurs-Such as Not Tax on Tips

According to Nick Gausling, a millennial entrepreneur, consumer sector consultant, and managing director of Romy Group, many millennial entrepreneurs outside tech run consumer sector businesses, but the American consumer is “close to tapped out.”

“Trump reviving the No Tax on Tips proposal pioneered by Ron Paul is a big win for these entrepreneurs,” said Gausling.

He argued that first, ending taxation on tips would be a massive direct stimulus for many service workers, especially in lower tax brackets.

“Since every service worker is also a consumer, that stimulus would spill over and improve revenues for businesses across the consumer sector,” he said.

In addition, he noted that this policy could also bring new innovation in labor modeling and better customer service.

“Many consumers are tired of tipping culture run rampant, but if entrepreneurs combined lower base wages with lower retail prices, tax-free tipping could yield higher overall net income for service workers, better customer experience at lower cost for consumers, and more sales and customer retention for entrepreneurs,” he added.

Reducing Taxes for Small Businesses

Trump could introduce several policies benefiting millennial entrepreneurs including the focus on reducing taxes for small businesses, which is key in this case, said Adam, CEO, Ferrari Phoenix Capital Group.

“Lowering corporate tax rates, as seen during Trump’s first term, can free up capital that entrepreneurs can reinvest into their businesses, whether it’s for hiring, expanding operations, or investing in new technologies,” he added.

More From GOBankingRates

This article originally appeared on GOBankingRates.com: Millennial Entrepreneurs: 4 Financial Policies We Want Under a Trump Administration

Finance

I’m a Financial Advisor: 5 Ways To Become Wealthy by Investing Just $100 a Month

Published

24 hours ago

August 18, 2024

Press Room

I’m a Financial Advisor: 5 Ways To Become Wealthy by Investing Just 0 a Month

damircudic / Getty Images

Think you need a fortune to build wealth? Think again. With the right strategy and a healthy dose of patience, even small monthly investments can grow into substantial wealth over time. GOBankingRates spoke with financial experts to uncover some practical ways to build wealth by investing as little as $100 a month.

Find Out: In 5 Years, These 2 Stocks Will Be More Valuable Than Apple

Trending Now: 7 Reasons You Must Speak To a Financial Advisor Before Spending $50,000 or More

Brandon Galici, CFP and founder at Galici Financial, is all about consistent investing. “As a financial advisor, I often emphasize that there’s no one-size-fits-all ‘magic number’ for monthly investments,” he said. “Instead, I encourage you to focus on your savings rate — the percentage of your gross income you set aside for savings and investments.”

With that in mind, here are five ways to become wealthy by investing just $100 a month.

Earning passive income doesn’t need to be difficult. You can start this week.

Start Early and Be Consistent

Time is your greatest ally when it comes to building wealth. Aaron Cirksena, founder and CEO at MDRN Capital, illustrated this point powerfully by saying, “If at age 25, you just invested $100 a month until you were 65, it could turn into over one million dollars.”

This kind of growth can only come thanks to compound interest over time. The earlier you start, the faster you’ll be on the path to great wealth.

Read Next: I’m an Investor: I’m Making These Money Moves Immediately If Trump Wins

Focus on Your Savings Rate

Rather than fixating on a specific dollar amount, Galici said it’s all about your savings rate. “A healthy savings rate typically falls between 10% and 20% of your income,” he shared.

To put this into perspective, Galici provided an example: “Let’s consider a household income of $75,000 per year (which is approximately the median household income in the U.S.). At a 10% savings rate, you’d be setting aside $625 per month. Increasing that to 15% would mean $938 per month, while a 20% savings rate would equate to $1,250 monthly.”

If you can swing between 10% and 20% of your income, you’ll most likely be sitting pretty when it comes to retiring.

Leverage Tax-Advantaged Accounts

Anthony DeLuca, an expert contributor for RetireGuide.com, pointed out the power of maxing out tax-advantaged accounts like IRAs. “If you max out the IRA each year (assuming the maximum stays at $7,000), for 40 years with an annual return of 7.0% (roughly the S&P average over the last 25 years after inflation) you will have an ending value of $1.3 million,” he shared.

This strategy not only helps you build wealth, but also provides tax benefits that can boost your overall returns.

Gradually Increase Your Investments

If investing a large percentage of your income feels overwheming, Galici thinks you should start small and gradually increase your contributions over time. “Start by aiming to increase your savings rate by just 1%,” he said. “On a $75,000 annual income, this 1% increase amounts to $750 per year, or about $63 per month. Once you’ve adjusted to this change, challenge yourself to increase by another 1%, and so on until your savings rate is healthy.”

This slow-but-steady approach allows you to build wealth without changing your entire life overnight..

Automate Your Investments

One of the simplest ways to ensure consistent investing is to automate the process. Galici advised, “Automating these savings can make the process even easier.”

By setting up automatic transfers from your checking account to your investment account each month, you won’t be tempted to spend that money elsewhere. The end result will be that you’re working toward your savings goal in a sustainable way.

The Power of Long-Term Investing

Here is where it breaks down into some fascinating numbers. According to Galici, if you’re 35 yeras old and invest the following amounts monthly, assuming an 8% annual return, you could potentially accumulate: