Written by 10:10 am abroaden weekly insights

Cryptos for retirement?


Hello and welcome to issue number 057 of the abroaden weekly insights newsletter asking if cryptos for retirement is a good idea.

Cryptos are coming to your retirement account (sort of). 

The Americans are perhaps the masters of retirement planning. 

Not only is there a strong investment culture, but there’s also plenty of tax-friendly ways to do it. 

American 401(k) accounts are one of the most popular ways to save for retirement in the US. 

This account is what we call a “tax wrapper” that allows you to grow your wealth tax-free until it’s time to retire. 

401(k) plans are a little bit different from other tax wrappers in that your employer sponsors them. 

The employer will pick a provider who will select different investment plans for employees to choose from.

From there, you can contribute part of your salary to your plan, and your employer can match it. 

Usually, these are pretty boring, with “off-the-shelf” funds and portfolios designed to grow moderately but not roll the dice. 

However, that might slowly be changing. 

Late last week, a 401(k) provider struck a deal with crypto exchange Coinbase to offer plan participants crypto investments.

Under the agreement, provider ForUsAll will allow 401(k) participants to invest up to 5% of their retirement plans in cryptos.

(The 5% limit is in place to ensure there’s good diversification, which is the key to building a solid retirement portfolio)

This offering is a significant milestone for the enigmatic investment asset. 

ForUsAll is a tiny player in the retirement space, only managing 1.7 billion USD of the 20 trillion retirement market in the US. 

(Yeah, I know; those are huge numbers, but it’s but one slice of the pie). 

However, this first step over a once red line will continue to put cryptocurrency into the mainstream. 

Speaking of which…  

Cryptos get categorized

On Thursday, the Bank of International Settlements’ Basel Committee on Banking Supervision declared cryptocurrencies the “riskiest of assets.”

This venerable body helps banks and investment professionals around the world categorize assets by risk. 

In turn, they can use that information for all sorts of vital functions. 

Banks (believe it or not) have strict protocols in terms of capital requirements. 

We don’t have the space to go into the ins and outs of how a bank works (although if you’re interested, let me know, we could definitely put something together). 

In short, they can only take so much risk since bank failures are so bad for the economy. 

At the same time, though, banks want to make all sorts of investments to grow their balance sheet. 

Banks will need to limit their exposure (banker speak for investment amount) to cryptocurrencies to a tiny fraction of their holdings with this statement. 

You could imagine that banks aren’t sure how to react to this news.  

On the one hand, they’re probably missing out on some opportunity, given the never-ending crypto craze. 

On the other, you probably don’t want to piss off the regulators. 

In any case, this piece of news is worth noting, as it will continue to shape the ongoing narrative over what role bitcoin, ethereum, and others will play in the economy as a whole. 

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What’s weighing down the airlines’ bottom line? 

With the pandemic cooling off in many parts of the world, travel is making a rapid comeback. 

(If you’ve been reading this newsletter, that shouldn’t all come as a surprise to you)

While the return of flying is welcome news for the airlines, there’s just one problem:

Over the pandemic, people got a bit fatter

Recall that airplanes can only defy gravity to a point.    

Each aircraft has a maximum take-off weight. It has to split between passengers, cargo, crew, and, well, anything else not bolted down. 

Before taking off, the airline will estimate how much fuel it will need based on the expected payload weight, distance to destination, and flying conditions. 

The extra weight adds up, meaning that airlines are now left with two choices: 

  • Spend more on fuel to carry the same amount of passengers as before
  • Bump passengers from flights to get under the weight limit. 

Obviously, the airlines aren’t pleased about this conundrum. 

When there’s already 15-months worth of pent-up demand, this situation will increase ticket prices further. 

Ultimately, we’ll see this add to inflation rates. 

Since investors are hypersensitive to anything related to inflation right now, our “food therapy” might come back to take a bite out of the financial markets. 

Our new guide on green investing for people living abroad. 

We just completed our guide on green investing. 

As promised, as a subscriber to this newsletter, you’d be the first to receive a copy!

Get yours here.  

The Wall Street Journal’s take on investors versus the rest.

Over the weekend, the Wall Street Journal’s Intelligent Investor column laid out a solid case as to why investors aren’t traders.

In short, investors make data-driven decisions. Traders go with their gut. Speculators are even farther from investing.

We couldn’t agree more.

In fact, we made a similar argument a while back on our blog, and we’re standing by it. 

Eight international remote workers talk about what it’s like to…work from abroad

Remote work continues to be a hot topic right now. 

If the prophecies are correct, the world will go remote, with everyone working from whichever corner of the planet they choose. 

(We’d welcome that, as we want to be right there with these millions of new expats to help build their wealth. But maybe we’re a bit biased 😀 )

Conde Nast Traveler talked to 8 different international remote workers to give our “target audience in waiting” a taste of what it’s like. 

I know we have a lot of remote workers subscribed to this newsletter. 

I’m sure you know some less glamorous parts about working from abroad don’t get covered so much. 

So what are your thoughts? 

Did the interviewees nail it?  

Or is it like when you show a war film to a veteran, and they chuckle about how fake it is? 

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