When talking to my financial advisor recently, I mentioned that my usual habit of holding some cash reserves as a ‘rainy day fund’ might be a bad idea this year given the current levels of inflation.
After all, cash will lose its value over time when prices are rising rapidly, as they are at present.
He agreed and so we reduced my cash reserves.
Then I brought up the opportunities presented by blockchains, NFTs, bitcoin, and web.3. (Definitions below).
Should I be looking for investments in crypto currencies? I’d read that bitcoin might double in value over the coming year and there is plenty of chatter on various lists I follow.
“Direct investments in those are a bad idea,” he said. “Those stocks are going to be too volatile for a retiree like you. Leave them for younger people.”
He was right of course. Directly investing in bitcoin, which is a decentralized digital currency, and similar products might be a smart long-term investment for an adventurous 30-year-old, but not for me.
This conversation was a reminder how much one’s opportunity to improve one’s finances reflects not only current trends and your future expectations but your stage of life. I may well live long enough — say 25 more years — to make high-risk gambles on crypto sensible but very few actuaries would advise me to make them.
Actuaries, in case you don’t know one, specialize in analyzing statistics in order to calculate insurance risks and premiums. My parents wanted me to become an actuary when I went away to college, which is one of the reasons I initially majored in math.
But I soon discovered in Ann Arbor that I wasn’t suited to be a true math major, let alone an actuary. As for calculating risks, as a muckraker by trade I turned out to be a lot better at taking absurd risks than calculating or avoiding them.
I’m sure the actuary I could have become would have turned purple in the face by the risk/benefit equation that was my actual career. When it came to love, money and exposes, I didn’t exactly play any of it safe.
Nonetheless, I enjoyed enough success eventually (mainly by NOT spending money) that now I can have conversations about investment strategies that are not strictly theoretical. And while I should certainly not pour any money directly into crypto, there’s nothing wrong with indirect investments in, say, a company like Square.
Get it?
DEFINITIONS:
Web3 is an idea since 2014 for a new iteration of the Internet that implements decentralization, is currently celebrated by cryptocurrency enthusiasts, big tech companies, and venture capital firms.
A blockchain is a sequential list of records, called blocks, that are linked together using cryptography. Each block contains a record of the previous block, a timestamp, and transaction data. The blocks form a chain, with each additional block reinforcing the ones before it. Therefore, blockchains cannot be altered retroactively.
An NFT, or non-fungible token, is a unique digital representation of a good like a work of art. It's basically a certificate of authenticity or a deed and it is probably recorded on a blockchain.
Bitcoin is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.
TODAY’s HEADLINES:
How Crypto Became the New Subprime — Once again, risky financial products are being sold to the vulnerable. (Paul Krugman/NYT)
Patriotism — We are a nation of storytellers, and right now we desperately need a good story. (Atlantic)
Pentagon defends its preparation for possible Russian invasion of Ukraine
The U.S. military is preparing to potentially send thousands of troops from the United States to Europe. (WP)
Ukraine crisis: Don't create panic, Zelensky tells West (BBC)
Russia sent its strongest signal so far that it is willing to engage with U.S. security proposals and reiterated that it does not want war over Ukraine. Meanwhile, Britain warned big business to bolster defenses against possible Russian cyber attacks. (Reuters)
Putin faces plenty of obstacles as he tries to impose his will — (Fareed Zakaria/WP)
China warns of risk of military conflict with US over Taiwan (Financial Times)
Biden admin blocks military aid to Egypt over human rights concerns (Politico)
VIDEO: Cardona Urges Schools to Invest in Extra Tutoring — Miguel Cardona, the education secretary, said reopening the nation’s schools without addressing the time lost from learning during the pandemic would be insufficient, and called on schools to use federal stimulus funds to invest in mental health counseling and tutoring. (NYT)
India Schools Stay Closed, and Hopes Fade for a Lost Generation — A large proportion of working-age people, once seen as a demographic advantage, could turn into a burden if many of them are undereducated and underemployed. (NYT)
School Board in Tennessee Bans Teaching of Holocaust Novel ‘Maus’ — The board voted unanimously to remove the Pulitzer Prize-winning graphic novel from classrooms because it contained swear words, according to minutes from the meeting. (NYT)
Republicans are hoping two wrest control of both chambers of Congress in the midterm elections this year, largely on dissatisfaction with President Joe Biden — and not much else. Asked what the GOP would do with the control, Senate Minority Leader Mitch McConnell said it was a “very good question.” Evidence points to the power of staying mum and saying no to Democrats' agenda, however, and the party’s policy avoidance could actually help them, explain HuffPost’s Kevin Robillard and Igor Bobic. [HuffPost]
Republicans Are Trying to Suppress More Than Votes — The proliferation of restrictive laws—from school curriculum to the ballot box—continues. (Atlantic)
Federal agents arrested a Nevada man for threatening a state election worker last year and telling her that she was “going to f------ die” for stealing the 2020 presidential election from Donald Trump, the Justice Department said, the second arrest in a week by its election threats task force. (Reuters)
A second version of omicron is spreading. Here's why scientists are on alert (NPR)
Biden is right to help the Afghan people — and not the Taliban (Edit Bd/WP)
As Hunger Spreads in Afghanistan, Hospitals Fill With Premature, Dying Babies (WSJ)
Western nations issue statement on Afghanistan (NHK)
Who has more influence on supreme court: Clarence Thomas or his activist wife? (Guardian)
Chinese travel for Lunar New Year despite plea to stay put (AP)
Suicide hotline shares data with for-profit spinoff, raising ethical questions (Politico)
Apple Takes Smartphone Lead in China, Helping Drive Record Profit (WSJ)
6 Wordle-esque Games That Are Just As Good (or Better) Than the Original (Lifehacker)
NASA Gently Lowers Hot Dog On Fishing Line Into Black Hole (The Onion)
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