The Major Pros of Bitcoin & Ethereum, and How I Would Invest $1,000,000

Let’s say someone were to hand you $1M to invest between two primary cryptocurrencies, Bitcoin and Ethereum. How would I recommend they allocate their capital based on a simple pro & con assessment? Exciting right?! Let’s go over the pros of Bitcoin(BTC first). 

You’ve Won The Lottery!

Pro #1: Bitcoin is a heavily adopted, scarce asset that has been heavily adopted globally to further the cause of decentralized finance. The first and largest pro is digital scarcity. Currently, in the world, there are about 47M millionaires. That’s a lot of millionaires! The thing is if each of these millionaires wanted to own 1 Bitcoin, they couldn’t. This asset has an extreme level of scarcity and if it ever becomes adopted by more countries and states, and if we see more millionaires in the future – we know that there is a lot of upside potential in the price primarily due to the scarcity. To elaborate this point even further, as the supply decreases even further crypto exchanges may have an even harder time getting ahold of it in the future. If there is a situation in which crypto exchanges can’t get supply to distribute to their customers, it will cause a bidding war to the miners, causing the prices to increase. 

Pro #2: The removal of non-value added middleman and corruption. The list goes on for too long of countries that have carried out poor monetary policy at the expense of citizens’ financial wellbeing. While there may have been a point in time where BTC was used for illicit purposes, this mostly has been flushed out of the system. All fiat currencies eventually come to an end or become reset. The beauty of having a BTC is the fact that it will be around for a very long time. It is not prone to the folly of bad actors at this point as it is SHA 256 encrypted. Many governments and those in traditional finance fear Bitcoin. These people fear the fact that since it is deflationary, and if a crisis were to come that the fixed supply will be a negative impact on citizens. I don’t see this being a negative impact whatsoever, as even owning a small amount of Bitcoin will help secure your financial future whether there is a catastrophic event, hyperinflation, or an economic collapse. 

Bad Actors, Government Regulation and Lobbying can hinder growth in Bitcoin.

Con #1: While it is true that Bitcoin does remove a lot of corruption and non-value added middlemen, it is prone to bans and restrictions by the government (in any country). We’ve seen this in Turkey, India, mining in China, and many other countries. By nature, governments tend to want control of their citizens. One form of control is that in a monetary form. The issue is, the government can’t control the BTC source code and inflate, deflate the monetary supply. They have no way to give handouts if a crisis were to come. There is tremendous lobbying by the traditional financial services world for the government to put additional regulation and restrictions on this asset class as a form of control. 

Con #2: The layer one technology isn’t the most advanced and there are more advanced blockchain protocols that offer faster transactions per second, with lower fees that are better for the environment. Furthermore, while SHA256 is encrypted, it could potentially be hacked one day and an exploit like this could cause tremendous waves in the market, if not a total collapse. Something to consider is that quantum computing could potentially pose a risk to the cryptocurrency markets in ten to twenty years. 

We discussed the major pros and cons of Bitcoin, but what about Ethereum (ETH)? 

The Ethereum Token

Pro #1: The most important thing about Ethereum to consider is that it is looking to decentralize all types of applications. It is a decentralized operating system. Just like Bitcoin was trying to decentralize finance (banks, credit unions, etc.), Ethereum is looking to decentralize Google, Facebook, Insurance, and any inefficient thing. Throughout time, we have seen countless examples of big tech silence or oppose certain lines of thought. Through decentralized apps or dAPPs this will change in the future. 

Pro #2: An ecosystem where you don’t need permission to build. There isn’t too much of a barrier to entry, and with no barrier to entry, you get so many great problems being solved (some of which we didn’t even know existed). It truly is a beautiful thing. In a world of being credentialed, caught in the system, red tape, and policy, this isn’t needed anymore. If you want to create an ERC-20 token that isn’t an issue. What is cool is that if you can vision it, you can build it out on an excellent network that will transform the way we interact with others whether that be art, gaming or insurance. 

Vitalik Buterin – Founder of Ethereum

Con #1: Just as I mentioned how there isn’t much of a barrier to entry, this also leads to many bad actors being able to create ERC-20 tokens and scam people. Countless rug pulls or scams are coming out that have been built on the Ethereum network. It is a double-edged sword, this very blade that can fight against socialism, control, and red tape can also harm people in the community. Countless influencers have come out promoting crypto rug pulls like Ethereum Max or Save the Kids. In reality they get paid out by the protocol and the influencers/ software developers line their pockets, and the crypto community/ audience is caught holding the bag. 

Con #2: The lack of a max supply is another big con. Too much circulation makes the price go down, and while I do see some valid points in inflationary mechanisms, this decreases what Ethereum should be worth. Another con I couldn’t pass up is the fact that Ethereum 2.0 is way behind schedule, and this is due to the lack of leadership amongst the developers and disorganization in the going-forward plan. 

Diversifying based on risk tolerance, research and correlation is of high importance

So if I were to win the lottery, or someone gives me $1M how would I allocate it between these two cryptos?

I would recommend putting 70% in Bitcoin (BTC) and 30% in Ethereum (ETH). Something to consider though, what are you going after? Do you believe more in digital scarcity and economic security, or do you believe more in an operating system that moves power to the edges? Can you see Ethereum disrupting big tech, which is a $10 trillion industry? Can you see Bitcoin disrupting gold which is a $10 trillion industry? I can, but as someone in the financial world, I place higher emphasis on scarcity hence why I am putting 70% into BTC and 30% into ETH.


Disclaimer: Nothing stated in this video is a recommendation from PieceofPaul to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.


My Thoughts on Stimulus and the Downstream Impacts

***Disclaimer – This post is not meant to be political. I have neutral views on both the Republican party and the Democratic party. This blog is meant to primarily discuss the impacts of bad economic policy. 

There is a famous meme that most people are familiar with both locally and globally now regarding endless money printing that we are incurring.

Powell – Money Printer Brrr Meme

We do not need to look far to see that everything that feels good, and is good to us, may not be good FOR us. To speak about the manner in an elementary way, candy makes one feel great! One may get a sugar rush and feel happy for a little. In the long run, candy is not good for us – it rots our teeth, can cause blood sugar imbalances and even obesity if not moderated. I look at stimulus as the same thing.

Initially, the stimulus feels great, one looks at their bank account and sees a larger balance. They can now have freedom without having to worry about the typical paycheck to paycheck lifestyle. We can now spend more money on activities that we normally could not! Shopping, traveling, and entertainment is likely where the money goes for many people – and it feels great. Eventually, it will rot our teeth.  

The money printing cannot go on perpetually, and sometime down the road, we are going to have to pay for this money printing. Facing reality and deciding to sober up and stand tall against unsound economic policy will help us in the medium term and long term/ alongside subsequent generations, even though it may be hard to rip that band-aid off initially.

Stimulus Payments Toward Each U.S. Citizen

Nobody wants to be the bad guy and reduce unneeded government programs; nobody wants to be the person that denies free things to those “suffering”. Do not get me wrong, some people are suffering out there who need stimulus, but I think there should be certain standards and requirements one must meet before they are eligible for stimulus. Now, let us discuss the downstream impacts.

There are countless downstream considerations for massive Government Quantitative Easing (QE). First and foremost, the inflation rate for future years is likely to occur. Inflation erodes our purchasing power, and it does not help the lower-income bracket’s economic situation. The second negative impact of this is the reliance on the government for goods and services. Think to yourself, when has the government done anything efficiently, in our best interests, and cost-effectively? With confidence, I can say seldom – that is what the marketplace is good at doing. Another thing to consider is do you want to leave your kids or their grandkids with your bill? It is like racking up a huge bill at a fancy restaurant, ordering lobster, caviar, and wine imported from the south of France, and then leaving someone else sitting at the restaurant to pay for the dinner. They did not make the poor spending decisions, but why do they have to pay for it?

Child Receiving Candy

When you were a child/teen and wanted a toy or a piece of candy and were told no you could not have it, what would you do? How would you get that thing you wanted? Option A – You could cry until you get what you wanted or Option B – You can set up a lemonade stand, sell popcorn or take on a paper route. Option A would condition you to think that the way to get something is to beg and ask, making you reliant on the whims of others and putting one in a reactive state. Option B would set up a fantastic work ethic, ensure one is responsible and develop a value for things, an appreciation per se.

In today’s day and age, many not all of us want free things. They cry in a more sophisticated grown-up way and expect the government to give them free things just because they demand it. We cannot take this approach! We need to be self-reliant and go with Option B in our economic and monetary policy. Will people hit the hard times? Yes, they will, and then and only then should the government come to help them out once determined they are facing hardship. The easy option is to always give handouts, the easy option is to cave into the crying child – there needs to be a better solution.


Off at Sea – Free

It is an exciting time to be alive, and I think there are many benefits to money printing, but I think it needs to occur on an as-needed basis. We as individuals need to send letters to our elected officials and lead without a title on policy matters. Both Biden and Trump promise great things, but at the end of the day, your success is up to you. A $1,200, $1,400, $2,000 check or above will not crack your passion. It will not bring you financial freedom, it will not create prosperity. It is a little push that can get you through a rough time (if you are going through one), and that is it. Position yourself in the best way possible so one day you will not need stimulus and you can be fully independent of the policy considerations in Washington D.C.  

DeFi – Democratizing Finance for All

Democratizing financial solutions for all tends to be the northern light for many new
cryptocurrency projects. Our society does a great job of finding out what is not working and
developing a technology that will help all, not just a few influential individuals in Washington in
tandem with the help of the FED. DeFi will substantially evolve how traditional commerce is
carried out for many reasons. These reasons include reducing the amount of unbanked/
underbanked, equitable access to financial services, access to permissionless financial products,
and the lack of central control by for-profit companies.

Graphic Explaining High Level Decentralization Versus Legacy Financial System – The Medium

First, what is DeFi? It is a movement whose mission is to decentralize standard financial services
(e.g. borrowing, investment, trading, payments, and more). Below, I showcase an example
(borrowing and lending) of how it works, alongside how it will transform traditional commerce
and lastly, I go over some current obstacles DeFi needs to overcome.

Democratizing payments solves many problems that traditional financial services has not
solved. For example, many people in our society are either unbanked or underbanked and do
not have the same access to financial services as other individuals. From a Report on Economic
Well-Being from 2018 to 2019, 21% of U.S. citizens are Unbanked or Underbanked[1], which
leads to approximately $68.9M of the U.S. population facing financial challenges when it comes
to getting access to traditional financial services and products.

Federal Reserve Graphic – Conceptualizing the Under/Unbanked versus the Banked

Decentralized finance aims to make it, so payments are available to anyone in the world no matter what income level, net
worth, minority group, or where one is located. If one has an internet connection, they can
participate in today’s modern, fast, transparent, secure, and forward-thinking DeFi world.

Statista – Internet Users Worldwide – Out of 7.8 Billion Global Population

While much of the world still doesn’t have a reliable/consistent internet connection, this is
continuously being reduced and thus allowing citizens to participate in this new global financial
system. This new financial system is not just limited to peer to peer payments, but it also
expands into other areas in which individuals use financial services or products. These include,
through smart contracts, everything from high-interest savings accounts, loans, asset trading,
asset management, staking, tokenization, derivatives, insurance, and more.

Tezos is a competing project with Ethereum, and has integrated Smart Contracts, Staking and More – Contributing to the DeFI Ecosystem

Ethereum is the primary blockchain for smart contracts, but Tezos is another large competing
DeFi project that has been gaining momentum in the past couple of years. On these
blockchains, developers have created smart contracts which are essentially hard-coded
contracts in which certain conditions are or are not met. There is no ambiguity or
misinterpretation as there may be in the standard court of law. For example, let’s say a
borrower defaults on a loan that they took out with a smart contract. Depending on the terms
of the smart contract, if he misses a few consecutive payments, the collateral the borrower put
up will automatically go to the lender due to their failure to uphold the contract. How the
contracts are written is almost completely airtight and does not execute until the initial
conditions are met, which helps mitigate risk for lenders, insurance companies, investors, and
more.

These smart contracts (often referred to as DeFi apps/DAPPS) are not centralized and managed
by any for-profit institution, bank, etc. They are essentially rules that are written into code by
the developers of the given project. Since there is no centralized institution managing the smart
contract there is reduced bias on any individual or organization. Since the code is visible for
anyone to see, if there are any bugs/issues with contracts or anything, developers working on
the project can implement updates if necessary. The power is in the hands of those using the
protocol, rather than a for-profit institution looking to maximize profits for themselves.

Centralized Versus Decentralized Network

There are some noteworthy obstacles in the way of DeFi taking over as our new financial
system. Foremost, many people in the world do not have internet access. Specifically, 19 million
Americans do not have an internet connection[2], and worldwide, there are 3.22 Billion people
who do not have access to the internet.[3] Many of the individuals who are under/unbanked
are those who are poor, and can not afford internet, or maybe in an area of the world that is
more rural and has a less developed infrastructure. These very people that would stand to
benefit the most from DeFi, cannot access the platforms/networks to participate. Next, as DeFi
is currently in its infancy, there are still rare cases where there have been flaws in the code of
smart contracts, and if this were to occur it could cause a contract not being executed properly
or, the worst case, a loss of funds overall[4]. Next, while there aren’t financial institutions
running DeFi projects, developers are. It can be more challenging to assess the motives of a
developer/team as much as we can assess the motives of a financial institution (especially
those publicly traded). The developers have a large amount of control of the code. Even with
proper voting on the network, there is always the potential for missteps. Finally, not pertinent
to just DeFi, but many governments around the world have or are putting regulations in place
to limit their citizens’ access to DeFi, due to lack of control. While it is unfortunate, this is a
reality that DeFi is facing and is something that can impede its full potential.

There are numerous benefits to DeFi that we have already seen, and even more beneficial use
cases to come. With billions of dollars moving in, many individuals, critics, and institutions alike
witness how this can revolutionize the world we live in. While it is not without its flaws, these
issues are continuously being worked out by talented teams who aim to make the financial
world more permissionless, secure, and less controlled. With the erosion of trust amongst the
FED policies, and for-profit financial institutions’ antiquated ways of finance, the future holds
many pros for DeFi, and it will change the way humans transact for the better.


References
[1] https://www.federalreserve.gov/publications/2019-economic-well-being-of-us-households-
in-2018-banking-and-credit.htm
[2] https://www.fcc.gov/reports-research/reports/broadband-progress-reports/eighth-
broadband-progress-
report#:~:text=Notwithstanding%20this%20progress%2C%20the%20Report,lack%20access%20
to%20this%20service.
[3] https://www.statista.com/statistics/617136/digital-population-worldwide/
[4] https://news.bitcoin.com/DeFi-protocol-bzx-loses-8-1-million-in-third-hack-this-year/


Disclaimer

Disclaimer: Nothing stated in this video is a recommendation from PieceofPaul to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.

Bitcoins Breathtaking Rise

Twitter Feed, The Morning of January 2nd.

At the time of this writing, Bitcoin has taken the #5 trending spot on Twitter and is edging $33,000 in price. Everyone and their crazy uncle are talking about it, and how they have made money off of it. Why do I bring up what is trending? This shouldn’t be the foundation for discussing an asset, and the adoption thereof… Well, everyone is. The rideshare drivers are talking about how great of an investment it is, the bartenders and even friends at the holiday parties. It is the hype; it is the talk and is something that people are buying into because they want to join the party and get some of the action.  

This all feels too familiar. I want the rise to $50,000, $100,000, or better yet $1M to be straight and swift with no major pullbacks, but this isn’t likely. As a HODLER (Hold on Dear Life), Investor and strong advocate for the decentralization Bitcoin is bringing to finance, when large amounts of retail investors, hedge funds, and other institutions are purchasing for the wrong reasons this is when our ears should perk.

People are beyond calling the people who own Bitcoin crazy libertarians who know there is something better than a currency consistently being debased and manipulated. If you go to Google finance, for the longest time Bitcoin was listed forefront as the currency (now moved to its tab).

Google Finance – Backing the Legitimacy of Bitcoin

I remember all the euphoria in the fall of 2017 with Bitcoin’s meteoric rise to ~$20,000. At this time, it was purely hype-driven. Specifically, you can see Google searches at this time, and it was for everyday people trying to get in on the action.


2017 to Present Google Trends Search Graph

As it can be seen the hype and hysteria are starting to take off again. Although, in my opinion now it is different. With all this crazy stimulus and money printing, we are seeing so much worthless confetti (USD) entering into the market. With this happening, our purchasing power is decreasing while concurrently our savings are going away. Bitcoin solves this, because, in its nature, it is a deflationary asset, meaning every year less and less are being mined. Everyone who is reading this article should have at least a few Satoshi’s (1 Satoshi = 100 millionths of a bitcoin). What do you have to lose, your precious infinite confetti? 🙂 Jokes aside, we want something that finite and the USD is just the opposite.

Why do I say this? 

There are many reasons, but as humans, we should be exploring things that better humanity and adopt them into our lives. By purchasing, you are essentially supporting a cause that leads to the preservation and storage of wealth. This should be something we all aim for, as it is in our best interests to move to one globally decentralized currency, where not a few rich and powerful can get ahead, rather anybody can participate without worrying about unsound money, bad politics, and being controlled.

A lot of this is complicated to understand, what should I know if I want to dabble in it or just get started? 

Bitcoin is a lot of fun, and cryptocurrencies can be addicting to watch. Seeing yourself making 30-50% daily returns is almost unheard of in the stock market. Just as we see these massive rises, we also will face 30-50% pullbacks, and they can be devastating. When people get in for the wrong reason, they sell because they are not making a return and end up taking a massive loss (Just as we see all the time in the stock market). These spectacular gains and nasty crashes can be full of euphoria and sadness, but in the end, know this. You should not day trade unless you are experienced, and it is only a loss if you sell. Invest what you can afford to lose. Do not trade on leverage or take out a second mortgage on your home to buy Bitcoin. Most importantly, buy-in consistently over a period to minimize significant price variances.

What is next? Where are we going from here? 

MustStopMurad posted a fantastic graphic that we should all look at for some of the necessary steps for a large scale currency adoption. I know many people state, “Oh well it is already too expensive, I didn’t get in at $10,000, so I am not going to be able to get in at all.” This limited thinking couldn’t be further from the truth and in fact, we are still in the early stages of Bitcoin’s adoption.

Currency Adoption Chart – Bitcoin

To reiterate what I have said in former videos, and blogs/social media posts in the past we are in uncharted waters. In the past couple of months, we have had tremendous tailwinds helping drive up the price of Bitcoin and its altcoin counterparts, and it is uncertain how long these tailwinds will last. To name a few, from big companies (PayPal, MicroStrategy, Square, Grayscale, and more) putting this on their balance sheets, Biden’s new Treasury pick, the massive money printing from the Federal Reserve, the pandemic driving people to move towards digital currencies, and the erosion of trust in monetary policy long term this asset will perform spectacularly. There will be setbacks, and likely within the next couple of weeks/months, but as we look at the long term it will keep breaking all-time records eventually to $500K per coin. Am I too bold with this statement? Calculated risk and fortune favors the bold.


Disclaimer:
Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment. 

Easily Explained – Ethereum

This blog is meant to inform those who are interested in understanding more about Ethereum, thinking about investing in ETH or curious on a high level understanding of what Ethereum is. I tried my best to remove as much financial jargon as possible, but additionally aimed to reduce cryptocurrency technical lingo. If you would like a deeper more technical understanding of Ethereum, please see the link at the very bottom(relevant articles from Forehand Financial). Please enjoy!

Ethereum is essentially the city layout, but things can be built on the layout of the city. While one cannot necessarily change the layout (without further releases of Ethereum’s network), one can build on top of it, in fact many projects and other things. Homes, parks, bridges, games, trees, markets, hospitals – you name it. These things that you can build on top of the city layout are essentially non-controlled applications on Ethereum’s network.

A Vibrant, Decentralized City

Picture a large vibrant city, with no controlling body or government. It is large, growing and there are a lot of transactions that occur throughout. This city has no center power, so it is not completely controlled by any single business or person. If one business were to go bankrupt, the city will still be able to operate – because there is no central point of failure.

The things that go in the city do not always need to be new. They can be old businesses or buildings, that need to be renovated. They can also be started completely from scratch, like a brand-new coffee shop. The people that transact in the city can do so directly with each other. There is not a bank, card processor, government entity or financial institution taking a cut of the profits on the transactions of the city. Only transactions occur between the people and that is it. No reseller, no middleman – just you and the other party (Unless you dictate otherwise).  

Without police or a central authority to ensure people are operating in check, the individuals/business/groups in the city enforce the rules. It is a collaborative effort that everyone in the city partakes to make sure the city is operating in the best legal and ethical manner possible. All those who do participate in helping to police and ensure ethical behavior will receive a little money in exchange for doing so. This money is called Ether.

Smart contracts run the city. If someone commits a crime and is found guilty in the court of law, no worries, the smart contract will execute due to the terms and conditions written therein. If a borrower defaults on a lender, again no problem, the lender will receive the collateral automatically as written per the contract.


Smart Contract As Per Wikimedia Commons

Ether is the electricity, the movement, or the lifeblood of the city. Without Ether, the city will turn into a ghost town. People who better the city(stake), receive the Ether as a type of incentive to continuously improve, refine and weigh in on improvements.

Revisiting the city layout from earlier on, the city wants individuals building things whether it may be for monetary gain, improving how things are done or simply for enjoyment. If a guy named Sam wants to build a few properties to rent out, he will then pay charges to the city. Individuals who decide to live in Sam’s properties likely will need to pay to use the property. If Sam’s properties use a lot of the city’s resources (electricity, water, etc.) he will need to pay more, if Sam’s properties use less resources, he will need to pay less Ether.

The Ethereum Token

As dictated from the founders of the city, only 18 million Ether will be created per year. To keep the city in balance, and prevent drastic inflation, this number was decided on by the founders to help promote transactions amongst individuals. This number will keep the city operating at a healthy level.

All in all, Ethereum is a city. ETH is the lifeblood of that city. Both are needed to create the excellent fin-tech ecosystem we have today. The city is ever evolving with further upgrades to the layout and the technology that the city can be built upon.


Relevant Articles from Forehand Financial: https://wordpress.com/post/forehandfinancial.com/443

Article References: https://commons.wikimedia.org/wiki/File:Smart_contracts_in_insurance_policies.png

Disclaimer:
Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment. 

The Two Most Popular Cryptocurrencies This Month by Market Cap

In this article, we are going to look at the two largest cryptocurrencies by market cap, and discuss both the factors at play as to why, but also the importance of relying on additional metrics to make a purchasing decision in this space.

An important metric to determine when purchasing cryptocurrency is the market capitalization (or cap). While this factor is important, please note, when purchasing in this asset class to consider other important investment factors. At a minimum, some factors to include with one’s decision is to analyze the volume, technical trends, previous price, use cases, and non-circulating supply.

You can determine the market cap with an easy to remember calculation. To find this, take the current price and multiply this by the number of coins in circulation (Market Capitalization = Current Price x Circulating Supply).

Over the previous ten years, several hundred billion dollars have entered the cryptocurrency space. Per a popular source for Crypto research, CoinMarketCap[1], there is $430.34 Billion in the crypto asset class, with 7,600 cryptocurrencies.[2]

Before we get started, it will be beneficial to address non-circulating supply, because this is such an important factor when understanding market cap. Many cryptocurrencies have large amounts of crypto that have not been mined yet or released from the early adopters/founders. This can dramatically impact the price of the currency downward once the crypto is released on the exchanges.

It is important to know how much circulating, non-circulating supply there is at a specific point in time, but also long term whether there is a hard-coded finite supply or an infinite supply.

Forehand Financial

Below, please see the top two most popular cryptocurrencies by market cap!

  1. Bitcoin (BTC) – Since Bitcoin was launched at the beginning of 2019, it has been the most widely used with the largest market cap.

The supply of Bitcoin is finite.

With the circulating supply being $18,536,750 and the current price being $14,908.68, this has a market cap of $276B which is 5.57X higher than the second coin by market cap. There are many reasons behind this price point, and a major reason for this high market cap is because of the limited total supply.

What are the major factors at play in driving up the price? Plain and simple, the primary factor is scarcity. As mentioned, currently there are ~18.5M BTC in circulation. The total available supply is 21M. Something important to note is that these remaining 2.5M Bitcoins are becoming progressively harder to mine.

The way one could look at it would be digging into the earth with a shovel. At first, it is easy to dig into the soft moist ground, as you dig deeper the earth gets harder and colder which makes it makes one much slower at digging. Eventually, around a thousand meters deep, you hit bedrock which is extremely thick and next to impossible to dig through. With Bitcoin, approximately every two weeks, the mining difficulty increases to ensure the stability of the verified blocks in the blockchain, thus fewer rewards per week, and eventually, Bitcoin mining will not be profitable anymore from a production standpoint.

Besides just scarcity, there is quite impressive liquidity, an ever-growing acceptance of it as a payment method, privacy, and independence from any central agency. While this is not every factor, most of these factors help drive up bitcoins value.

Bitcoin is a haven asset for countries experiencing hyperinflation.

While we know Bitcoin historically has had many dramatic swings, and many critics don’t look at it as a store of value, relatively it is stable, many countries such as Zimbabwe, Venezuela, or South Sudan stand to benefit significantly from the adoption of Bitcoin.[3] Each of these countries has experienced significant hyperinflation. Even with 20-50% swings in bitcoins value, these countries stand to benefit from the adoption of Bitcoin because you cannot just print more bitcoin, but central governments can always print more fiat currency.

From inception to present, Bitcoin has remained at the top in popularity by market cap. Entire books, articles, and research papers have been written on the countless use cases of bitcoin, and many calling it the digital form of gold. But unlike gold, the market cap for Bitcoin can be potentially more volatile, like we saw in the crash of December 2017 shedding hundreds of billions of dollars of value.

Debates can be made on both sides on the future of Bitcoin’s use as an everyday currency, but at this time, and the foreseeable future it will be the leader from a market cap perspective because of its current market price, wider vendor acceptance, and scarcity of coins available.

2) Ethereum (ETH)

In February 2016, Ethereum (ETH) took the second-place token by the Market cap.

Foremost, how scarce is ETH (the token sitting on top of Ethereum)? This is important to note because many often confuse the difference from the platform Ethereum versus the cryptocurrency ETH. We commonly understand it that there are 21M Bitcoins that will be or are in existence, but how much ETH is there, or will there be?

At this time, the supply of ETH is not finite, but this can change with further iterations of the protocol.

ETH never set an upper limit on the total coin supply to be mined. What this means is inflation might occur at points in the future, and the asset is not as scarce as Bitcoin. This is an important point to bring up from a market cap perspective because more supply can be rolled out through mining. If more supply gets rolled out, and there is not as much demand, it will harm the price thus lowering the market cap.

Looking at the current price and circulating supply we have 113,332,093 ETH circulating at $437.46 per coin. The total market cap of Ethereum is $49.577B.

With an impressive market cap, what gave ETH the trajectory to achieve second on our list in terms of most popular cryptocurrencies by market cap? What drove larger-scale adoption to the usage of Ethereum?

Ethereum’s protocol has numerous use cases and adoption amongst many important stakeholders. 

Ethereum was built to address many of the things that Bitcoin could not do or was not programmed for. The most widely known and well-accepted uses of Ethereum would be the use of Smart Contracts and dApps(decentralized application). Having this functionality has helped propel Ethereum in popularity because it increases the use cases several times over. Use cases involve everything from market predictions, legal contracts, financial contracts, crowdfunding, web hosting, and more. With all these use cases, large banks, developers, individuals, and institutions alike are using the protocol’s technology to drive the adoption of the Ethereum network, which drives the price up higher.

The secondary function of Ethereum is the use of the cryptocurrency ETH, but since it is not as widely accepted across vendors, this is not the primary use case. Unlike Bitcoin, it can be a challenge trying to find those who accept the ETH currency. A route many holders of ETH take would be to convert ETH into BTC to make a purchase or to just move into cash.

Ethereum also has adoption through diversification, correlation trading, and retail investors.

Something that is not as investigated with Ethereum is the spillover from Bitcoin by retail investors. This plays into increasing the market cap because if investors see the price of Bitcoin go up, correlated assets are another way to capture upside potential. The correlation between BTC and ETH remains positive averaging 50% over a year’s time frame (correlation coefficient). While the correlation can swing dramatically, on average, the prices have a generally positive correlation in the long run.

Also, with the rise in the adoption of cryptocurrencies, many individuals purchase altcoins to diversify and speculate on different products that may take off. Since Ethereum is listed at the top of many exchanges, and it has the power of network effects, without doing ample research, many individuals drive up the price and market cap just through speculation.

Nevertheless, it is without a doubt that Ethereum has earned its place as the second-largest crypto by market cap. With the adoption of smart contracts/dApps, with countless use cases, adoption, and use by larger institutions, this protocol will be here to stay and even evolve into further iterations such as Ethereum 2.0.

My call to action to everyone today is to look at market cap as an important investment criterion, but it needs to be analyzed through several other factors concurrently.

Forehand Financial

When trading stocks, one will not base a decision solely on the price, it is important to understand how all the factors work together. There are currencies out there with very large market caps but under $1,000 trading volume a day. By just looking at the market cap, one may think a coin has a strong foothold in the cryptocurrency space, but often you do not want to trade coins with such low volume because liquidating can be very challenging, but also, these projects have the potential to be scams.

While Bitcoin and ETH reign at the top of cryptocurrencies by market cap, only time will tell if they hold the top two positions well into the future. While these coins are not without their flaws, the network effects are critical when it comes to the mass adoption of a new currency to replace or coexist with fiat money. The cryptocurrency space is still young and evolving, and with the underlying technologies and unique characteristics of these two coins, many are confident they will hold their dominance for years to come.

Key Points

When looking at the market cap, please try to remember the points below:

  1. Market Capitalization = Current Price x Circulating Supply (MC= CP x CS)
  2. Bitcoin & Ethereum Market Cap = Bitcoin has the second-largest Market Cap at $276.35B, and Ethereum has the second-largest Market Cap at 49.577B
  3. Supply = Identify both circulating and non-circulating supply, and long term whether there is a hard-coded finite supply or an infinite supply
  4. Price = Realize the factors that drive up the price on the cryptocurrency being analyzed
  5. Interconnected Factors = Know how each factor plays into each other (Price, Market Cap, Supply, Volume, Etc.)
  6. Unique Crypto Characteristics = Each cryptocurrency has unique characteristics that give it unique qualities, do your best to understand the protocol and what sets one apart from another

Do you think Bitcoin and Ethereum will stay at the top in the popularity of cryptocurrencies by market cap? Please feel free to let us know in the comment section below.

Resources


[1] https://www.coinmarketcap.com/

[2] Data Pulled as of September November 7th

[3] https://news.bitcoin.com/venezuela-bitcoin-use-hyperinflation-crypto-adoption/#:~:text=The%20firm%20elaborated%3A-,The%20country%20has%20reached%20one%20of%20the%20highest%20rates%20of,preserve%20their%20savings%20against%20hyperinflation.


Disclaimer:
Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment. 

Eirin Holmeide – Wealth Coach

Eirin Holmeide

Paul: In your journey through finance, what is a common misconception you initially had when it came to money?

Eirin: To be honest, I can’t remember having any misconceptions about money. I started working on my wealth-building journey quite early. I was 18 years old and knew I didn’t want to depend on one salary and trade my time for money to live my life. What I do remember hearing growing up at home is that you have to work hard in life to earn money and live well. I didn’t fully agree with it though as I had influence from other people in my life who had built their wealth outside of a traditional job. They had started their own businesses and invested in the stock market and in property. When I look back at my life now I realise how important the saying “You are the average of the 5 people you surround yourself with” truly is. I think having a positive influence from others and seeing what’s possible for you is key. Then it’s up to you to plan and make it happen!

Paul: What practices do you try and implement in your life to achieve your (financial or non-financial) goals faster?

Eirin: One of the most profound practices that I created and implemented in my life is a daily morning routine. I love waking up really early before the rest of the world wakes up and noticing the peace and quiet. I do my workout first thing in the morning. I follow this with journaling and mindset work. Our mindset is at the core of everything we do. I work on my mindset so that it always matches my aspirations in life. I also write at least 5 things I’m grateful for every day. Then I set my top priorities for the day and write out what would make my day a success.⁠ My morning routine is a practice where I dedicate time for myself. I don’t put a time limit. I just let myself flow. I have no stress to get to a job or to be somewhere else. This is something that I’m constantly so grateful for. I’ve created a life where I choose what to do with my time. I’m usually ready to work between 9:00 and 9:30 am feeling motivated and with so much positive energy.⁠


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​I also recognise that sometimes life gets in the way and it’s not about doing everything perfectly. If I miss a day or two, it’s not the end of the world. The most important thing is to be consistent with your habits and come back to it quickly if you fall out of it.

Other practices I implement to achieve my goals is to hold myself accountable. No one will care more about your success than you. I like to think of it as a game and I make it fun to work towards my desires. I track and review how I’m doing consistently and at a minimum once a month. Lastly, I think celebrating your progress is part of what makes the process and journey enjoyable. I like to recognise the efforts I am making by celebrating my small and big wins.

Paul: After a long day of work, what do you like to do to destress, wind the day down and reach a relaxed mood to be fresh to take on the next day?

Eirin: I prioritise self-care as much as work. I believe that in order to be productive it’s just as important to rest and slow down. I like to switch off completely when I’m finished with work although it’s hard to always follow through with this, especially since I have my own wealth coaching business. When I do switch off I like to spend quality time with my fiance, friends, or family. I enjoy slow evenings with a good glass of wine and good food. I really enjoy cooking, baking, or any kind of creating in the kitchen. It feels like meditation for me. I also like to spend time reading a good book or watching a show or movie with my fiance. Finally, I love going for walks in nature but the only thing I’m missing is having a dog that I can bring with me. 

Paul: If you were to recommend one movie, show or book that has changed you for the better what would it be and why?

Eirin: I always find it so hard to just mention one so I’m going to share two books and one documentary that have impacted me. 

1) One of the first books I ever read on personal finance was Rich Dad, Poor Dad by Robert Kiyosaki. My parents knew I had an interest in business and learning how money works in the world so they gifted it to me when I was 18. This is also around the time I started working on my building my wealth and it definitely shaped my financial independence journey. The biggest takeaway I took from this book was about the difference your mindset makes in your life.

2) Your money or your life by Vicki Robin: This book is different from other personal finance books because it guides you through the inner work needed to transform your relationship with money. To achieve true change in your life you must first change your beliefs about money and bring consciousness to the way you spend and earn your money. It’s not really about money but about what you are trading your life energy for. I love it because it truly highlights the difference between making a living and making a life.

3) Minimalism: A Documentary About The Important Things. I am not a minimalist although I am closer to practicing some form of minimalism than the consumerist lifestyle of modern society. I really resonate with the idea of finding freedom by living with less. Through my own wealth-building journey I have learned to live life more intentionally, aligned with my values, and following what truly matters to me. I really enjoyed seeing how other people in the documentary have made changes in their lives to prioritize happiness over external and superficial measures. It focuses on the virtues of downsizing your life and understanding the true meaning of “enough” which also Vicki Robin writes about in her book Your Money or Your Life. The documentary really inspired me to embrace minimalism even more although I can’t say I am even close to the authors Joshua and Ryan’s way of living.

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Paul: Ten years ago, have you expected to be where you are now? What financial advice would you tell your younger self or someone in their teens or twenties?

Eirin: Yes, I had no doubt that I would be well on my way to financial independence. I also think that this strong self-belief that I had in myself is what made it possible for me. I started working on my wealth-building journey when I was 18 (over 13 years ago now) and I set myself savings goals and investing goals every year to get closer to my ultimate goal of financial independence. I think the best financial advice I can give to someone else is to get financially educated. The biggest risk in life is not to understand how money works and how you can use it as a tool to build your dream life or create a safe future for yourself. I would also recommend women to start talking more openly about money between each other. It’s definitely something I would tell my younger self to do. I felt quite alone in my wealth-building journey and would have loved to have a community of other women to speak to about this. That’s also one of the main reasons why I decided to build one myself through my business.

Finance Questions

Paul: What advice would you give to someone who has trouble sticking to a budget? Any strategies to help them stay the path?

Eirin: Budgeting has such a bad reputation and often makes people think and feel that they have to restrict or deprive themselves. Nobody enjoys this so I would start by changing the perspective. A budget is supposed to feel expansive. It gives you the freedom to spend on the things that matter to you. Start with your why and set yourself a goal. Why do you want to create a budget? Is it to get out of debt? To break the paycheck to paycheck cycle? To start saving more money? To invest for your long-term goals? One of the reasons that budgeting may be difficult is because there are so many emotions tied to the way that you spend your money. It is important to address your emotions when it comes to your budget. I always advise my clients to start tracking their money first, before they create a budget. Tracking your inflow and outflow of money is a great way to become aware of your money habits and the emotions tied to your spending. When you’ve been tracking your money for a few months you can really start to analyse your spending. You will probably notice certain trends and patterns. From here you can start to be forward-thinking and make decisions about what you want to allow yourself to spend in each category and how much you allocate to your savings. This is the perfect time to make a budget! Make sure you set aside fun money each month that you can spend guilt-free. 

For additional strategies to set yourself up for success: Schedule a review with yourself at the end of the month (or as often as you like) to check-in, see how you did, learn from your results, and make adjustments as needed. Make it a fun experience. What do you enjoy doing? Make it a special occasion and something you look forward to doing. For the biggest chances of success, find yourself an accountability partner or invest in a wealth coach that can support you and hold you to your highest potential.

Paul: If you were to give advice specifically to women on things, they can do to maintain their lifestyle, while concurrently achieving their financial goals what would they be? Is there anything that you or other women may have experienced when it came to money?

Eirin: I think my biggest advice to women is to get financially educated. It is especially important for women to take control of their finances and to build their own financial independence.

We are aware of the gender pay gap, that women take more career breaks to care for children/elderly, we pay a premium on most products our entire financial lives, and we live on average 5 years longer than men. Research shows that women end up with around 70% less money than men in their retirement!! The huge wealth gender gap that women experience is a result of systemic issues and a lifetime of income and workplace inequality which is why it’s so important for women to start building their own wealth.

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I would advise women to start by understanding themselves and their own relationship with money so they can choose to live authentically and maximize the time they spend working towards their desires. I always advise my clients to identify their “why” for wanting to achieve their financial goals. You will constantly be challenged and there will be things tempting you every day. That means that you have a choice presented to you in every single situation. Coming back to your “why” will help you when you need to make a choice between something now or your goal later. Additionally, learning to identify what you value and what you love spending money on will help you maintain your lifestyle and make it easier to say no to things that don’t matter so much to you. 

Paul: If someone were in bad debt, what advice would you give to them regarding getting out of it?

Eirin: It can be tough to face up to your financial situation but it is such an important first step.  
I think the most important thing to remember is to look at it with no judgment. Remember that your debt does not define you and it does not determine your worth. It can also feel like a lonely journey but there are so many others who are experiencing the same. Speak to someone you trust who can support you. Start by creating a list of all your debts (credit cards, overdrafts, loan and mortgage, personal loans, etc.). Then check how much you owe on each one, the interest rate on each debt, the minimum payment on each debt, and the payment due date on each debt. After you’ve listed it all out, prioritise what you want to pay off first. Look at your budget to see how much you have left after your expenses are covered. How much can you afford to put down toward your debt payment each month? The most important is to not overpay as you need to make sure you have enough for your monthly expenses so you don’t end up taking on more debt. Once you start eliminating expensive debt and can afford to pay down more, you can start adjusting the amount. Eliminating debt can end up taking a long time so celebrate your progress along the way. Create a reward system and be specific about how you will celebrate each small win. 

Paul:  What investments have you found the most rewarding both from an impact perspective (ESG or supporting other local causes), but also a strong rate of return?

Eirin: I’ve always been conscious of our impact on the environment and I try to look for ways where I can live my life more sustainably. I started looking into this with my investments and specifically how we can use renewable energy to combat climate change. In 2015, in my stock picking research, I came across a company in the green hydrogen industry. I started reading more about how excess solar and wind power can create operability challenges. I learned about how the excess wind and solar power could be converted to hydrogen and used elsewhere or even to produce electricity which made me realise that hydrogen would play a key role in transitioning towards green energy. I opened a long position in a growth stock in this industry in 2015. It’s definitely been my best investment to date as well as one that is in full alignment with my values too. I got in early and I have a 620% return so far. The best part is that this stock is just in the early stages of its growth journey. I’m planning to hold it for many years. 

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Paul: What traits do you see in most successful people financially? Can these be learned, and if so, how would you recommend adopting them into one’s life? 

Eirin: I believe successful people have common traits which come from a desire or purpose to achieve a bigger vision for themselves in life. They have a long-term mindset and a strong belief in themselves. They also have a strong commitment to follow their dreams. They use this for direction and implement consistent daily habits and discipline to work towards their goals. However, I think it’s also important not to put successful people on a pedestal. They also have their own insecurities and moments of self-doubt. They can also have bad habits and have gaps in their knowledge too. The difference is, they know, that all of these things are perfectly normal. The goal is not perfection, it’s to take imperfect action towards your desires. Lastly, and maybe most importantly, successful people have a genuine desire and willingness to learn. So yes, I believe anything can be learned. Start by identifying one new habit that you want to implement in your life. Set yourself up for success by doing it first thing in the morning or at a time you know you are most likely to follow through. If you have too many things that you are trying to change at the same time you will probably get distracted and not be fully focused on them. By just focusing on one at a time you can place all your energy on implementing it and you will have a higher chance of success.


Thanks everyone for reading this thoughtful and actionable content! To stay and touch with Eirin, please be sure to follow and support @eirin.holmeide on Instagram! 

-Published 7/28/2020


Disclaimer:
Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.  

Marco Carreira – Founder of Carreira Finance

“Marco Carreira is the founder of Carreira Finance. He’s a financial coach who teaches people how to make better financial decisions. His goal is to help them make more out of their money and reach financial independence.”

Personal Questions

Paul: What is the most exciting thing you have encountered on your journey so far blogging, coaching, and educating?

Marco: Without hesitation, for coaching and educating, it has been the interaction with my clients.

I love my clients’ reactions when they achieve their financial goals like becoming debt-free.

For the blog, I would say that the most exciting part was when I launched it. I worked so many hours to develop my website that when it went online, it was an achievement.

Paul: What hurdles have you had to overcome in your journey so far? What hurdles lie ahead that you are starting to work on?

Marco: I think the biggest hurdle I had to overcome was my impatience. It takes a lot of time and patience to start a business from scratch. 

However, I tend to get excited when I have a new idea. At the beginning, I was a bit frustrated to see only a few people reading my articles because my goal is to help as many people as possible.

The next hurdle I need to overcome is growing my client base. It has been difficult to find new clients. I don’t have a big budget to spend on advertising so it takes more time to get new clients.

Paul: When it comes to developing your skills, what areas do you want to focus on that will bring the most value to your personal life and career?

Marco: I would say communication, organizational, and analytical skills are the three most important skills I need to improve continuously.

My job is to understand my clients’ financial situation and help them in their path to financial freedom.

  • Communication – I’m constantly interacting with my clients
  • Organizational – I need to make time in my schedule to grow my business the way I want it to
  • Analytical – I need to understand my clients’ needs to give them the best advice for their financial situation

Paul: Any sports or healthy activities that you embark on to help reduce stress or keep a level head?

Marco: Sports play a big part in my life. I played a few team sports like soccer, volleyball, and handball when I was in college. And I still play soccer as much as I can here in California.
Another activity that helps me reduce stress is meditation.

Paul: What is the best non-finance book you have read in the past year and why?

Marco: I’ll say The Power Of Now by Eckhart Tolle. This book is eye-opening for me.
Before reading it, I tried meditation a few times, but I hated it. I didn’t understand how it worked and my mind was not open to it.

Now, it’s the first thing I do when I wake up in the morning. It changed my life! 

                                                                        Finance Questions

Paul: What are some of the most challenging topics in finance that you must explain? How do you break it down for your audience?

Marco: In personal finance, the most challenging topics are the ones that trigger emotional reactions like debt or budget.

Debt is a tricky one because it’s a touchy subject. People get in debt for multiple reasons, but it’s not because they want to. As a financial coach, you need to understand the reason behind it, so you can find the best solution for each situation.

Most debt relief businesses offer plans for their clients to follow in order to pay down their debt, but it’s not enough.

Let’s take the water leak analogy to illustrate my point. Your ceiling is leaking water. Are you going to dry it out and move on with your life or are you going to find out the reason of the leak so you can fix it properly?

To learn about the 7 step plan to become debt-free, you can read this article

Paul: As a financial coach, how would you encourage people who are living paycheck to paycheck during these times to get by, that was recently furloughed or laid off?

Marco: The first thing I would tell them is to keep calm. Taking financial decisions when stressed or letting emotions control your finances is not a great idea. Keep in mind that every situation has a solution.

The next step is to assess their financial situation. Before trying to make things better, they need to understand how bad it is. Most people know that their financial situation is not in the best shape, but they don’t know how bad it is until they look at the numbers.

Then, they can find a solution to get out of this paycheck to paycheck cycle. If they can’t save money on their salary, they are living above their means. Creating a budget is a great way for them to take control over their finances.

Paul: Do you have any pet peeves regarding the topic of money and poor stewardship of it?

Marco:

I could probably write an entire article on inconsistent behaviors around the topic of money. But here are a few of them.

  • Buying items you can’t afford
  • Predicting the next bull or bear market
  • Paying bank fees for free services

Also, here are a few financial myths you may have heard of.

  • “Only rich people can invest their money”
  • “Buying a house is always better than renting one”
  • “You need to work until retirement age”

Paul: For someone in their 20’s or 30’s, what advice would you give them to not fall into a debt trap?

Marco: The best advice I can give millennials and generation Z is to only buy what you can afford. In Jay-Z’s words: “you can’t afford something unless you can buy it twice.“

Other advice I give my clients is to use their credit cards as debit cards. That way, they can pay off their credit cards every month on time and not pay high interests.

Paul: Through coaching individuals financially, what methods have you found the most effective at seeing positive changes in their spending or debt tempting habits?

Marco: I don’t think there is a universal method that can work for everyone. We all have different life experiences, backgrounds, and things we love to do in life. So it really depends on each individual.
However, the most effective way to improve your finances is the willingness to change. For example, if someone wants to improve their household finances, but only one person in the household is willing to make changes, it won’t work.

Thanks, Forehand Financial for inviting me to do this blogcast. If any of you are interested in financial freedom, I started a new program that aims to help you in your pursuit of financial freedom.

-Published 5/19/2020


Disclaimer:
Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.  

Brendan Dale – Founder of Take Charge of Your Money

Personal Questions: 

Paul:What about your blog and financial education drives you to wake up every day and continue working on your successful blog? Have you had any epiphanies in the past decade or so knowing that this is what you wanted to do and where you wanted to be?

Brendan: Wow, this is a tough one. I don’t always wake up feeling motivated to continue working on my blog and sometimes feel a little despondent about it. I’m really motivated by emails that I receive from readers, often sharing personal stories about how they have managed to change their finances by implementing some of the things I’ve written about. I also love reading stories of how people have managed to pay off debt and not only change their financial position, but their relationship with money too. It’s these stories that keep me motivated and feeling that I am helping people. 

I’ve only been blogging for 3 years now and I see this as a great way to escape the “rat race” as I can literally blog from anywhere in the world, at whatever time suits me. That’s quite a motivating factor as I am keen to travel more and will be able to fund my travels through writing.

Paul: What do you do to stay current on industry trends in the finance space, do you happen to subscribe to any publications, online courses, or mastermind groups?

Brendan: I get most of my information from the finance section of newspapers as well as the many finance folk I follow on Twitter. I also read finance books on investing and try to keep up with some of the FIRE community although there really is just too much information out there that one has to limit oneself.

Paul: What are some of the biggest obstacles you have had to overcome building up your successful blog? Did you ever have any doubts?

Brendan: I started my blog as an experiment to learn about blogging, social media, SEO and all the rest that goes with a blog. I certainly didn’t imagine that my blog would become what it has and that I would get radio interviews or be working on marketing campaigns with some of the largest banks in the country. My first year was definitely the hardest as I had incredibly low readership numbers and really struggled to get a Twitter following. I enjoyed writing though and decided to just keep going as long as I had interesting topics to write about.

I got into the habit of writing at least one blog post a week and set up a weekly email newsletter to force me to keep it up. The popularity of the blog has grown exponentially and my advice to any new blogger is to just keep going. Do something on your blog every day, no matter how small.

Paul: After a long day at work, what do you do to de-stress or wind down effectively? Do you partake in any healthy habits that keep you energized throughout the day?

Brendan: I don’t have a particularly stressful job but my usual day starts at 6 AM with a yoga session. I practice the Mysore style which is a self practice under the guidance of a teacher. You simply memorise the full sequence over time and do the same sequence each day. It’s a form of meditation and can be incredibly hard, especially on cold winter mornings or on those days that you simply cannot get out of bed. After yoga it’s usually a race to the office to continue the day. 

My wind down is usually an episode or two of something on Netflix, followed by some mindless social media or reading. My partner and I often joke that we’re the most boring people in the world as we live a simple life and are content with our routine and lifestyle. Early to bed and early to rise.

The past few weeks of lock down have been a change of pace as I’ve been working at home and can wake up a little later and enjoy the peace and quiet of my garden during breaks.

Paul: Do you have a favorite quote, and if so, what is it?

Brendan: “If you don’t like where you are, move! You’re not a tree” – Jim Rohn

Finance Questions:

Paul: 
What advice would you give to someone who’s trying to pursue higher education, but does not want to take on any debt?

Brendan: It’s tricky as higher education is expensive and student loans are almost inevitable. I’d suggest to start by applying for all bursaries or financial assistance programs that are available (and for which you qualify). You may find that you’re selected for a program from which you can benefit tremendously. Many would suggest taking up a part-time job to fund your studies. This is certainly an option but could lead to burn-out if you’re working too hard and trying to keep up with studies. If you’re spending time and money to gain an education then that should really be your focus so that you can get the most out of it and get the best value for your money. 

Crowd funding is another great way to fund studies as friends and family (and even strangers) can contribute to your future. There are probably more people willing to assist than one would think, they just don’t know how. 

Paul: What are the best investments that you have made(both financial and non-financial)? With financial investments, what process do you typically go through to evaluate the viability of a prospective opportunity?

Brendan: I’ve invested in many interesting things from standard investment products to property, art and antique coins. One of my best investments was a series of courses on property investments and how to use various legal entities, gearing, managing the risk and ultimately building wealth. The courses were quite expensive but have been well worth it as I learnt so much and have been able to put it into practice.

The first property that I bought (long before attending any courses) also happened to be my best financial investment as I bought and sold at just the “right time” to more than double my money in a 3 year period. This was just luck though and had I known better I would actually not have sold and would still be sitting with a great investment. 

I also have a piece of art which has increased in value by around 11% per year. It’s not necessarily the best growth, but I do happen to love the painting and it’s a tangible investment which means I can see something real for my money. I don’t necessarily recommend art as an investment, that’s something I should blog about.

Paul: What negative financial habits have you seen people bring into their lives and do you have advice on how those with bad financial habits can get out (in addition to following your wonderful and informational blog )?

Brendan: The worst financial habit I see is consumerism. Simply buying for the sake of it. 

I have friends who shop online daily simply because of the special offers available. They literally have a garage full of boxes of “stuff”. As they buy new things each day the older ones get stored. And as the house and garage get full, they opt for more storage.

It’s hard, if not impossible, to tell people what to do with their money. That is why I blog about everyday situations, basic financial decisions and how to track your money. People unfortunately need to recognize that they have a problem for themselves and then seek help. Hopefully they find me or any of the other great finance blogs out there.

I am also always excited to talk about money and how I feel about certain situations. So whenever I get asked about finances, I’m happy to share.

Brendan: What is the biggest lesson you have learned from money and what would you say to yourself to your younger self to have avoided this misstep?

Paul: My absolute worst money mistake was to cancel insurance on my car. I was young, had gotten into debt to buy the car, and couldn’t afford the insurance anymore. I must have the worst luck in the world as my car was stolen within weeks of cancelling the insurance and I ended up having to pay the car off over the next 2 years even though I didn’t have it. I couldn’t afford another car and had to walk and cycle everywhere. It was a terrible event and one which I’ll never forget!

Advice to younger self “Take out insurance!”

Paul: Some people use leverage(debt) in a way that brings a larger investment upside and a stream of cash flow (Robert Kiyosaki, GrantCardone, Graham Stephan to name a few). What are your thoughts on the utilization of debt to attempt to achieve higher returns?

Brendan: I use this concept myself in property investments. It really works. I would however caution anyone considering this to attend courses, read books and really be sure that you understand the risks and are able to carry yourself through the tough times. You need to have a good buffer fund in place and be able to analyse your investment strategy to know whether it is working or not.

If it’s a guessing game and you’re hoping for the best then I’d be worried.

Paul: With all that is happening right now in the world with the pandemic, are there any specific finance or investments tips you would encourage readers to consider getting through the other side in a fruitful manner?
Brendan: Everyone’s situation is so different that I would hate to offer some kind of “one size fits all” advice. I’d simply say that we don’t know how long this will last, what the effects on the economy will be, and what our families job situations will be like. Be cautious with your money now. Don’t make rash decisions and try (as far as possible) to avoid increasing your debt.

Paul: Thanks for your time Brendan! I appreciate your wisdom on all things money and finance. Let’s stay in touch! 

Please visit Brendan’s website for more information on taking control of your money! Link is below. 
https://takechargeofyourmoney.blog/

-Published 5/9/2020


Disclaimer:
Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.  

Derek Sall – Founder of Life and My Finances

Derek Sall

Personal Questions:

Paul:
 In your journey through finance, what books have you read that really have helped you grow? What books do you recommend people just starting out in finance read?

Derek: The book/course that most impacted me was Financial Peace University, by Dave Ramsey. I used the tools in this book to get out of consumer debt, build up an emergency fund, invest in the market, and pay off my house! Today, I enjoy a peaceful life (even among the turmoil all around us) with plenty of funds to live on for years. I’m so glad I’m not like the 67 million Americans today that are worried about making their next credit card payment. 

Other books that have impacted me over the years:

  • The Richest Man in Babylon
  • Rich Dad, Poor Dad – Robert Kiyosaki
  • The Automatic Millionaire – David Bach
  • The Millionaire Next Door
  • The Index Card

Paul: How did you balance working a full-time job, doing a “hustle”, maintaining relationships, social lives, physical shape, etc. while also performing optimally? Is there anything you had to sacrifice?

Derek: Ha, it’s not always easy!! With wife and kids, a full time job, and a blog… For a while there, I was thinking about selling the site because it was simply taking up too much time! Thankfully, I didn’t get the 6-figure offer I wanted and decided to keep it…with a little bit of hired help. I now have a virtual assistant that handles my advertising and emails, and I also have 3-4 staff writers at any given time. 
I’ve come to realize that I’d rather spend 5 hours a week on my blog and earn $2,000 a month than 20 hours a week and earn $3,000. It’s a wayyyyy better scenario!
Also, I’ve cut way back on screen time (used to be video games and TV). It’s just not that important to me. I’d rather use the time to play with the kiddos, work out a bit here and there, and continue to learn by reading!

Paul: Over the past couple of years, what is the biggest lesson you have learned through your finance blog, and what suggestions would you give to beginners?

Derek: Oh man, a big one sticks out in my mind… I was running the blog, working Corporate America, trying to be a great husband and dad, but also to propel us ahead financially. My wife and I already had one rental house and saved up a good chunk of change for another. It took a few months of searching, but I finally found that diamond in the rough! Or so I thought…
It was going to be great! We’d fix it up, I’d blog about the process and increase my following, and then we’d rent it out for $1,300 a month, which would double our rental income. I was in love!
And then we got into month 6 or 7 of the “fix-up” stage…
This house was a disaster. It smelled like cat, dog, smoke, you name it. We had to tear down drywall, pull up sub-floor, remove ceiling tiles. It was a HUGE project! I still wasn’t overly concerned, but my wife was fed up with me working mornings, nights, weekends… It nearly broke our marriage to be honest. I still found time for the kids, but had no time for the wife. NOT SMART!
Once we were finally done, she could barely even look at that house. We had to sell it to get rid of the reminder of that awful time. We still made $27,000…but it truly wasn’t worth the sacrifice of those 8 grueling months…
Yes, money is important and we all need to have it, but there is such a thing as ‘enough’ money. Relationships, exercise, our spiritual walk…there are so many other things that are important as well. It’s all about the balance of everything, not the domination of one.


Paul: To unwind and relax, what activities do you take part in that gives you a second wind, so you can start fresh the next day? 

Derek: 

     (1) Getting outside. My favorite way to do this is go golfing. If there’s not enough time for that, I’ll just go for a walk or a run through the woods!
   (2) Talking with people. I always learn something and grow a bit more, just by chatting with someone else.
   (3) Exercise. Lifting weights, swimming, and running – those are my staples. They get my heart pumping, my mind cruising, and they distract me from my day-to-day work.

Paul: Do you have a favorite quote, and if so, what is it?

Derek: “We buy things we don’t need with money we don’t have to impress people we don’t like.” — many have claimed to be the originator of this quote…
The point is, stop living your life for someone else. Live it wisely, and live it for you.

Finance Questions:

Paul: During volatile times, what measures do you take to protect from downside risk, while concurrently maintaining upside potential?

Derek: After sifting through dozens of articles and thousands of data points, I’ve come to the realization that investing with the market (ie. Index funds) makes way more sense than trying to time the market or pay someone else to try to time the market (ie. active mutual funds). So, I put a good portion of my retirement investments into Vanguard index funds.
Besides this, I’m a huge fan of real estate investments. I have one rental house now that’s a complete cash cow and my wife and I plan to buy a couple more in the upcoming years.
And, a solid chunk of cash is never a terrible thing. We all need a safe-guard against job loss and unfortunate accidents.

Paul: What type of investor are you (income investor, growth investor, combination, speculative, etc.)?

Derek: I’m more about growth. I never got that big into dividend investing – the concept makes sense but too many people end up investing heavily in a company purely for a 6% dividend…while growth stocks can average 10%+. Sure, it’s more volatile, but on average it’s the absolute truth!
And…like I said before, I just chunk my money into Index Funds modeling the S&P 500. Unless you have a ton of money and a lot of time on your hands to learn the ins and outs of the market, betting your funds of single stocks here and there just isn’t worth it. You might have some big winners, but you’ll also lose many times as well.

Paul: What advice would you give someone who has a partner who is bad with finances and is simply uneducated in the world of finance?

Derek: Ugh, this one is tough…and it’s more or less why my first marriage failed. She saw no reason in having more than $1 in our bank account. I wanted millions in investments. Needless to say, it was tough to find a middle ground. So, the first point of advice is,

“Find a partner that shares your spending habits, your religious beliefs, and your exercise habits” — or at least, comes close.

If you’ve already chosen a partner and didn’t quite get the saver you wished you had now, it will never be easy, but the best thing to do is set some common goals.
– Where do you want to be in 5 years? 10 years? 20 years?
– What do you have to do with your money today to get you there?
Even the biggest spender should realize that money needs to be saved if you want to travel the world in retirement or buy that cottage on the water.
Also — be willing to compromise. You’re not fully right and neither is your partner. Learn to meet in the middle. 

Paul: What is the best investment you have ever made (You don’t need to name the specific company if you don’t want), and what research led you to this investment?

Derek:

1st – my best investment was in me – my education. I’ll earn millions more than the average person because of my college degree, my MBA, and most importantly, what I’ve learned through both of those programs (ie. the application of what I’ve learned is probably more important than the piece of paper I earned).
2nd – my spouse that I’m on the same page with. I put tons of time into wooing my current spouse. 7 years later and I still say the investment was totally worth it. We’re on the same page with money, with our kids, and with our future selves!
3rd – my Roth 401k at work. I get a match, an additional 4% from my company, and I don’t have to pay taxes on the money in retirement! And of course, I invest largely in index funds. 🙂

Worst investment? When I was broke and bought 5 shares of Coach. The stock went up and earned me $60, but I spent $20 on transaction fees and another $60 to file the additional tax schedules to record my earnings… Therefore, I lost $20 and had to pay taxes on my “earnings”. 
When you’re broke, pay off debt. It’s the best investment you can make. 

Paul: What is the biggest mistake you have made investing or doing personal finance?

Derek: Ha, I guess I jumped the gun on this question! Refer to the above…
Oh, also, I invested $2,000 in silver a few years ago. The stock market soared and my silver tanked. Pretty sure I sold that investment for $1,400… Not worth it! 

My investments today are real estate, index funds, and cash. It’s simple, but good enough for me!

Paul:  Any general finance rules of thumbs you would like to share with my audience? 

Derek: Absolutely!!
– Never take out a mortgage that’s more than 2X your yearly income.
– If you have consumer debt, do everything you can to pay if off quickly!
– Once you have consumer debt paid off, keep living frugally – preferrably on 50% of your take-home pay. Invest the rest. It’s amazing what a pile of money will allow you to do — take a different job, start working for yourself, retire extremely early, give money away to those in need… Having money is way better than not having money, so why not just work at having the latter!

Derek Sall is a lover and writer of all things personal finance. And, there’s nothing he’d love more than to see you succeed!! Follow him on his site at https://lifeandmyfinances.com

-BlogCast on 3/22/2020

Derek SallPersonal Questions:

Paul:
 In your journey through finance, what books have you read that really have helped you grow? What books do you recommend people just starting out in finance read?

Derek: The book/course that most impacted me was Financial Peace University, by Dave Ramsey. I used the tools in this book to get out of consumer debt, build up an emergency fund, invest in the market, and pay off my house! Today, I enjoy a peaceful life (even among the turmoil all around us) with plenty of funds to live on for years. I’m so glad I’m not like the 67 million Americans today that are worried about making their next credit card payment. 

Other books that have impacted me over the years:

  • The Richest Man in Babylon
  • Rich Dad, Poor Dad – Robert Kiyosaki
  • The Automatic Millionaire – David Bach
  • The Millionaire Next Door
  • The Index Card

Paul: How did you balance working a full-time job, doing a “hustle”, maintaining relationships, social lives, physical shape, etc. while also performing optimally? Is there anything you had to sacrifice?

Derek: Ha, it’s not always easy!! With wife and kids, a full time job, and a blog… For a while there, I was thinking about selling the site because it was simply taking up too much time! Thankfully, I didn’t get the 6-figure offer I wanted and decided to keep it…with a little bit of hired help. I now have a virtual assistant that handles my advertising and emails, and I also have 3-4 staff writers at any given time. 
I’ve come to realize that I’d rather spend 5 hours a week on my blog and earn $2,000 a month than 20 hours a week and earn $3,000. It’s a wayyyyy better scenario!
Also, I’ve cut way back on screen time (used to be video games and TV). It’s just not that important to me. I’d rather use the time to play with the kiddos, work out a bit here and there, and continue to learn by reading!

Paul: Over the past couple of years, what is the biggest lesson you have learned through your finance blog, and what suggestions would you give to beginners?

Derek: Oh man, a big one sticks out in my mind… I was running the blog, working Corporate America, trying to be a great husband and dad, but also to propel us ahead financially. My wife and I already had one rental house and saved up a good chunk of change for another. It took a few months of searching, but I finally found that diamond in the rough! Or so I thought…
It was going to be great! We’d fix it up, I’d blog about the process and increase my following, and then we’d rent it out for $1,300 a month, which would double our rental income. I was in love!
And then we got into month 6 or 7 of the “fix-up” stage…
This house was a disaster. It smelled like cat, dog, smoke, you name it. We had to tear down drywall, pull up sub-floor, remove ceiling tiles. It was a HUGE project! I still wasn’t overly concerned, but my wife was fed up with me working mornings, nights, weekends… It nearly broke our marriage to be honest. I still found time for the kids, but had no time for the wife. NOT SMART!
Once we were finally done, she could barely even look at that house. We had to sell it to get rid of the reminder of that awful time. We still made $27,000…but it truly wasn’t worth the sacrifice of those 8 grueling months…
Yes, money is important and we all need to have it, but there is such a thing as ‘enough’ money. Relationships, exercise, our spiritual walk…there are so many other things that are important as well. It’s all about the balance of everything, not the domination of one.


Paul: To unwind and relax, what activities do you take part in that gives you a second wind, so you can start fresh the next day? 

Derek: 

     (1) Getting outside. My favorite way to do this is go golfing. If there’s not enough time for that, I’ll just go for a walk or a run through the woods!
   (2) Talking with people. I always learn something and grow a bit more, just by chatting with someone else.
   (3) Exercise. Lifting weights, swimming, and running – those are my staples. They get my heart pumping, my mind cruising, and they distract me from my day-to-day work.

Paul: Do you have a favorite quote, and if so, what is it?

Derek: “We buy things we don’t need with money we don’t have to impress people we don’t like.” — many have claimed to be the originator of this quote…
The point is, stop living your life for someone else. Live it wisely, and live it for you.

Finance Questions:

Paul: During volatile times, what measures do you take to protect from downside risk, while concurrently maintaining upside potential?

Derek: After sifting through dozens of articles and thousands of data points, I’ve come to the realization that investing with the market (ie. Index funds) makes way more sense than trying to time the market or pay someone else to try to time the market (ie. active mutual funds). So, I put a good portion of my retirement investments into Vanguard index funds.
Besides this, I’m a huge fan of real estate investments. I have one rental house now that’s a complete cash cow and my wife and I plan to buy a couple more in the upcoming years.
And, a solid chunk of cash is never a terrible thing. We all need a safe-guard against job loss and unfortunate accidents.

Paul: What type of investor are you (income investor, growth investor, combination, speculative, etc.)?

Derek: I’m more about growth. I never got that big into dividend investing – the concept makes sense but too many people end up investing heavily in a company purely for a 6% dividend…while growth stocks can average 10%+. Sure, it’s more volatile, but on average it’s the absolute truth!
And…like I said before, I just chunk my money into Index Funds modeling the S&P 500. Unless you have a ton of money and a lot of time on your hands to learn the ins and outs of the market, betting your funds of single stocks here and there just isn’t worth it. You might have some big winners, but you’ll also lose many times as well.

Paul: What advice would you give someone who has a partner who is bad with finances and is simply uneducated in the world of finance?

Derek: Ugh, this one is tough…and it’s more or less why my first marriage failed. She saw no reason in having more than $1 in our bank account. I wanted millions in investments. Needless to say, it was tough to find a middle ground. So, the first point of advice is,

“Find a partner that shares your spending habits, your religious beliefs, and your exercise habits” — or at least, comes close.

If you’ve already chosen a partner and didn’t quite get the saver you wished you had now, it will never be easy, but the best thing to do is set some common goals.
– Where do you want to be in 5 years? 10 years? 20 years?
– What do you have to do with your money today to get you there?
Even the biggest spender should realize that money needs to be saved if you want to travel the world in retirement or buy that cottage on the water.
Also — be willing to compromise. You’re not fully right and neither is your partner. Learn to meet in the middle. 

Paul: What is the best investment you have ever made (You don’t need to name the specific company if you don’t want), and what research led you to this investment?

Derek:

1st – my best investment was in me – my education. I’ll earn millions more than the average person because of my college degree, my MBA, and most importantly, what I’ve learned through both of those programs (ie. the application of what I’ve learned is probably more important than the piece of paper I earned).
2nd – my spouse that I’m on the same page with. I put tons of time into wooing my current spouse. 7 years later and I still say the investment was totally worth it. We’re on the same page with money, with our kids, and with our future selves!
3rd – my Roth 401k at work. I get a match, an additional 4% from my company, and I don’t have to pay taxes on the money in retirement! And of course, I invest largely in index funds. 🙂

Worst investment? When I was broke and bought 5 shares of Coach. The stock went up and earned me $60, but I spent $20 on transaction fees and another $60 to file the additional tax schedules to record my earnings… Therefore, I lost $20 and had to pay taxes on my “earnings”. 
When you’re broke, pay off debt. It’s the best investment you can make. 

Paul: What is the biggest mistake you have made investing or doing personal finance?

Derek: Ha, I guess I jumped the gun on this question! Refer to the above…
Oh, also, I invested $2,000 in silver a few years ago. The stock market soared and my silver tanked. Pretty sure I sold that investment for $1,400… Not worth it! 

My investments today are real estate, index funds, and cash. It’s simple, but good enough for me!

Paul:  Any general finance rules of thumbs you would like to share with my audience? 

Derek: Absolutely!!
– Never take out a mortgage that’s more than 2X your yearly income.
– If you have consumer debt, do everything you can to pay if off quickly!
– Once you have consumer debt paid off, keep living frugally – preferrably on 50% of your take-home pay. Invest the rest. It’s amazing what a pile of money will allow you to do — take a different job, start working for yourself, retire extremely early, give money away to those in need… Having money is way better than not having money, so why not just work at having the latter!

Derek Sall is a lover and writer of all things personal finance. And, there’s nothing he’d love more than to see you succeed!! Follow him on his site at https://lifeandmyfinances.com

-Published 3/22/2020


Disclaimer:
Nothing stated in this article is a recommendation from Forehand Financial to buy or sell a particular security or asset class. You should wisely consider your tolerance for risk, time horizon, and financial goals before making an investment. With investing, you run the risk of losing money, always read an investment prospectus and make an informed decision before allocating capital to a particular investment.