Entertaining Money http://entertainingmoney.com An Entertaining Approach to Serious Money Matters... Thu, 11 Oct 2018 21:58:27 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.25 69275999 Should Credit Cards Be Used To Buy Cryptos? http://entertainingmoney.com/2017/12/should-credit-cards-be-used-to-buy-cryptos/ Mon, 11 Dec 2017 02:02:01 +0000 http://entertainingmoney.com/?p=1530
Please be warned: This article discusses using debt as a wealth-building tool. It may alter your understanding of debt and credit card usage. You’ve been WARNED!

Look, I recognize that many people were taught to think of debt as a bad word. However, this article strives to paint a clear picture that it’s not debt that’s bad; it’s the misuse of debt. In fact, as you’ll see, the financially educated use debt as a tool to get rich!

Most people use debt to buy things that make them poorer.

Getting right to the point, the reason that people believe that debt is bad is because most people use debt to buy things that make them poorer, like television sets, stereos, and tennis shoes, for example. In the world of personal finance, these things are called liabilities. Liabilities are things that take money out of your pocket. The middle class grows poorer because people attempt to look rich by buying liabilities. This is largely why debt gets a bad name.

The Rich Use Debt to Get Richer!

The problem with this is the rich use debt to make them richer! You read that right! The rich actually use debt to grow even richer. How? By purchasing assets. Assets are things that put money in your pocket. In other words, assets make you money – instead of making you poorer. Examples are stocks and bonds, real estate, businesses, and precious metals. However, there’s a new entry into assets: digital assets – also known as cryptocurrencies!

This article addresses whether it’s wise to purchase cryptocurrencies using debt (i.e., with a credit card).

And the answer is really quite simple: It depends on how good a person’s financial education is. If an individual knows how to manage debt and understands a digital asset’s profit potential, then debt usage could be a great idea. Here’s an example. In 2017, Ethereum, one of the top 3 cryptocurrencies, had a return of over 5700%! This means that the price of Ethereum grew by over 57 times. A $1,000 investment a year ago would be worth over $57,000 today! Sounds great, right? Well let’s say a person didn’t have $1,000 at the time, but they did have a credit card. Most importantly, they were able to make the monthly credit card payments with ease. Also, if the investment turned South and moved against them, they had an exit strategy. Once the $1,000 was earned through cryptos, the credit card could be paid off.

Debt is Leverage

Using debt in this manner may still seem abnormal to some people. But investors use debt all the time to become richer. When someone buys a rental property, the bank loan (mortgage) they receive is debt. When a stock investor buys shares on margin, it is a type of loan. As you can see, the rich use debt all the time to leverage assets. Ultimately, it’s about an individual’s financial education. How well can they manage debt? How disciplined are they with money? How well do they know their investment? In the case with Ethereum, the use of debt would have been a brilliant play.

]]> 1530 What is Bitcoin? – A Quick Introduction http://entertainingmoney.com/2017/12/what-is-bitcoin-a-quick-introduction/ Fri, 08 Dec 2017 14:28:21 +0000 http://entertainingmoney.com/?p=1521

What is Bitcoin?

Although Bitcoin is formally known as a cryptocurrency, it can easily be thought of as digital cash, or virtual currency. Instead of carrying physical cash or coins, Bitcoin users make electronic transactions on the Bitcoin payment system. Units of digital currency called Bitcoins are used to store and transmit value among users in the Bitcoin network. When Bitcoin users are ready to purchase something or use Bitcoins, they simply verify and complete the transaction.

  • Bitcoin can be thought of as virtual currency.
  • Decentralization

    The Bitcoin global payment system uses cryptography technology to enable peer-to-peer transactions without the aid of an intermediary. Unlike traditional currency, which is controlled by a central authority (e.g., a government) all transactions and transaction verifications are done by various people within the network. Thus, Bitcoin and other cryptocurrencies are said to be “decentralized.”

  • Bitcoin is a decentralized, peer-to-peer payment system.
  • Wallets

    Bitcoin users must possess access to “wallets” in order to use Bitcoins. A wallet can be likened to a bank account. Wallets are software programs that function to store public and private keys, which are used to receive and send the cryptocurrency, respectively. They also provide the cryptocurrency balance. It should be noted that wallets actually don’t store cryptocurrencies, however. Cryptocurrency is stored and maintained on the publicly available ledger. The private key allows a user to “write” in the public ledger, meaning they can spend the cryptocurrency.

  • Bitcoin users must open a "wallet," which is similar to a bank account.
  • Value

    Bitcoin derives its value from its global payment solution. As more people and businesses begin to accept Bitcoin as a store of value and currency, its demand will rise. Additionally, only 21 million Bitcoins will ever be “mined.” Mining is the process by which cryptocurrencies are created. This means that a limited supply of Bitcoin will ever exist. As fiat currencies across the globe begin to fail, the use of Bitcoin and other cryptocurrencies will increase.

  • Bitcoin's value is based on its use acceptance.
  • Purchasing Bitcoin

    Bitcoin can be purchased from an exchange, such as www.coinbase.com (click here). It’s important to know that Bitcoins and other cryptocurrencies do not have to be purchased in whole amounts. That is, fractions of a coin can be purchased. This makes entry into cryptocurrencies accessible to anyone. Investors are attracted to Bitcoin because of its profit potential. Since its inception, many early adopters have become “Bitcoin millionaires.” As demand continues to increase for the coin across the globe, people will be willing to pay higher prices to obtain Bitcoin. As large institutional investors pile in, the price will increase even more.

    Below is a video explaining some of the basics of Bitcoin further:




    ]]> 1521 Add This to Your New Year’s Financial Goals http://entertainingmoney.com/2017/11/add-this-to-your-new-years-financial-goals/ Sat, 25 Nov 2017 00:55:16 +0000 http://entertainingmoney.com/?p=1483 OK. 2017 is almost up, and you know what that means! That’s right… New Year’s resolutions! Whether you’ve already thought of your goals for the upcoming year or not, we at Entertaining Money believe the topic of this article definitely needs to be considered. For 2018, one of your top financial goals should be reducing spending.

    Reduce Spending!

    Let’s be honest. Americans like to shop. There’s no doubt about it. Shopping in America almost seems like a birthright. However, the problem is that way too many of us are falling deeply into debt because of our spending habits. And it’s dangerous. As of matter of fact, credit card debt is currently at all-time highs. Credit card debt, also known as revolving credit, stood at $1.021 trillion in June 2017.

    One reason that Americans are taking on more credit card debt is high costs of living compared to low worker wages. In other words, life is too expensive for the paychecks workers receive. The shortage of available funds must be made up in some way. On the other hand, however, there are some people who simply have poor money management skills. These people are living beyond their means. When a person lives beyond their means through debt usage, it puts them deeper and deeper into the debt hole.

    Instead of spending foolishly in 2018, develop a plan. We all need a plan because that’s the only way to know where we are going financially! And cutting expenses is something that most people can do! You should take the time to review bank statements from the previous few months – or entire year – to see where your money is going and the areas you can reduce spending. It could be dining out, clothes purchases, or entertainment. Whatever the case may be, find out where you can reduce spending!

    The reason this is so important is the money you are able to save each month can be invested for future growth. The basis of financial education is knowing how to have your money work for you and increasing your wealth. This should be your goal! It’s possible and you can do it, but you first must develop the discipline to cut out unnecessary spending! As Dave Ramsey puts it, “If you will live like no one else, later you can live like no one else.”



    ]]> 1483 Respect Bitcoin and Digital Assets! http://entertainingmoney.com/2017/11/respect-bitcoin-and-digital-assets/ Fri, 24 Nov 2017 14:10:14 +0000 http://entertainingmoney.com/?p=1476 Like many people today, I’m kicking myself because of Bitcoin. Specifically, I’m kicking myself for not throwing $100 into Bitcoin in 2010 when it was priced at $0.003 per coin. $100/$0.003 per coin equals 33,333 Bitcoins. That’s the beauty (or torture) of hindsight; it’s typically crystal clear. An opportunity passed up. Extremely deep regret. 33,333 Bitcoins! At today’s prices, that equates to around $273,330,600.

    Looking back, I should have at least had the common sense to look into all the hype. A new financial instrument seen on major television shows and discussed in major publications, and I completely ignored it. Smart move.

    As of this writing, the market capitalization of Bitcoin is approximately $134 billion. The current total value of all Bitcoins in circulation is over $134 billion! For comparison, at $17/oz the market capitalization of the world’s silver is $17 billion. Bitcoin is presently almost eight times the size of the silver market!

    When all cryptocurrencies are considered, the total market capitalization hovers around $259 billion.

    IMF Says Get Serious About Digital Currency

    In a recent article from CNBC, International Monetary Fund (IMF) Managing Director Christine Lagarde stated, “I think we are about to see massive disruptions,” concerning developments in financial technologies.

    The article (here) goes on to say that the IMF at some point could develop its own cryptocurrency. In fact, global financial institutions could be taking risks by not watching and understanding emerging financial tech products that are already starting to shake up the financial services and global payments system.

    Going Forward

    If you pay attention to the mainstream financial news, then most likely you have heard talk about Bitcoin possibly nearing a bubble. Honestly speaking, the question of Bitcoin being in a bubble has been posed since prices were significantly less than current valuations. In 2017 alone, Bitcoin is up over 1000% for the year. Each investor must perform his or her own due diligence and decide if Bitcoin is too expensive or just beginning a historic run.

    However, when comparing market caps, at $1,275/oz the market capitalization for gold is $7.7 trillion – about 57 times the size of Bitcoin.



    ]]> 1476 Cryptocurrencies Offer Investment Ease http://entertainingmoney.com/2017/11/cryptocurrencies-offer-investment-ease/ Thu, 23 Nov 2017 14:40:26 +0000 http://entertainingmoney.com/?p=1470 The world of investing can seem overwhelming to the newcomer. Before someone gets to learn more about a specific asset class, they must first decide which asset class to invest in! Real estate, stocks, bonds, precious metals, businesses, and cryptocurrencies are all assets a person can potentially place their money. And each comes with a multitude of information that must be understood to be successful. See how this can be overwhelming?

    Luckily, there are assets that don’t have as large a learning curve as others. With today’s would-be investor strapped for both time and money, investment ease is very important. And cryptos offer that simplicity.

    Cryptos Offer Simplicity

    Low Cost of Entry

    One of the advantages of cryptocurrencies over other assets like real estate and some businesses is low cost of entry. Investors can purchase cryptocurrencies without needing a lot of money, since cryptos can be purchased in parts, of fractions. There’s no need to buy an entire coin. For example, imagine that Bitcoin is currently valued at $8,000 per coin. Someone wanting to purchase Bitcoin doesn’t have to drop $8,000 to enter a position. They could simply buy whatever amount desired. If that amount was $100, they could buy 1.25% of a Bitcoin ($100/$8,000 = 0.0125, or 1.25%).

    Liquid Market

    Cryptocurrencies are a liquid market. Because there is a large number of buyers and sellers, it is easy to execute a trade quickly and at a desirable price. If an emergency arose and someone needed to sell their cryptos to have extra cash, they could easily do so. On the other hand, real estate requires substantially more time to close a transaction. With cryptos, transactions can be completed within seconds.

    Easy to Manage

    Lastly, cryptocurrencies are easily managed. Once an investor takes a position (makes a purchase), they can simply wait until the value increases. This strategy is called, “buy and hold.” In the crypto-sphere, it’s also affectionately known as HODL – Holding On for Dear Life. Large price swings are normal in the crypto world. Thus, crypto investors have to expect the swings as they HODL for the long-term.

    Low cost of entry, a liquid market, and ease of management are all characteristics of cryptocurrencies that offer investors an asset class that’s simple to enter. Of course, each investor should do their own due diligence and increase their understanding through education. But if the future is anything like the past, the cryptocurrency world may definitely be worth the effort.


    ]]> 1470 HODL: The EASIEST Bitcoin Strategy http://entertainingmoney.com/2017/11/hodl-the-easiest-bitcoin-strategy/ Thu, 23 Nov 2017 03:15:49 +0000 http://entertainingmoney.com/?p=1458 The performance of the cryptocurrencies – and Bitcoin in particular – has garnered the attention of swarms of new investors from across the globe. The opportunity of becoming the next crypto-millionaire is alluring, indeed. However, as anyone who has been investing for a substantial amount of time knows, it takes a while to figure out what you’re really doing and your personal risk tolerance. Let’s face it: Today’s average new investor doesn’t have money to lose. For this reason, it is important to have a strategy when entering an investment.

    This article introduces an easy strategy that many Bitcoin investors have used since the coin’s market inception in 2009.

    HODL (Hang On for Dear Life)

    Without a doubt, the simplest approach any investor can take with Bitcoin and other cryptos is to buy and hold. Yep, that’s it. That’s the “secret formula.” Seriously speaking, buying and holding sounds like something easy to do, but for many it’s not. The reason is volatility.

    From Investopedia, volatility “refers to the amount of uncertainty or risk about the size of changes in a security's value.”

    In layman’s terms, you can think of volatility as the size of an asset’s price swings. In other words, you can be up one day, then down the next. The up and down action makes a lot of new investors nervous, especially since they are not used to it.

    Unfortunately, Bitcoin and cryptos are normally volatile. But as you’ll see, this shouldn’t stop you. What really matters is the long-term results of an asset. As shown in the chart below, the long-term trend for Bitcoin is up. So, despite the temporary and occasional price drops, Bitcoin continues to reach new highs.

    For the investor new to cryptos it must be understood that price drops do – and will – happen, but they are typically temporary. In fact, even with the pullbacks included, Bitcoin is up over 1000% for the year! Those are stellar returns.

    A more involved strategy is to trade Bitcoins (i.e., entering a position when the price is low and selling at highs). However, this requires the ability to analyze charts and other data, which are advanced concepts. Some people are successful at trading, yet many others are not. Consider Warren Buffet’s words on attempting to time the market for trades: "People that think they can predict the short-term movement of the stock market — or listen to other people who talk about (timing the market) — they are making a big mistake."

    The simplest strategy for cryptocurrency investors is to think “long-term.” There’s a saying that you aren’t a real Bitcoin-er unless you’ve been through a price drop. But a quick glance at any long-term Bitcoin chart reveals that the price typically bounces back – strongly! In cryptos, HODL is the name of the game.

    ]]> 1458 The Biggest Misunderstanding About Bitcoin! http://entertainingmoney.com/2017/11/the-biggest-misunderstanding-about-bitcoin/ Thu, 23 Nov 2017 00:55:14 +0000 http://entertainingmoney.com/?p=1456 Bitcoin’s amazing performance this year has turned the heads and captured the attention of scores of investors wanting a piece of the action. I don’t blame them. As of this writing, Bitcoin is up over 1013% for the year! One year ago, Bitcoin’s price was $740.85. Today, Bitcoin sits at $8,249.24 per coin. This remarkable run has many people thinking they are priced out of ever owning or investing in Bitcoin because it’s too expensive. That’s simply not true!

    This article addresses the biggest misunderstanding about Bitcoin – the belief that you must buy the entire coin! Let’s be honest. $8,000 is a serious chunk of change for us ordinary human beings. That means the average person would easily be priced out if the whole coin had to be purchased. Luckily, you don’t have to buy an entire coin to start investing in Bitcoin.

    Bitcoin Can Be Purchased in Fractions

    Bitcoin is a digital currency, not a stock. This means that it can be purchased in parts, or fractions. Here’s an example:

    If Sarah has $200 and wants to purchase Bitcoin (which is $8,000 in this example for simplicity) she can buy 2.5% of one coin, or 0.025 Bitcoin. Here are the numbers:

    Amount to Invest: $200
    Current Price per Bitcoin: $8,000
    $200/$8,000 per coin = 0.025 Bitcoin (or 2.5% of a Bitcoin)

    This is how Sarah’s investment grows as Bitcoin grows:

    Let’s say Bitcoin grows to $12,000 per coin after three months. This means that Sarah’s ownership of 0.025 Bitcoin is now worth $300.

    $12,000 per coin x 0.025 Bitcoin = $300

    Sarah’s initial investment of $200 has grown to $300 in three months! If she sold her position (amount of Bitcoin owned) at this point, she would earn $100 in profit!

    Conclusion

    There’s no reason to be confused about being priced out of Bitcoin any longer, since it’s possible to purchase it in parts, or fractions. An investor could begin with any amount of money available to them! As Bitcoin grows in value, so does the value of their position. If you’ve been wanting to try your hand at Bitcoin and cryptocurrencies but felt you were priced out, now you know that price isn’t holding you back!



    ]]> 1456 Don’t Miss the Crypto Opportunity! http://entertainingmoney.com/2017/11/dont-miss-the-crypto-opportunity/ Mon, 20 Nov 2017 01:44:46 +0000 http://entertainingmoney.com/?p=1436 I happened to look at the one-year chart of Bitcoin – from November 19, 2016 to November 19, 2017 – and I’m astounded by what I see. Over that one-year period, Bitcoin is up over 979%! This means a $1,000 investment in Bitcoin would be worth nearly $11,000 today! Needless to say, those are great returns!

    Those types of returns can be life-changing! But, as is often the case, the people who need those types of returns the most are missing out. And because life is only going to get more difficult over time, they simply can’t afford to. The good news is even though many have missed Bitcoin’s initial run, it may be far from finished! If this is the case, the wise thing to do is get educated on the crypto-world. Honestly speaking, like driving a car, you don’t need to know or understand everything. But you do need to know enough to get you to where you want to go.

    This includes knowing which cryptocurrencies to buy and how to keep them safely stored. Neither of these are hard concepts, and there’s a ton of information available free on the internet. We’ll also be developing content to help the new crypto investor over the coming weeks and months.

    Digital Assets are Here

    The important thing is to be aware that digital assets (i.e., cryptocurrencies) are here and should be strongly considered for your portfolio.

    Anyone can begin today by purchasing $50 worth of Bitcoin at www.coinbase.com. You just sign up, get verified, and begin!

    Like we’ve stated in numerous articles, you must have assets if you are striving for financial freedom! The average person cannot work his or her way out because wages are too low. Instead, you must invest your way out! And if the cryptos’ future is anything like their past, digital assets may be a critical component of achieving financial freedom for the everyday investor!



    ]]> 1436 Dollar-Cost Averaging and Cryptos http://entertainingmoney.com/2017/11/dollar-cost-averaging-and-cryptos/ Sun, 19 Nov 2017 22:16:18 +0000 http://entertainingmoney.com/?p=1423
    So you’ve made up your mind to start investing in cryptocurrencies, but you haven't determined how to go about it. Well, in this article, we introduce an investment technique that can simplify your life. You won’t have to worry about how much of a cryptocurrency to purchase anymore. In fact, once you figure out how much money you can invest each month, you’ll just purchase that dollar amount. It’s that simple!

    Dollar-Cost Averaging

    The investment technique we’re referring to is dollar-cost averaging. With dollar-cost averaging, an investor buys a fixed dollar amount of an investment on a regular basis, regardless of the price. When the price is low, the investor purchases more of the investment. On the other hand, when the price is high, less of the investment is purchased. Either way, the same dollar amount is purchased regularly.

    Here’s an example: After completing her monthly budget, Sarah determines that she can invest $250 per month. After doing research on several cryptocurrencies, she decides to invest in XYZ coin. Therefore, each month Sarah will purchase $250 worth of XYZ coin regardless of the price.

    Let’s assume the following are costs of XYZ over a five-month period.

    Month 1: $7
    Month 2: $6
    Month 3: $8
    Month 4: $6
    Month 5: $10

    If Sarah purchases $250 worth of XYZ coin on the first of each month, the total number of coins per month is equal to:

    Month 1: $250/$7 per coin = 35.71 coins
    Month 2: $250/$6 per coin = 41.67 coins
    Month 3: $250/$8 per coin = 31.25 coins
    Month 4: $250/$6 per coin = 41.67 coins
    Month 5: $250/$10 per coin = 25 coins

    After five months, Sarah has accumulated 175.3 XYZ coins at an average price of $7.13. As you can see, dollar-cost averaging is an effortless way to approach your monthly investing. It allows you to get into the habit of investing on a regular basis. First, determine how much you can afford to invest each month, then let dollar-cost averaging work for you!

    See more on dollar-cost averaging at www.investopedia.com



    ]]> 1423 You Should Know About Cryptos! http://entertainingmoney.com/2017/11/you-should-know-about-cryptos/ Sun, 19 Nov 2017 18:57:33 +0000 http://entertainingmoney.com/?p=1411 Maybe you’ve heard of cryptocurrencies and maybe you have not. The important thing is to understand that you need to know about them! Why? Because cryptocurrencies, such as Bitcoin, are the newest asset class, with the potential to create substantial wealth. So, if you’re a serious investor or a newbie to investing, cryptocurrencies may be worth your time (and money).

    Bitcoin

    Bitcoin is the oldest cryptocurrency, arriving on the crypto scene in 2009. As of this writing, Bitcoin’s market capitalization, or the total value of the digital coins in circulation, has risen from $7 billion in May 2016 to $133.5 billion. Said another way, Bitcoin’s market capitalization is over 19 times what it was in May 2016. This means profits. For some early investors, it means big profits! But do big profits mean that the opportunity is over?

    That’s a conclusion you’ll have to arrive at on your own, but it’s a strong possibility that Bitcoin’s run is only beginning. One of the reasons why is cryptocurrencies are virtually unknown to so many people. Because it’s a new asset class many people still don’t know it even exists. Thus, as cryptocurrencies grow in popularity and come to the forefront, more investors will demand owning them. As demand increases, so will the price. And this is where the opportunity lies.

    It is also expected that large institutional investors (i.e., Big Money) will likely adopt the cryptocurrencies as a viable investment option, as they seek greater yield. Again, this means profit potential for early holders of the cryptos. As you can see, the growth and profit potential for cryptocurrencies are enormous.

    Although Bitcoin is oldest and most known of cryptocurrencies, there are literally thousands to choose from. And because cryptocurrencies are new, there are scams and scam coins that investors need to be cautious of. That’s why it’s so important to do your due diligence and learn all you can about the cryptos – to protect yourself and your wealth.

    Get in the Game!

    New investors to the crypto game can dip their toes into Bitcoin. Taking a small position in Bitcoin (e.g., $50) will get the new investor into the game. From there, it’s wise to educate yourself with the numerous resources available on the internet, from YouTube videos to free websites. The critical thing is getting started!

    If you are interested in getting started in Bitcoin and cryptocurrencies today, visit www.coinbase.com to make your first purchase!


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