Nearly $13 billion wiped off of cryptocurrency market as major coins plunge

  • The price of major cryptocurrencies bitcoin, XRP and ethereum plunged on Thursday.
  • The move comes after the International Monetary Fund warned that cryptocurrencies “could create new vulnerabilities in the international financial system.”
  • Around $13 billion of value was wiped off of the cryptocurrency market in about three hours.
A visual representation of the digital Cryptocurrency, Bitcoin, is seen on September 04 2018 in Hong Kong, Hong Kong.

Yu Chun Christopher Wong | S3studio | Getty Images
A visual representation of the digital Cryptocurrency, Bitcoin, is seen on September 04 2018 in Hong Kong, Hong Kong.

The price of major cryptocurrencies plunged on Thursday with nearly $13 billion of value being wiped out in a matter of hours.

At around 10:23 a.m. HK/SIN, bitcoin had fallen nearly 5 percent to $6,303, while XRP and ethereum both tanked over 10 percent, according to data from Coinmarketcap.com. It’s not unusual to see bitcoin lead other digital tokens lower.

In just three hours, nearly $13 billion of value had been erased from the entire cryptocurrency market.

The drop comes amid fresh warnings from financial authorities about the rapid growth of digital coins and the potential threat to the economy.

“Continued rapid growth of crypto assets could create new vulnerabilities in the international financial system,” the International Monetary Fund said in a recent report.

Many cryptocurrency enthusiasts hoped 2018 would be a year that regulators warmed up to the idea of professionalizing the trading of digital assets through new financial products like exchange-traded funds. But the U.S. Securities and Exchange Commission has rejected several ETFs including a highly anticipated one planned by the Winklevoss twins. Other countries, including China, have come down hard on cryptocurrencies.

At the same time, the year has been marked by high-profile hacks on cryptocurrency exchanges as well as a number of scams tied to people carrying out so-called initial coin offerings.

All of those factors have meant that bitcoin, XRP and ethereum have not recovered to the record highs seen toward the end of 2017 and beginning of this year. On Thursday, bitcoin was more than 68 percent off of its record high of $19,783.21, which it hit on Dec. 17 of last year.

Americans have big retirement dreams, but their financial plans don’t back them up

Americans have big retirement dreams, but their financial plans don’t back them up

  • Many individuals see retirement as the “most liberating phase of their life,” when they can finally put family and friends, travel and hobbies first.
  • But financial insecurities, such as whether they have enough financially to really cover their needs, could stand in the way of those goals.

Businesswoman working, jar of money in foreground

Jamie Grill | The Image Bank | Getty Images

A majority of Americans expect their retirement to be the “most liberating phase of their life,” according to a new survey.

Yet for many, their financial plans have not caught up to their retirement dreams.

That is according to a new survey from TD Ameritrade, which asked 2,002 adults in July about their perceptions on aging and retirement.

Most — 81 percent — said they see their elder years as a time to pursue new goals. And 76 percent said they see themselves using that time to pursue passions they previously neglected.

Those priorities include spending time with friends and family, traveling abroad or taking up a hobby, in that order, according to the survey.

But many have yet to figure out how to match their retirement funds to those priorities.

About half of those surveyed — 51 percent — said they do not think they will have more than enough money in retirement to pay for their needs.

And 60 percent do not know how much they will need to save to fund their lifestyles beyond age 65.

Two of the biggest concerns in retirement: Social Security and health care.

Most survey respondents — 72 percent — do not believe Social Security will be enough to cover their retirement spending.

And most individuals said they were more worried about health-care costs and finances than death.

Declining health — particularly the loss of mental and physical abilities — also ranked high among people’s worries.

“Their perception is that they are not there [financially] and they don’t have the confidence that they’re going to be OK in retirement,” said Matt Sadowsky, director of retirement and annuities at TD Ameritrade.

Most individuals can rectify that using a two-step plan, Sadowsky said.

First, they need to make a financial plan and map out how they can make their nest egg last.

Next, they need to evaluate their retirement needs against their wants and wishes, he said.

Lifetime income — such as money from Social Security retirement benefits, pensions or annuities — can serve as guaranteed income to cover your recurring needs.

Saving More, Working Less

Saving More, Working Less  

For all your other expenses, you can tap money from your nest egg, he said.

Starting to draw down the assets you have spent years accumulating requires a “major shift in mindset,” according to Sadowsky.

“When you’re in retirement, you lose an important lever of the pay check,” Sadowsky said. “It’s less about growing and saving.

“It’s more about protection and income generation and planning for the unexpected.”

More from Personal Finance:
Do this to strengthen your retirement savings in 2019
Women are losing sleep over this retirement savings fear
Use a less-is-more approach to win at 401(k) investing

WATCH: This is how long $1 million will last in retirement

Predicting Social Security’s 2019 COLA

Each and every month, more than $81 billion is paid out in benefits by the Social Security Administration (SSA).  Of this money, three-quarters winds up in the hands of retired workers, many of whom lean on Social Security as their major source of income. Or, to put this in another context, America would be facing a serious elderly poverty crisis if Social Security weren’t offering a guaranteed monthly payment to seniors who’ve earned the prerequisite 40 lifetime credits needed to receive a benefit.

The most important Social Security date of the year is nearly here

With more than three out of five aged beneficiaries reliant on the program for at least half of their monthly income, there’s perhaps no event that has more significance than the cost-of-living adjustment (COLA) announcement by the SSA, which comes out during the second week of October (Oct. 11 this year). COLA is nothing more than a fancy term to describe the “raise” that beneficiaries will receive in the following year as a result of the rising price of a predetermined basket of goods and services (i.e., inflation).

Two Social Security cards lying atop a fanned stack of cash bills.

IMAGE SOURCE: GETTY IMAGES.

Between the very first Social Security retired worker payout in January 1940 through 1974, Social Security benefits were arbitrarily adjusted by special legislative bills passed by Congress. However, since 1975, as a result of legislation passed by the Nixon administration in 1972, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) has been the program’s inflationary tether. This index measures the spending habits of urban and clerical workers across eight major categories and dozens upon dozens of subcategories to determine the “raise” that all beneficiaries — retired workers, survivors, and the disabled — will receive in the upcoming year.

One of the more interesting things you may not realize about Social Security’s COLA calculation is that only three months are taken into consideration. The average reading of the CPI-W during the third quarter (July through September) of the previous year acts as the baseline figure, while the average reading from the third quarter of the current years is the comparison. If prices rise year over year, then beneficiaries receive a COLA that’s commensurate with the percentage increase, rounded to the nearest 0.1%. If prices were to fall year over year, which has only happened on three occasions (2010, 2011, and 2016) since the CPI-W was tied to the Social Security program in 1975, benefits remain the same from one year to the next. Thankfully, benefits cannot be reduced due to falling prices.

What does Social Security’s 2019 COLA look like so far?

So, what can aged beneficiaries who depend on Social Security to make ends meet expect for 2019?

The word inflation spelled out by dice in front of a calculator and multiple rising charts in a newspaper in the background.

IMAGE SOURCE: GETTY IMAGES.

As a refresher (because I know how exciting CPI-W data from the Bureau of Labor Statistics can be), here are the CPI-W readings from the third quarter of 2017:

  • July 2017 CPI-W: 238.617
  • August 2017 CPI-W: 239.448
  • September 2017 CPI-W: 240.939

If these figures are added up and divided by three, it yields an average CPI-W for Q3 2017 of 239.668.

Now, here’s how the first two months of the all-important third quarter of 2018 have turned out:

  • July 2018 CPI-W: 246.155
  • August 2018 CPI-W: 246.336

As you can see, these figures are notably higher than the readings from the third quarter of 2017. Although we’re still missing data from the month of September (which’ll be released on Oct. 11, 2018), the average reading from the third quarter of 2018 so far is 246.246, or 2.74% higher than last year. When rounded to the nearest 0.1%, it yields an increase of 2.7%, which would represent the biggest COLA since 2012.

Predicting September’s all-important inflation reading

But what about September’s inflation data? The biggest question mark is what sort of impact, if any, Hurricane Florence would have on inflation. Even though hurricanes are disasters from a human perspective, they tend to have a positive impact on inflation. When hurricanes strikes land or cross major bodies of water, they can particularly disrupt the energy industry, leading to refinery and/or production shutdowns that ultimately push fuel prices higher.

A hurricane over water bearing down on land.

IMAGE SOURCE: GETTY IMAGES.

Last year, the refinery and production disruptions caused by Hurricanes Harvey and Irma were singlehandedly responsible for adding what I’d suggest was about 50 basis points in COLA. In other words, instead of Social Security recipients netting a roughly 1.5% COLA in 2018, they received a 2% COLA, thanks in part to double-digit increases in fuel oil and gasoline prices after both hurricanes.

Now, the tricky part in figuring out September’s inflation data is that Hurricane Florence didn’t hit the Gulf of Mexico, which is generally the worst-case scenario for the energy industry. This makes predicting its impact on the energy industry a bit tougher. However, weekly retail gasoline and diesel prices from the U.S. Energy Information Administration (EIA) may hold some clues.

According to the EIA, we’ve witnessed a very modest uptick in gasoline and diesel prices over the past month. In the four weeks between the weeks ending Aug. 27 and Sept. 24, the average price per gallon for all grades of gasoline rose from $2.906 to $2.923. Meanwhile, the per-gallon price for diesel increased from $3.226 to $3.271 over this same time frame. Some of this increase could be season-based (i.e., Labor Day travel), and some might be related to Hurricane Florence. Comparatively, weekly gasoline prices ranged from $2.701 to $2.80 in September 2017.

Why does this matter so much? Put plainly, energy inflation and to some extent shelter inflation, provided the bulk of the heavy lifting last year, and they’re liable to do the same this year.

So, what’s my 2019 COLA prediction? Given that gasoline prices are heading higher, but only by a single-digit percentage from September 2017, and that Florence appears to have only minimally impacted the energy industry, I’ll be looking for COLA to come in at 2.8%. Though it’s not going to make anyone rich, it’s certainly one of the more robust raises seniors will have seen in a long time.

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5 Warren Buffett Principles to Remember in a Volatile Stock Market

5 Warren Buffett Principles to Remember in a Volatile Stock Market

5 Warren Buffett Principles to Remember in a Volatile Stock Market

The market has fallen quite a bit this week — how would Warren Buffett react?

However, instead of panicking, it’s important to take a step back and assess the situation from the standpoint of a rational, long-term-oriented investor. And there’s no better rational long-term investor to learn from than Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) CEO Warren Buffett. Here are five principles that the Oracle of Omaha uses during volatile markets that you can implement in your own investment strategy.

Warren Buffett speaking with the media.

IMAGE SOURCE: THE MOTLEY FOOL.

The stock market is unpredictable — all the time

In his most recent letter to Berkshire Hathaway shareholders, Buffett said: “The years ahead will occasionally deliver major market declines — even panics — that will affect virtually all stocks. No one can tell you when these traumas will occur.”

The takeaway: The stock market is unpredictable, and large price swings are normal. And to be perfectly clear, this applies to the upside as well. I’ll spare you the statistics lesson, but a gain of 45% or a loss of nearly 23% on the S&P 500 in any single year would not be considered unusual. Manage your expectations (and your reactions) accordingly.

Over the long term, there’s only one direction the market will go

“Successful investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant,” Buffett has said.

While stocks can be wildly unpredictable over shorter time periods, they are surprisingly predictable over long periods. Over periods of several decades, the stock market has generated annualized returns of 9% to 10% per year. Since 1965, the S&P 500 has produced annualized total returns of 9.9%, for example, and this includes the dot-com bust, Black Monday in 1987, and the Great Recession. The point: Even the worst crashes are rather meaningless when it comes to long-term returns.

What if you’re already enrolled in your 401(k)?

If you’re already enrolled in your 401(k), then you’ve taken the most important step. But that doesn’t mean you can sit back and relax just yet. Most employers set the contribution rate fairly low — typically around 3% — which won’t be enough in the long term if you want to save enough to retire comfortably.

That means it’s your job to determine how much money you should contribute to your retirement fund. At the very least, make sure you contribute enough to earn the full employer match — otherwise, you could be leaving money on the table. Then try using a retirement calculator to figure out how much you should save each month to reach your long-term goals.

It’s a good idea to test out a few different calculators to get a better estimate of how much you’ll need. All calculators are different (some factor in Social Security benefits, for example, and they may or may not account for factors such as taxes and inflation), and you’ll likely get different results depending on which one you use. Keep in mind that all of these numbers are estimates, but they’re a good starting point.

Once you have a ballpark idea of how much you should be saving each month, adjust your 401(k) contributions accordingly. Also remember to tweak your contributions when you experience any important financial event, such as when you get a raise or start a new job with a higher salary.

It’s easy to put off retirement saving for another day, waiting until you start earning more money or have more time to sit down and figure out how much you should be contributing. But the longer you wait, the more valuable time you lose — and that could ultimately cost you tens of thousands of dollars down the road.

Two-Thirds of Workers Save More for Retirement Thanks to One Simple Change

 

 

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Saving for retirement isn’t easy, and it’s no secret that the majority of workers are behind on their savings. Roughly one-third of Americans have absolutely nothing saved for retirement, according to a recent survey from GOBankingRates. That’s a big problem, especially considering the average retirement costs upwards of $700,000.

Large pile of $100 bills
Large pile of $100 bills

Image source: Getty Images.

Part of the reason why so many people are falling behind financially could be that they’re not taking advantage of one of the most powerful tools in their arsenal: a 401(k). According to the Bureau of Labor Statistics, 59% of U.S. workers have access to a 401(k). Yet among those who do have a 401(k), only 69% are actively contributing to it.

Making the most of your 401(k) is one of the easiest and most effective ways to prepare for retirement, and if your employer offers matching contributions, you could potentially double your savings with zero effort on your part. Whether you’re just getting started saving or are already enrolled in your 401(k), there are steps you can take to maximize your savings and set yourself up for financial success.

Participation is the first step to success

Sometimes the hardest part of saving is just getting started. When workers are not automatically enrolled in their 401(k), only about half of them will opt into it, according to a Fidelity Investments survey. However, when employers automatically enroll new employees, 401(k) participation jumps to 87%. Those who were automatically enrolled also tended to save more over time: Fidelity found that among workers who were automatically enrolled in their 401(k)s, the average savings rate rose from 4% of wages in 2008 to 6.7% in 2018.

Of course, you don’t have control over whether your employer auto-enrolls new employees in its 401(k), but you can choose whether and how much to contribute yourself. And while increasing your savings rate from 4% to 7% may not sound like a big leap, it can amount to tens of thousands of dollars over time.

For example, say you’re earning $50,000 per year, you just started contributing 4% of your salary — or $2,000 — to your 401(k) each year, and you currently don’t have anything stashed away in your retirement fund. After five years, you increase your savings rate to 5% per year, and after 10 years, you up it again to 6%. Assuming you’re earning an average annual return of 7% on your investments, here’s what your savings would look like over time:

Years Savings Rate Total Contributions per Year Total Savings Accumulated
0 (today) 4% $2,000 $0
5 5% $2,500 $12,307
10 6% $3,000 $32,644
20 6% $3,000 $108,566
30 6% $3,000 $257,918

Data source: Calculations by author.

If you had continued to contribute 4% (or $2,000) per year, and all other factors remained the same, after 30 years you’d have ended up with just $202,000 — a difference of more than $55,000.

Also, if your employer matches your contributions, you could stand to gain even more. In this example, say your employer will match 100% of your contributions up to 3% of your salary, which amounts to $1,500 per year. This is how your savings would look over time with that additional $1,500 per year, assuming you’re still earning an average annual return of 7% on those investments:

Years Savings Rate Total Contributions per Year (With Employer Match) Total Savings Accumulated
0 (today) 4% $3,500 $0
5 5% $4,000 $21,537
10 6% $4,500 $54,820
20 6% $4,500 $174,365
30 6% $4,500 $409,529

Data source: Calculations by author.

By continuing to contribute just 4% of your salary plus the additional $1,500 per year without increasing your savings rate, you’d end up with around $354,000.

Homprofitcoach shares tips and techniques on the importance of communications and list building

Yours In Success, Howard Martell Webmaster http://HomeProfitCoach.com I have been marketing online helping others for 25 years Love the automation which i have each day 24-7. Been part of this great community for 7 plus years. 757-647-2886

5 Signs Your Financial Future Is Dire

If you have a history of making poor spending decisions and repeating common money mistakes, such as racking up debt or neglecting to save for retirement, there’s still time to improve your future financial situation. By taking stock of long-term financial goals and saving, earning and budgeting more effectively, you can get your plans back on track.

If you’re concerned that your future financial picture looks bleak, experts suggest looking for these telltale signs, and regaining control over your finances with the following basic money-management principles.

[See: 15 Little Things That Impact Your Finances.]

Your credit card debt is increasing. “When I work with clients, the biggest sign of financial trouble is consistent or increasing credit card debt. It’s a clear sign of overspending,” says John Caserta, a chartered financial consultant and managing director at Caserta & de Jongh, LLC, a financial advisory firm with offices in Cheshire and New Haven, Connecticut.

Caserta says there can be many legitimate reasons for temporarily accumulating credit card debt, and so this doesn’t automatically mean that your financial future is grim. “But when there’s a history of transferring balances from one credit card to another without a decrease in the balance, there’s a clear cash flow problem,” he says.

The financial fix: Caserta advises consumers to take an inventory of income and expenses and create a cash flow statement in order to see how they’re spending their money. “That can be accomplished with pen and paper, free appsor even paid software. They have to choose what works for them,” he says.

In short, lower your credit card balance, and gradually pay off any lingering credit card debt each month to get your finances in order.

You don’t have enough money saved for an unexpected major expense. This may not be a sign of major financial ruin down the road, but it’s a way to assess whether you’ll have enough saved for an emergency when money is very tight.

“Unfortunately, life happens, and if you aren’t prepared for a flat tire, home repair or some other unexpected expense, it assures you’re having financial trouble,” says Amit Chopra, a certified financial planner and managing partner at Forefront Wealth Planning and Asset Management, a financial services firm in New York City.

The financial fix: Consider setting up an automatic withdrawal every month and have a certain amount of money go into a savings account. That way, eventually you will have some money to draw upon in the case of a financial emergency. It can be challenging to put money aside if you’re constantly struggling to pay bills, but it’s an important financial step. For example, you could start by diverting $50 a month, which would amount to $600 in a year. If that goes well, start setting aside $75 or $100 per month into an emergency fund to stay prepared.

You’ve raided your retirement account. If you’ve tapped into your retirement account, that’s a big clue you may encounter financial trouble down the road. “I see many people make the same mistake, which I feel is a precursor for a future financial disaster,” says Joseph Carpenito, a financial advisor in Boca Raton, Florida, at Raymond James Financial Services. Carpenito says he often will see clients with a 401(k) plan taking money out of their account in the form of a cash distribution.

“Most of these individuals are under 59 1/2 years old, and even after explaining the penalties and tax implications of taking an early cash distribution, I hear the same excuse: ‘Well, it’s only a couple thousand dollars.'”

[See: 8 Big Budgeting Blunders — and How to Fix Them.]

“Although now it only seems like a couple thousand dollars, investors are giving up growth and compounding interest potential, which over a long time horizon could be the equivalent of having hundreds of thousands of dollars less in retirement,” Carpenito says.

The financial fix: Find an alternative way to access money, such as putting money into a well-stocked emergency fund.

You barely have enough money for discretionary expenses. Do you live from paycheck to paycheck, and rarely, if ever, have extra money left over? Eventually you may run out of luck and money, and find yourself taking on more credit card debt or seeking out payday loans.

Corey VanDenBerg, a mortgage banker with Platinum Home Mortgage in Lafayette, Indiana, often sees people buy houses with the highest mortgage payment they can afford, instead of a payment that they can comfortably manage. “Many, many times, people are scrambling to find cash to close,” he says.

The financial fix: Putting money into a savings account and budgeting strategically may solve your paycheck to paycheck scenario. But when it comes to making major purchases like a house and car, get in the habit of crunching numbers and doing your research before consulting professionals. VanDenBerg says that many times clients will ask him, “How much can I afford?” Instead of asking mortgage lenders or car salespeople that question, it’s best to ask yourself how much you can afford, VanDenBerg says.

You haven’t done any financial planning. This is a troubling sign that your financial future is heading toward a frightening state, Chopra says. It may not seem like your finances are out of whack, especially if you’re living comfortably currently, but if you haven’t started saving for retirement, now is the time to kick-start planning to reach your long-term financial goals.

[See: How to Talk to Millennials About Money.]

The financial fix: Start budgeting. Make a list of your monthly fixed bills, like your mortgage or rent and your utility bills, and your expenses that aren’t fixed, such as your grocery bills and gas purchases. Track where your money is going each month. Once you have a budget in place, start creating some goals and ask yourself if you think you’ll be able to afford to pay for them in the future. For example, consider if you need to begin investing for your retirement or for your kids’ college fund. If you don’t think you’ll be able to meet your goals, that’s a wake-up call that you need to start putting money away now.

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