The Breadwinner


The IRS has started sending out unemployment money to people who filed their taxes in 2020 before the American Rescue Plan was enacted into law. If you got unemployment benefits in 2020 and filed last year’s tax return early, you might not have gotten the unemployment funds that are now available to you because of the covid stimulus bill.

Many American taxpayers were worried they would miss the new unemployment benefits if they filed early, but as pledged, the IRS has automatically changed taxpayers’ incomes from 2020 and taken into account how it would change their eligibility for unemployment after March of 2020, when the legislation became law. It started giving automatic tax refunds to eligible people in May. While it has already mailed millions of checks, the IRS says it will keep doing this through the end of this summer.

The American Rescue Plan makes it so that as much as $10,200 for singles (or $20,400 for couples) of unemployment funds gotten in 2020 are exempt from federal income tax. The threshold for someone being eligible is an AGI of under $150,000 on your 2020 return. Only the initial $10,200 is exempt from taxation — any dollar higher than that is subject to tax.

Important to understand: This exemption deals with federal taxes, not with your state taxes. Although many states don’t tax unemployment funds regardless of the new stimulus bill, some states do, so it is important to find out what rules apply in your state.

The IRS says further action is not needed if you are among the people affected by this new change because the agency will automatically alter the tax returns of those people who are eligible.

With this being said, if you have filed early and your recalculated AGI now means you are eligible for more unemployment benefits not included in your initial return, you may need to send in a new amended return.

Either way, a new check in July will be a much needed relief for most Americans as inflation creeps in and prices increase to cause more pain for the American consumer.

Author: Blake Ambrose

When the market is having a bull market and the prices of certain securities are going up in value, investing seems easy.

But since all good things eventually end. And sooner or later the market is going to crash. This change does not mean you should not invest. Instead, try this easy strategy.

Dollar cost averaging explained 

When you do dollar-cost averaging, you are investing a pre-decided amount of money into a certain investment over a particular period of time. This happens no matter what the market is doing or the price of shares. This will end with you getting lower prices during some months while also getting higher prices in other months.

With this strategy, let’s say you invested $1,000 into SPDR S&P 500 ETF Trust each month. This would have gotten you a total of $12,000 and got 31.84 shares for the average price of $376.88. Over the previous 12 months, the cost of SPY has gone up in value by nearly $100 per share, but if the opposite occurred and we were in a time of declining prices, your average share price would be the same.

When this works

If you could determine exactly when the stock market will go into a bear market, you would perfectly time your sells and avoid losses. And if you understood when it will rebound, you could then get shares back at the perfect time. But timing like this is very hard, and although you could get lucky, most of the time you will miss the mark. Sometimes a little, sometimes a lot.

Dollar cost averaging works during bear markets, flat markets, or bull markets. But it might also be very helpful in soothing your nerves and getting you in line for profits instead of waiting on the sidelines in cash if you are anxious about a market crash.

When the market went down by 34% in March of 2020 because of fears of coronavirus, you might have seen yourself in this kind of scenario. But instead of lasting a long time, the market crash quickly turned around, and shares of SPY are now priced 200% higher — double what they were then.

If you were sitting and waiting for the perfect opportunity, you would still be keeping cash. If instead, you would committed to this form of investing, and slowly put your money into the stock market over the past year and a half, you would have reaped these profits.

Author: Steven Sinclaire

Although the Q1 should give the low in precious metals, one strategist says that investors should not chase the market at the current numbers.

During an interview, Carley Garner, who is the co-founder of the brokerage firm DeCarley Trading, stated that she was bullish on the yellow metal since March and is now expecting the price to be much higher at year’s end.

However, she also said there is a risk that the precious metal might see another washout before it’s ready to go even higher.

“There is some pretty big resistance near $1,850. So, if you are attempting to purchase nearly $1830, it is somewhat dangerous,” she said. “You want to ensure you have hedges in place.”

Garner added that she enjoys the idea of getting in on dips and revealed there is the potential for gold to retest support right below $1,800 per ounce.

The gold market is not only getting strong support during a low interest rate climate, but Garner says the precious metal is also going into a positive season.

“Late summer, early fall is normally a great time for silver and gold,” she said.

Looking at gold’s numbers, Garner says that she does not expect inflation to give much more support, stressing the drop in commodity prices such as the one in lumber. With lumber giving back its gains after having a historic rally during the first part of this year. Garner said that she sees comparable patterns among a broad group of commodities from copper to hog futures.

However, Garner also said that weak commodities cause the issue of deflation or maybe even stagflation instead of inflation. It is not likely that the Fed will move fast to tighten its policy in this climate, she said.

She further expects the deflation danger to show itself later on this year as she believes oil prices will lower to $50 a barrel. She explained that United States shale producers have been reluctant to raise oil production; however, with oil being higher than $70 per barrel, crude oil supply is rising.

Looking at the price of gold, Garner says that if the price can get to $1,900 per ounce by summer’s end, then she would anticipate the yellow metal to get back to $2,000 per ounce by year-end.

Author: Scott Dowdy

Investing in cryptos might seem exciting — especially when you see stories of people getting to millionaire status essentially overnight. But these sorts of investment wins are difficult to get and are not as easy as you might think.

1. Expect chaos

When you put money into something like an index fund, you don’t have to keep a close eye on it. With crypto, you are signing up for a lot of chaotic ups and downs. This includes fast changes. It should not surprise you if your portfolio doubles in value or loses half of its value in mere days. While this sort of thing can be of course good, it can also be disastrous. Which brings us to point #2

2. Use small amounts of money

You can step into cryptocurrency by beginning with small amounts. But doing this, you can prevent a disastrous scenario where an important financial goal is ruined, like retirement, by a major loss

By sticking to smaller amounts of your capitol, your portfolio fluctuations won’t brother you as much. And even better, it will tell you how you deal with this kind of volatility with your funds on the line.

3. Watch it carefully

You don’t need to be glued to your screen all the time watching your crypto, but it is probably not the sort of investment you just invest in and forget about, like an ETF or index fund.

Cryptocurrency is different: You might end up trading more often to get profit from its volatility. And because of these cryptocurrencies fluctuating so much, it can be sometimes tempting to sell and buy often, maybe even daily.

But you need to time the market well and this can be hard and time-consuming. If you want to invest into cryptocurrency without having to deal with the volatility, a good alternative is to look for crypto-related ETFs or stocks.

Putting your money into cryptocurrencies might be lucrative, but this sort of reward normally comes with a certain level of risks. Successfully getting through this demands awareness of the dangers and bright spots so you truly grasp what your crypto journey should look like.

Author: Blake Ambrose

While most traders and analysts were looking through Goldman’s trading and banking results – of which the latter came in stellar while trading, especially with FICC, was not good at all…

… when the bank announced its second best quarter ever, there was also a big slide in the bank’s second quarter earnings, and it was connected to what Goldman was doing for its “asset management” book.

Goldman’s Asset Management also experienced a great quarter, giving a record $5.1BN of net revenue, over double than a year ago.

In detailing the group’s great performance, Goldman says that “equity investments gave record net revenues, with the y/y boost mostly fueled by much higher net gains from private equity investments, driven by company-linked events, including sales and capital raises, and better corporate performance versus a difficult 2020.”

The bank then goes into detail on its asset mix, which has some $21 billion in equity investments spread among certain sectors and geographies (mostly inside the US).

Which then leads us to the kicker: a chart revealing what Goldman had done with its equities this year. The bank does not mess around, they make it clear right in the title that it was “harvesting” its portfolio. Which is another term for selling.

What is even more incredible is how much Goldman harvested already this year. Having begun with a $20BN portfolio which say a $5BN increase in value, Goldman sold a large $5.5 billion of its assets so far, which is over a quarter of its whole portfolio.

The sales were so wide ranging that the issue was mentioned during the Goldman earnings call recently. In reply to a question about the company’s efforts to lower its portfolio, the bank stated that it has “made efforts on improving its capital efficiency and is seeking to ‘aggressively’ manage equities, especially given that the market is supportive.”

What does this mean in plan English? Goldman is dumping its stocks while dumb money investors give a constant bid into which Goldman can sell for a huge profit.

When was the last time Goldman “aggressively” sold? Well, you have to return to 2007 and 2008 when this happened. And we all remember how that turned out.

Author: Steven Sinclaire

Bitcoin is experiencing a “reset” in investor actions at the $30,000 marker and the trend will only need to keep going to lead to a price rise.

According to Bitcoin on-chain monitor Ecoinometrics this week, the only path for Bitcoin is “up” if hodlers keep buying in.

Looking at who purchased coins since the beginning of the recent bull run in Oct. 2020, Ecoinometrics showed that huge changes are afoot compared to 2020.

At the beginning, it was smaller investors who were buying. This started when Bitcoin went pass its last all-time record high of $20,000 and kept going to the new high at $64,500.

But at $20,000, bigger investors started selling, albeit not in large enough quantities to stop the bull run.

Whales added selling pressure after Bitcoin hit $30,000. The result, report analysts, was the tipping point for the month of May’s highs.

“$30k is a crucial level that prevent the continuing of coin accumulation by whales,” Ecoinometrics said.

The reason for selling pressure taking over might lie with whale beliefs that Bitcoin was getting “too high, too soon” and that the market was seen as unsustainable.

Now that $30,000 has come back, cold feet are gone — investors, both small and big, are getting back in again.

“Whales and smaller fish alike have begun accumulating while others have gone neutral,” the findings said.

“If this interpretation is right, then what we saw was a reset. Would this trend of accumulation, there is just one direction that Bitcoin can go and it’s up.”

That perspective gives a refreshing argument to the seemingly bearish tone that has taken over many investing commentators over the previous few weeks.

Even the traditional stock-to-flow price model has led to concerns about invalidation, something its creator says isn’t true, while on-chain activity has had low volumes and a lack of good support over $30,000.

Predictions for a major price movement higher are not in short supply, meanwhile, with new hopes for upward move lingering even with Bitcoin sliding under $32,000 on Wednesday.

Author: Blake Ambrose

Do you like to take a chance on high-risk, high-reward stocks every now and then? You are not alone. As long as you do not risk more than you can reasonably lose, there is nothing wrong with keeping things fun.

But if your capital is being saved away in an IRA to grow a retirement nest egg, things change fast. Growth is something that can be achieved, and risk should be managed. Many retirees will achieve this balance by purchasing a basket of stocks instead of going for individual ones.

So with that in mind, here’s a rundown of three top ETFs any investor working on retirement should think about adding to their IRA.

SPDR S&P 600 Small Cap Growth

When you want to stick to index funds instead of dabbling in individual companies, the fund many people recommend is the SPDR S&P 500 ETF Trust.

This index’s constituents are some of the nation’s top corporate names, and it could be one of the most widely used barometers of the market’s overall health.

The S&P 500 index is not necessarily the best index for performance, however. The smaller companies that are inside the S&P SmallCap 600 have better gains over time, and smaller-cap names lead the charge.

Over the past 20 years, the S&P 600 index has doubled the the numbers of the S&P 500. This puts an ETF like the SPDR S&P 600 Small Cap Growth ETF into play.

First Trust Clean Edge Green Energy

The green energy movement’s top stocks have lived up to their true potential. Almost 20% of the U.S. energy production now is sourced from renewable energy such as wind and solar.

With the First Trust NASDAQ Clean Edge Green Energy Index ETF, investors do not have to run the risk of choosing the wrong ones. The fund currently has 53 different companies ranging from Tesla to First Solar to NextEra Energy Partners, giving investors a connection to every company within the clean energy sector.

Vanguard High Dividend Yield

Finally, add the Vanguard High Dividend Yield ETF to your IRA as a final step to ensure easy portfolio growth.

The dividend yield of this ETF is not very high. Its current yield is 2.8% and that is respectable sure, but not unattainable from other investments.

The dividend is not the only benefit here. While promoted as a dividend stock ETF, what shareholders are getting is really a group of top-quality stocks that can reliably pay — and increase — their dividends.

Within the fund’s are big names like Johnson & Johnson and JPMorgan Chase — among names that are made to last.

The kicker: Vanguard makes it very cost-effective to buy these quality names in just one bundle instead of forcing you to do a lot of individual stock purchases on your own.

Author: Blake Ambrose

Electric vehicle stocks have been very hot over the previous year, and even new companies with no revenue are achieving large valuations.

There is one EV company possibly hitting the market later in 2021, named Rivian, and it is a start-up that’s already brought in $8.2 billion from Amazon, Ford, Cox Automotive, and other huge investors with real possibilities. Bloomberg says the company has found underwriters for their IPO and it might reach the market coming this fall.

But the money that Rivian has raised does not excite me, it is the products the company is planning to offer.

A unique EV need

One of the largest gaps in the EV sector has been trucks and SUVs. Tesla has stepped its toe into SUVs with the Model Y and Model X, but these were not really created as rugged off-road machines and work more as crossover-size cars.

Ford and General Motors have electric trucks coming, but nothing available yet. This means the Rivian vehicles coming this month, the R1T and R1S, will be the first real EV trucks to hit the market.

These vehicles come with a 300 mile range, the power to drive through three feet of water, and towing capacity of as much as 11,000 pounds. And the $50,000 to $70,000 price tag won’t be that much of a shocker to EV buyers.

A big buyer is already on board

The drivetrains for the R1T and R1S are the same, but they are not the only cars being built. The first to be produced will actually be Amazon delivery trucks. Here’s what the CEO of Rivian, RJ Scaringe recently Tweeted.

Amazon’s $700 million bet on Rivian was not just for equity, it was meant to create a new supplier for 400-plus-mile-range trucks that could reduce costs and lower Amazon’s carbon footprint.

What about the IPO?

Rivian is not quite a pre-revenue company with its production line being operated, but it is close. Outside of some products being given to Amazon, the company will not report a lot of revenue pre-IPO — but that will quickly change. R1T trucks are expected to begin delivery soon, with wide scale deliveries starting in early 2022.

Bloomberg says that Rivian might seek a $70 billion valuation in their IPO. I don’t usually get excited about pre-IPO businesses because we do not know much about their financials. But for Rivian, the company has the goods to succeed in the EV industry, and that is good enough for me to get excited about their IPO coming in 2021.

Author: Steven Sinclaire

United States consumer prices increased last month at the fastest race since Aug. 2008.

The Labor Dept. revealed on Tuesday that the consumer price index went up y 0.9% in June, more than the 0.6% uptick in May. Analysts polled by Refinitiv were anticipating a 0.5% boost.

Used car prices also went up 10.5% last month, making up more than one-third of the boost. Also, energy prices went up 1.5% month over month and the price food also rose by 0.8%.

Prices increased 5.4% year over year, and have been going higher every month of 2021. Analysts polled by Refinitiv were anticipating prices to only increase by 4.9% annually.

The yearly data has a “base effects” tilt because of the lowering in prices that happened at the beginning of the covid-19 pandemic.

Core prices, which exclude energy and foods, increased 0.9% in June, more than the 0.7% boost recorded in May. The 4.5% yearly increase was the highest since Nov. 1991.

Higher prices went through large swaths of America’s economy as businesses have had trouble solving supply-chain bottlenecks that happened as a result of the covid pandemic. Some businesses are also having a hard time finding workers as easy unemployment benefits have led to workers staying home.

The Fed has said that these price gains are only “transitory” and that they will soon return to pre-covid levels as the dislocations from the pandemic are dealt with.

However, Jerome Powell, the Fed Chairman, has admitted the timing of this is “uncertain.”

This comes at a time when President Biden is preoccupied with election security changes among other partisan issues.

Meanwhile, Republicans say Biden’s out of control spending has caused the current inflation problems. And Democrats are maneuvering away from their previous “defund the police” stance, and instead linking police funding with the agenda-filled relief programs of the past six months.

By doing this, they hope to pin the blame of “defunding” the police on Republicans. This attempt seems to have failed as far too many Americans heard their calls to “defund the police” in 2020 and before.

Author: Steven Sinclaire

Peter Thiel’s $5 billion Roth IRA is among the hottest retirement topics of the year.

The Silicon Valley CEO has reportedly stashed away money in a Roth IRA to grow his 1.7 million shares of PayPal (which he co-founded) in 1999, according to data published by ProPublica. His $1,700 starting investment was worth $3.8 million a year after. Now, he is sitting pretty on a $5 billion fortune that will be 100% tax-free if he does not touch it until after he is 59 1/2.

Although building a billion-dollar retirement is maybe not realistic for the average American, it is still a perfect occasion to research Roth IRAs and find out how you can enlarge your portfolio. Here are three lessons you can learn from Thiel’s retirement.

1. Get started now

Time is your gold path to success. The more time, the more your money can increase tax-free. Unfortunately, your time to give direct contributions to your Roth IRA will go away once your income gets past an annual limit.

When Thiel gave to his Roth IRA back in 1999, the max contribution limit was $2,000 for singles who had a modified AGI of under $110,000. He was eligible to use his after-tax money to contribute to his Roth IRA in exchange for lifetime of tax-free increases. By getting started early, he was able to watch his investments grow and use his increases to invest in other assets that might help him continue his strong growth.

2. Contribute a high amount

Thiel’s Roth IRA was limited at $2,000 in 1999. Now, the Roth IRA limits have been increased and given an opportunity to use more contributions to change your portfolio’s total value.

For 2021, most singles can give up to $6,000. Anyone over 50 can invest another $1,000 into a Roth IRA.

Although it could be tempting to just contribute small amounts to your Roth IRA right now, you will have more money to invest in assets you want if you contribute the max each year. If Thiel just put in $800 to his Roth IRA, he would have lowered his earnings in half.

3. Invest in good assets

To make your contributions work even better, you must invest wisely. You may not have shares of a private company such as Peter Thiel had, but you can grow wealth by buying well-selected publicly traded stocks.

Even if you only achieve an average return of 10% per year (which is not unthinkable), a Roth IRA might get you to the million-dollar level in around 30 years if you continue to contribute the maximum amount (this assumes that max amount stays at $6,000 or higher).

Author:Scott Dowdy

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