The Wolf Den #519 - This One Thing Changes Everything

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There is a piece of simple financial advice that most people understand but choose to ignore.

Save first.

The typical approach to managing money involves paying bills, buying the things that you want, and then saving whatever happens to be left over. The problem is, there is almost never anything left to save.

In order to be effective at saving and building your nest egg, you need to make it a priority. Most of us are good at finding excuses, and there’s always a reason why saving isn’t convenient. But if you pay yourself first and then create a budget around the amount that you want to save or invest, you’ll find that it’s possible to make progress even when things seem tight.

When I was in my mid 20’s I was living on my own and getting by, but I didn’t have a lot left over after paying bills and necessities. I had no savings and did not start an IRA as I should have. This put me way behind. I was living in New York City, spending an incredible amount of money on meals and drinks with friends, even though I did not have that money to spend.

Here are some numbers to show exactly how far behind I was by not saving early.

Published in 1994 by USAA, this study shows how much money you’ll accumulate over time if you invest $250 a month starting at different ages. It assumes an eight percent average annual investment return.

If you start at age:

25: You’ll accumulate $878,570 by age 65

35: You’ll accumulate $375,073 by age 65

45: You’ll accumulate $148,236 by age 65

Crazy, right?

If I had paid myself first, in terms of contributing to an IRA and built my budget around what was left, I would have been able to make it work. Even if I had saved $100 a month, that would have been $1200 a year that would have compounded for the past two decades.

As Albert Einstein once famously said, “compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” The snowball effect it creates isn’t exciting at first, but the avalanche it turns into is magnificent. Putting saved money into any vehicle that can compound has always been and will always be the simplest path to wealth.

Make saving your first priority, not your last. Put money away early and do not touch it. This is the simple secret to accumulating wealth.

And don’t forget to do some of that saving in Bitcoin!

This is the best Bitcoin chart that I can share today. A complete flatline around 30K.

Is that a bad thing? No. Stocks had a terrible day yesterday and Bitcoin, for once, did not get the memo. Also, we have inflation numbers coming in today which could trigger volatility in all markets.

But for now, skip the charts and go outside.

It’s all about CPI, baby.

US inflation numbers drop today like the hottest mixtape in the streets. The world is waiting with baited breath to see just how bad inflation is, even knowing that the calculations are iffy at best and are often changed to fit a narrative.

“Investors will be closely watching the US inflation reading. An upside surprise would be a setback for both the Fed and markets, raising doubts about how well rates are working to subdue prices rising at a clip of more than 8%.

Policymakers “are looking for ‘clear and convincing evidence’ that inflation in the US is going to start falling back from its eye-watering level,” Nick Chatters, investment manager at Aegon Asset Management, wrote in a note. “Wishful thinking?””

Today could get very interesting.

Key events to watch today:

Some of the main moves in markets:

Here come the police. An SEC investigation has officially been launched on Terra and its subsequent downfall. This isn’t the first time that Do Kwan has been in trouble with our chief financial watchdog. He was actually served by the SEC over another issue last November, during a conference! Other countries are also investigating the matter.

The first to get caught usually get hit the hardest, ie. Ross Ulbricht, Charlie Shrem, the Nate Chastain, and now Do Kwan. Considering what unfolded - $60B lost - it is not surprise that regulators are paying attention.

That said, it would be unfortunate to set a precedent of criminalizing failure. One can clearly argue that everything that happens with Luna was predictable, that they were transparent in their actions, and that this was simply a massive failure that lacked criminal intent or illegal action. Sometimes things break and people lose money. Painting Do Kwon as a criminal or scammer if that is proven to be untrue could have widespread implications moving forward, disincentivizing entrepreneurs to build.

Crypto companies are breaking records. The Forbes Fintech 50 list honors the most innovative private fintech companies in the world, which included 9 crypto companies for 2022. In the lead for crypto was none other than FTX, followed by OpenSea, Alchemy, and Ava Labs. Also included in the list are Circle, Paxos, Fireblocks, and a few others. If you were wondering, FTX was so high up on the Forbes list, that it came in 3rd place in terms of total valuation. It was only behind Stripe and Chime and by only a few hundred million. Here’s my bold prediction. Next year, crypto dominates the list.

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