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10 Reasons You Should Own Bitcoins

10 Reasons You Should Own Bitcoins

Bitcoins have been all over the media lately. As Tim Draper believes: “Bitcoins are opening up a space that will create a revolution like the personal computers did in the 1970’s or the internet did in the 1990’s” . This article presents 10 reasons why you should be owning Bitcoins:

1. Bitcoins are independent of any central authority

Bitcoin is a digital currency that originated in 2009 by a software developer called Satoshi Nakamoto. Bitcoins are independent of any central authority. Therefore, no government nor central bank rules over them

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    2. Lower fees than other traditional online payments

    Bitcoins come with almost no fees. In addition, all the apps and services that have been built around the Bitcoin ecosystem, and which the vast majority of end users end up using also carry lower fees than other traditional online payment methods.

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      3. Its the largest cryptocurrency out there

      As of now, there are lots of cryptocurrency on the internet. However, Bitcoins are by far the one with the largest user adoption and market cap. Therefore, if you have to pick a cryptocurrency, go for Bitcoins!

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        4. Europe just regulated it as a commodity exempt of VAT

        Europe has just approved regulations that qualify Bitcoins as a commodity. Therefore, they are exempt from VAT. The price of bitcoins is defined by demand and supply. The new regulations are likely to produce an increase for the demand of Bitcoins as they are regularized and exempt of tax within the European monetary union.

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          5.  High volatility in the equities market can positively affect the price of bitcoin

          2015 has proven to be a highly volatile year for the equities as stocks markets around the world have been rallying up and down. Bitcoins are seen for some as a substitute to gold and therefore as a mean to store value. High volatility in the markets can create an inflow of money into Bitcoins. During the coming months the markets are likely to be highly volatile.

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            6. More and more companies are creating tools for the Bitcoin ecosystem

            Venture capitalists have poured tons of money into the Bitcoin ecosystem. Different services and apps enabling the end user are now available for the non-technical consumers. As more products are build and used in the bitcoin ecosystem, the adoption rate for Bitcoins will increase and its demand with it. This mean you can easily turn a few hundred dollars into a few thousand dollars with enough increase in demands.

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              7. To prevent a possible bank run (Think Greece or Argentina)

              Remember bank runs? You do not have to go that far in time. Both Argentina and Greece have suffered bank runs in the lasts years. Bitcoins can be a solution to store wealth outside of the traditional banking system and therefore avoiding people to panic when bank runs take place.

              This photo dated October 24th, 1929, shows a view of people rushing to a saving bank in Millbury, Massachusetts as the stock market on Wall Street crashed, sparking a run on banks that spread across the country.

                8-. Upwards trend in the coming month

                If we know something about Bitcoins is that they are highly volatile. Through 2015 it seemed for a while that the cryptocurrency would find a price resistance to stick to but the rally in October and post fall in November proved this stability wrong. However, Bitcoins are on upward trend towards $600 per Bitcoin that should start to stabilize through 2016.

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                  9. Most secure way to pay online

                  The bitcoin protocol provides the most secure system to make online payments and with so many payment processing system creating products for the end user, bitcoins are definitely one of the most secure options to proceed online payments.

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                    10. To be an early adopter of the powerful blockchain technology

                    The most powerful about bitcoins, is not the bitcoin (aka the cryptocurrency). But the blockchain that they have behind. A blockchain is just a confusing name for a share data base and it will have lots of large scale applications. Bitcoins allow you to become one of the early users in this technology that can revolutionize the world.

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                      If you want to learn more about Bitcoins, the powers of the blockchain and why Bitcoins are likely to increase in price over the coming months check: My First 20 Hours With Bitcoin

                      Featured photo credit: Bitcoins via esteve.co

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                      Last Updated on September 2, 2020

                      How to Set Financial Goals and Actually Meet Them

                      How to Set Financial Goals and Actually Meet Them

                      Personal finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. That’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

                      In this article, we will explore ways to set financial goals and actually meet them with ease.

                      4 Steps to Setting Financial Goals

                      Though setting financial goals might seem to be a daunting task, if one has the will and clarity of thought, it is rather easy. Try using these steps to get you started.

                      1. Be Clear About the Objectives

                      Any goal without a clear objective is nothing more than a pipe dream, and this couldn’t be more true for financial matters.

                      It is often said that savings is nothing but deferred consumption. Therefore, if you are saving today, then you should be crystal clear about what it’s for. It could be anything, including your child’s education, retirement, marriage, that dream vacation, fancy car, etc.

                      Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives that you foresee in the future and put a value to each.

                      2. Keep Goals Realistic

                      It’s good to be an optimistic person but being a Pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going beyond what you can realistically achieve will definitely hurt your chances of making meaningful progress.

                      It’s important that you keep your goals realistic, as it will help you stay the course and keep you motivated throughout the journey.

                      3. Account for Inflation

                      Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” This quote sums up what inflation could do your financial goals.

                      Therefore, account for inflation[1] whenever you are putting a monetary value to a financial objective that is far into the future.

                      For example, if one of your financial goal is your son’s college education, which is 15 years from now, then inflation would increase the monetary burden by more than 50% if inflation is a mere 3%. Always account for this to avoid falling short of your goals.

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                      4. Short Term Vs Long Term

                      Just like every calorie is not the same, the approach to achieving every financial goal will not be the same. It’s important to bifurcate goals into short-term and long-term.

                      As a rule of thumb, any financial goal that is due in next 3 years should be termed as a short-term goal. Any longer duration goals are to be classified as long-term goals. This bifurcation of goals into short-term vs long-term will help in choosing the right investment instrument to achieve them.

                      By now, you should be ready with your list of financial goals. Now, it’s time to go all out and achieve them.

                      How to Achieve Your Financial Goals

                      Whenever we talk about chasing any financial goal, it is usually a two-step process:

                      • Ensuring healthy savings
                      • Making smart investments

                      You will need to save enough and invest those savings wisely so that they grow over a period of time to help you achieve goals.

                      Ensuring Healthy Savings

                      Self-realization is the best form of realization, and unless you decide what your current financial position is, you aren’t heading anywhere.

                      This is the focal point from where you start your journey of achieving financial goals.

                      1. Track Expenses

                      The first and the foremost thing to be done is to track your spending. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you will be surprised by how small expenses add up to a sizable amount.

                      Also categorize those expenses into different buckets so that you know which bucket is eating most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pumping up your savings rate.

                      If you’re not sure where to start when tracking expenses, this article may be able to help.

                      2. Pay Yourself First

                      Generally, savings come after all the expenses have been taken care of. This is a classic mistake when setting financial goals. We pay ourselves last!

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                      Ideally, this should be planned upside down. We should be paying ourselves first and then to the world, i.e. we should be taking out the planned saving amount first and manage all the expenses from the rest.

                      The best way to actually implement this is to put the savings on automatic mode, i.e. money flowing automatically into different financial instruments (mutual funds, retirement accounts, etc) every month.

                      Taking the automatic route will help release some control and compel us to manage what’s left, increasing the savings rate.

                      3. Make a Plan and Vow to Stick With It

                      Learning to create a budget is the best way to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be organized

                      Nowadays, several money management apps can help you do this automatically.

                      At first, you may not be able to stick to your plans completely, but don’t let that become a reason why you stop budgeting entirely.

                      Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options, and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

                      You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

                      4. Make Savings a Habit and Not a Goal

                      In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that, in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

                      Make savings a habit rather than a goal. While it might seem to be counterintuitive to many, there are some deft ways of doing it. For example:

                      • Always eat out (if at all) during weekdays rather than weekends. Weekends are more expensive.
                      • If you are a travel buff, try to travel during off-season. You’ll spend significantly less.
                      • If you go shopping, always look out for coupons and see where can you get the best deal.

                      The key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice, which will be harder to sustain over a period of time.

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                      5. Talk About It

                      Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission.

                      Therefore, in order to stay the course, surround yourself with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

                      6. Maintain a Journal

                      For some people, writing helps a great deal in making sure that they achieve what they plan.

                      If you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

                      When you have a written commitment on paper, you are going to feel more energized to follow the plan and stick to it. Moreover, it is going to be a lot easier for you to track your progress.

                      Making Smart Investments

                      Savings by themselves don’t take anyone too far. However, savings, when invested wisely, can do wonders.

                      1. Consult a Financial Advisor

                      Investment doesn’t come naturally to most of us, so it’s wise to consult a financial advisor.

                      Talk to him/her about your financial goals and savings, and then seek advice for the best investment instruments to achieve your goals.

                      2. Choose Your Investment Instrument Wisely

                      Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about the common ones, like a savings account, Roth IRA, and others.

                      Just like “no one is born a criminal,” no investment instrument is bad or good. It is the application of that instrument that makes all the difference[2].

                      As a general rule, for all your short-term financial goals, choose an investment instrument that has debt nature, for example fixed deposits, debt mutual funds, etc. The reason for going for debt instruments is that chances of capital loss is less compared to equity instruments.

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                      3. Compounding Is the Eighth Wonder

                      Einstein once remarked about compounding:

                      “Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.”

                      Use compound interest when setting financial goals

                        Make friends with this wonder kid. The sooner you become friends with it, the quicker you will reach closer to your financial goals.

                        Start saving early so that time is on your side to help you bear the fruits of compounding.

                        4. Measure, Measure, Measure

                        All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments and taking stock of how our investments are doing.

                        If we don’t measure progress at the right times, we are shooting in the dark. We won’t know if our saving rate is appropriate or not, whether the financial advisor is doing a decent job, or whether we are moving closer to our target.

                        Measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

                        The Bottom Line

                        Managing your extra money to achieve your short and long-term financial goals

                        and live a debt-free life is doable for anyone who is willing to put in the time and effort. Use the tips above to get you started on your path to setting financial goals.

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                        Featured photo credit: Micheile Henderson via unsplash.com

                        Reference

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