Too Many Questions About Yield Farming!

What are things behind the enthusiasm for cryptos? It’s something relatively new for many of us. It’s Decentralized Finance or DeFi for short. This new concept looks like the traditional banking system that cryptos have come up with before, but it is different from what we have known about this term in fintech.

In this article, we’ll get yield farming explained, which is a hot topic in DeFi, so that you can understand why many people are talking about it. If all these things sound a little puzzling to you, don’t worry! We are here to resolve your skepticism of how yield farming is explained.

So What Is Yield Farming?

Yield Farming is a form of staking cryptocurrency or lending crypto assets to generate profit (% profit or reward in the form of a new cryptocurrency). This is an innovative but also risky and volatile feature of the decentralized finance (DeFi) system.

The Reasons Why Yield Farming Is So Popular

The apparent benefit of Yield Farming lies in the attractive profits brought to each investor. Up to now, the form of interest farming still generates higher interest rates than players depositing money in traditional banks. However, high interest rates come with certain risks.

In 2020, Yield Farming had explosive growth in popularity, the number of participants. It is estimated that a considerable amount of money has been created through the Ethereum ecosystem. Productive mining platforms that operate on Ethereum and the DeFi engine system dominate the market.

Yield Farming’s productive farming process has also pushed the advent of many different protocols. When owning an infrastructure platform that includes a community of users who share the same passion and actively participate in the system’s activities, it can easily attract more partners to cooperate.

Yield Farming has become as popular as it is today in part because it supports projects in terms of liquidity. Along with that is the benefit for both lenders and borrowers. Yield Farming helps everyone to have access to capital in the world of DeFi finance.

DeFi Platform For Yield Farming

Investors who want to use Yield Farming to increase their profits can go through the following DeFi platforms:

Compound: is a currency market that allows users to earn interest by depositing crypto-assets into several pools supported by the platform.

MakerDAO: is the first decentralized credit exchange that allows users to lock cryptocurrencies as collateral to borrow DAI, a USD-pegged stablecoin. Interest is paid as a “stabilization fee.”

Aave: is a decentralized liquidity exchange where users can participate as depositors or borrowers. Depositors provide crypto assets to the market to earn passive income, while borrowers can borrow either over-collateralized (permanent) or uncollateralized (one-block liquidity).

Uniswap: is a protocol for creating crypto mobility and trading ERC-20 tokens on Ethereum. Uniswap eliminates intermediaries and unnecessary fees, allowing for fast, efficient transactions.

Balancer: is an automatic market maker (AMM) platform developed on the Ethereum blockchain and launched in March 2020. Balancer acts as a self-balancing, price-adjusting portfolio. And crypto coordination. Participants in the Balancer will receive back BAL tokens.

Synthetix: is based on the Ethereum (ETH) blockchain and provides highly liquid synthetic assets (synths). Synths track and deliver returns on the underlying investment without requiring investors to hold the purchase directly.

Yea rn. Finance: uses its algorithm so that investors can choose from many different DeFi lending platforms like Aave and Compound for the highest yield. Yearn. Finance made waves in 2020 as its YFI governance token grew to over $40,000 in a short time.

Yield Farming Vs. Other Forms Of Investment

When new to the cryptocurrency market, perhaps not many people see Yield Farming with some other form of investment. Examples include liquidity mining, staking, and cryptocurrency mining.

Yield Farming and Liquidity Mining

Many people often get confused between Yield Farming and Liquidity Mining. Although they can be used interchangeably, there is a fundamental difference.

Both Yield Farming and Liquidity Mining have the potential to generate profits from governance tokens. In it, Yield Farming will need DeFi applications, such as leverage. As for Liquidity Mining, it works based on the Proof of work algorithm.

During liquidity processing, the pool of miners will manage to earn a dividend swap equivalent to 0.3%. Along with that are the newly mined tokens after successfully identifying the block of transactions and saving them in the Blockchain ledger.

For Yield Farming, however, the liquidity provider uses DeFi decentralized finance platforms. Here, allow them to transfer money or lend money to earn interest.

In addition, Yield Farming participants can also use leverage when borrowing or lending stablecoins. At the same time, players will apply different money transfer strategies to optimize interest rates.

Yield Farming and Crypto Mining

Yield Farming and Crypto Mining forms of cryptocurrency mining have a relatively significant difference. Specifically, Crypto Mining mainly runs on the Proof of work algorithm. Meanwhile, Yield Farming relies on a DeFi application that operates primarily on the Ethereum network platform.

Compared to cryptocurrency mining, profit farming is an advanced way to earn rewards still. However, players must own cryptocurrency to participate in the lock and deposit to make a profit.

In a nutshell, Yield Farming is like a form of users lending out properties they own to receive interest. As for cryptocurrency mining, users will directly participate in the mining process with their efforts and the hardware system they invest in.

Farming and Staking

The Staking staking process works based on the Proof of Stake consensus mechanism. Accordingly, validating participants create blocks through a completely random selection process, earning rewards from active investors in the same platform. Then, the higher the bet, the bigger the prize.

As for Yield Farming, players will generate profits from the tokens they are holding through lending and interest.

On the other hand, Staking requires a more significant amount of cryptocurrency to increase the chances of being selected as a validator in the next block. Depending on the token’s block formation, players may have to wait up to several days to receive their staked rewards.

Yield Farming participants have the right to move assets flexibly whenever it is essential to optimize the possible profit. Compared to staking, profit farming allows you to send your notifications to the liquidity pool integrated on the protocol.

Conclusion

Yield Farming is a form of making money through the player’s house locking its assets. The assets here are usually cryptocurrencies. It works almost similar to the structure of savings in traditional banks, but the deposit process is more straightforward, the interest rate is more attractive.

That’s everything we want to show you about yield farming. Hopefully, after reading this summary, you have a better understanding of Yield Farming.

Oddest Collectibles to Invest in 2021

The Oddest Collectibles to Invest in 2021

When it comes to investment strategies, there is no single prescribed way to maximize your returns. While most investors choose to put their money into stocks, bonds, or real estate, they are not the only options out there. Some people seek out more unconventional assets such as collectibles. Although many of us are still holding on to childhood memorabilia in the hopes that someday it may be worth a fortune, chances are slim that you will see five figure returns. However, some of these may net you better returns than traditional portfolio assets. Here are some of the oddest collectibles to invest in 2021.

The Best Collectibles to Invest in 2021

1. Stamps

As the king of all hobbies, most people know that rare stamps are worth a small fortune. With a quick Google search, you will find dozens of news stories of stamps that sold for millions of dollars. Although experts estimate that only 1% of stamps worldwide will appreciate over time, it is one of the safer options on the list of oddest collectibles to invest in 2021.

If you are lucky enough to have one of these in your collection, it could earn a yield between 5% and 20%. However, they also advise that you will need to hold these assets for up to 15 years before you see significant returns.

2. Coins

Collecting coins is a popular pastime than has huge rewards to the most persistent collectors. In fact, rare coins can bring in thousands or even millions of dollars at auction. While your wheat pennies will only sell for a few bucks, coins made from precious metals or featuring mistakes are the most valuable ones. Unfortunately, investing in coins doesn’t earn you any dividends. Therefore, the value depends entirely upon how much someone is willing to pay.

However, gold coins provide a more tangible return for investors. Even after nearly 600% growth in the last two decades, gold prices continue to rise. So, even if these coins hold no value among coin collectors, they will always be worth their weight in gold.

3. Comic Books

In recent years, Hollywood has brought our favorite childhood superheroes back to life. But, it has also made many super-fans rich. With the recent surge in popularity, original comics in mint condition now fetch top dollar at auctions. For example, a 1938 comic featuring Superman’s first appearance sold for over $2.1 million.

If your comic books have been well-loved and show their age, they won’t be worth nearly this much. However, it is possible to find rare issues at conventions which you can sell or trade for a profit. Comic-Con events are a great place to build your comic book collection as well as find some of the oddest collectibles to invest in 2021.

4. Trading Cards

While this is a broad category, trading cards are a solid choice if you want to invest in collectibles. The most attractive thing about trading cards is that you can personalize it to your own passions or interests. Whether you are into baseball, Pokémon, Yugioh, or Magic the Gathering, rare cards are worth millions.

If you had any trading cards as a child, dust off your collection and check their value. Even if you don’t have a Topps 1952 Mickey Mantle card, your trading cards could still be worth money.

5. Toys

Vintage toys are another good option for collectors. As with comics, vintage toys from the 80s and 90s have seen a huge resurgence in popularity. If you held onto your favorite toys after the various toy crazes subsided, they could fetch a good price, given they are in good condition. Action figures, Beanie Babies, Lego’s, Barbie dolls, and Hot Wheels are all hot-ticket items right now.

When you are ransacking your home for valuable collectibles, look for items still in the original packaging. However, if you don’t have any toys from your own childhood, you can always begin a new collection.

The Oddest Collectibles to Invest in 2021

Now that we’ve covered the most common and valuable ones, here are some of the oddest trends and collectibles that people are investing in.

1. Sneakers

Any vintage item in good condition will generally bring a good price. However, sneakers are quickly becoming one of the most valuable vintage items on the market. There is a huge demand for first and limited-edition sneakers. In particular, Nike and Adidas sneakers in mint condition regularly sell for thousands of dollars on eBay.

A recent article from the Huffington Post uncovered that vintage sneakers provided better returns than gold. However, be warned that prices and demand are unpredictable. So, it’s a bit of a gamble knowing which shoes to invest in.

2. Electronics

It’s not surprising to learn that vintage electronics fetch high prices at auction. Original Apple products and first-generation devices not only make great conversation pieces, but also sell for millions online.

While you probably don’t have an original Macintosh computer lying around, early generation iPods, Alexas, and Nintendo DS gaming systems are likely to appreciate in value over time. Since most of this technology is still relevant, early editions are relatively easy to find. So, if you have any vintage electronics still in the box, it would be worth your while to hold on to them to see if they increase in value over the next few years.

3. Anthropomorphic Taxidermy

This is by far the oddest collectible to make the list. For those who don’t know what it is, anthropomorphic taxidermy is the art of preserving dead animals and displaying them in human situations. For example, specimens are usually dressed in human clothing or posed into human roles and settings. Although it may seem odd to many people, this type of art is extremely valuable to the right collector.

Investing in Collectibles

If you are looking to invest in less traditional assets, collectibles are a fun and interesting way to diversify your portfolio. However, it always includes greater risk than more traditional options like stocks and bonds. While there are no guarantees that your collectibles will bring high returns, patience is a virtue. Although most collectibles won’t earn a fortune in your lifetime, you never know…your favorite collectibles could bring you more than enjoyment in the years to come.

 

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How the Drought in Taiwan Is Affecting the Tech Industry

How the Drought in Taiwan is Affecting the Tech Industry

Severe Drought in Taiwan Drying Out Production

For those who are closely watching the global chip crisis, all eyes are currently on Taiwan. As a resident of the R.O.C. myself, I have both personal and financial stakes as the severe drought conditions in Taiwan persist. The country is facing its worst drought in over 50 years. This leaves tech manufacturers and policymakers with some difficult decisions in the days ahead.

Not only do I worry about my friends still living there as reservoirs dry up, but I have also heavily invested in several Taiwanese tech companies. The island is home to some of the world’s largest producers of semiconductor chips, which are responsible for approximately two-thirds of the global supply. However, the drought may further aggravate chip shortages and affect production as the government enacts even tighter water restrictions.

How Severe Is the Drought in Taiwan?

Water is a precious resource, especially in places like Taiwan where supplies frequently fluctuate. The country depends on typhoon season to fill its reservoirs, but it has faced several water shortages in recent years. Current reserves are quickly drying up since no major storms hit the island last year to replenish its water supply.

When I lived there in 2015, we faced similar conditions. Previous droughts led cities to shut off supply two days a week in order to conserve water. But, experts say this is the worst drought Taiwan has faced in recent memory. The water levels in Taiwan’s reservoirs have not been this low in 56 years. Right now, 16 of the islands’ 19 reservoirs are below 40% capacity. Of these, seven are under 10% and steadily declining. At this rate, some regions of Taiwan could be without water in the next 30 to 60 days.

Conservation

To conserve the supply, the government announced restrictions to ration its reserves to over a million residents and businesses. Earlier this spring, officials required its most important technology and industrial parks to cut water usage by an additional 11%. Unfortunately, government officials may have to decide between further limiting supplies to its two most important sectors: technology or agriculture.

Continued conditions promise to further strain the local economy. However, the questions remains as to who will have priority access to water. With Taiwan Semiconductor Manufacturing Co. accounting for roughly 4.5% of the national GDP and its increasing dependence on foreign imports of food, decisions must be made about resource allocation. Officials also warn that things will only get worse. Without significant rainfall, there will be stricter water rationing for all.

How Will the Drought Affect Production and the Global Chip Shortage?

It is not only investors who are questioning how the drought in Taiwan will affect the global stock markets. Automakers, tech manufacturers, and world leaders are also concerned about a shortage of components if water restrictions impact Taiwan’s manufacturing and exports.

Semiconductor chip producers require massive amounts of water. They use it to clean wafers at every step of production, etch patterns, polish layers, rinse all the components, and maintain health standards at the facilities. In 2019, Taiwan Semiconductor Manufacturing Co., the world’s biggest contract chipmaker, used 156,000 tons of water per day, accounting for 10.3% of that region’s water consumption. As these chips become more complex with added layers, manufacturers will require even more water for production processes.

Billions of people around the world require semiconductor chips to operate their cars, smartphones, computers, and gaming consuls on a daily basis. Since Taiwanese wafer-fabrication factories make up 65% of global revenue, the future of Taiwan’s tech industry may be in peril. Analysts are unsure if companies like Taiwan Semiconductor Manufacturing Co., Micron Technology Inc., United Microelectronics Corp., and Vanguard International Semiconductor Co. will be able keep up with growing demands without sufficient water supplies.

How Are Industry Leaders and Officials Responding to the Drought in Taiwan?

Continued patterns of extreme weather and water shortages have industry and government leaders questioning how climate change will further affect production in the future.

Manufacturers’ response

In the face of the growing shortages, chipmakers are looking for solutions. Some are searching for alternative sources of water, including a new desalinization plant near Hsinchu. But, constructing new facilities, conservation measures, and limited resources will likely increase production costs. Furthermore, higher costs will also inhibit these companies’ manufacturing capabilities.

Although industry spokesmen remain stoic in the face of adversity, Taiwan’s manufacturers are preparing contingency plans for worst-case scenarios. The three major technology parks have already been trucking in water to ensure they have at least a two day supply on hand at each factory. However, facilities can only receive about 20 tons per delivery. Tankers and other sources provide a meager 20% of necessary water supplies should the government enact more extreme restrictions. Many producers are reusing as much water as possible and even using groundwater from construction sites. Unfortunately, none of these measures provide long term solutions.

Government response

Over the last few decades, government officials have taken several steps to address Taiwan’s water concerns. Their primary focus has been on improving infrastructure to retain its water reserves. Replacing aging pipes has been one of the most successful ways to reduce leakage. Since 2010, Taipei City reported a 9% decrease in water loss due to leakage. Furthermore, policymakers strongly support the private sectors’ efforts to construct more desalinization plants to reduce industrial dependency on national supplies.

Lawmakers have also suggested increased rates for heavy consumption. While Taiwan boasts the lowest prices for water in Asia, critics say this has contributed to the problem. So, some officials have proposed an additional surcharge for customers using more than 10,000 metric tons each month. Their hope is that increased rates will make everyone re-evaluate their daily water consumption.

An Uncertain Future

No one can say for certain how long the drought will last, when stricter limitations will occur, or how much it will impact production. This puts Taiwan and its manufacturers in a precarious position. The government is doing everything it can to ensure the tech manufacturing industries stay up or running. With recent contracts to supply chips to German, Japanese, and American automakers, the country’s economic growth depends on it.

Amid all this speculation, one thing is certain. If the water supply is not replenished soon, there will be ever greater stress on the country’s water supply and global chip demands. The Taiwanese government will have to choose to ration water to households or businesses supporting its economy.

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5 Reasons to Max Out Your Roth IRA

Reasons to Max Out Your Roth IRA Contribution

Time is your greatest asset when you invest with a Roth IRA. The earlier you begin investing, the greater your dividends will be during your retirement years. So, it is easy to understand why you would want to take advantage of accounts that let you build your tax-free retirement funds. There are many reasons to max out your Roth IRA this year, not the least of which is the extension for your 2020 contributions.

The Advantages of Maxing Out Roth IRA

When it comes to starting your retirement fund, the Roth IRA is one of the best options available. When you fund a Roth IRA, you capitalize on an important tax break if you contribute your after-tax dollars now. While traditional IRAs give you immediate tax breaks on your tax return, a Roth IRA lets you make withdrawals tax-free after retirement. A Roth IRA also gives you more control over your money since you choose the amount to invest.

One attractive feature of the Roth IRA is that you can maintain it indefinitely. Since there are no Required Minimum Distributions (RMDs), you are not required to make withdraws once your reach a certain age.

Additionally, you can withdraw what you put in at any time.  You only pay a penalty if you prematurely take out the earnings in your account. So, there is no need to pay taxes if you only withdraw what you put into it.

A Roth IRA is especially good for young savers who will likely be in higher tax brackets after retirement.  Thanks to compounding interest, you get the most of your money when you max out your Roth IRA from an early age. Therefore, the sooner you start funding a Roth IRA, the more time you have to accumulate assets.

The Restrictions for a Roth IRA

These types of accounts have several restrictions on them because they have the greatest returns. These limits are put in place because Roth IRAs offer such a strong incentive to invest and take advantage of them. Here are some of the most important restrictions you should be aware of, but you can find a more comprehensive explanation here that outlines every detail of contribution rules.

Making Contributions

Although you can contribute to your Roth IRA at any age, you must have earned income for the year. However, if your income exceeds the set limit, you are ineligible to make any contributions for the year. If you do qualify, you can only contribute a maximum of $6,000 annually. If your earned income is lower than the threshold, you can only match the amount made after taxes.

There are no minimum contributions required, but you cannot exceed the yearly maximum threshold. The only exception to this rule is for people over 50 who can make a catch up contribution totaling $7,000. Keep in mind though, you can only make your annual contribution up until the tax filing deadline.

Making Withdrawals

When it comes time to make withdrawals, there are no penalties for the sum you have put in. However, you cannot make withdrawals on any earnings the account has generated for at least five years. There is a 10% penalty if you withdraw the earnings within the first five years of opening and funding the account.

To start receiving distributions from your Roth IRA tax and penalty free, you must meet one of the following conditions:

  • You must be at least 59 1/2 years old.
  • The distribution will be used to help purchase, build, or rebuild the first home for an account holder or qualified family member.
  • The account holder becomes disabled.
  • The assets are being distributed to beneficiaries after the account holder’s death.

My Contributions for 2020

With a Roth IRA, you are investing in higher-quality assets so you earn even more tax-free income. So, it makes sense to max out these accounts first. Especially now, when you have an extra month to get your contributions for an extra month thank to the extended tax filing deadline.

When I returned to the U.S. last year, I began investing by setting up my first retirement account with a Roth IRA. Unfortunately, I fall under a weird caveat of restrictions placed on foreign earned income. Although I had been working in country for a few months of the 2020 fiscal year, I am only able to match watch I earned domestically. This amount was less than limits set for maxing out a Roth IRA, so I will not be able to make a full contribution for 2020. However, it will give me a good head start for 2021.

5 Reasons to Max Out You Roth Contribution This Year

Any financial advisor can provide a long list of reason why it is a good idea to begin investing sooner rather than later. However, here are five great reasons you should max out your Roth IRA contributions for 2020 as well.

1. The IRS extended the tax filing deadline this year.

Now is the best time of all for maxing out your Roth IRA contribution. This year, you have an extra month for 2020 contribution thanks to the filing extension deadline until May 17.

2. You can begin accruing tax-free income for retirement now.

Retirement may not be on your mind if you are just starting your career, but it is never too early to begin investing in your future. Every dollar you contribute today equates to more tax-free income available to you in your golden years.

3. With time on your side, compounding interest is reason enough to open a Roth IRA.

Since you are unable to easily access the earnings from a Roth IRA, it encourages the account holder not to make withdrawals. If the principle amount remains untouched, compounding interest will drastically increase your initial investment. If you have time on your side, compounding interest is your best friend.

4. You never know when circumstance will change.

At some point in your future, you may not qualify for Roth IRA contributions. So, it is wise to take advantage of opportunities when they present themselves.

5. A Roth IRA protects against increased taxation rates.

Taxes are most people’s biggest expense after retirement. Therefore, maxing out your Roth IRA means you keep more of your money since withdrawals are tax free.

Furthermore, if you add more money now, a Roth IRA protects you against increased taxation rate. Other retirement accounts like 401(k) and traditional IRAs will be heavily taxed when you withdraw. However, the money you add to your Roth IRA would be unaffected by any future rise in taxation rates.

As you can see, there are several good reasons to max out your Roth IRA this year. Contact your financial advisor with and specific questions about how to set up and take advantage of these retirement accounts.

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What Are Your Retirement Options after Employment Termination?

What Are Your Retirement Options after Employment Termination?

When you leave a job, there are several loose ends that you will need to tie up. One important consideration when you leave your position is what to do with your employer-sponsored retirement accounts. If you are new to investing or not well-versed in financial matters, you may be wondering what your retirement options are after employment termination. You have a few choices. But, some are better than others. Before you make any major decision, you must evaluate eligibility requirements, know the tax implications, and compare the fees and investment options available to you.

Options for Your Retirement Plans after Employment Termination

1. Leave it where it is.

Depending on how much you have invested in the employer-sponsored 401(k), you may be able to leave your money in the current account. If you have more than $5,000 invested in the old plan, most companies allow you to maintain your retirement account. Even if you are no longer work for the employer, you may be able to leave your money parked in the account.

This will be most beneficial to you if the old plan has low fees, good investment options, or you have a large balance. If you go in this direction, you could always roll it over to a different account in the future as well.

However, if the balance is less than $5,000, your former employer might require you to move it after employment termination. For balances under $1,000, the company could force you out by simply writing a check. But, for balances between $1,000 – $5,000, your former employer must assist you in setting up an IRA if they are forcing you out of their plan.

When considering you retirement options after employment termination, this may not the best one for you. You may want to consider alternatives if you are likely to forget about it, let the account sit dormant, or you are not impressed by the terms. Your former employer’s plan may have more limited options when compared to various IRA offerings or your new employer’s retirement savings program.

2. Roll it over to a plan with your new employer.

Another possibility is to roll over the balance to your new employer’s retirement plan. Most companies will allow new employees to enroll in their retirement savings plan once they have reached the minimum length of employment. It is a fairly simple process, and only requires some paperwork to complete a direct transfer. The administrator of your former plan can deposit the balance of the previous account into your new one.

Rolling your retirement plan into a new one prevents you from paying any taxes on the balance. If you do not want the direct transfer, you can also have your former employer issue a check for the balance. Then, you can deposit the funds yourself. However, you must do so within 60 days. Otherwise, you will pay income tax for the entire lump sum. Before you close the first account, make sure the new 401(k) is set up and able to receive balance transfers.

This option is cost-effective because you can defer taxation. Additionally, you can consolidate your funds into a single account rather than keeping track of several different retirement accounts after employment termination. It also makes things easier down the line for family members or heirs when they need to handle your financial affairs. Just be sure to compare the available options and fees. Once you transfer the balance, you cannot go back to your old plan.

3. Roll it over to an IRA.

If your new employee does not have a retirement plan for its employees or the options are not ideal, you should consider rolling it into an IRA. Whether you choose a traditional or Roth IRA, the account will be in your name. Therefore, you have greater control over the account and can choose any financial institution you like. Since you are not restricted by your employer, you have freedom to decide how and where you invest your money.

There are few restrictions or limitations on these kinds of transfers. Furthermore, both traditional and Roth IRAs provide a wide range of low-cost offerings. Consolidating your investments into a single account also makes them easier to track.

If you go this route, you will have to include the untaxed amount in your gross income for the fiscal year you completed the rollover. But, if you meet certain qualifications, future withdrawals could be tax-free.

4. Begin taking distributions.

If you are nearing retirement age, you may want to begin taking distributions from your accounts. You can begin receiving distributions at age 55. But, you may have to pay the penalty on the taxable portion of it. Most retirement accounts dictate that you must be 59 ½ to receive distributions without the 10% tax penalty on early withdrawals. However, those who retire between the ages of 55 and 59 ½ do not need to pay this penalty.

Many people avoid this option because of the taxation and penalty fees. Moreover, when you begin receiving distributions from a traditional 401(k) you will need to pay income tax. On the other hand, distributions from your IRA will be tax free as long as you meet the age requirements and had the account a minimum of five years.

5. Cash out the balance of the account.

The last resort is to cash out your retirement accounts. However, if you liquidate your retirement accounts early, you will have to pay taxes on the full amount in addition to the 10% penalty. Most financial advisors warn against this because you are depleting your retirement savings. Unless you need the cash now, it is better to leave it in your accounts until the balance and distribution payments are tax-deferred.

Explore Your Retirement Options

Before making any major financial decisions, you should explore all your options. Weigh the pros and cons and determine which route gets you closer to your financial goals. There are many online resources that can help you make informed decisions. However, there is no shame in admitting you need help if you are in over your head. When in doubt, it is always wise to seek professional advice.

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The SMBX: Changing the Way You Invest in Small Businesses

SMBX: A new way to invest

As an individual investor, I am always looking for new and innovative ways to diversify my portfolio and increase my earnings. I already have a healthy range of holdings in stocks, bonds, and mutual funds.

However, I’m always on the lookout for new ways to generate passive income. That’s where platforms like the SMBX come in. This new marketplace directly engages with its investors to make it simpler for you to invest in small businesses.

The platform is somewhat complicated and new, so here is some explanation of what it is.

What is the SMBX?

The SMBX is new investment platform where small business owners can directly connect to the public. Their model utilizes regulation crowdfunding to allow small businesses to go straight to the source. As their tagline states, individual investors get to “be the bank,” providing an entirely new way to raise capital. Rather than purchasing stock in a specific company, any investor can buy small business financial securities through their marketplace.

What sets the SMBX apart is that they have created a new asset class: the Small Business Bond. The idea is to help small businesses generate capital through bonds instead of relying on bank loans. Private investors purchase bonds, which are debt-based financial assets. The investor (you) loans money to an issuer (the small business) for a period of time. In exchange, the issuer has a legal obligation to repay them, plus interest.

It is a win-win scenario for everyone. Small businesses can bypass the loan process to get the funding they need at better prices than banks offer. Meanwhile, investors have more control over where their money goes since you can pick which small businesses to invest in.

What are the Advantages of Investing with SMBX?

The greatest advantage of the SMBX is that it creates new options for both small businesses and individual investors. Unlike other marketplaces that emphasize equity, the SMBX is transforming small business debt through community engagement. Additionally, investors have the opportunity to affect change by supporting these businesses. What seems like a modest investment to the individual has the potential to impact not only the business owners, but also the people they serve.

For Small Businesses

The greatest benefit to small businesses is that they have the ability to bypass traditional lenders. Small companies no longer have to be captive to bank loans. It is much easier and cheaper to raise capital through Small Business Bonds since they can appeal directly to the public. Furthermore, there are less regulations and fees associated with this type of asset. Here is what their website says:

SMBX value for businesses

For Investors

There are even more advantages for individual investors. Since you get to replace corporate banks, you have the ability to affect change within your community. You support local commerce when you invest in small businesses, allowing them to continue operating. What seems like a modest investment from the individual can have a huge impact on hundreds of people by creating more jobs locally and returning profits back to their communities.

Another benefit is that the SMBX welcomes non-accredited investors to join. The platform is easily accessible and very user-friendly. There are no investors fees and you can begin with as little as $10. The average returns on investments is approximately 6.5%, and it pays the principle plus interest each month.

What are the Disadvantages?

As with any investment, there is always risk. It is possible that your investment will not see profitable returns, and you could lose your money. SMBX is offering bonds, so you’ll want to read the bond prospectus for each offering.

Another thing to keep in mind is that the SMBX is a relatively new platform. Any financial advisor will tell you that it is risky to invest with new firms that have a short history. However, the expertise and combined experience of the founders give me confidence that I’m not throwing my money away.

One thing that I was disappointed with was the limited offerings. Since it is a relatively new marketplace, this makes sense. However, I hope to see a wider variety of small businesses on the marketplace and more frequently updated offerings in the future.

Here are some of the companies in their marketplace offering bonds.

SMBX Offerings

How Do You Start Investing with SMBX?

Getting started was the easiest part. It is simple to sign up. First, you need to create an account, which requires you to enter your personal details. They will ask for typical information including your legal name, address, estimated income, and estimated net worth. Once you verify your email and add a payment method, you are ready to get started. Just be aware that you must link to either a credit card or bank account to your profile.

After you confirm and submit everything, you can then browse the available offerings and choose which one to invest with. I carefully looked at each one, evaluating their financial goals, bond duration, expected yield, and overall mission.

Once I reviewed my options, I chose to purchase my first Small Business Bonds from ChildWise because I am very passionate about education. Furthermore, the bonds I bought have an estimated 8% yield. Not only can I feel good about where I am investing, but it also seems like I will see good returns.

Why Should You Use SMBX to Invest in Small Businesses?

My initial experience with the SMBX has been extremely positive. I feel it is important to find innovative ways to directly connect investors with the small businesses they want to invest in. Through their marketplace, investors are able to engage and interact with the company in an entirely new way. As the markets continue to evolve, it is important that small businesses find ways to thrive.

The best part is that it creates new revenue streams for your portfolio by supporting your local community.  You don’t need thousands of dollars to get started. Even a modest investment in Small Business Bonds with a high yield can significantly increase your earnings. You can get started with as little as $10 and choose from the latest offerings at the SMBX. The bonds pay between 4% and 9%, which is higher than most bank accounts, although you are taking a bit more risk.

By way of a quick wrap up here, if your looking for some additional revenue and you like the idea of investing in small businesses, you can sign up here.

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Energy Stocks during America’s Cold Snap

Energy Stocks Have High Performance during the Cold Snap

This February brought another bout of extreme weather to the United States. As subzero temperatures swept across the country, energy providers experienced unprecedented demands for heat and electricity. While many of us were watching the news, financial analysts have been watching how these winter storms affect energy stocks during this cold snap.

Record Lows during America’s Cold Snap

Normally, Arctic temperatures are contained within the polar vortex by the jet stream. However, the pressure systems usually concentrated around the North Pole pushed winter snow storms south. It brought snow and freezing temperatures to some of the driest, hottest parts of the country.

At one point, an estimated 150 million Americans experienced winter storm warnings. Meteorologists said roughly 73% of the country received snowfall. Many who live in the northern regions have seen these conditions before. But, southern states proved they were unprepared to deal with energy demands during the cold snap.

For the first time in the state’s history, every county in Texas was under winter storm warnings. At the coldest point of these extreme weather conditions, it was colder in Dallas than it was in Anchorage. When these drastic changes in temperature occur, it becomes dangerous to be outside. There are serious concerns of frostbite, hypothermia, and death when the power grid is disrupted.

Dealing with Rising Energy Demands

The Midwest and Southern parts of the United States faced record low temperatures that tested the limits of the power supply. To cope with rising energy usage, SPP implemented rotating power outages. The company had to reduce demand on their power grid in 14 states. By Sunday February 14, it became clear that supply and distribution would reach critical levels.

Rolling power outages began February 15, with residents told to expect them to last about 30-60 minutes. Here in the Midwest, we were left without power for up to an hour at a time. But, local providers quickly restored electricity and heat. Although it was inconvenient, the worst part was not knowing when or which part of the city would be affected.

However, it becomes more serious in places where the infrastructure is not designed for such extreme temperatures. The blackouts left 4.3 million people without heat and electricity in Texas. Some residents criticized the lack of response and preparedness, especially those who lost loved ones due to the extreme temperatures.

Energy Stocks Performance During the Cold Snap

As bitter temperatures drove up the country’s demand, the energy sector saw significant gains. Natural gas prices skyrocketed by 7.5%, reaching the highest levels since November. Meanwhile, oil prices also saw a boost. Oil production dropped to approximately 2 million barrels a day. This drove prices to more than $60 a barrel, the highest they have been since January 2020.

The Winners

Comstock Resources was one of the biggest winners. They reported that it was “like hitting the jackpot” since it was able to sell natural gas for premium prices. EQT Corp, a natural gas provider based in the shale regions of Ohio and Pennsylvania, also saw gains from the high prices. Australia’s Macquarie Group also expects to see a 10% rise in profits this year.

With large swaths or refineries out of commission along the Gulf Coast, companies like Valero Energy Corp and HollyFrontier Corp also saw increased production. Other refiners, like Shell and Total, have little exposure to the Texas markets. So, they are also in a prime position to ramp up production and increase profits.

The Losers

Unfortunately, many other utilities providers reported huge losses due to the winter storms. Alternative power sources became ineffective with wind turbines and natural gas wells freezing over.

Innergex Renewable Energy Inc estimates the financial impact on their Texas wind farms to be about $48 million. Algonquin Power and Utilities Corp adjusted their projected core earnings by $45-55 million due to restricted production. Just Energy doubts they will be able to continue after it forecasted $250 million in losses.

Furthermore, the extreme weather also interfered with transportation of oil and shutdown many refineries. The country’s hub of refineries along the Gulf Coast were the hardest hit. Exxon Mobil and Phillips 66 halted operations, losing 19% of the U.S.’s refining capacity. Diamondback Energy expects to lose at least five days of production. Other southern shale oil producers say it could take two weeks to restart their crude oil operations.

As milder temperatures return, you can be certain that financial analysts and investors alike will continue to watch the energy sector.

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Best Trade Simulator Apps for New Investors

What Are the Best Trade Simulator Apps?

The stock market can be an intimidating place for new investors. If you have no training or background in finance, investing your hard-earned money seems like a huge gamble. There is always some level of risk associated with investing. However, the best trade simulator apps allow you to test the waters before you dive in head first. Creating and trading with a virtual portfolio lets you learn through experience without risking real money.

How Do Trade Simulator Apps Work?

In essence, trade simulators use practice accounts, also referred to as paper trading accounts, as an experiential educational tool. Even better, most of them are free once you set up your account. The purpose of these apps is to provide a learning environment for new investors within real time market conditions. Users have access to the same tools utilized by active investors, including live feeds and tickers, watch lists, and stock screens. However, since you are using “play money,” you eliminate all financial risk.

Additionally, you can use trade simulator apps in a variety of ways. Individual investors can test new ideas and strategies before making any changes to their actual portfolio. You can also make a game of it by inviting friends, family, or coworkers to join a friendly competition. Investors that get the highest returns at the end are the winners. But, since you are not investing real money, there are no losers.

What Benefits Do Trade Simulator Apps Offer?

As an educator, I firmly believe that the best way to learn something is by doing it. The only way to get better at something is through practice and repetition. If you have never invested or learned about the stock market, trade simulator apps are a great place to start. Here’s why:

1. There is no risk since you are investing fake money.

The best part about trade simulator apps is that there is zero risk. Since you are trading with virtual currency, you can be as conservative or aggressive as you like. If it is your first time investing, these apps allow you to get your feet wet without risking your retirement accounts. If you make a bad trade, it is a lesson learned rather than a nest egg lost.

2. You can test new investing strategies and individual stock picks.

Trade simulator apps provide a safe place to learn the basics. You can begin with the fundamental mechanics of investing, then move on to other trading options. Since it is virtual money, you are free to take more chances and make mistakes as well.

Furthermore, it gives your room to explore potential strategies and ideas. Although financial experts tell you to avoid taking advice from just anyone online, these trading platforms act as a safety net. Not only does it protect your finances, but it will also help you determine which advisors have the most credibility.

3. You have access to their full library of educational resources.

In addition to real-time trading, you also can get a focused education through their resources. You can find articles, tutorials, videos, and demos on nearly every investment topic imaginable. Moreover, you can also join the online communities where you can interact with other investors and discuss strategies.

These free resources will help you become a more savvy investor by learning and mastering the basics. They can also teach you how to factor in outside variables, such as trading costs, and perform stock analysis. Understanding how these factors affect the market will help you see the broader economic picture and become a more successful investor.

4. There is less emotional investment in the outcome.

Lastly, trade simulator apps remove emotion from the equation. They grant you a more objective view since your money is not at stake. Riding the markets’ highs and lows can bring a roller coaster of emotions. However, the apps give you a preview of market volatility and how you will react to them.

What Are The Best Trade Simulator Apps?

There are a lot of trade simulator apps out there. However, these three are consistently recommended by financial experts and analysts across the web.

Wall Street Survivor

This trade simulator app has withstood the test of time…and for good reason. Wall Street Survive is a fountain of personal finance and investing knowledge. It offers more than 30 courses which you can complete at your own pace. Each one provides step-by-step instruction to help you succeed in the stock market.

Once you are ready to invest your virtual cash, it is time to get in the game. You can join the leagues and work your way to the top, or start your own game. All the while, you can apply different trading strategies as you play the stock markets. As you improve, you will earn more virtual cash, badges, and even compete for real prizes.

Market Watch Virtual Stock Exchange

This app is also popular with adult investment clubs and first time investors. Just like the other trade simulator apps out there, you create a virtual portfolio to trade real-time stocks. However, as you develop you investing strategies, you can also turn on more advanced features. Once you join, you are also able to join their discussion groups to compare strategies with skilled traders.

However, as an educator, I will admit that I do have bias here. In my opinion, the Market Watch Virtual Stock Exchange is one of the best resource for teachers. It even has lesson plans with required readings, videos, and report cards to help you track your progress. Public and private games allow you to interact with other users or challenge those you know to test their skill. It’s both a fun and educational way to gain experience trading stocks, mutual funds and ETFs.

HowTheMarketWorks

HowTheMarketWorks is another app that has been around for quite some time. It remains at the head of the pack because it is specifically tailored for beginners. It offers all the tool and resources you need in their Education Center. In addition to basic instruction and advanced techniques, it also provides career guidance if you are interested in a future in finance.

However, this app isn’t just for beginners. This simulator gives you the ability to practice trading in the global market, mutual funds, ETFs, options, and commodities. Since you can customize your private competitions, it is another excellent resource in the classroom.

Reality Over Simulation

While trade simulator apps are a great resource, there are certain things they cannot do. Unfortunately, some lessons can only be learned through real experience. However, simulators ensure you will be better prepared to jump into the stock market.

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