This is a real text from my younger brother:
“I had $30 in a cryptocurrency account from like five years ago. As a joke, I put it in Dogecoin and I made $500 today!”
My brother is a smart, deliberative lawyer who lives in New York and is by all measures a very mainstream investor. But he wanted in on the joke about the Shiba Inu-themed cryptocurrency that dominated headlines this week and ended up making some serious cash.
I take my brother’s message as a sign that cryptocurrencies are in a rather kooky phase at the moment. This very helpful explainer should get you up to speed on why Bitcoin, after hitting all-time highs last week, ended up with what feels like a very bad hangover.
Yet some investors saw a silver lining in the cryptocurrency’s fall by as much as 15%. On Monday I called up a 32-year-old retail trader in the U.K. who said he felt like the drop was a great moment to pick up some extra Bitcoin. He told me he “bought the dip,” picking up some 4,800 pounds ($6,710) of Bitcoin. He told me that he was feeling vindicated as Bitcoin started to recover at least somewhat from its weekend plunge. (That was then, this is now.)
Then on Tuesday we took a serious (well, as serious as you can be about a meme-themed crypto based on a grammatically challenged dog) look at Dogecoin, which has managed to stay elevated despite the drop in other cryptocurrencies. Funny as it seems, financial experts still do not recommend buying into it.
“If you have excess funds that you like to speculate with instead of betting on the Yankees, and you want to put it into cryptocurrencies, then maybe, yeah, that would make sense,” said David Trainer, chief executive of New Constructs, an independent securities research firm based in Nashville. “As long as you’re not afraid to lose it all.”
Sounds like my brother. — Charlie Wells
My husband’s fantasy baseball league is taking a novel approach to this year’s side bet. Nine of the 15 team owners, who wanted to bet extra money, have put in another $100 each. But here’s where it gets interesting: They’re investing the $900 pot in crypto. If their investments make money, all nine will split the profits, while paying the top three winners from the principal. If crypto crashes between now and the end of the season, that means less money for the winners — and none for the losers. They had to make a lot of strategic decisions. Should they buy just Bitcoin, or dabble in Ethereum, Chainlink, NFTs or something else? (I suggested Dogecoin when it was trading at around 8 cents, but I got laughed off. They should have listened to me, right?) If they do end up making money, there’s one thing they haven’t yet figured out: How to deal with the taxes. — Lisa Fleisher
The Covid economy has pushed a lot of older workers into early retirement. But think twice before sinking into the arms of an earlier Social Security check. Claiming benefits before age 70 — when the maximum benefit can be claimed — means life-long, permanent cuts in monthly payments to you, your spouse and any dependents. It’s clear that sometimes people face pressure to claim Social Security benefits much earlier than they should. And those sometimes might be right now.
Read her full argument here.
I’m a U.S. citizen moving to Berlin. I’m being paid in U.S. dollars, but I’ll soon be paid in euros. I’m looking for a brokerage account in Germany that would allow me to buy stocks and funds with euros so I don’t have to pay fees to convert the money into dollars to put into my brokerage account back in the U.S. However, all the brokerage accounts I’ve tried to set up are giving me a lot of trouble because I am a U.S. citizen. It seems the reason is that these firms do not want to report to the IRS. Does anyone have a recommendation for a brokerage account to open in Germany as a U.S. citizen? — Patrick Esposito, 29
Few European brokers work with Americans, as doing so triggers onerous U.S. FATCA reporting requirements. Furthermore, funds available from European brokers are considered “passive foreign investment companies” for U.S. tax purposes. PFICs are legal for Americans to own but are taxed extremely punitively by the IRS. Americans should only own U.S.-domiciled funds.
Given these limitations, I recommend that you convert your euros into dollars and wire the cash to a U.S. broker for investment in U.S.-domiciled ETFs. The breadth of the U.S. ETF market provides ample opportunity to build a globally diversified, multi-currency portfolio. Remember, what matters with respect to underlying currency risk is not the nominal currency in which the fund trades, but rather the currency exposures of the fund’s underlying holdings. Some funds invest in non-U.S. dollar debt and therefore have no dollar exposure, even though they trade in dollars stateside. — David Kuenzi, director of international wealth management, Thun Financial Advisors
Send us questions about your own financial dilemmas to email@example.com.
— With assistance by Daniel Avis