Investing Archives - Page 20 of 28 - The Free Financial Advisor

Finance Lessons Learned from the Pandemic

February 23, 2022 by Jacob Sensiba Leave a Comment

The Covid-19 pandemic changed life for two years and there are definitely still elements of what life was in the world today. No doubt there were some terrible things that happened. People lost their lives and their jobs. But there were also positives that came out of it. We’re going to highlight the lesson we can learn from this pandemic, particularly some personal finance lessons we can learn.

Working from home

This new type of work does not apply to everyone and I don’t like leaving people out, but this needs to be talked about. Working from home and articles about it took over during the pandemic and continue to be discussed.

Working from home, at least from some of those articles and studies, appears to be a net positive for employees and employers. Let time commuting, less overhead costs, more productivity thanks to no commute, increased job satisfaction, and improved work-life balance.

Thanks to the work-from-home setup, people who were able to do that moved out of the city or rented an Airbnb for an extended amount of time. In either case, those people were, likely, able to reduce their housing costs by moving to the suburbs or giving themself a little vacation/change of scenery.

Savings rate

A lot of people saved money during the pandemic thanks to stimulus payments. In April of 2020, the personal savings rate for Americans was 33%. In March of 2021, the personal savings rate for Americans was 26.6%.

The savings rate has fallen since then but is still above 12% which is higher than it was before the pandemic (less than 10%).

Stimulus payments

According to the National Bureau of Economic Research (NBER), most Americans either saved or paid down debt with the majority of their stimulus payments. 40% of the stimulus payment was spent, 30% was saved and another 30% was used to pay down debt.

Personal finance lessons

I think there were a lot of personal finance lessons that can be learned from the pandemic. Here’s a list of them below:

People saved more money

The future was very uncertain so people were more conservative with their spending and less conservative with their savings. That mindset shouldn’t change. The future, in principle, is uncertain. We do not know what tomorrow holds, so saving for a rainy day/goals/retirement is very important.

You don’t need to spend money to have fun

At the very beginning of the pandemic, you couldn’t go anywhere. Quarantine and lockdown orders came in right away. Instead of getting together in person, people utilized Facetime, phone calls, and Zoom. I, personally, had group Zooms with family members where we played and had conversations like we would if we were in person.

Diversification is important

Early in the pandemic, the market tanked. We lost over 30% in six weeks. Granted, it came right back up not long after, but that might not always be the case. If you don’t have time to ride out the ebbs and flows of the market, it’s important you get your asset allocation right. Talk with your adviser to make sure your investment matches your time horizon and risk tolerance.

Get rid of debt

You never know when your job and your ability to earn can be taken from you. Some people lost their jobs, some people were furloughed, and some people just weren’t able to go to work. If you don’t have an income, the only other part of the balance sheet you can affect is your expenses. Get rid of your debt. That’ll help you reduce your expenses in case that happens (you can also save more).

Protect your loved ones

Get life insurance. A lot of people passed away during the pandemic. If you contribute income to your household, you need to make sure you financially protect the people that rely on your income.

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com

Jacob Sensiba

Jacob Sensible is a financial advisor with decades of experience in the financial planning industry. His journey into finance began out of necessity, stepping up to support his grandfather during a health crisis. This period not only grounded him in the essentials of stock analysis, investment strategies, and the critical roles of insurance and trusts in asset preservation but also instilled a comprehensive understanding of financial markets and wealth management. Jacob can be reached at: jake.sensiba@mygfpartner.com.

mygfpartner.com/jacob-sensiba-wisconsin-financial-advisor/

What To Do With Your Old 401k

February 16, 2022 by Jacob Sensiba Leave a Comment

When you leave your job and you have a 401k, there are a few things you can do with it. You can leave it there, you can cash it out, you can roll it into an IRA, or you can roll it into a retirement plan with your new employer. So what should you do with your old 401k?

Theoretically, you have four options.

Withdrawing your funds

If you are under the age of 59 ½ and you withdraw the money, you’ll have to pay a tax penalty on it. UNLESS, you meet some of the exceptions: medical expenses, your first, primary residence (up to $10,000), health insurance premiums while unemployed, distributions from an inherited IRA, pay off an IRS tax levy, higher education expenses, as well as a few others.

If you don’t meet any of those criteria and you’re under 59 ½, you’ll have to pay that penalty. It’s not worth it. UNLESS you’re using that money to pay off a credit card. Credit card interest rates are usually well above 10%. So if you’re saving yourself from paying a 27% interest rate, theoretically, you’re making a 17% return on your money (27–10=17). But this calculation doesn’t account for taxes so you might come out even, or behind.

95% of the time, it makes the most sense to pursue other options.

Keep it where it is

Some people will leave their old 401k with their previous employer. I think a lot of that has to do with laziness, but it could be a good, rational decision as well. The primary factor has to do with cost. What are the expenses of the 401k? Typically, if it’s a large employer and/or a large plan with a lot of assets, the fees are going to be low.

That might be a good reason to leave it. The plan might also have good investment options. If the fees are reasonable, or at least average, then the investment options might be reason enough to stay.

Roll it to your new employer

Nine times out of ten, I’ll have people roll their old 401k into their new one. If they’re able to. Some employers don’t allow income transfers. Having everything with one firm makes managing it so much easier.

The only time I don’t think it would be appropriate is if the new firm has high fees, but it’s also important to compare the new fees to the fees of the alternative. That alternative is rolling it into an IRA at a separate firm.

Roll it into an IRA

As an independent financial advisor, this option is best for me, but not typically best for the client. If you take a standard fee for a financial advisor (1.00 %) and compare it to the standard expense paid by a 401k participant. Employers with 2,000 employees pay below 1% and employers with 50 or fewer employees pay 1.25%. Here’s some more info on that.

That might be the case if it’s a small plan. The large plans, however, can have ALL IN fees of around .5%.

As is the case with a lot of things in the finance world, the answer is not black and white. You need to compare and contrast your options and then make a decision. Here are things to consider: cost, investment options, ease of management, and customer service. How do the fees compare? What are the investment options? Do you have everything in one place and is it easy to make changes? Can you get in touch with someone if you have problems/questions?

Disclaimer:

Jacob Sensiba

mygfpartner.com/jacob-sensiba-wisconsin-financial-advisor/

How to Increase Your Net Worth

February 2, 2022 by Jacob Sensiba Leave a Comment

Your net worth is a benchmark for your financial success. Notice that I said financial success and not just success. That was intentional because money doesn’t define your success. Money can afford you freedom, but I believe real success doesn’t involve money. That was free of charge, now let’s talk about how to increase your net worth.

What is net worth?

Net worth is assets minus liabilities. How much wealth do you have after you subtract what you owe versus what you have? It’s typically used to gauge your progress in your financial life. If you have debt, then when you pay it down, your net worth goes up. The same happens when you increase your savings.

How to increase your assets

Honestly, the only way to increase your assets is to save money. At least, that’s where it all starts. The more you save, the more you have to work with.

How do you save money? Decrease your expenses and/or make more money. That’s what it comes down to. Figure out what’s important – in terms of your budget and spending. Everything else that doesn’t fit on that list needs to either be removed or reduced.

Once you have money saved, then you can put it to work. Invest it in securities or assets that have a chance to increase in value. What kinds of things have a chance to increase in value? Stocks, bonds, mutual funds, ETFs, precious metals, real estate, certificates of deposit (CDs), and cryptocurrency/NFTs (though I would tread carefully here).

Growing your assets will help you increase your net worth.

How to decrease your liabilities

Pay down your debts. That’s it. Obviously, it’s more challenging than that. Ideally, what you’d want to do is pay down your debts before you focus on the saving aspect of it. If you have debts with high-interest rates, like credit cards, those should be your first priority.

We’ve gone into detail about the repayment methods before so we’ll only touch on them briefly, but what’s important is decreasing your expenses so you can make larger, more regular payments towards your debts.

The next step is developing a repayment strategy. The two we’ve talked about before are the debt avalanche and the debt snowball. The debt avalanche – you pay the debt with the highest interest rate off first before moving to the next one. The debt snowball – you pay the debt with the smallest balance off before moving on to the next one.

Paying down your debts will really help you increase your net worth.

Is there a net worth number you should hit?

At the end of the day, your net worth number is really a reflection of what you’ve saved for retirement. Ideally, you will not have any debts, including your mortgage. So there’s no math that needs to be done. What are your assets? Primary home, any rental properties, and then your retirement savings, with primary home and retirement savings being the two most common for everyone.

So the question becomes, how much should you save for retirement? Thankfully, we’ve created a guide for you to help answer that question (see below).

Disclaimer:

Jacob Sensiba

mygfpartner.com/jacob-sensiba-wisconsin-financial-advisor/

What’s a Thrift Savings Plan?

January 26, 2022 by Jacob Sensiba Leave a Comment

A thrift savings plan is a retirement plan available to federal employees and members of the uniformed services.

Real quick…Uniformed services are bodies of people in the employment of a state who wear a distinct uniform that differentiates them from the general public. Their purpose is to maintain the peace, security, safety, and health of the public they serve.

Back to it. A thrift savings plan is a defined contribution plan, like a 401k, that offers federal employees the same benefits as people who work in the private sector.

In this article, we learn about what a thrift savings plan is, as well as the rules and regulations.

What is it?

As mentioned in the introduction, a thrift savings plan (TSP) is a defined contribution retirement plan for federal employees.

A TSP includes deferred contributions from employees and can include matching contributions from the federal agencies. The employee also has the option of contributing pre-tax to a Traditional TSP, or post-tax to a Roth TSP.

If applicable, you can rollover a previous 401k or IRA into a TSP, and vice versa if you retire or move back into the private sector.

Investing

Currently, Blackrock is providing the investment products used in the Federal TSP. The investment options include:

The Government Securities Investment (G) Fund
The Fixed-Income Index Investment (F) Fund
The Common-Stock Index Investment (C) Fund
The Small-Capitalization Stock Index Investment (S) Fund
The International-Stock Index Investment (I) Fund
Specific lifecycle (L) funds designed to include a mix of securities held in each of the other five individual funds

Rules and Regulations

Not only is it a retirement plan, but it’s also a government-sponsored retirement plan. Obviously, there are going to be some regulations that accompany it.

The TSP contribution limit for 2022 is $20,500. The government has a sliding scale match, starting at 1% and topping out at 5%. The match is available even if you don’t contribute, though it is at the 1% base amount. It’s a percentage for a percentage match. If you contribute 2%, the match is 2%. If you contribute 5%, the match is 5%.

Fees are considerably lower with TSPs, usually .05%. Like IRAs, TSPs also have required minimum distributions that must start at 72. IRAs have an early withdrawal penalty of 10% if you pull money before 59 ½ years of age. TSPs will waive that 10% penalty if you retire at 55 or older.

Disclaimer:

Jacob Sensiba

mygfpartner.com/jacob-sensiba-wisconsin-financial-advisor/

Managing High Inflation in Retirement

December 29, 2021 by Jacob Sensiba Leave a Comment

Inflation is high. We all know that. I’ve been writing about it for months and it appears that it’s here to stay. With all of that said, I saw a question the other day about how to manage the high inflation when you’re in retirement, and I thought it was a good topic to talk about today. So we’re going to discuss high inflation in retirement, how it’s impacting retirees, budgeting strategies, investment strategy changes, and if inflation will be an ongoing concern for retirees.

Inflation right now

It’s high…no surprise to anyone. In January it was 1.4%, in April it was 4.2%, in July it was 5.4%, in October it was 6.8%, and in December it was 5.9%. That’s historically high. The highest it’s been in 40 years. Will that stay, only time will tell and we’ll get into that later.

How is it impacting retirees?

Things are getting expensive, so when you set a budget at the beginning of your retirement you account for the current price of the things you need. You should also account for increased costs of items as time goes on because there can be big or small increases…either way, prices costs will go up.

Groceries and energy are two prime examples of things that have gotten more expensive recently. So when those things went up in price, it probably pinched people’s budgets, and/or pushed forward costs that probably weren’t expected for several years. Odds are, they’re spending more money now on food and energy than they anticipated. Hopefully, people have been able to make adjustments already.

Budgeting Strategies

There really aren’t a lot of tips I can give you. The best thing I can really say is to cut costs where it makes sense to account for things that are now more expensive. The other tip, though this is more of a gamble, is to not make any changes now and make changes in the future when inflation comes down.

Investment Strategies

With your investment, you’ll need to reallocate some assets. I wouldn’t take any money out of stocks. What I would do is take some money out of your bond investments and put it into precious metals. The FED said that they plan on hiking rates three times in 2022. Bond prices will go down when interest rates go up. Increasing your stock allocation or putting some money in precious metals could be a good way to combat inflation.

High inflation here to stay?

No, I do think it will be here until the FED hikes rates, but my reasoning for that has to do with what happened in 2018. If the FED can raise rates without putting a cork in the recovery, then I think there’s a possibility that inflation and the federal funds rate will stay elevated until the bubble pops.

Disclaimer:

Jacob Sensiba

mygfpartner.com/jacob-sensiba-wisconsin-financial-advisor/

End of Year Money Moves

December 22, 2021 by Jacob Sensiba Leave a Comment

We’re getting close to the end of the year so I think it’s a good time to review how to set yourself up for success for next year. Here are some end-of-year money moves you should make.

Year in review

I think it’s important to reflect on the year that has been – financially, emotionally, physically, and spiritually. If you’re not evaluating your progress as a human, I think you are doing yourself a disservice.

We’ll stick with the finance side of things in this article. Did you achieve the goals you set out to reach when the year started? If you had a goal to pay off debt, did you? If you had a goal to increase your savings rate for retirement, did you?

I think that’s important for two reasons. One, you review your progress to see if you were successful or not. Two, you use this year’s progress to help set your target for next year. If you achieved your goal, you can set a higher target for next year. If you didn’t, maybe keep the same goal and try to hit it next year.

It’s also a good idea to review your investment/retirement portfolio at the end of the year. If you’re investing your retirement savings, there are some sectors or asset classes that performed better than others throughout the year. If that’s the case with your portfolio, the percentage you’re at now is probably different from where you started.

Typically, I like to leave it be, but if you’re in a stage of life where you have to be more selective, then being overweight in a risky asset is probably not a good idea. When you review your investment portfolio make sure that you’re still in good shape with regard to your risk tolerance and time horizon, and you’re pleased with your account’s performance.

Set goals for next year

After you review your progress from this year, set your goals for next year. If you saved more than you set out to at the beginning of the year, use the ACTUAL savings as your goal for next year. If you paid off some debt, redirect toward another one.

What happens if you don’t have any more debt? Congratulations! Then make sure your emergency savings are adequate. If it’s sufficient, beef up your retirement savings or something else you’re saving for.

When you’re making your money moves for next year, make sure you’re designating time to assess your progress throughout the year.

Disclaimer:

Jacob Sensiba

mygfpartner.com/jacob-sensiba-wisconsin-financial-advisor/

How to Set Investing Goals

December 15, 2021 by Jacob Sensiba Leave a Comment

Saving money for the future is important, but I believe it’s even more important to invest that money and make it work for you. With that said, you can’t just start investing. You need to lay some groundwork first, you need to have goals in mind, and you have to be intentional so that when things get difficult, you stick with the plan instead of abandoning it during the discomfort. Today, we’re going to talk about how to set investing goals.

What kind of goals are there?

There are typically three-goal time horizons: short-term, medium-term, and long-term. A short-term goal is something you plan on achieving in 2-10 years. Saving for a down payment is a pretty common goal that fits into that window. A medium-term goal is 10-20 years. Saving for educational expenses for a child fits into that window. A long-term goal is retirement or anything else that’s 20+ years down the road.

These time windows are my opinion, though I think they’re pretty close to conventional opinion. Also, there are more goals than the ones I listed above.

How to think through your goal-setting

There are three things to keep in mind when you set investing goals (not to mention figuring out the goal itself). How much time do you have? Is this a short-term, medium-term, or long-term goal? Do you have time to take some risks or do you have to play it safe?

Speaking of risk…what are you comfortable with? Usually, this goes hand in hand with how much time you have. A short-term goal like saving for a down payment will need to be invested conservatively, if at all. In this scenario, you’ll have a set price you’re saving for so you can’t take a chance that the market dips and your savings fall below what you need it to be at.

Conversely, when you’re saving for retirement, you’ll have an opportunity to be more aggressive (at least in the beginning) because you have time to make back the money that you’ve potentially lost.

The last part of positioning your portfolio according to your goals is your comfort level/investor psychology. Time horizon and risk tolerance are small factors here, but it’s more about how volatility affects your mind. If the market drops and you’re panicked, maybe you need to be more conservative.

How to invest based on your goals

Here are some thoughts on how to invest based on your goals. If you’re saving for a short-term goal, like a down payment, I wouldn’t even invest it. UNLESS you’re very confident and you’re an expert in the particular field (though that applies to all of the time horizons).

If you’re saving for a medium-term goal, like saving for college, here’s what I’d do. You can be a little aggressive in the beginning because you have time to earn some money back. As you get closer to the end of your window, you’ll need to be more cautious. Maybe start 50/50 (stocks/bonds) and as you get closer, either get out of the market entirely or something like 10/90 or 20/80.

For your long-term goal, you’re able to be more aggressive for a longer period of time. 90/10, 80/20, 70/30, 60/40 all work great here. It depends on what you’re comfortable with. Same as the last one, as you get closer to the end of your window, you need to shift your allocation to be more conservative.

Keep in mind, these are blanket recommendations. I don’t know your situation, so you need to talk to a professional first before you set investing goals and make investment decisions.

Disclaimer:

Jacob Sensiba

mygfpartner.com/jacob-sensiba-wisconsin-financial-advisor/

Financial Resolutions: Debt, Savings, Investing, Real Estate, and Crypto

December 8, 2021 by Jacob Sensiba Leave a Comment

The new year is right around the corner so I thought it fitting to layout some resolutions for a few different financial topics. Here are financial resolutions for crypto, investing, real estate, savings, and debt.

Debt

Pay down or pay off your debt. If you have credit card debt, make it a goal for next year to pay it off completely. The interest rates that credit card companies charge are so brutal. Getting rid of credit card debt would relieve a lot of stress and save you a lot of money that you’re wasting on interest. Not to mention, whatever you’re currently paying towards your credit card can be used for something way more productive.

If all you have is a mortgage, make extra payments. If you have no debt, congratulations! Try and save more so there’s no chance of you going into debt again.

Savings

Would you like to buy a house next year? Save for your down payment. The bigger your down payment is the smaller your responsibility will be; in terms of monthly payments and in terms of total money owed. Especially if your down payment is 20% or more. If that’s the case, you don’t have to pay mortgage insurance (AKA PMI).

If a down payment isn’t something you need to save for, increase your savings rate for retirement. Or set yourself up to cover some unexpected expenses by creating an emergency fund. Do some math, establish a goal number (emergencies, down payment, retirement savings), and then create a plan to save and hit that number.

Investing

For the most part, investing will take place in your retirement account. And for most people, the amount of time you have until retirement is a couple of decades. With that said, you can be a little more aggressive with your investments.

If this description doesn’t fit you, then figure out what works for you. Determine your time horizon, risk tolerance, and what you’d be able to tolerate in terms of short-term losses. If you’d like to get a good idea about what your preference is, take our risk tolerance quiz.

Real Estate

This one is a little challenging because it’s not like you’re going to move once per year. Also, investing in real estate isn’t for everyone. So I’m going to try and hit a few groups with this one.

Buy a new home. If you need more space for your growing family, you got a new job that requires relocation, you want to be closer to your church or family members, then make a move.

Make improvements to your current home to increase the value of your home or to make better use of the space. It can also improve tax credits especially if you use sustainable materials like solar panels. Either way, the improvement has a positive effect on your living situation.

Most people can invest in real estate, they just do it differently. Some people are going to invest in physical properties and some can invest in Real Estate Investment Trusts (REIT). Either way, you need to be picky (like all investments) so you get a good return on your money.

Crypto

This applies to everything in this post, but especially here…do your homework. I like crypto. I think there are investment opportunities, but I also think there’s a possibility it all collapses. I like the technology it’s created on, but I don’t know how it’ll transform and what the adoptability will be. Invest only what you can afford to lose is my best advice. With all that said, make financial resolutions to get more educated about cryptocurrencies and the blockchain.

Disclaimer:

Jacob Sensiba

mygfpartner.com/jacob-sensiba-wisconsin-financial-advisor/

Big Tech Moving Into Finance

November 24, 2021 by Jacob Sensiba Leave a Comment

Big tech wants a bite of the financial services pie. I think technology and finance go hand in hand, but I also think it’s mostly a one-way street, in terms of benefits. Technology has definitely given the financial services industry an upgrade, but the finance industry tends to think of big tech as a threat. Why is that? Today, we’ll take a look at big tech, how they’re changing financial services, and if those big banks actually have something to worry about.

What do you mean by “Big Tech”?

The names you know off the top of your head. Apple and Google to name two, but there are other players that don’t get as much publicity. Cloud storage from Amazon and/or Microsoft. Software companies like Oracle. Chipmakers like Nvidia. Data companies like IBM. There are a lot of moving parts and it’s no surprise, everything uses technology. What’s different about financial services is the regulation, so adoption of new technologies is typically slower.

How tech changed finances

From a consumer standpoint, banking is easy. Checks are deposited directly into your bank account. You use your bank’s app to review expenses and deposit any real checks you may have. Practically all bills are able to be paid electronically. Not to mention you can automate bill payments and transfers. Also, if you want to save for retirement or invest some money, there are several companies that can do it all online (though we always advise you to speak with a person for advice).

Big tech in finance moving forward

Big tech is already offering some financial products. Google has Google Pay, Samsung has Samsung Pay, and Apple has Apple pay. Apple is also working on a Buy Now, Pay Later (BNPL) offering, but nothing is out yet.

Big tech will be able to compete with legacy financial services companies because they have a competitive advantage. They don’t have the regulatory oversight that current companies do and they have a customer base (and their data) that they can leverage with new offerings.

Parting thoughts

Do I think several big tech companies will come out with financial services offerings? No. I think there will be a select few that come out with some, but I don’t think it’ll be the scale of Wall Street, for example. I think it would behoove big tech and other large companies to remember that being a conglomerate doesn’t work right now. Just this year, there were several companies that split their business up, based on industry (like GE). Could the conglomerate model come back around? Absolutely, but I don’t think now is the time.

Should You Be Investing in Shiba Inu?

November 8, 2021 by Tamila McDonald Leave a Comment

investing in shiba inu

During the past year, cryptocurrencies like Bitcoin and Ethereum have reached new heights. Additionally, Dogecoin – the most prominent meme coin around – garnered a lot of attention, ultimately having a relatively tumultuous year. Due to Dogecoin’s rise into the spotlight, many wonder if Shiba Inu – a newer coin – is a worthwhile investment. If you’re considering purchasing Shiba Inu, here’s what you need to know.

A Word About Cryptocurrency

Before worrying about whether Shiba Inu is worth investing in specifically, it’s important to understand the risks involved in putting money into any cryptocurrency. While Bitcoin and some other older coins have seen values rise, the overall crypto market is incredibly volatile. Values rise and fall rapidly, at times with seemingly very little reason for the change. As a result, money can be made or lost in mere moments, often without much warning.

Additionally, it isn’t clear how future regulations may impact the market. Since long-term investing is often based on the desire for long-term growth, changes to laws could significantly alter the viability of cryptocurrency as an investment.

Finally, cryptocurrency scams are commonplace. While Shiba Inu isn’t necessarily a scam, it’s crucial to take any new coin with a grain of salt. Without some due diligence, the odds of making a mistake go up dramatically, potentially causing significant losses.

The Pros and Cons of Shiba Inu

The Pros

One of the points Shiba Inu has going in its favor is a sense of likability. The meme-based coin has an edge on the branding front, making it feel grassroots and accessible. That perception can make Shiba Inu more attractive to certain investors, potentially boosting its potential.

Shiba Inu is also part of Shibaswap, a form of peer-to-peer-style decentralized exchange that gives investors the ability to trade a select number of coins without a traditional platform. With Shibaswap, generating yield and tracking returns are possible, leading some to take great interest in the coin.

The Cons

On the downside, Shiba Inu is technically a Dogecoin parody. Some of its popularity is placed purely on investors who appreciate meme culture and not necessarily because the coin has any real value or long-term potential. As a result, interest in Shiba Inu can be a bit fickle, ebbing and flowing quickly.

Additionally, some of the interest in Shiba Inu is based primarily on familiarity. Some investors attempted to get Shiba Inu added to Robinhood, leading to some media attention that caused a value increase. However, that coverage had nothing to do with the merits of the coin.

Unlike Bitcoin, Shiba Inu currently has no meaningful applications outside of the investment space. Mainstream companies don’t allow shoppers to use the coin as payment. Additionally, since there is nothing functionally unique about Shiba Inu, the likelihood companies will choose it as a payment option over others is slim.

Shiba Inu also isn’t in short supply. Part of Bitcoin’s appeal was that the number available is relatively small. With Shiba Inu, there are one quadrillion coins, so it doesn’t have a sense of scarcity on its side.

Finally, there has been a lot of volatility surrounding Shiba Inu. Most investors are only holding the coin for weeks, indicating that many don’t view it as a long-term investment. As a result, there’s a good chance many will move away from the coin rapidly if something else catches their attention, potentially leading to significant value declines in a short period.

Should You Be Investing in Shiba Inu?

In the end, determining whether any particular cryptocurrency is going to be a success is challenging at best. Shiba Inu does have a few things going for it, particularly when it comes to widespread recognition and its meme-friendly positioning. Plus, while it isn’t a standout functionally, it operates like many other coins, so it isn’t falling behind when it comes to use potential.

However, companies aren’t actively behind Shiba Inu as a payment mechanism, and some platforms like Robinhood aren’t supporting Shiba Inu trading at this time. That could hold back the coin, essentially limiting its potential.

Additionally, the large supply of Shiba Inu coins prevents a sense of scarcity. As a result, prices may not reach the same heights as options like Bitcoin, which doesn’t necessarily work in investors’ favor.

Inherently Higher Risk

Finally, cryptocurrency is inherently higher risk than many investment alternatives. New coins regularly emerge, drawing attention away from those that were trending in the past. Even without those, the sheer number available means there isn’t any way to determine which ones will gain broader traction outside of the crypto investing sphere. Until companies start welcoming more as a form of payment, it’s incredibly difficult to figure out which will rise and which will fall.

Ultimately, only you can decide if Shiba Inu is worth buying. Check out how to buy SHIB in Canada. If you do your research and are comfortable with the risks, then adding it to your portfolio shouldn’t automatically be off the table. You’ll simply want to figure out what’s right for you. That way, if you move forward, you’ll know what could potentially occur.

Do you think investing in Shiba Inu is a good move? Have you already bought in and want to tell others about your experience? Share your thoughts in the comments below.

Tamila McDonald

Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.

Working from home

Savings rate

Stimulus payments

Personal finance lessons

People saved more money

You don’t need to spend money to have fun

Diversification is important

Get rid of debt

Protect your loved ones

Related reading:

Disclaimer:

Withdrawing your funds

Keep it where it is

Roll it to your new employer

Roll it into an IRA

Related reading:

Disclaimer:

What is net worth?

How to increase your assets

How to decrease your liabilities

Is there a net worth number you should hit?

Related reading:

Disclaimer:

What is it?

Investing

Rules and Regulations

Related reading:

Disclaimer:

Inflation right now

How is it impacting retirees?

Budgeting Strategies

Investment Strategies

High inflation here to stay?

Related reading:

Disclaimer:

Year in review

Set goals for next year

Related reading:

Disclaimer:

What kind of goals are there?

How to think through your goal-setting

How to invest based on your goals

Related reading:

Disclaimer:

Debt

Savings

Investing

Real Estate

Crypto

Related reading:

Disclaimer:

What do you mean by “Big Tech”?

How tech changed finances

Big tech in finance moving forward

Parting thoughts

Related reading:

A Word About Cryptocurrency

The Pros and Cons of Shiba Inu

The Pros

The Cons

Should You Be Investing in Shiba Inu?

Inherently Higher Risk