Crypto markets remain volatile over US regulatory and macro developments

Hey folks!

Happy Monday! Welcome to this week’s wholesome read packed with mutual fund and financial knowledge, a round-up of the crypto markets, an investment book recommendation, and a fun crypto crossword to help you relax after a heavy read. 

Let's dive into the newsletter now!

Like stock investments, mutual fund investments are subject to market volatility and risk. So why invest in mutual funds? Watch the video below to learn how mutual fund investments differ from stock investments. 

The video compares stocks and mutual funds, breaking down their differences and helping you make informed investment decisions. Gain insights into each option's risk and return factors, diversification benefits, and ease of investment.

Click on the link below to gain valuable investment guidance.

Let’s move on to our Portfolio Building series now. We have some interesting emergency fund creation and debt-free lifestyle information lined up for you today.

Portfolio Building in your 20s and 30s - Part 4

Planning your finances early in your life will give you ample time to grow your wealth. Additionally, it will give you the luxury of time in case you misjudge and incur some losses. Still, any time is a good time to start. You can start in your early 20s, your late 20s, anytime in your 30s or even 40s. The only miscalculation here is not starting at all because you think it is too early to think about 30 years into the future or it is too late. 

So, while starting financial planning early on is best, no time is too late. On this note, let’s start today’s portfolio-building process with two things you should do before investing. While being an essential part of your financial planning process, these topics or situations should be addressed before you start investing. 

Create an emergency fund

Emergencies come unannounced; thus, you might not have the time to liquidate a part of your portfolio to meet your urgent financial needs. Moreover, liquidating your investment to meet the emergency can upset your future financial plan. Therefore, it is advisable to keep a separate emergency fund. 

• How do you estimate how much to keep aside for emergencies? 

While this is a personal choice, the amount will depend on the number of dependents you have and their health condition, which might increase the chance of medical emergencies, your lifestyle, your monthly expenses, and the like.

Your emergency provision should not be too little or too large. 

Pro tip: Divide your emergency fund into cash and cash equivalents. For example, If your total emergency fund is ₹1,00,000, keep one-fourth of the fund in cash form and invest the remaining in less risky assets such as corporate bonds, debt mutual funds, etc. This way, your emergency fund will grow with time, and you should be able to liquidate it quickly in case of an emergency. Also, we are talking about investing in less risky assets to avoid potential losses from market fluctuations at the time of liquidation. 

Pay your debt

If you have any debt, it is advisable to prioritize savings and paying your debt while budgeting from your income. Prioritizing both being debt-free and savings will prove to be efficient for your future. 

There are two methods to pay off your debt. It is important to understand the difference between them so you can make a smart decision for your financial future.

No matter the debt repayment option you choose, the key to getting out of debt is to be as disciplined as possible with your budget. 

Skipping even one or two months of debt repayments can throw a wrench in your financial plans, so it’s essential to create a realistic budget that you can stick to whenever possible.

Two weeks back, we had undertaken an exercise to calculate one’s net worth. The above step of going debt-free is of utmost importance to anyone who has a negative net worth, meaning their debt exceeds their capital. 

Follow the steps mentioned to build an emergency fund, and in case you have debt, follow the steps to go debt-free as well. These steps will help you plan your finances effectively in a way that will lead to wealth creation in the future. 

While you work on charting the optimal emergency fund for yourself and your family and ways to go debt-free, we will be back next week with ideas for investments and optimal diversification and organizational strategies for your investments. 

Crypto markets witnessed a week of high volatility as several triggers caused outsized moves in both directions. The week was marked by a steep fall in prices after US Senator Elizabeth Warren introduced her "anti-crypto" bill to put stringent checks on several crypto industry participants. However, the fall was short-lived after the US Fed said that it is looking at three interest rate cuts in 2024 and sees a "soft landing" for the economy, sending "risk-on" assets including crypto higher. 

The weekend brought with it increased selling pressure across broader crypto markets. Major assets like BTC and ETH remained rangebound in trading but with a downward bias in price, anchoring closer to $41k and $2.2k levels respectively. But there was a lot of token-specific action in the broader crypto markets, maintaining the overall crypto market cap above $1.6 trillion. There's some rotation of capital happening into select altcoins, driven by narratives.

On the regulatory front, it wasn't all negative news as the Financial Accounting Standards Board (FASB), a US entity that details how companies should report assets on their balance sheet, published a standards update that will let corporations recognize "fair value" changes in crypto holdings, a huge positive if prices move higher!

Another major positive was that Project Diamond, developed by Coinbase Asset Management, received in-principle approval from the Financial Services Regulated Activity (FSRA) of Abu Dhabi Global Market (ADGM) to Bring TradFi Assets On-Chain. Also worth highlighting is that the world’s first Bitcoin Bonds also referred to as "Volcano Bonds" received regulatory approval in El Salvador.

For the broader crypto markets, it was mostly a sea of red, but certain token-specific developments resulted in major outsized positive returns.

Solana's SOL continues to march ahead, but last week the focus was on its meme token BONK, which more than doubled in price as arbitragers bought Solana's Saga phone to get BONK exposure.

The pack of ETH competitors is also seeing a solid inflow of investor interest that's sending prices higher for layer 1 alternatives like ADA, AVAX, FTM, ATOM, HBAR, and ICP. 

Cardano's ADA has been seeing a lot of Whale buying activity; while Avalanche's AVAX has surged on the back of increasing RWA tokenization and gaming-related projects. 

On the gaming front, Immutable's IMX token surged as VanEck said that the release of new blockchain-based video games like Illuvium next year could boost value for the gaming-focused chain.

• BTC $41,097 ⏬ 2.90%

• AVAX $38.34 ⏫ 6.85%

• ADA $0.5616 ⏫ 0.41% 

• IMX $1.85  ⏬ 6.07%

(All data here is as of 3.20 p.m., 18 December 2023)

Before we conclude, here’s a quick look at some important news from around the crypto world.

• Crypto exchange Coinbase will soon be offering the option to spot trade cryptos outside of the US as part of its global expansion efforts, the company said in a blog post. Starting 14 December, Coinbase’s international exchange will allow institutional customers to trade bitcoin and ether against the USDC stablecoin. Read more here. 

• JPMorgan said it is cautious about crypto markets in 2024, but expects ether (ETH) to outperform bitcoin (BTC) and other cryptos due to an upgrade that will make the Ethereum blockchain more scalable. Read more here. 

Why Didn’t They Teach Me This in School?

By: Cary Siegel

Written in simple lucid language, this book is a laundry list of financial do’s and don’ts. Unlike many of the personal money management books out there, this one is a quick, easy-to-digest read that focuses more on the qualitative side than the quantitative side of personal money management. The principles are not from a textbook. Rather, they are practical principles learned by the author as he navigated through his financial life. Since these are practical experiences and not theories, many examples are unorthodox and thus easy to remember. 

This is a perfect book for anyone who is looking to understand personal finance in layman's language with clear examples and detailed reasoning. Invest in this book today if you are in the process of charting your financial future. 

Before you get on with your day, don’t forget to flex those brain muscles with our weekly crypto crossword.

That’s it for now. Thanks for sticking around.

See you later, folks! 👋

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