Steve's note: I'm no cryptocurrency expert... But I'm proud to say my colleague Eric Wade might be the No. 1 crypto analyst out there. Since 2020 alone, he has closed out seven different recommended positions that could have made you 1,000% to 2,100% or more. Today, he's sharing the strange story of how one of America's most popular investment vehicles is taking its first steps into the world of crypto...
What do we remember the Carter presidency for?
Gas lines? High interest rates? A stagnant economy? Annual inflation of 8%, and a stock market that dropped 0.7% during his four years in office?
If any of those are the first thing you thought of, you'd be right.
Now forget all of that... Not because it isn't true (it is), but because it pales in comparison to Carter's greatest accomplishment. And, if you'll humor me for five minutes of your time, I'm going to share how you might still be benefiting from Carter's administration.
And if we as investors get lucky, sometime in the next few months, Jimmy Carter could make us so wealthy that the IRS will be salivating over the fully taxable income we'll be forced by law to collect.
Wow... big statement, right? You're thinking, "I knew that Crypto Capital guy would eventually lose his marbles."
Nope. Here's how I know I'm right...
How many statutes passed by the 95th U.S. Congress and signed by President Carter do you know? And for how many can you cite the Internal Revenue Code section and paragraph?
All you need is one: Section 401(k).
That's right... The investment vehicle that holds the largest portion of most Americans' investment wealth was signed into law by Jimmy Carter.
It has become a household name – as it should be. Without it, many Americans would have virtually no assets.
Consider this. As of 2019, the Federal Reserve estimated that the median American household's net worth was $121,000. And in 2018, investment-banking giant Fidelity reported that the average 401(k) balance for investors under the firm was little more than $100,000.
That means for some Americans, your 401(k) could hold $5 of every $6 you own.
The 401(k) has become such a popular investment vehicle because it allows convenient, tax-deferred investing by way of payroll deductions. I'd wager that most investors manage their 401(k)s in a "set it and forget it" fashion... and that's probably a good thing. Investing small amounts routinely over time can pay off for investors who sit back and let their balance grow.
Indeed, some investors accumulate so much money in their 401(k)s that after they retire and roll the balance over to an individual retirement account ("IRA"), the law states that eventually, you must start taking withdrawals to try to get the balance down.
If you deferred the taxes on your earnings, this income that you're "forced" to take is a massive boon to the IRS. It's likely that you'll owe big taxes on the income you withdraw.
And this is why I – the crypto guy who has decidedly not lost his marbles – am getting so excited...
... Because we're starting to see 401(k) providers offer access to cryptocurrencies.
At least two small providers – ForUsAll and iTrustCapital – are adding the cryptocurrency asset class as a possibility for you to own. And because changes like this can happen quickly, the asset class may be in some folks' 401(k)s sooner than they expect.
This is another step in a positive direction. Obviously, it would go up on the high-risk end of the spectrum. The details are going to make all the difference (for instance, are you buying real cryptocurrencies or are you buying placeholders?). But like any investment that requires special handling, it will just be a matter of time before the biggest, most well-run 401(k) service providers start competing for who can offer the best selection.
I'm pretty excited by this. I'm a big believer in deferred taxation, and 401(k)s are great for that (and for tax efficiency). If I could buy bitcoin in my 401(k), you couldn't hold me back.
If that worries you, keep this in mind... over the past decade, bitcoin has been the best-performing asset of any major asset in the world.
Sure, more than a few investors have been turned off by the legendary volatility of bitcoin and other cryptocurrencies. These assets routinely correct 30% to 40% even during the best rallies.
But think about this: investing a very small amount of money on a routine basis can tame the most volatile investments, can't it? Think about strategies like dollar-cost averaging, in which you invest a total sum of money in small portions over time.
Doesn't that sound like a perfect match for a 401(k) that we contribute a tiny amount every paycheck? This kind of routine new-money investment into the cryptocurrency asset class will surely keep the already massive growth going strong.
And that's why I'm guessing the IRS – who knows that the laws are already on the books, forcing people to claim their taxable income – is as excited about this as I am...
The IRS knows that really big 401(k)s generate really big taxable income... and if your account includes even a small amount of bitcoin's phenomenal gains, you're going to make the tax man very happy.
Your 401(k) may be the unlikely legacy of decades past. But now, it's taking its first steps into the future. And it's just one more reason the big gains from mass adoption of cryptocurrencies will continue...
Editor's note: Eric has been tracking a new opportunity recently. It's entirely separate from this retirement story... And he says it could be like buying bitcoin back in 2017, when it was trading for less than $3,000. The most surprising part is that Eric says this opportunity gives you the HUGE upside of cryptos WITHOUT the volatility... So, he's calling for all Stansberry Research readers to hear him out during an urgent summit on July 21. Find out how to tune in for free right here.
With the recent volatility in crypto prices, a lot of investors are wondering if the boom is over. But Eric believes today's conditions are totally different from the crash in 2017... Read why he thinks we could be on the verge of another rally right here: Why I Expect Crypto Prices to Go Up From Here.
"Most people look at (and think about) bitcoin in terms of dollars," Eric writes. At first glance, cryptocurrency might not seem useful as anything other than a growth investment. But bitcoin becomes even more attractive once you understand the underlying technology... Read more here: Look Beyond Bitcoin's Price to See Its Real Value.
Today’s chart shows the benefits of investing in a popular brand…
DailyWealth readers know that strong brands inspire loyalty in their customers. They’ll come back to their favorite names… and are even willing to pay a premium for brands they trust. Today, we’re looking at a brand that’s known and loved around the world. In fact, Forbes labels it as the world’s “most valuable” brand…
Apple (AAPL) is a $2 trillion consumer-electronics giant. It has created some of the most popular devices in the world, like the iPhone, iPad, and Apple Watch. Every time a new product or edition is released, consumers race to buy it. And this brand recognition has paid off… In the most recent quarter, Apple saw double-digit growth in each of its product categories. It also brought in record revenue of $89.6 billion – up 54% year over year.
As you can see, AAPL shares are up around 190% over the past two years. And they recently hit a new all-time high. As long as the Apple brand remains a leader in the electronics world, this uptrend should continue…