The Investment Mistake Otha Anders Made

In 2015, an elderly Louisiana gentleman cashed in at a nearby bank, a truckload of 55-gallon plastic water jugs of pennies that he had collected over the previous 45 years. After the last penny had been counted, Otha Anders received over $5,130 as the total amount for his pennies. That’s over 510,000 pennies. To the general public, this news probably sounded wonderful, but to every American numismatist who collects and buys coins for fun and profit, Anders lost a lot of money.

According to the News-Star of Monroe, La., Anders referred to each of his pennies was a “God-given incentive reminding me to always be thankful.” In Anders case, however, a “penny saved” may be more than “a penny earned.” Many of those that he cashed in to get instant money, would have been worth more money.

Since Anders began his penny hoarding in 1970, he would have picked up many “wheat” pennies that the Mint struck between 1909 to 1958. Even today, there are still many “wheat” cents in penny rolls and circulating change. When he started saving in 1970, he would have found many wheat cents in great condition. Over the last 45 years, most of each of those pennies would become more valuable than one cent.

According to the “Guide Book of United States Coins 2015″ by R.S. Yeoman, wheat cent values ranged from $.10 in “good” condition to several hundred dollars in “almost” uncirculated condition. Also, the guide records a few extremely rare pennies that were worth up to $5,000 in uncirculated conditions. However, it would be impossible to estimate how much the numismatic value of the entire collection might be; each coin would have to have been examined by reputable coin dealers who could have helped him sell his collection, but it’s easy to imagine Anders would have made over $20,000 if he had had the patience to get them evaluated.

In addition to numismatic value, there is a precious metal value for the price of all of the coin’s weight in copper. All American copper coins struck until 1981 contained 95% copper. According to the “InvestmentMine” website, in 2015 the average value of copper was $2.86 per pound. All of Anders’ pennies together weighed over 2,800 pounds. So, if he picked out all of the coins, we’d multiply 2,800 pounds and 2.86 the sum in copper would have been a total of roughly $8,000. However, a conservative estimate of the number of pennies made of copper was 75%, we’d get about $6,000, which is about $900 more than he received.

Although Anders received over $5,100 for his enormous collection, he could have gotten much more if he took the time to get all of them evaluated by a trained numismatist. However, the good news is that if you live in or near Louisiana, you could buy many rolls of pennies from local banks and probably find some of those higher valued wheat cents.

Is Cryptocurrency the Future of Money?

What will the future of money look like? Imagine walking into a restaurant and looking up at the digital menu board at your favorite combo meal. Only, instead of it being priced at $8.99, it’s shown as.009 BTC.

Can crypto really be the future of money? The answer to that question hinges on the overall consensus on several key decisions ranging from ease of use to security and regulations.

Let’s examine both sides of the (digital) coin and compare and contrast traditional fiat money with cryptocurrency.

The first and most important component is trust.
It’s imperative that people trust the currency they’re using. What gives the dollar its value? Is it gold? No, the dollar hasn’t been backed by gold since the 1970s. Then what is it that gives the dollar (or any other fiat currency) value? Some countries’ currency is considered more stable than others. Ultimately, it’s people’s trust that the issuing government of that money stands firmly behind it and essentially guarantees its “value.”

How does trust work with Bitcoin since it’s decentralized meaning their isn’t a governing body that issues the coins? Bitcoin sits on the blockchain which is basically an online accounting ledger that allows the whole world to view each and every transaction. Each of these transactions is verified by miners (people operating computers on a peer to peer network) to prevent fraud and also ensure that there is no double spending. In exchange for their services of maintaining the integrity of the blockchain, the miners receive a payment for each transaction they verify. Since there are countless miners trying to make money each one checks each others work for errors. This proof of work process is why the blockchain has never been hacked. Essentially, this trust is what gives Bitcoin value.

Next let’s look at trust’s closest friend, security.
How about if my bank is robbed or there is fraudulent activity on my credit card? My deposits with the bank are covered by FDIC insurance. Chances are my bank will also reverse any charges on my card that I never made. That doesn’t mean that criminals won’t be able to pull off stunts that are at the very least frustrating and time consuming. It’s more or less the peace of mind that comes from knowing that I’ll most likely be made whole from any wrongdoing against me.

In crypto, there’s a lot of choices when it comes to where to store your money. It’s imperative to know if transactions are insured for your protection. There are reputable exchanges such as Binance and Coinbase that have a proven track record of righting wrongs for their clients. Just like there are less than reputable banks all over the world, the same is true in crypto.

What happens if I throw a twenty dollar bill into a fire? The same is true for crypto. If I lose my sign in credentials to a certain digital wallet or exchange then I won’t be able to have access to those coins. Again, I can’t stress enough the importance of conducting business with a reputable company.

The next issue is scaling. Currently, this might be the biggest hurdle that’s preventing people from conducting more transactions on the blockchain. When it comes to the speed of transactions, fiat money moves much quicker than crypto. Visa can handle about 40,000 transactions per second. Under normal circumstances, the blockchain can only handle around 10 per second. However, a new protocol is being enacted that will skyrocket this up to 60,000 transactions per second. Known as the Lightning Network, it could result in making crypto the future of money.

The conversation wouldn’t be complete without talking about convenience. What do people typically like about the their traditional banking and spending methods? For those who prefer cash, it’s obviously easy to use most of the time. If you’re trying to book a hotel room or a rental car, then you need a credit card. Personally, I use my credit card everywhere I go because of the convenience, security and rewards.
Did you know there are companies out there providing all of this in the crypto space as well? Monaco is now issuing Visa logo-ed cards that automatically convert your digital currency into the local currency for you.

If you’ve ever tried wiring money to someone you know that process can be very tedious and costly. Blockchain transactions allow for a user to send crypto to anyone in just minutes, regardless of where they live. It’s also considerably cheaper and safer than sending a bank wire.

There are other modern methods for transferring money that exist in both worlds. Take, for example, applications such as Zelle, Venmo and Messenger Pay. These apps are used by millions of millennials everyday. Did you also know that they are starting to incorporate crypto as well?

The Square Cash app now includes Bitcoin and CEO Jack Dorsey said: “Bitcoin, for us, is not stopping at buying and selling. We do believe that this is a transformational technology for our industry, and we want to learn as quickly as possible.”
He added, “Bitcoin offers an opportunity to get more people access to the financial system”.

While it’s clear that fiat spending still dominates the way most of us move money, the fledgling crypto system is quickly gaining ground. The evidence is everywhere. Prior to 2017 it was difficult to find mainstream media coverage. Now nearly every major business news outlet covers Bitcoin. From Forbes to Fidelity, they’re all weighing in with their opinions.

What’s my opinion? Perhaps the biggest reason Bitcoin might succeed is that it’s fair, inclusive and grants financial access to more people worldwide. Banks and large institutions see this as a threat to their very existence. They stand to be on the losing end of the greatest transfer of wealth the world has ever seen.

Key Medicare Annual Enrollment Choices

The Annual Enrollment Period for selecting Medicare choices is well underway.

Medicare coverage decisions can only happen during the period of October 15 to December 7 of each year. “Special Election Periods” allow, in specific circumstances, changes during other parts of the year.

The Annual Enrollment Period gets much attention, advertising from insurance companies and comment. What is at stake?

The Government provides Medicare services in Part A and Part B. Private insurance companies sell supplement insurance to cover many of the costs Part A and Part B do not and Part D drug coverage. That is classic “Original Medicare”.

Private insurance companies also offer Part C “Medicare Advantage” plans. These offer Original Medicare services; often with other benefits.

This will not survey the details of all the choices. We discuss here the choice between the Original Medicare choices and the Medicare Advantage choices. The bottom line is the potential out-of-pocket costs a person has to incur in either case.

Original Medicare has premiums for Part B and any supplement policy bought. However, there is less in co-pays and co-insurance. Medicare Advantage plans often have much lower monthly premiums but often higher co-pays and co-insurance; but there are maximum “total out-of-pocket” expenses to protect against major expenses from hospitalizations and other causes. To make a choice to go with Original Medicare or a Medicare Advantage plan calls for a projection of how much medical attention you are going to need.

Original Medicare is usually best suited for someone who expects to need more medical services. Even though the premium is higher than most Medicare Advantage plans, the lower co-pays and co-insurance costs can make it the better bet. If there is a sense there will not be a need for much medical attention, a Medicare Advantage plan may be the better way to go. The lower premium saves money over Original Medicare Part B and a Supplement policy; and there is a cap if you need more medical attention than expected. Plus, Medicare Advantage Plans often have added benefits like vision or dental services Original Medicare does not have.

Trying to calculate the potential cost differences is, itself, trying. But the general principles are a good guide to what to consider. If it is clear much medical attention will be required, Original Medicare planning should be considered. When the expectation is little medical attention will be needed, then a Medicare Advantage plan can have the advantage of less monthly premium; but, perhaps, some added benefits.

Cost is always important. However, if you have favorite doctors and other providers, make sure they are in the network of any Medicare Advantage plan. If you cannot see the doctor of your choice or get the medications you need, any cost savings is not worth it. Your good health is the most important preference of all.

Most important, remember to complete your choice before December 7. If you do not, you may find yourself stuck in a plan you do not like until this time next year.

5 Practical Tips for Lifelong Financial Sustainability

Sustainability is usually a term about environmental issues. Lately it’s become more of a personal finance term as well. That’s because financial decisions need to be sustained over the long term. To sustain you and your family over time, Financial Sustainability means planning and flexibility. Having Plans B, C and D is a necessity.

Here are a few tips for those who want to see their money stay around as long as they do.

Save Before You Invest

It’s a good idea to secure at least nine months of living expenses saved before even thinking about investing. As you plan your savings strategy, make sure you contribute enough to your retirement funds, particularly if your employer still offers a 401(k) match. Once you have your emergency fund, keep on saving. A good goal is to put aside at least 10 percent of your earnings each month (or as you can afford it). By retirement, you’ll have a nice chunk of money to nest in.

Keep Credit History Good

Being a habitual bill payer signals to banks and issuers that you are a risk worth taking. Paying credit cards or mortgages late will lead to negative consequences that damage your credit score and overall credit health. Banks and issuers consider payment history when evaluating your credit risk. A long-standing history of on-time payments suggests you are responsible and reliable borrower; a poor history suggests you many not repay debts and could result in a costly loss. Remember that a credit report is like an adult report card.

Spend for Retirement

A simple trick for saving: spend less than you earn. That might not be easy if you are already having trouble keeping up with bills. A spending plan would take care of that. Some people call this a budget, but since we’re referring to retirement as something to buy, a spending plan is more appropriate. Think of a budget not as a means to the end of buying a 60-inch television but a budget that will sustain over decades that will put you out ahead financially once you’re deep into retirement.

Savings Plans Are Still Good If You Can Get Them

If your company still offers a traditional retirement plan like a 401 (k) plan, it’s a good idea to put in your money up to the point where the company stops matching your contribution. Even if the funds within the 401 (k) don’t make great gains some years, at least you know you have the company match that doubled your contribution. A fairly high interest rate will come out of that. You might not have doubled your money by the time you are allowed to take it out, but it’s going to be a lot higher than what you could make on any other investment.

Make the Most of Income Sources Other than Savings

Choices of when to start taking Social Security can cut your retirement income by 25 percent or boost it by an additional 32 percent. Married couples can use strategies like claiming spousal benefits to increase income substantially. Factor in maintenance expense if your income comes in the form of rental properties. There’s a tremendous amount of benefit that some smart planning can do for you that will help over the long haul.

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