Strategic Planning for Personal Wealth

Making money is the first challenge, but securing those profits in a way that stands the test of time and macro economic conditions is another. Whether it is crypto, stocks or any other trading instrument, wealth preservation is key.

Invest

Crypto

The most lucrative way to achieve significant gains is through cryptocurrency investments. However, it's not as simple as randomly investing in various crypto projects. Success requires intention and thorough research to identify the most legitimate assets that will endure over time. It's a harsh reality that approximately 99% of cryptocurrencies are scams. Therefore, it is crucial to adhere to a strict set of criteria when deciding where to invest your money. To begin your crypto journey, view my guide to getting started with cryptocurrency.

Cryptocurrency markets refer to the platforms and exchanges where digital currencies (cryptocurrencies) are traded. Cryptocurrencies or digital/virtual currencies use cryptography for security and operate on decentralized networks based on blockchain technology. Examples include Bitcoin (BTC), Ethereum (ETH), and many altcoins.

Exchanges are online platforms where cryptocurrencies can be bought, sold, and traded. Major exchanges include tear one's such as Binance, Coinbase, and Kraken. These can be centralized (CEX) or decentralized (DEX). Exchanges are unofficially categorized as tear one, two and three, depending on their size.

Cryptocurrency markets operate 24/7 globally and are known for their high volatility and rapid innovation. Crypto offers the same trading modes as traditional markets like spot and futures/margin trading.

Traditional Finance

The term "traditional finance" (often abbreviated as "trad-fi") refers to the conventional financial system that includes established financial institutions, markets, and practices. Traditional finance encompasses a wide range of markets and financial instruments, including stock, bond, money, commodity, foreign exchange and derivative markets.

The stock market is a platform where shares of publicly traded companies are bought and sold. Major stock exchanges include the New York Stock Exchange (NYSE) and NASDAQ. Historically, stock markets have been central to raising capital for businesses and providing investors with opportunities for capital appreciation and dividends.

Bond markets are markets where debt securities (bonds) are issued and traded. Governments and corporations issue bonds to raise capital, promising to pay back the principal with interest over time. Bond markets provide a mechanism for entities to secure long-term funding and for investors to earn fixed income.

Money markets are short-term debt instruments, such as Treasury bills, commercial paper, and certificates of deposit. These instruments are typically highly liquid and considered safe investments, used for managing short-term funding needs.

Commodities Markets are used for trading raw materials and primary products like gold, oil, and agricultural products. Commodities markets can be spot markets (for immediate delivery) or futures markets (for delivery at a future date).

Foreign exchange (Forex) markets are markets where currencies are traded. The forex market is the largest and most liquid financial market in the world, facilitating global trade and investment by allowing currency conversion.

Derivative markets are for financial contracts whose value is derived from the value of underlying assets, such as stocks, bonds, commodities, or currencies. Common derivatives include futures, options, and swaps. Derivatives are used for hedging risk or speculative purposes.

Hold Assets

Cashing out and taking profits is a rewarding experience, reflecting the time and effort invested over the duration of your investment. However, it's crucial to consider the form in which you hold your gains. With the US dollar experiencing increasing inflation, it's evident that a shift will eventually be necessary. Precious metals like silver and gold often keep pace with inflation. The fact that many nations are accumulating gold may indicate where true wealth lies. Gold should be accumulated as the ultimate form of wealth preservation, while silver offers more upside potential in terms of returns and is highly divisible, making it useful for trading goods and services if necessary.

Reduce Your Tax Liability

Anyone with a stake in any financial instrument, whether it be cryptocurrency, stocks, or others, dreads capital gains taxes. Depending on your location, you could pay as much as 40 to 50% of your total gains in taxes. The goal is to minimize your tax liability. To achieve this, there are legal entities and structures that can significantly reduce your tax burden. These include self-directed IRAs and charitable remainder trusts (CRTs). While the initial setup cost for a CRT can be high, it becomes negligible when considering potential returns in the six or seven figures.