Token Advice - #5 📈

Next-Gen Estate Planning | Protect Your Crypto | Finding Balance With Money | Predicting Returns | Crypto Price Rally

February 03, 2023

Hey everyone,

👋 Welcome to another monthly edition of Token Advice!

❓ So what is Token Advice? In short, Token Advice is a curation of what the 401 Financial team is reading, writing, listening to, and thinking about at the intersection of crypto, financial planning, and traditional finance. We didn’t see a newsletter that consistently combined these 3 topics, so we created one for you. We hope you enjoy!

P.S. Big announcement below. 👀

Before we dive in, here is a quick update on 401 Financial!

Our COO (and Notion Wizard🪄) Amber will be hosting a webinar on February 15th to break down how we built our interactive client experience inside of Notion. 🕵️

We’ve released a guide for those impacted by the recent layoffs. If this is you, stay strong, you got this! 💪

Tap in with Tyrone & Ben Phillips on Queue and A! 🔥

The 401 Financial Pinterest is live! 📍

The 401 Financial Team will be joining the Planner DAO at Crossroads in April! 🗣️

Personal Finance Tips 💳 🧰

👇 Now let’s dive in.

4 Insights

🫂📄 Next-Gen Estate Planning is Here

Exciting news! We’re ecstatic to announce that we’ve partnered with Wealth to bring our clients something truly special. Every one of our clients can now receive comprehensive estate planning services at NO cost to them. This includes wills, trusts, powers of attorney, advanced healthcare directives, guardian nominations, and much more. All of these are delivered in a high touch way with Wealth’s elite platform. This is a massive win for our clients and we’re thrilled to be able to offer this valuable service.

Estate planning is such an important aspect of the financial planning process, yet it’s often overlooked. It provides peace of mind for both you and your loved ones, ensuring that your assets are protected and distributed according to your wishes. With our new partnership with Wealth, we're making sure that this critical component of financial planning is accessible and affordable for everyone. This is a new age for RIAs, and 401 Financial is leading the charge.

We want to extend a HUGE thank you to Tim, Danny, Cyndie, and the entire Wealth team for working with us to make this a reality. Their dedication and expertise in the estate planning area will be invaluable in helping us bring this amazing opportunity to our clients. We're so proud to be able to offer this service and can't wait to see the positive impact it will have on our clients' lives. Thank you again, Wealth, for your partnership and for helping us empower our clients to secure their financial futures.

🔒 Protect Your Crypto

The rise of self-custody is upon us! Let’s revisit what “self-custody” is briefly:

Self-custody refers to the practice of holding and managing your own private keys, rather than relying on a centralized exchange or third-party service to manage them for you. With self-custody, you have complete control over your assets and you are also responsible for securing them. In short, self-custodial wallets allow you to own your digital footprint and assets which could include your money, identity, network, and more.

As we discussed about in our 2023 key themes in Token Advice last month, we anticipate this will be the year that the decentralized finance (DeFi) user experience becomes mobile and ready for primetime. The shift will allow new crypto entrants to skip the centralized custodian and open their own wallet in a seamless way.

As of today, one of the greatest barriers to self-custody is the technical understanding needed in order to protect your cryptoassets when they’re fully on-chain. Even crypto veterans can have security breaches as we saw in January when Kevin Rose’s NFT wallet was drained. We’ll outline some tips here to safely operate within decentralized finance:

Find a Trusted Wallet

In our view, these wallets are in a league of their own when it comes to combining security and user experience:

Best Practices & Actionable Tips

  • Send a small amount of crypto first: Before sending all of your cryptoassets from a centralized exchange into your self-custodial wallet, try sending a small amount first to make sure everything is set up correctly and you have the right wallet address. This is great for practice and can help avoid the loss of funds.

  • Have two wallets or a Multi-Sig: It may be beneficial to have two wallets, one for signing/transacting and another for long-term holding. This way, you minimize the risk of losing all your assets in the event of a phishing signature. You could also set this up as a “multi-signature” wallet, which requires multiple signatures for transactions to be approved. This adds an extra layer of security.

  • Write down your private keys: Physically writing down your private keys and storing them in a safe location, separate from your devices is currently one of the best ways to secure your funds. The crypto space is currently looking to solve some of these manual tasks through the use of account abstraction and zero-knowledge proofs.

  • Consider Insurance: The vast majority of crypto investors currently don’t protect themselves against smart contract risk and other forms of self-custodial risk. Check out Nexus Mutual or another crypto insurance provider to see how they can help insure your funds.

  • Keep your software up-to-date: It’s important to regularly install software updates to ensure that your mobile and desktop devices are secure with the latest security measures.

💰⏳ Balancing Money & Time

Often it can be difficult to find the sweet spot where our finances and our life moments and memories are in harmony.

Whether you are a busy professional, a student, or simply someone who wants to make the most out of life, this blog written by Simone Stolzoff will likely resonate with you.

He begins the blog post with this short story that hits home for all of us:

“A businessman is sitting on the beach of a small fishing village when he sees a fisherman approach the shore with his daily haul. Impressed by the quality of the fish, the businessman asks the fisherman how long it took him to bring in his catch.

“Just a short while,” the fisherman replies.

“Why don’t you stay out longer to catch more fish?” the businessman asks.

“Because this is all I need.”

“But then what do you do with your time?”

“I sleep late, catch a few fish, play with my kids, take a nap with my wife, and then join my buddies in town to drink wine and play guitar,” the fisherman responds.

The businessman is shocked. He explains that he has an MBA, and that if the fisherman follows his advice, he could help him grow his business. “You could buy a bigger boat,” the businessman says, “and use the proceeds to open your own cannery.”

“Then what?” the fisherman asks.

“You could move to the city to open a distribution center.”

“And then what?”

“You could expand your business internationally and eventually take your company public,” the businessman says. “When the time is right, you could sell your shares and become very rich.”

“And then what?”

“Well, then you can retire, move to a small fishing village, sleep late, catch a few fish, play with your kids, take naps with your wife, and join your buddies in town to drink wine and play guitar.”

The fisherman smiles at the businessman and continues down the beach.”

📈📉 Predicting Returns

At the beginning of every year, analysts release their stock market return predictions. Most years, they get it wrong. As you can see in this visual put together by Vanguard and Bloomberg, 75% of the time “actual” market returns fall outside of the high/low prediction!

Markets are highly complex and in any given year new “risks” pop up that were unexpected. It’s important as long-term investors to not get caught up in short-term predictions that lead to impulsive decision making.

1 Bonus

The total crypto market capitalization is back above $1 Trillion after spending the vast majority of the last 6 months below that mark. While still more than 50% off their all-time highs, Bitcoin & Ether both rallied in January closing at their highest levels since July, 2022. They also remain above their 2017/2018 closing highs.

Bitcoin Monthly Chart (Jan 2012 - Jan 2023)

Ethereum Monthly Chart (Jan 2016 - Jan 2023)

📖 Looking for more? Check out the links below.

Final Bits

📚 Articles

🐦 Tweets

🎧 Podcasts

📝 Long Form Reports

🧰 Crypto Tools

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This newsletter is copyrighted by 401 Financial, LLC. It is published and provided for informational and entertainment purposes only and not for individualized investment advice.  Please go to our website, www.401financial.co for additional information.