Morning Download from Invincible Money 

Personal finance + economics + markets

Good morning investors on the 13th straight day of market gains!

The results of yesterday’s poll were pretty split. Here’s what you said:

• 20% the market is going up

• 40% it stays flat

• 40% a crash is coming

This is similar to what analysts and economists have been saying. They’re just as split! No one agrees on anything and it’s the widest disagreement ever.

Today we cover:

1. The U.S. Fed raises rates again. What does it mean for you?

2. Protect your portfolio against a market crash

3. Hedge funds getting bullish on crypto

4. Why foreign banks don’t want Americans

📊 Economy 

U.S. Fed raises again

As expected, the Fed raised rates another 0.25% to the highest rates in 22 years. The Fed is expected to maybe raise 1 more time and even start cutting next year.

What does it mean for you?

The rates for everything will be going up again: credit cards, car loans, mortgages and student loans.

However…

While now isn’t a great time to lock in a high rate mortgage or auto loan, the rates you get paid on short-term investments like CDs are going up, so now may be a good time to lock in the rates.

(On Tuesday we covered different short-term investments.)

The interest rate on your savings account and money market fluctuates, and while the rate may be good now, it won’t stay that way when the Fed starts cutting rates (maybe early next year).

To lock in those rates, considering opening a CD (Certificate of Deposit). The rate is fixed and you can choose from between 3 months to 5 year terms (the money isn’t available during that time and you get paid more the longer the term.)

This makes a great option for medium to long-term money.

Maximize your savings account

Short-term money is best in a bank account or money market. The problem is most accounts pay an average of 0.50%. Consider a high-yield savings account where you can get ~5%. You can get these at your bank or brokerage.

Prioritize paying off debt

Lastly, to take advantage of higher rates, pay off any variable or high-interest debt, especially credit card debt or anything with variable interest since those will just keep going up.

Want more? Learn about the new Pro subscription to get more in-depth research and get your questions answered.

📈 Stocks

S&P 500 4,566.75 (-0.02%)
DJIA 35,520.12 (+0.23%)
NASDAQ 14,127.28 (-0.12%)
VIX 13.19 (-4.83%)

7 Automakers partner for charging stations

The partnership network will open 30,000+ high-powered charging stations available to all EV customers - both the CCS (Combined Charging System) and NACS (North American Charging Standard run by Tesla).

The companies are GM, BMW, Honda, Hyundai, Kia, Mercedes-Benz and Stellantis.

Rivian [RIVN +7.10%], Lucid [LCID +4.83%] and Nio [Nio +10.58%] popped on the news, while Tesla [TSLA -0.35%] was down.

Chinese EV maker XPeng up 26%!

This is why investors are always looking for M&A news and why insider trading of coming mergers is illegal. Volkswagen announced it was investing $700 million in XPeng [XPEV +26.69%] and the stock shot up.

📚 What I’m watching

Prepare for a market crash

This week I published a video about how to prepare for a market crash with the 3 Bucket System - a system a lot of financial planners (like I used to be) use with their clients.

In short, divide your assets into 3 different accounts based on when you’ll need the money and invest according to that time horizon.

• Short-term: money you need in the next 2-4 years. Put it in liquid accounts like savings and a money market. Use for living expenses and an emergency fund.

• Medium-term: money you don’t need for 2-4 years, but need before retirement. Invest in index funds, ETFs and real estate.

• Long-term: this is retirement money and the bulk of your investments that’s invested into stocks, index funds, ETFs and real estate.

For a better, more in-depth explanation, watch this 14 minute video (plus learn how to best save for a vacation and other large expenses)

🔐 Crypto

Bitcoin $29,497.68 (+1.0%)
Ethereum $1,871.47 (+0.6%)
Total market cap $1.23 (+0.8%)
* Prices as of July 26th, 10:23 PM UTC

Hedge funds see crypto rising significantly

A recent report by auditing firm PWC revealed that hedge funds are accumulating crypto and expect the crypto market to rise significantly in the next year.

However, some hedge funds are hesitant to invest in crypto due to regulatory concerns and the reputation damage caused by events like the collapse of Terra and FTX. The report also highlights that crypto hedge funds want regulations around customer and company crypto segregation, auditing, asset reserves, and increased platform security and liquidity.

Note: the survey for this report was from before all the BTC ETF filings, so they may be even more bullish now.

Takeways:

• 30% of hedge funds still invest in crypto

• Mostly in BTC and ETH with ETH the largest holding

• They’re also investing in other Layer 1s and 2s

• Most think 2022 did serious damage to the industry

• They’re actively trading: SOL, MATIC, UNI, AVAX, DOT, ATOM, LINK

Coin Bureau did a great summary of the report if you don’t want to read all 49 pages.

💵 Personal Finance

Why don’t foreign banks want Americans?

Despite what “Mission Impossible” tells us, the days of numbered Swiss bank accounts are long over. In fact, most foreign banks don’t want Americans at all.

Why? Thanks to FATCA.

What is it? FATCA requires foreign financial institutions (FFIs) to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.

FATCA stands for the Foreign Account Tax Compliance Act, which is a United States federal law that was enacted in 2010 to address tax evasion by U.S. taxpayers holding financial assets outside the United States. FATCA requires certain individuals and entities to report their foreign financial accounts and offshore assets to the Internal Revenue Service (IRS).

In short: All foreign banks are required to report information on the Americans’ accounts who bank there, so while Americans can still have “offshore accounts,” assets can’t be hidden from the prying eyes of Uncle Sam.

💰 Be a Better Investor

👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.