Morning Download 

Personal finance + economics + markets

Good morning, investors! There’s trouble looming. Netflix and Apple aren’t doing as predicted, crypto isn’t going up, and the Consumer Price Index isn’t encouraging.

🧂 Fun fact: The word salary can be traced to ancient Rome and the history of salt. Roman soldiers were historically paid in coin, but it is also said that they were paid in salt. Some even say the word salary is derived from the word salt, due to the salt allowances of soldiers. #whysosalty

Today we cover:

• What’s happening to consumer prices?

• Netflix falls – but why?

• Incomes that are tax free

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📊 Economy and News 

Consumer Price Index is up again

The Consumer Price Index measures the monthly change in prices paid by US consumers. Used to measure inflation, the number went up 0.6% in August rising 3.7% over the last 12 months.

The chart above shows historical prices. The number started to increase in 2021 and hit the highest level in over three decades in 2022. It is expected to fall in 2023 but not to the level the Fed would like. So far that’s not panning out.

What’s Fed’s next move? We don’t see a raise hike until November due to factors such as weaker consumer spending and a cooler US job market.

🌮 Food prices jumped 4.9% between July 2022 and July 2023. In comparison, prices had jumped 11.4% from August 2021 to August 2022. This is attributed to a variety of factors, including increasing oil prices and the Russia-Ukraine war.

⛽️ In fact, gas prices were the largest contributor in August, accounting for more than half of the increase. The CPI’s gasoline index rose 10.6% in August. Partly thanks to Saudi Arabia’s decreasing production.

Global hits:

• China declines iPhone ban rumors.

• The EU to probe Chinese subsidies of electric vehicles.

• India might allow Indian businesses to list abroad.

📈 Stocks

S&P 500 4,467.44 (+0.12%)
DJIA 34,575.53 (-0.20%)
NASDAQ 13,813.59 (0.29%)
VIX 13.48 (-5.27%)
* Prices as of Sept 13th, 22:40 PM UTC

Netflix had a fall

Netflix closed lower (-5.16%) after CFO Spencer Neumann offered soft guidance on operating margins in the 18-20% range, which is shy of the current consensus of 22.1%. 

Huh? He tried to soften that by saying that Netflix is 'nowhere near' peak margins.

Here’s what else he said:

• Netflix isn’t interested in live sports right now.

• The ad business 'is not that material yet'

The stock opened higher at $435.50 and went as low as $410.69 to close at $412.24. The stock currently has support at $400. If it breaks, it may go around $375.

🔐 Crypto

Bitcoin $26,259.10 (1.0%)
Ethereum $1,607.33 (0.6%)
Total market cap $1..08 (0.7%)
* Prices as of Sept 13th, 22:40 PM UTC

A lot has happened in the world of crypto in the last 24 hours; here are some links worth checking out:

• Ripple might crash by 25%, warn experts.

• FTX to sell its crypto holdings, Including SOL and BTC.

• Cryptoqueen’s sidekick to spend 20 years in jail.

• Major changes in Binance: CEO quits and the company cuts 1/3rd of the workforce.

💵 Personal Finance

Incomes that are tax free - Part I

We want you to save tax money. So, let’s introduce you to some incomes that aren’t taxed (in the US).

You will find alternatives abroad. For example, one-third of the family pension, subject to the maximum of Rs. 15,000 will be exempt, if you are a widow in India. 🇮🇳 

Similar exemptions apply in other countries as well. However, for the purpose of this piece, we’ll focus on the US. 🇺🇸 

Up to $3,000 of Income Offset by Capital Losses

Selling investments at a loss can end up being slightly beneficial. Though not the same, it works in the same manner as seen in the case of Warner Bros where the loss from Batgirl helped lower taxable income significantly.

However, the amount is capped at $3,000 per year. On the plus side, you can carry over capital losses from year to year until you offset your entire loss.

Sale of a Principal Residence

This is one of our favorites because it can help you save a lot of money.

There’s a catch: you must meet the IRS's ownership and use tests, i.e.:

• Must have owned the home for at least five years

• Must have lived in the home as a principal residence for at least two of the last five years

Those who meet these conditions can exclude up to $250,000 (for individuals) or $500,000 (for married couples filing jointly) from their income (of capital gain) when they sell the property.

So, be wise and choose the right time to sell your primary residence.

Earned Income in these states

Some US states are more tax friendly than others. These eight states have no individual income tax:

• Florida

• Alaska

• Nevada

• Tennessee

• South Dakota

• Texas

• Washington

• Wyoming

Another state that has our interest is New Hampshire, which also does not tax earned income from wages and salary but does tax interest and dividend income. Also, while most states do not tax Social Security income, you will still have to pay taxes on it due to federal laws.

Employer-Provided Insurance

"In most cases, the value of accident or health plan coverage provided to you by your employer is not included in your income," according to the IRS.

This includes everything from employer-provided long-term care insurance to health insurance provided by your employer through companies like Blue Cross, and reimbursement and coverage for medical care provided through a health reimbursement arrangement.

Furthermore, there are other exceptions, including no tax on the cost of up to $50,000 of employer-provided group term life insurance.

Complicated? Let’s make it simple. ⬇️

It means that you do not owe any tax on the amount your employer pays to give you a life insurance policy. for as long as the death benefit does not cross $50,000 death benefit. However, if the benefit crosses this amount (say $70,000), you will pay tax on the cost paid by the employer to cover the extra $20,000.

Life Insurance Payouts

Losing your loved ones can be devastating and the government understands that. This is why life insurance benefits are tax free; however, there are some exceptions.

You will pay taxes in these conditions:

• You cash in or convert a life insurance policy

• You receive accelerated benefits because you're terminally ill (with some exceptions)

We’ll come back with part II of this guide. For now, enjoy the video below:

💰 Be a Better Investor

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