🛑 Seeing red
and do this to save income tax money VI
Morning Download from Invincible Money
Personal finance + economics + markets
Good morning investors! Yesterday wasn’t a good day for the market. Almost all sectors, including crypto and tech, were red. But, to keep you motivated, here’s a cool stat:
About 14.9% of Switzerland's population has a net worth of $1 million or more making it the country with the most millionaires per capita; however, the US still has the highest number of millionaires in the world – 21,951,000 –according to 2021 figures.
Today we cover:
The stock market dips again. 😩
Are T-bills now better than DeFi? 👌
Do this to save income tax money VI 👀
📊 Economy and News
A.I. startup, Hugging Face, attracts big names
Though not a publicly traded company, AI startup Hugging Face is attracting big names such as Nvidia, Intel, IBM, Salesforce, Amazon, and Google.
These companies have contributed to a big $235 million round for the startup. CEO Clement Delangue is excited about the future and said that he plans on using the money to hire new talent.
This proves that big companies are willing to work together to make something great, especially since their employees are using tools like Hugging Face to improve results.
“Maybe in five years, you’re going to have like 100 million AI builders. And if all of them use Hugging Face all day, every day, we’ll obviously be in a good position,” said the CEO.
Our take: Keep this company on your radar as one of those companies providing the “picks and shovels” to the gold miners.
S&P 500 4,376.31 (-1.35%)
DJIA 34,099.42 (-1.08%)
NASDAQ 14,816.44 (-2.19%)
VIX 17.21 (7.70%)
* Prices as of Aug 25th, 12:20 AM UTC
The stock market fails to benefit from Nvidia
Blockbuster Nvidia earnings could not keep the stock market afloat as most stocks tumbled on Thursday.
The day started on a positive note but stocks soon turned red. Nvidia gained $30 to reach an all time high of $502.66 at the start of the day; however, it closed the day on a poor note – 0.1% – losing almost all it had gained. It’s believed that the company has failed to attract institutions despite great numbers.
Almost all major big companies were red, including Boeing (-4.93%), Netflix (-4.92%), and Tesla (-3.12%).
Everyone has an opinion on NVDA. Overvalued or the next Google?
Who the hell is buying NVDA 43x revenue now right now and 125x earnings?
It’s market cap is only 35% less than Google now despite Google doing 10x the revenue and 9x the profit.
I’m not a smart man but this craze prolly won’t end well.
— Nick Huber (@sweatystartup)
Aug 24, 2023
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Bitcoin $26,065.20 (1.37%)
Ethereum $1,652.58 (1.58%)
Total market cap $1.05 (-1.73%)
* Prices as of Aug 25th, 12:20 AM UTC
T-bills more profitable than crypto DeFi?
DeFi's total value is now down to $38 billion, its lowest level since the first quarter of 2021.
What’s happening? People are choosing T-bills over DeFi as the former now offers 5.5% risk-free, more than double when compared to DeFi. Plus, there's no risk of smart contracts or exploits.
But, it’s not over for DeFi just yet because T-bills will not always continue to offer such a high return. Plus, some crypto platforms are working to match the rate.
💵 Personal Finance
Do this to save income tax money - Part VI
We have reached the end of our ‘How to Save Income Tax Money’ guide. In previous issues, we discussed different ways to save tax money, including starting a business, maximizing your retirement accounts, investing in municipal bonds, using a Health Savings Account, and claiming tax credits.
Today, we’ll talk about another great way to save income tax money – shooting for long-term capital gains.
How does it impact taxes?
Capital gain is defined as the amount of money or profit you make from the sale of an investment. Examples include real estate, stocks, and more.
Some people invest for a short period of time and cash out profit in only a few months and some like to keep the investment for a good few years, which is considered long-term. This option is beneficial from a tax point of view as long-term gains offer lower tax rates.
How does it work?
We suggest that you keep an asset for at least a year to enjoy a lower tax rate, which depends on your income.
Investors holding a capital asset for longer than one year enjoy a preferential tax rate of 0%, 15%, or 20% on the capital gain, depending on their income level.
Yes, it is possible to fall in the zero rate bracket if you keep the asset for at least a year. You must meet these requirements in order to qualify:
Your taxable income must not be above $89,250 (for couples filing jointly).
The amount falls to $44,625 for single individuals.
I must mention that a lot depends on timing and it might be a good idea to get in touch with a professional to determine the right time and method to sell assets, whether appreciated or depreciated, so you can save maximum tax money.
Something exciting: Tax-loss harvesting
Tax-loss harvesting is another great technique to save tax money.
It refers to "offsetting a capital gains tax liability by selling securities at a loss."
This technique gives investors the option to carry forward capital losses in excess of $3,000 to later tax years.
Here’s a short video on how tax-loss harvesting works:
💰 Be a Better Investor
What did you think of the 6-part tax saving series?
👩🏽⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.