January 19, 2023

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TOGETHER WITH

Good Thursday to you. Can you guess how much the average U.S. taxpayer spends completing their tax returns? a. $120, b. $240, c. $480. Follow the wave 🌊 below for the answer.

Here are the topics du jour:

The growing relevancy of alternatives
Where to go for the best savings rates
Investments to make in yourself

INVESTING

The Growing Relevancy of Alternatives

Based on data from 2021, it's estimated that only about 22% of investors incorporated alternatives into their portfolios, and yet 81% of ultra-high net worth individuals had invested in the asset class — an interesting dichotomy.

It's the road less traveled that often takes you the farthest, and it seems investors are beginning to realize this. From crypto and real estate to wine and fine art, signs point to more growth ahead for alternatives.

The rise of the alts

Defining alternatives: "Traditional" investments usually refer to a pretty narrow grouping: stocks and bonds. On the other hand, alternative investment refers to pretty much everything else — real estate, crypto, private equity and VC, commodities, art, and other collectibles.
Demand: Alternative assets under management (AUM) have more than doubled in the last decade, now totaling over $13T in value. This upward trend is expected to continue, with most estimates coming in around $17T by 2025.
Biggest winners: The two fastest-growing alternative investment sectors are digital assets and private equity. Crypto AUM has exploded — from $100B in 2019 to nearly a trillion presently, and the private equity sector is projected to double again by 2025, topping $9T in value.
Easy access: We've seen this trend manifest itself in the form of growing access to these investments, often facilitated by startups and private companies themselves. Apps, websites, and everything in between — there are now countless services available for us to use, giving almost everyone easy access to the world of alts.
The appeal: "Never put all your eggs in one basket." The appeal of alternatives comes from the unique, uncorrelated diversification they provide investors. And because certain alternatives are more volatile with higher risk than traditional investments, these alts usually provide greater upside.

Is now a good time to get into alts?

Not only are they becoming more accessible to the average investor, but during down markets they may also provide some protection and diversification, not to mention future growth potential.

What's paramount here is keeping your alternatives allocation to a level you can tolerate — don't bite off more than you can chew. Many advisors will suggest keeping your alternatives allocation to around 5%, but no higher than 20%.

Take this related lesson on this topic and earn Dibs 🟡 while you're at it:

What are Alternative Investments?

Investing Basics

7 mins

SAVING MORE

Where to Go For The Best Savings Rates

When the FOMC elects to raise the Federal Funds Rate, banks usually respond in unison by also raising their interest rates—both on debt and saving products. The relationship between the two is loose, but the primary reason banks do this is to attract more deposits at a cheaper rate than what they'd be paying for an overnight loan from another bank.

Regardless of the logistics, the outcome is the same—more ROI on your savings. Online banks tend to offer better yields than those of the brick-and-mortar type, so that's where we'll focus today.

Accounting for both rate and reputation, here are our top savings accounts at the moment.

The top ways to reap APY

Reminders: With these offers, it's important to remember that these rates are sometimes only applicable to certain balance ranges, and often the more you hold, the lower your rate becomes—it's like the inverse of taxes. Additionally, the standard FDIC insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.
Ally Bank: Did you know that Ally Bank was originally founded by General Motors? It's evolved quite a lot since then, but it has perhaps since become a leading stalwart of the online banking world. With a 3.3% APY on savings, while also offering a reliable and friendly customer support team, it's hard to beat Ally.
Higher yields: If you want to eke out a little extra, there are a few more savings alternatives. UFB, Merchants Bank, Bask Bank, and CIT are offering 4% or more on their savings accounts.
Alternatives: If you're seeking a little more but want to do so safely, there's always the option of going for a rewards checking account, some of which offer APYs of 2%+ if you meet their criteria.
And check regularly: We haven't had rates rise this fast and consistently in a while, so it's worth comparison shopping online at sites like Doctor of Credit, BankRate, MagnifyMoney and others.

Take this related lesson on this topic and earn Dibs 🟡 while you're at it:

⚡ Saving Tip: The 1% Rule

Budgeting & Saving

0 mins

FEATURING FABRIC BY GERBER LIFE

Plan Like a Parent

Parenting is hard—getting life insurance shouldn't be. Life insurance is important for your family's future, especially if you have young children. That's why parents choose Fabric by Gerber Life to help them navigate through all the options.

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Fabric's easy digital platform, which also offers support from licensed agents, empowers you to make the right decisions for your family's financial future. Get started today.

PERSONAL FINANCE

Investments to Make in Yourself

It's hard to invest in the markets without first investing in yourself. It's almost impossible. Without first securing some income, productivity, solid routines, and hopefully good mental health, we wouldn't have the time, money, or motivation to invest.

Creating a healthy and productive life for yourself is the foundation of a healthy financial life, and one can't exist without the other.

Ways to invest in yourself

Pay yourself first: It sounds ironic, but "paying yourself" first is one of the most important moves you can make when investing in yourself. The idea here is to prioritize your saving, investing, and budgeting and set up some automatic transfers that streamline the process for you. The best investment you can make in yourself is to secure these essentials and the peace of mind that comes with them.
Eliminate bad debt: Sometimes debt can benefit you, but debt that doesn't serve you can be a major drag to your budget and get in the way of your goals. This year, make it a priority to reduce any bad debts you might have to clear up room in your expenses and eliminate as many interest payments as possible.
Get organized: A home is worthless without a good foundation, and the same could be said about life as well. Without a sustainable structure beneath it all, any progress is liable to crumble beneath us at any given time. And a solid foundation and plan precede almost all good actions because starting with the end in mind makes achieving your goals exponentially easier.
Learn and build new skills: Consider taking classes or earning a degree in a field that interests you or that will improve your career prospects. Or develop new skills through training programs, workshops, or self-study. And if you work for a company that offers education reimbursement benefits, take advantage of it as it can offer your career a nice ROI boost. Employer-sponsored learning resources not only afford you more skills but also save you potentially thousands of dollars.

🌊 BY THE WAY

💳 Answer: $240. The average person spends 13 hours and $240 completing their tax return; 90% of tax returns are expected to be filed electronically. The average refund in 2022 was $3,473. And the IRS received over 1,500 calls per second during the last filing season (WalletHub)
📆 IRS announces opening day of January 23 to kick-off the tax-filing season (Yahoo)
🗃️ ICYMI. Ways to file your U.S. taxes for free (Finny)
🪑 There's a simple way to offset the health risks of sitting all day (ScienceAlert)
⚕️ AI could someday make medical decisions instead of your doctor (Axios)
✍️ If you're one of those pen & paper people, here's a nifty bill tracker template to help you track your monthly bills (FinMasters)

🔎 Finny lesson of the day. If you haven't done so already, review tax basics:

Tax Basics

Taxes

7 mins

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Finny is a financial wellness platform for employees. The Gist is Finny's twice-a-week (Tues & Thurs) newsletter covering personal finance, market trends and investing insights. The content team: Austin Payne, Carla Olson, Chihee Kim. Finny does not offer investment and stock advice.

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