By: Andrew L. Rossow, Esq.
It’s time that millennials and young investors take control over their financial futures, and that starts with digital portfolio management. There’s no doubt that digital money is here to stay. Hell, we’ve been using platforms like PayPal and Venmo for many years now, so it’s nothing new. Economists estimate that only 8 percent of the world’s currency exists as physical cash. The rest exists only on a computer hard drive, in electronic bank accounts around the world. In fact, 98% of the US Dollar and 95% of Euro is digital money has clearly evolved since its inception, that’s why it’s fair to assume it will evolve to a yet more efficient means.
The difference is now, we have investing modernized and formatted for the 21st century, and we are witnessing a new “dot-com” era of finance.
Since the emergence of Satoshi Nakamoto’s whitepaper on Bitcoin back in 2008/2009, the world has learned quite a bit about how digital money works and is transacted.
What Have We Learned This Far?
#1 –Investing In Crypto Is No Easy Task
Most of us entering the crypto space are anything but experts. Waking up one day and deciding you are going to enter into the crypto space is both exciting and terrifying. Knowing where to begin will automatically set your nerves on a journey like a ping-pong ball.
Choosing the Right Exchange
I could go all day on this, but as you have probably seen and/or heard, there are an unlimited number of exchanges that offer many of the same benefits, but with their own unique offering. Understanding why one exchange is better than the other takes days and if not months to fully grasp, before choosing one.
Choosing the Type of Wallet
No different than evaluating financial institutions in which to open up a checking, savings, or retirement/investment accounts, deciding which type of wallet (hot/cold) to store your funds and tokens in, can also take a great deal of time.
Plus, you also have to learn how the wallet itself works and the terms that govern it. Anxious yet?
Understanding Your Investment Decision
Whenever I am asked whether a person should get into the crypto space, and where they should invest, I always follow-up with five questions:
(1) Why do you want to enter the space? Is it because you have a genuine interest in learning about it, or because of the fear of missing out (FOMO)?
(2) Why do you want to invest in that particular crypto? Do you believe in it or have a personal attachment to their vision?
(3) How do you know what token to buy and/or when to sell it?
(4) How often are you trading?
(5) Are you meeting the team behind these projects, or simply reading their whitepapers.
For those who can’t answer one or both of those questions, it’s probably best you stay out for now, until you have a better idea of what you’re doing, or look to an alternative investment solution, such as “smart crypto investment automation” (SCIA). But, more on that below.
#2 –Scams Are Inevitable For the Novice
With any new technology, there are new job opportunities. Unfortunately, these employment ventures are for your ‘black hatters’, not your white-collar/blue-collar workers.
Like all hackers, ‘black hat’ hackers usually have extensive knowledge about breaking into computer networks and bypassing security protocols. But, when it comes to digital money, you don’t have to wear anything other than a hat that says, “I know what I’m talking about”, and next thing you know, you find yourself the victim of a large scam of fiat, with little to no payoff.
Trust me, I’ve fallen victim to it myself. Which is why I’ve made the decision to stop investing in cryptocurrencies, and invest into trusted index funds and portfolios.
If you’re not a full-time trader, be extremely wary about investing in cryptocurrencies, because at one point or another, you will fall victim to a scam or ploy by either a company who claims to know what they are doing, or are just a simple front for making quick easy cash and heading off to the Caymans.
#3—You Will Most Likely Lose Most of What You Put In
If it was as easy as many investors (and foolish ones) claim it is, everyone would be walking in riches. Unfortunately, that’s not the case. With an unregulated and an extremely volatile market, there’s no telling what the value of your particular investment or portfolio will look like when you go to sleep at night, because it could 180 on you the moment you wake up.
It is for this reason that educating ourselves on smart investing is all the more necessary. Understanding that when it comes to investment options, there are too many currencies with very few options. For most cryptocurrency investors, the current options are limited and vary widely in quality and execution.
Not all crypto indexes are created equal, because it requires a well-rounded supply of investor knowledge and overall knowledge of what the crypto market is doing 24/7. To you and I, we don’t have this kind of time.
So, with the growth and popularity of “smart technology,” implementing “smart investment” means that those with the knowledge and experience to do so, are able to bring their investment knowledge to the masses.
Democratizing Professional Crypto Investment Knowledge
While an RIA isn’t required, we are legally a fiduciary and felt that it was important to be regulated as it signals trust. Like your traditional investment portfolios, hand picking your cryptocurrency investments can be quite a challenge and extremely time-consuming. As crypto is still in its infancy stage, the markets are still extremely volatile, making the reality of losing everything all the more likely.
No different than overthinking who you’re starting next week on your fantasy sports team, it’s very easy to overthink an investment and end up losing too much or all of it.
So, why focus on indices? Plain and simple—actively managed portfolios underperform.
#1 –Tax Efficiency
Unless you’ve studied tax law or have a strange aptitude for how the IRS and federal government loves to prey upon our success, many don’t have the requisite knowledge required to understand how the world of tax falls into this new world of digital money.
Many index funds follow a fixed methodology that involves purchasing a basket of underlying assets without any “active” management or trading. Therefore, by having a mechanism that is able to re-create the composition of a pseudo- index, which includes the performance of research, analysis, back-testing, and knowledge, the investor is able to reap the benefits of having fewer taxable events through a passively-managed approach, rather then an actively managed one.
Snowball takes it one step further by offering their user’s Tax Optimization. Many crypto apps will provide their customers with never-ending spreadsheets of trades which result in time-consuming calculation and reporting processes. Snowball documents all trades so that at the end of the year, it’s as easy as downloading a statement, similar to a 1099 you would receive from a traditional broker for simplified and convenient tax reporting.
#2 –Simplified Maintenance
Through the use of algorithms, a Smart Crypto Investment Automation (SCIA) platform like Snowball is able to keep automated portfolio investing relatively straightforward.
By eliminating the infrastructural requirements of building what is usually a complex set of algorithms and trading strategies, the platform is able to build its own infrastructure and mirror the top crypto funds within the platform, democratizing access to trusted portfolios that have been professionally crafted and have material assets under management behind the strategy.
Remember, the purpose of smart investing, especially for millennials, is not to give them the idea they are in control, but to show them they are in control.
#3 –Reducing Overall Risk
Most importantly, keeping the overall risk down is crucial to on-boarding young investors into this space. The benefit of investing in crypto portfolios is that they are generally comprised of multiple cryptocurrencies. By providing a diversified portfolio of pre-selected investments, you as an investor are already reducing many of the risks purchased by investing in individual cryptocurrencies.
A New Snowball Effect For Young Investors
Snowball CMO, Jason Stone shaking hands with Snowball CEO, Parul Gujral
You’ve no doubt heard of the “snowball effect” when it comes to debt reduction. But, even attempting this strategy is overwhelming and makes you feel as if you’re the size of an ant.
Well, in the cryptocurrency space, creating your own “snowball” when it comes to your investments fiscally nourishes you to the size of an eagle.
Born from the brilliance of Parul Gujral and the renowned experience of its Chief Marketing Officer (CMO), Jason Stone, aka the ‘Millionaire Mentor’, Snowball allows the everyday investor to participate in the space, simply by adding their bank account into the mix.
“Unfortunately, the way that it works now with investing in digital assets, is that you have to have deep pockets to have a professional curated portfolio,” Gujral explained.
According to the Snowball CEO, people will invest no matter what. Especially with the current market sentiment:
“The last time bitcoin broke $8,000 you couldn’t buy your Whole Foods or Starbucks with it. Amazon, Microsoft and Facebook weren’t building on it, congress wasn’t fighting it. Fidelity wasn’t banking it. Square, eTrade and TD Ameritrade weren’t selling it”
Understanding Crypto Index Funds
According to Gujral, if you want to invest in the majority of the top 25 cryptocurrencies, the process is exhausting—you first need to sign up and register on multiple exchanges, then move money across multiple accounts, and to ensure that you don’t fall victim to exchange hacks, purchase a hardware wallet to store your tokens in, then physically write down your private key and keep it in a safe place separate from your hardware wallet.
Think about it, this is just but one step in the process, with way too many additional steps to follow, and way above the heads of the average investor/consumer.
So, how does Snowball change this for the average investor or millennial?
According to its CMO, Jason Stone, it takes the guesswork out of investing by implementing the very first smart crypto investment automation (SCIA). Specifically, it enables access to professionally curated portfolios that would otherwise be unavailable to the average investor. Through an internal algorithm, it automatically follows the portfolio allocations of professionally curated regulatory compliant index funds.
“We put your portfolio on autopilot, such that you don’t have to time the market, you don’t have to have the anxiety of missing out on a trade or trouble sleeping at night, because the crypto market like any other market, doesn’t sleep when you do,” Gujral emphasized.
“Snowball provides investors with a clear, and transparent way to invest in a portfolio or groups of crypto assets. We have identified three main evaluation criteria as the baseline for our selection process. A review of the funds strategy to determine merit, regulatory compliance or independent certification, and a minimum AUM of 10 million.”
Gujral, a millennial, has been trading cryptocurrencies for over three (3) years and has the technology background and understanding of what it takes to be conducting his business in Silicon Valley, directly across from the Salesforce headquarters in downtown San Francisco.
What Can You Take Away From This?
So, after a lot of discussion on why the crypto market is so complex, why you should be more focused on index portfolio investment, rather than individual cryptocurrency investment, and entrusting a millennial-app to do the heavy bidding for you, here are your key takeaways:
#1 –If You’re Not a Full-Time Trader, Do Not Invest In Crypto
As silly as it sounds, if you aren’t a full-time trader, you don’t want to invest in cryptocurrencies, because you will lose at some point. It’s no different than if you were to walk into a Las Vegas casino for the first time, having never gambled, and said, let’s try this and see what happens.
Michael Bucci, COO of Snowball, having spent more than a decade managing a systematic hedge fund, echoes:
“Being able to outperform the benchmark takes cutting edge technology, sophisticated knowledge, and daily optimization; it’s a full time job.”
#2 –If You Are Going To Invest In Crypto, Use ‘Smart Crypto Investment Automation’
“I’m excited to see the launch of Snowball’s new smart crypto investment automation platform because it will finally provide Main Street investors with access to sophisticated investment and trading strategies for crypto assets.” –Brian Kerr, CEO of Kava.io and Investor in Snowball.Money
SCIA empowers everyone to invest intelligently and efficiently in cryptocurrency. We have ‘smart technology,now it’s time to implement ‘smart investment.’
So, what is ‘smart investment’?
“It’s about finding someone whose livelihood is trading in cryptocurrencies; someone who has access to information; someone who has that ivy league degree; who has an evolving investment thesis and is doing diligence on every single token, reading all the whitepapers and shaking the hands of those CEO’s and teams. You need to consistently track their progress and create your own research and thesis based off that information; subscribe to that.” –Parul Gujral
#3 –Go Back to Sleep
Unlike platforms like Robinhood whose slogan literally is “don’t go to sleep,” it’s time for you to remember to live and have fun with safe investing.
So, with Snowball, it’s as simple as downloading the app, connecting your bank account that you use every day, choosing the portfolio you want to invest in, and then sitting back to watch your portfolio snowball and grow.
Users of Snowball can also look forward to features like tax optimization, tax loss harvesting, staking and their investments paying them interest which are set to be released on their platform in the coming months.
Stone, a serial entrepreneur and investor, while investing in hundreds of companies, told me that he’s never made an investment quite this large before, and that his investment of $100,000.00 is in it’s CEO and his vision to truly help make this space playable and affordable for all to play in.
“I really believe in the future of money is digital, whether it’s through Bitcoin or another emerging token. I also believe that everyone should not only have the opportunity to play, but to play to win.” –Parul Gujral
Now, go get some rest and get ready to watch your portfolios grow.