Recently, many people asked me about the tax reform. I always replied that let's wait and talk about it when it's finalized. On December 22, 2017, president Trump signed the tax bill into law. Now it's time to take a look at it. Instead of focusing on the differences between current and new tax bill which you cannot control anyway, I will go through some potential tax planning strategies that may apply to you due to the changes. This post is intended for people who either prepare tax returns by themselves or at least have a basic understanding of how the U.S. tax system works. If you have any questions or not sure about any terms or strategies mentioned here, I recommend you consult a tax professional for your specific situation.
To Bit or Not to Bit: What Should Investors Make of Bitcoin Mania?
Recently, I have been overwhelmed with questions about one single investment idea: the Bitcoin. Generally speaking, when anyone starts talking about an investment, it is a warning sign to me. What concerns me is that none of those people, who asked me if they should invest in Bitcoin, truly understands the Bitcoin, and they don't care as long as the price keeps going up. When I ask them some questions, such as why they think the price will continue going up, what the future application of the Bitcoin is, and why they want bitcoin but not other cryptocurrencies, like Ethereum, they couldn't give me a logical answer besides speculating. I am not saying that the price of the Bitcoin will go down. It may keep rising. But the problem is there is no approved scientific approach to evaluate the value of the Bitcoin. The price of the Bitcoin is determined solely by supplies and demands. In other words, no one knows where it is going, and everyone is speculating and betting that he/she is not the last foul in the market.
I am a firm believer of goal-based investing. Investing should always start with goals, such as saving for the downpayment of a house in 5 years, saving for college expenses in 10 years, or investing for a comfortable retirement in 20 years. The investment products and the investment approach that you choose should align with your goals. If you have reached all your financial goals or you are at least on track achieving them based on your financial plan, you can feel free to use your extra money to speculate. If you just want to bet on something like the Bitcoin and hope one day it could make you a fortune, I recommend putting less than 5% of your investable assets in this type of speculative asset. Even if you lose all your wagers on the table, it won't hurt your overall financial plan too much. Dimensional Fund Advisors, one of our strategic partner, just created a great piece of content explaining the logic behind whether you should include the Bitcoin in your portfolio. Enjoy reading!
How does the volatility of the stock market affect your investment?
Is The Individual Income Tax Higher In China Than In The U.S.?
I read many articles saying that there is a higher individual income tax rate in China than in the U.S. Having worked in both countries and being familiar with both tax systems, I can say that the statement is mostly true but misleading. A Higher income tax rate does not necessarily equate to a higher income tax. I will explain the reasons and show you some numbers in this post.