Your Financial News Roundup
March 1, 2023
1. Economy: The Supreme Court will decide if funding for the CFPB and other programs is legal; and studies show 2.7M+ men are missing from the workforce.
2: Tech: The U.S. Copyright Office decided that AI-generated content is not covered by copyright; while Spotify’s AI DJ tailors music playlists for users.
3: World: Public backlash preserved the works of children’s author Roald Dahl; while Ukraine takes interest in China’s bid for peace in its war with Russia.
Personal Finance Concept [Part 5/8]: A Primer on Funds
🏛 Goodbye Consumer Protections?: On Monday, the Supreme Court agreed to review an appeal by the Biden administration on a case that could eliminate consumer finance protections. A federal appeals court ruled that the Consumer Financial Protection Bureau’s (CFPB) funding mechanism is unconstitutional. The CFPB is funded by the Federal Reserve, which gets its money from bank fees. Other agencies that may be affected include the U.S. Postal Service, Social Security, U.S. Mint, the Federal Deposit Insurance Corp (FDIC), and Medicare. A decision will likely be made in 2024. (NPR)
Our Take: For years, financial and banking lobbyists have been at odds with the CFPB, as they are the ones behind the lawsuit. Overturning the law behind the CFPB will have a drastic impact on other federal programs, making them more susceptible to political influence.
❓What’s Behind Inflation?: Transit prices (i.e. gas, airfare, and vehicle expenses) went up in January’s inflation report. Though gas prices rose by 2.4% last month, the pace of price increases in gas, new cars, and used vehicles is slowing after a year of large spikes. The biggest price increases over the past year are airfares (26%), vehicle repairs (23%), public transit (17%), and vehicle insurance (15%). Key drivers are strong travel demand, higher costs for vehicle parts, and higher accident rates. (CNBC)
Our Take: Disinflation can be likened to easing off the gas pedal in a car, as it indicates that inflation has peaked and is slowing down. The hospitality sector’s hiring spree aligns with the rise in travel demand, as it hired the most of any sector in January.
🤖 Patents Not Included: Author Kris Kashtanova used the generative AI tool Midjourney to produce images for her book “Zarya of the Dawn.” While reviewing her work, the U.S. Copyright Office said that the copyright would hold for her book’s story and content arrangement. But, it would not apply to AI-generated images because its “not the product of human authorship.” She and Midjourney welcomed the decision, but she plans to argue that the images are her creative output and thus, should be covered by copyright. (Reuters)
Our Take: This is the first decision on the copyright protection of AI-created content. As AI becomes more widespread, the government will be more involved in setting guardrails.
🎵 A DJ in Your Pocket: Hopping onto the AI trend, Spotify launched its AI product “DJ” to further personalize users’ listening experiences. Powered by OpenAI, DJ will play a curated music mix and share commentary on your favorite music and artists. Armed with Spotify’s treasure trove of user data, DJ will create a seamless and laid-back end user experience. The feature is currently available in beta for Spotify Premium users in the U.S. and Canada. (TechCrunch)
Our Take: Having tested DJ ourselves, we’re fairly confident Spotify’s AI product is a worthy addition to the AI frenzy and will set a high bar for streaming services.
🛑 Say No To Revisionism: International backlash ensued after publisher Penguin Random House announced that the works of beloved children’s author Roald Dahl would get edited to reflect “modern sensibilities.” The revisions removed or changed words related to gender, race, and weight. Critics called the move censorship and akin to changing the works themselves. Acknowledging public response, the publisher will release both the original versions and edited ones (in the UK only). (NBCNews)
Our Take: Though Roald Dahl had a history of bigoted beliefs, rewriting his works alters his original content and is an act of revisionism to fit the current emphasis on political correctness — offending the writing community’s anti-revision beliefs.
🇺🇦 An Unlikely Peacemaker: After China released its peace plan, Ukraine’s President Zelensky expressed a desire to further discuss it with CCP leader Xi Jinping. China released a peace proposal that includes peace talks, an end to sanctions on Russia, and most importantly — a ceasefire. China chided Western countries for worsening the conflict and says it wants all countries’ sovereignty to be respected. Biden remarked that the proposal helps no one but Russia. (Independent)
Our Take: China has made visible efforts to bolster its alliance with Russia, including arming them. As the only major power proposing peace, China is seeking to build its stature on the world stage on its road to superpower status.
Finance Concept of the Week
What’s This Asset? — A Primer on Funds [Part 5/8]
A Series Exploring Different Asset Classes and How to Invest in Them
If you want to make investing easier, your best bet is to invest in a fund, such as mutual funds, index funds, or exchange-traded funds (ETFs). They are all investment vehicles that allow you to own a mix of stocks, bonds, and other assets.
- Easy to Understand: Investing in funds doesn’t require tons of investing know-how or effort. If you want to meet the market’s performance, look at popular funds like VOO, SPY, VTSAX, and FSKAX — which follow the S&P 500 or total stock market, respectively.
- Diversification: You’ve heard the phrase “don’t put all your eggs in one basket.” Investing in a fund allows you to spread your risk across different asset types and earn the market’s return while reducing your risk — and all without the pain of stock picking.
- Set It and Forget It: Once you’ve researched and selected your funds, you can put your investing on auto-pilot and keep investing in the same funds. Make sure to check for fees!
- Accessibility: Whether you’re a beginner or a pro, you can easily open an account with a brokerage, bank, etc. to buy funds.
- Expense Fees: Funds come with expense ratios, which are fees as a percentage of your investment. Depending on your returns, some funds are not worth their fees, mainly the active ones. Fees tend to be lower the more passive a fund is, namely index funds.
- Less Action: If you are an active investor, funds may not be for you. They are meant for investors who want a base in long-term, passive investing or for those who want to put minimal effort in investing.
How to Make the Most of It:
- Conduct Due Diligence: Do research on the types of investments you are interested in. The S&P 500 is a popular benchmark investors like to use, but there are funds focused on growth, sustainability, bonds, etc., as well.
- Diversify Your Portfolio Further: Invest in a couple of different funds to further diversify your portfolio. For example, you could invest in a S&P 500 fund like VOO, a US stock market index fund like VTSAX, and an international market fund like FZLIX.
- Dig Deeper: The Securities and Exchange Commission (SEC) requires security issuers to file a prospectus to offer investments for the public. It’s a formal document that provides details on the fund’s investment objectives, performance record, and fees.
Risk Level: Low to Medium; the risk depends on the type of funds you pick.
Common Accounts to Use:
- Individual Brokerage (i.e. Fidelity, Charles Schwab, Webull, etc.)
- Retirement Account (i.e. IRA, 401(k))
- 529 Plans (for educational expenses)
- UTMA/UGMA (custodial accounts for children)
Tip of the Day
💵 If you have trouble keeping and building healthy financial habits, get a money buddy. Having someone to hold you accountable can help you tackle your financial goals better.
- Budgeting vs Forecasting (Finance Futurists)
- New U.S. Border Rules (BBC)
- Make a Man Cave (Finance Futurists)
- Accessing Your IRS Records (CNBC)
- The $20K Wedding Budget (Finance Futurists)
Personal Finance Resources
🚀 We recently launched a curated collection of personal finance resources on Gumroad, featuring both free and paid options! Visit us for all your personal finance tracking needs, including:
Stay tuned for updates! In the meantime, if there’s any other product you’d like to see, feel free to suggest it here.
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