Wealth Management
The U.S. is close to finalizing rules that will restrict certain American investments in China’s artificial intelligence sector, with a focus on national security. These regulations, currently under review by the Office of Management and Budget, are expected to be released soon and stem from an executive order issued by President Biden in August 2023.
The new rules will require U.S. investors to notify the Treasury Department about AI-related investments and limit funding for technologies like semiconductors, quantum computing, and microelectronics that could benefit China's military.
Some exceptions, such as investments in publicly traded securities and certain limited partnerships, have been proposed. Experts expect further clarification in the final rules, particularly regarding AI's scope and the conditions for limited partners.
Finsum: There seems to be broader efforts to safeguard U.S. technological from China and this trend is worth monitoring.
The three best business books of the last three years—Right Kind of Wrong by Amy Edmondson, Chip War by Chris Miller, and This Is How They Tell Me the World Ends by Nicole Perlroth—offer vital insights for navigating today's complex, tech-driven economy.
Edmondson's work explores the value of intelligent risk-taking and learning from failure, a key principle for fostering innovation in business leadership. Miller's Chip War unveils the geopolitical and economic significance of semiconductors, illuminating the high-stakes competition that will shape the future of global technology. Perlroth's exposé on the cyberwarfare landscape underscores the growing importance of cybersecurity, warning businesses of the existential threats posed by digital vulnerabilities.
Each book provides a different yet complementary lens on how technology, risk, and global power dynamics intersect in the modern economy.
Finsum: These books equip business leaders with the foresight needed to thrive in an increasingly volatile world.
For years, alternative investments were mainly the domain of institutional investors, with private individuals largely excluded from opportunities like hedge funds and private equity. The rise of fintech has changed this, offering wider access through platforms that enable everyday investors to participate in alternative investments.
These platforms utilize technologies like AI, blockchain, and crowdfunding to lower barriers and provide more transparent, secure options. This democratization allows regular investors to diversify portfolios and tap into high-potential markets, like venture capital or cryptocurrency.
However, the illiquidity and volatility of many alternative assets still pose risks for inexperienced investors. As fintech continues to evolve, it will further shape the future of alternative investments, but due diligence remains essential for success.
Finsum: There have been monumental innovations in fintech in the last decade, but perhaps the strongest is in the alternative investment space.
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A variable annuity offers the potential for investment growth along with tax deferral, but at a higher cost compared to fixed annuities. With variable annuities, you can invest in subaccounts like mutual funds, and when ready, convert the balance into income payments.
While the returns and income depend on investment performance, many insurers guarantee a minimum payout. However, these annuities often come with high fees and restrictions on early withdrawals. The best variable annuities have low fees, flexible withdrawal options, income guarantees, and are backed by financially strong companies. Here are three of the best options in the current market:
- Lincoln Financials’ American Legacy Target Date Annuity, Annual Fee 0.10% to 0.90%
- Pacific Life’s Pacific Odyssey Variable Annuity, Annual Fee 0.30%
- RiverSource RAVA Vista Variable Annuity, Annual Fee 1.00%
Finsum: There is currently more value in annuities than there was a decade ago due to the risk levels compared to bond markets and the return profile.
Private credit has shifted from corporate finance to consumer lending, with firms like Elliott, Carlyle, and Fortress purchasing billions in loans from FinTech’s. Companies like Klarna, SoFi, and Upstart, once dominant, have struggled with high costs and rising interest rates, prompting them to offload loans.
By moving loans off their balance sheets, these FinTech’s hope to boost new lending, though the long-term financial impact is uncertain. Upstart, known for its AI-powered underwriting, faces substantial risks from loan defaults, leading to significant losses.
Private investors, focused on high returns from loan interest, are seizing opportunities, as seen in deals that boosted stock values for Upstart and SoFi. Despite FinTech’s’ ambitions to disrupt traditional banking, private credit is now positioned to challenge their dominance.
Finsum: We’ll see if private credit can improve where fintech has not, but this could drastically change the industry.
Holiday travel can bring excitement, but it often comes with a range of stressors due to the sheer volume of people traveling.
- Book Early and Use Price Alerts: To avoid the stress of skyrocketing fares, it’s crucial to book your holiday travel as early as possible. Setting up price alerts on websites like Skyscanner can help you track fluctuations and snag the best deal when the time is right.
- Consider Less-Crowded Destinations: For example, if you’re dreaming of sun and sand, opt for alternatives to crowded hotspots. Instead of Cabo, try Todos Santos for a more relaxed, affordable getaway with fewer tourists.
- Have a Backup Plan: Preparing a solid backup plan is key. Consider purchasing travel insurance to cover potential disruptions, and map out alternative routes to your destination in case your flight gets canceled.
Millions are hitting the road, airports, and train stations, all with the same idea of seeing loved ones or taking a vacation at the same time.
Finsum: I love using flight monitoring services and historical averages to minimize my holiday flight costs.