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In short, the IRS extends the 2020 tax payment deadline to July 15 in response to the coronavirus. However, this relief applies to payments only. In other words, the filing period for returns still closes on April 15.

How the IRS extends the 2020 tax payment deadline to July 15

• First, income tax and self-employment tax payments move from April 15 to July 15, without interest or penalty.
• In addition, corporations may defer up to $10,000,000 per filing. This limit assumes a C corporation that does not file as part of a consolidated group.
• For individuals, the deferral limit is $1,000,000, whether they file as single or married. The same limit applies to other taxpayers, such as trusts.
• Finally, taxpayers must pay any amount above these limits by April 15, or they may incur penalties and interest.

Of course, the initial announcement covers only returns due before April 15. The IRS may issue further changes for returns that fall due after that date. Meanwhile, readers should note that later IRS guidance changed several of these terms. Therefore, please confirm the current rules with the IRS or your accountant before acting.

What the payment deferral means in practice

In practice, the change gives many households and businesses extra time to manage cash. For example, a self-employed consultant who expected to send a large payment in April can keep those funds available for three more months. As a result, the consultant can cover rent, payroll, or other near-term costs while conditions remain uncertain. However, the tax itself does not disappear. Instead, the same amount remains due on the new date, so it helps to set the money aside now.

Keep in mind that the deferral and the filing deadline are separate. In other words, you still need to submit your return by April 15 under the initial announcement, even if you plan to pay later. Most importantly, a complete return gives you and your accountant a clear picture of what you owe before July arrives.

Steps to take before April 15

• First, gather your income records and estimate your total tax for the year.
• Next, compare that estimate with the deferral limit that applies to you.
• In addition, plan how you will pay any amount above the limit by April 15.
• Finally, mark July 15 on your calendar and reserve the deferred amount in a separate account.

Why the timing matters for cash flow

Fortunately, the news that the IRS extends the 2020 tax payment deadline to July 15 gives many taxpayers breathing room during a difficult period. Above all, it lets you keep liquidity while income remains unpredictable. However, deferring a payment is different from reducing it. As a result, a sensible plan treats the deferred tax as money already spent. For example, you might move it into a savings account that you do not touch for other purposes.

Questions to raise with your accountant

A short conversation with a tax professional can prevent costly mistakes. For instance, you may want to ask whether your situation falls under the individual or the corporate limit. You may also ask how the deferral interacts with your other obligations. Meanwhile, business owners should confirm whether their entity files as part of a consolidated group, since the $10,000,000 limit assumes it does not.

Of course, every situation differs. Therefore, treat this summary as a starting point rather than a final answer. Next, bring your prior-year return and your current estimates to the meeting. In addition, ask how any later IRS guidance affects the dates in this article.

Activest Wealth Management is not a tax advisor. For guidance on your situation, we suggest contacting your accountant. Alternatively, let us know, and we can introduce you to a specialized accountant.

The official announcement is available on the IRS newsroom.

During our webinar, tax professionals discussed what the 2020 election could mean for your taxes, including former Vice President Joe Biden’s proposed tax plan. However, these proposals may never become law, and nothing here is individual advice.

Isaac Wakszol, President, and Jacobo Taurel, Managing Director at Activest Wealth Management, worked through key questions with Mike Vidal, CPA, JD, Tax Partner, and Moises Szyller, CPA, Tax Manager at Cherry Bekaert. We recorded the event on Tuesday, December 8, 2020, at 3:00 PM (EST). As a result, it reflects proposals as of that date.

This summary outlines the themes the panel covered and offers general context for each one. In addition, it points you to the full recording so you can hear the discussion in the speakers’ own words. The goal is to help you prepare better questions, not to predict how any law will turn out.

What the 2020 election could mean for your taxes: topics discussed

• Inheritance taxes.
• Taxes on capital gains.
• Income taxes for individuals and corporations.
• Ways families may prepare for possible changes.

Why inheritance taxes came up

Estate and inheritance taxes affect how families pass wealth to the next generation. For example, a change in how much of an estate the tax rules shelter could alter what heirs ultimately receive. The panel therefore spent time on how proposals might affect families who plan to leave assets to children or other loved ones. Of course, any change would depend on Congress and not on campaign statements alone. Families with existing estate plans may simply want to know which parts of those plans could deserve a second look.

How to read the capital gains discussion

Capital gains taxes apply when you sell an asset, such as stock or real estate, for more than you paid. In practice, the timing of a sale can matter as much as the rate itself. The speakers discussed how proposed changes might influence decisions about when to sell. Meanwhile, they reminded attendees that selling purely for tax reasons can create other risks. Above all, investors may want to weigh taxes alongside their broader goals, their time horizon and their comfort with market swings.

Where income taxes for individuals and corporations fit

Income taxes touch nearly every household and business. First, the panel looked at individual income taxes and how proposals might affect different earners. Next, the conversation turned to corporate income taxes, which can influence company earnings. As a result, corporate tax changes can also shape investment returns. In other words, a change aimed at businesses may reach individual investors indirectly. However, the details of any final law could differ from the proposals the panel discussed.

Planning ahead: what the 2020 election could mean for your taxes at home

Families often ask how to prepare when the rules might change. Fortunately, a few general steps can help, whatever the outcome in Washington.

• First, review your current financial plan so you know where you stand today.
• Next, gather recent tax returns and statements for your advisors to review.
• In addition, write down the questions that matter most to your family.
• Finally, revisit your plan once any new law takes shape.

Understanding what the 2020 election could mean for your taxes is only a starting point. Instead of acting on headlines, many families choose to wait for final legislation and then adjust. Most importantly, each situation is different. A strategy that suits one household may not suit another, so personal advice from a qualified professional remains essential.

Questions to bring to your advisors

The webinar format let attendees hear two perspectives at once. For instance, wealth managers can speak to investment strategy, and tax professionals can speak to filing and compliance. Together, they can help you see how the pieces connect. If you have questions after watching, consider bringing them to your own tax and financial professionals. They can then relate the general ideas from the discussion to your specific circumstances.

Finally, the recording of the event is available here.

Pursuing better after-tax outcomes is a core part of our Wealth Management and Family Office services. Tax loss harvesting is one strategy investors use to manage taxes. Below, we explain how tax loss harvesting reduces the tax on your gains in many cases, and where its limits lie.

How tax loss harvesting reduces the tax on your gains

First, consider the accounting. The goal is to shrink the net gain below, sometimes into a net loss:

Net gain or net loss = (long term capital gains minus long term capital losses) + (short term capital gains minus short term capital losses).

In other words, the investor sells positions trading below cost to offset gains realized during the year. As a result, the tax owed on those gains may fall or even disappear for that year. Those gains may come from selling positions or from mutual fund capital gain distributions.

However, harvesting often defers tax rather than eliminating it. The replacement typically carries a lower cost basis, so a larger gain may appear on its eventual sale. Trading costs also matter.

In addition, the IRS lets you deduct up to $3,000 of net capital losses against ordinary income each year. For married taxpayers filing separately, the limit is $1,500 (source: IRS Topic No. 409).

Where carryover losses fit

When losses exceed gains, the unused portion can carry forward. In practice, these carryover losses may offset future capital gains, plus up to $3,000 of ordinary income each year. In contrast, tax on realized gains is generally due for the year you realize them.

Why the portfolio comes first

In our view, tax savings should not drive portfolio decisions. Instead, each portfolio should follow its own objectives, and any harvest should fit them. Therefore, knowing how tax loss harvesting reduces the tax on your gains is only half the picture. Most importantly, coordinate this strategy with your accountant and other advisers.

When harvesting may help most

First, harvesting tends to matter most in taxable accounts. Losses inside an IRA or 401(k) generally do not produce a deductible capital loss. For that reason, the strategy usually applies to taxable brokerage accounts. Next, timing plays a role. Market declines can create opportunities at any point in the year, not only in December. For example, an investor who reviews positions after a sharp drop may find losses that would vanish once prices recover.

In addition, the character of a gain affects the value of a loss. Short term gains are generally taxed at ordinary income rates, while long term gains usually receive lower rates. As a result, a loss that offsets short term gains may save more tax. However, the actual benefit depends on each investor’s bracket and circumstances.

Staying clear of the wash sale rule

Of course, advisors should weigh several IRS rules when changing portfolios. A key one is the wash sale rule, which targets sales made purely for a tax benefit. A wash sale occurs if you sell a security at a loss and buy a substantially identical one within 30 days before or after. As a result, the IRS disallows the loss for now and adds it to the new position’s cost basis. In addition, purchases in a spouse’s account or an IRA can count.

For instance, a hypothetical investor could sell an S&P 500 index fund at a loss. Next, the investor could buy a fund tracking the Dow Jones Industrial Average, a related but different index. However, the IRS has not precisely defined ‘substantially identical.’ Meanwhile, the two funds may perform differently. This example is illustrative only, not a recommendation.

Keeping good records

Finally, careful records help at tax time. Your custodian reports sales and cost basis on Form 1099-B, but your accountant still needs the full picture. Therefore, the family should document each harvest, the replacement purchase, and the dates involved. In other words, clear notes make it easier to track carryover losses and spot potential wash sales across accounts.

This article is educational only, not tax, legal, or investment advice; consult a qualified tax professional before acting.

Seeking better after tax outcomes is a core part of our Wealth Management and Family Office services. One widely used strategy that US tax law permits is tax loss harvesting. This article explains how tax loss harvesting lowers your capital gains bill in many situations. In addition, it covers the limits and rules that apply.

How tax loss harvesting lowers your capital gains bill

The math starts with netting. In accounting terms, the goal is a smaller gain or a net loss from this simplified formula:

Net gain or net loss = (long term capital gains minus long term capital losses) + (short term capital gains minus short term capital losses).

In other words, the investor realizes losses in the portfolio to offset gains realized during the same year. As a result, the tax owed on those gains may shrink or disappear. The gains can come from selling positions. They can also come from capital gain distributions that mutual funds pay to the portfolio.

In addition, IRS rules let taxpayers deduct up to $3,000 of net capital losses against ordinary income yearly. For married taxpayers filing separately, the limit is $1,500. The limit applies per tax return, and your CPA can confirm how it affects you.

What happens when losses exceed gains

Sometimes losses in one year exceed gains plus the annual deduction. In that case, individual taxpayers can generally carry the unused loss forward to future years. Those carryover losses can then offset gains realized later. Meanwhile, tax on gains realized this year is generally due for this tax year.

Consider a hypothetical example for illustration only. Suppose an investor realizes $20,000 in gains and $30,000 in losses in one year. First, the losses offset all $20,000 of gains. Next, up to $3,000 of the remaining loss may reduce ordinary income. Finally, the other $7,000 can carry forward to later years. Actual results depend on each person’s tax situation.

Deferral, not always savings

Of course, the replacement investment usually carries a lower cost basis than the position sold. Therefore, a larger gain may appear when the investor sells it later. In many cases, the strategy defers tax rather than eliminating it. Benefits also depend on tax rates, holding periods, and trading costs.

The portfolio comes first

In our view, tax savings should never drive investment decisions on their own. Instead, the portfolio should stay aligned with its specific investment objectives. Above all, families should coordinate this strategy with their CPAs and other advisers. That coordination is central to how tax loss harvesting lowers your capital gains bill without distorting the portfolio. This article is educational and is not tax advice.

Watch the wash sale rule

In practice, advisers must consider several IRS rules before making portfolio changes. The best known is the wash sale rule. Congress wrote it to discourage selling assets at a loss purely for a tax benefit. A wash sale generally occurs when an investor sells a security at a loss. It applies if the investor buys a substantially identical security within 30 days before or after the sale. Purchases in a spouse’s account or an IRA can also trigger the rule. In that case, the IRS disallows the loss for now and adds it to the basis of the new position.

How to read an illustrative swap

For example, an investor might sell a fund that tracks the S&P 500 index at a loss. Instead, the investor could buy a fund tracking a different index, such as the Dow Jones Industrial Average. The two indexes often move similarly, but their holdings differ. However, similar is not identical, so the replacement may perform differently. Whether two funds count as substantially identical is a question for your tax professional. This illustration is not a recommendation to buy or sell any security.

LIBOR has long been one of the most widely used reference rates for short-term lending. Some industry estimates put the credit tied to it, from mortgages to bonds, at around US$350 trillion. However, regulators decided to phase LIBOR out from the end of 2021. One reason was the 2012 manipulation scandal involving several global banks. In addition, markets have changed since LIBOR began. As a result, alternative reference rates (ARRs) have become the new standard. Below, we explain what the end of LIBOR means for bond investors.

How alternative reference rates differ from LIBOR

Alternative reference rates are near risk-free overnight rates. They aim to reflect market liquidity more accurately than LIBOR did. The main ones are SONIA (GBP), SOFR (USD), €STR (EUR), SARON (CHF) and TONA (JPY). Central banks administer most of them. In contrast, SIX Swiss Exchange administers SARON.

LIBOR reflected the credit risk of the banks that submitted it. In addition, ARRs draw on actual daily transactions rather than bank submissions.

Because ARRs carry little bank credit risk, they typically sit below LIBOR. Therefore, many contracts add a spread adjustment to bridge the gap. Of course, no fixed adjustment can match LIBOR exactly in every market.

What the end of LIBOR means for bond investors

In our view, many bondholders may see a modest impact. Issuers generally seek to narrow the gap between LIBOR and the new rates. Even so, coupon income, pricing or liquidity may still change. However, no single procedure applies, because each contract has its own features. As a result, its terms and conditions largely determine how the transition works.

Bonds that lack fallback language

Some corporate bonds have no fallback rate language. In those cases, issuers may need to call a holders’ meeting to amend the floating rate clauses. Instead, some may call the bond, which can leave holders facing reinvestment risk. Meanwhile, in the US, the LIBOR Act of 2022 set a default replacement for certain contracts without workable fallbacks.

Where fallback language exists

Other bonds include this language in their prospectus. For these, the issuer usually only needs to notify holders of the new reference rate. The most common fallbacks are an ARR or a fixed coupon based on the last LIBOR rate used. Consequently, a fixed coupon may no longer track market conditions.

Key transition dates

ICE Benchmark Administration (IBA) administers LIBOR. In late 2020, it consulted on keeping certain US dollar settings until June 30, 2023. By some estimates, around 60% of LIBOR contracts used dollars. The consultation closed on January 25, 2021. Next, the UK Financial Conduct Authority confirmed the end dates below in March 2021.

First, these settings ended on a representative basis after December 31, 2021:

• EUR LIBOR (overnight, one week, 1, 2, 3, 6 and 12 months)
• CHF LIBOR (spot next, one week, 1, 2, 3, 6 and 12 months)
• JPY LIBOR (spot next, one week, 1, 2, 3, 6 and 12 months)
• GBP LIBOR (overnight, one week, 1, 2, 3, 6 and 12 months)
• USD LIBOR, one week and 2 months

In contrast, EURIBOR is a separate benchmark and continues after reforms.

Finally, the remaining USD LIBOR settings ended after June 30, 2023:

• USD LIBOR, overnight, 1, 3, 6 and 12 months

Temporary ‘synthetic’ versions of some tenors covered certain legacy contracts for a time and have since ended.

Our approach

In practice, our investment committee works with custodians to monitor issuer notices on reference rate changes. If you have questions about what the end of LIBOR means for bond investors like you, please speak with your advisor.

This article is for educational purposes only and is not investment advice or a recommendation. Outcomes can vary by bond.

Earlier this month, G7 finance ministers agreed to push for a global minimum corporate tax of 15%. If governments formalize it, the deal could underpin a global treaty with other major economies. This article explains how a 15 percent global minimum corporate tax would work, based on public statements to date. It is not tax or investment advice.

Why a global minimum corporate tax?

The stated goal is to end what US Treasury Secretary Janet Yellen described as a 30-year race for corporate tax relief. In practice, major economies want to discourage multinational companies from cutting their tax bills by shifting profits to low-tax jurisdictions. For example, some jurisdictions tax income from patents, software, and royalties at very low rates, sometimes near zero. However, supporters and critics still debate how much revenue a minimum tax would actually recover.

How a 15 percent global minimum corporate tax would work

Under the proposal, the minimum tax would apply to profits that multinationals earn abroad. Each country would remain free to set its own local corporate tax rate. However, if foreign profits face a rate below the minimum, the home country may collect a top-up tax. As a result, the combined rate could rise to the global minimum.

Last month, the OECD said governments had broadly agreed on the design of the framework but not on the rate. Meanwhile, the G7 talks gained momentum around a 15% level. Nevertheless, some tax experts say agreeing on the rate may be the hardest part of the process.

In addition, negotiators still need to settle other items. For instance, they must decide how the tax would treat investment funds and real estate investment trusts (REITs).

A simple hypothetical illustration

Consider a hypothetical example to see the mechanism. Suppose a multinational books foreign profits in a jurisdiction that taxes them at 5%. That rate sits 10 percentage points below the proposed 15% minimum. As a result, the home country could collect a top-up tax on those profits. The combined rate would then reach roughly 15%, although the final rules could change the exact calculation.

In other words, the minimum would not force any country to raise its own rate. Instead, it would reduce the benefit of reporting profits where rates are lowest. Of course, the real effect would depend on details that negotiators have not yet published.

What is next?

Next month’s G20 meeting may show how much support the agreement has among other major economies.

First, governments must still set the metrics that determine how the tax applies and which multinationals it covers. Next, the G7 statement left one question open. It did not specify how the deal would treat digital services taxes on large technology companies.

Where low-tax jurisdictions fit

In our view, adopting this agreement could significantly affect low-tax jurisdictions, including some that critics call tax havens. Ireland, for example, has seen significant economic growth, partly from investment by multinational companies. Therefore, we believe some of these jurisdictions may not support the agreement in its current form. However, positions may shift as talks continue. Finally, any account of how a 15 percent global minimum corporate tax would work remains provisional for now.

Key signals to watch

Readers following the talks may want to track a few signals. First, watch whether the G20 backs the 15% level next month. Next, look for detail on which multinationals the rules would cover and how the metrics would work. In addition, note any decision on investment funds and REITs. Readers should also watch for any decision on digital services taxes. Finally, watch how low-tax jurisdictions respond, because their support could shape any global treaty.

For now, the framework remains a proposal rather than law. Therefore, companies and investors should treat any estimate of its impact with caution.

It is natural to question the idea of a bitcoin ETF, since investors can buy and sell bitcoin directly. However, in October 2021 ProShares listed the ProShares Bitcoin Strategy ETF under the ticker BITO. It was the first US ETF built around bitcoin futures. According to press reports at the time, BITO drew one of the strongest first-day debuts of any ETF. At the time of original writing, the fund reportedly held about US$1.2 billion in assets, and current figures may differ. Below, we explain why a bitcoin futures ETF costs more than owning bitcoin. In our view, its appeal may partly reflect the familiarity of a registered, exchange-listed fund.

The custody problem

Custody is a serious topic with bitcoin, because owners typically hold it in a digital wallet secured by private keys. For example, if an owner loses the keys or password, the owner may be unable to recover the assets. Many investors have reported losses from forgotten credentials, hacks, or fraud. Specialized custodians do exist; however, they add fees and carry their own counterparty risks.

ProShares built BITO to avoid holding bitcoin directly. Instead, the fund buys bitcoin futures on the CME. Each contract is an agreement to trade bitcoin at a set price on a future date. In practice, traders keep futures prices close to bitcoin through arbitrage. For instance, when futures trade at a premium, a trader may buy bitcoin and sell futures to capture the gap. Of course, this structure does not remove risk. Futures can diverge from the spot price, and the fund still carries bitcoin’s high volatility.

Why a bitcoin futures ETF costs more than owning bitcoin

The first cost is visible. According to the fund’s prospectus at launch, BITO charges an annual expense ratio of 0.95%. Investors should check current fund documents for updated figures. In addition, a larger cost often comes from rolling futures, known as the roll cost.

Where the roll cost comes from

Futures contracts expire, so the fund must sell expiring contracts and buy later ones. When later contracts cost more than expiring ones, the fund sells low and buys high. Traders call this condition contango. As a result, each new contract tends to drift down toward the spot price as it nears expiration. That drift can erode returns over time. In contrast, when later contracts trade below spot, rolling can add to returns. Some market analyses estimated a gap of up to about 5 percentage points per year versus spot bitcoin. That figure is illustrative and covers certain periods since CME bitcoin futures launched in late 2017. Actual results vary with market conditions, and past performance does not guarantee future results.

Taken together, the expense ratio and the roll cost can help explain why a bitcoin futures ETF costs more than owning bitcoin directly. Therefore, investors comparing the two may want to look beyond the headline fee. For example, they can review the fund’s reported performance against spot bitcoin over several periods. In other words, the full cost shows up in tracking results, not only in the expense ratio.

What could change

Several crypto firms offer institutional custody solutions for bitcoin. Meanwhile, some of them asked the US Securities and Exchange Commission to approve an ETF that holds bitcoin directly. Such a fund could avoid the roll cost and may lower the cost of bitcoin exposure. Since this article first appeared, the SEC approved several spot bitcoin exchange-traded products in January 2024. However, spot funds still charge fees and carry custody, security, and volatility risks. In our opinion, adoption of any structure depends on whether investors trust it.

Finally, this article is for educational purposes only and is not a recommendation to buy or sell any security or cryptocurrency. Investors should consider their own goals and consult a financial professional.

Understanding what non fungible tokens are and how they work

Non-fungible tokens, or NFTs, are crypto assets in which each token is unique. This guide explains what non fungible tokens are and how they work. In practice, developers create NFTs on a blockchain, where each token carries its own identification code and metadata. For example, an NFT may represent music, a video, a game item or a digital card. Buyers typically trade them using cryptocurrencies.

Most cryptocurrencies, like physical money, are fungible. In other words, you can swap one unit for another of equal value. NFTs, in contrast, each carry a unique digital signature. As a result, the owner can use that record to help verify ownership. However, owning an NFT does not automatically grant copyright in the underlying item.

How minting and transfers work

People often call the process of creating an NFT minting. First, a creator uploads a file or links to an item, and a smart contract records a new token on the blockchain. Next, the token lands in the creator’s digital wallet, which holds the keys that control it. In many cases, the file itself sits off-chain, and the token stores only a link to it.

When someone buys the token, the network records the transfer publicly. As a result, anyone can trace its history from wallet to wallet. Most networks also charge a transaction fee, which people often call a gas fee. These fees can rise when the network is busy. Some smart contracts also pay the original creator a royalty on resales, although marketplaces do not always enforce it.

Common uses for NFTs

NFTs can represent digital items and, in some cases, physical assets such as artwork or real estate. Supporters argue this may make trading more efficient and help reduce fraud. However, many uses remain early-stage, and legal treatment varies by jurisdiction. Christie’s reported that a Beeple digital collage sold for about $69.3 million at its March 2021 auction. Of course, one sale says little about typical NFT values.

Markets linked to NFTs

Much of today’s NFT market focuses on collectibles such as digital artwork and sports cards. One often cited platform is NBA Top Shot, where fans collect tokenized NBA highlights. Beyond collectibles, some games use NFTs for in-game items that players can trade. Meanwhile, prices can swing sharply, and some tokens may be hard to resell.

Potential benefits and limitations

In our view, the clearest potential benefit of NFTs is market efficiency. For instance, artists can sell work on a blockchain marketplace and reach audiences more directly. Marketplaces still charge fees and control listings, however. Therefore, NFTs may shift intermediaries rather than remove them.

Security and risk considerations

Some published research suggests blockchains are difficult, though not impossible, to hack because many computers share their records. Owners can still lose NFTs through phishing, stolen wallet keys or marketplace breaches. In addition, NFTs carry no deposit insurance, and their value can fall to zero. Finally, knowing what non fungible tokens are and how they work can help you ask better questions.

Questions to ask before you buy

Before you buy, it helps to slow down and check a few basics. First, confirm who created the token and whether the listing comes from an official account. Next, read what rights the seller actually offers, since terms differ between projects. In addition, find out where the underlying file lives and what happens if that link breaks. Finally, consider fees, taxes and how easily you could resell the token later. Above all, treat any purchase as high risk, because NFT prices can be volatile.

This article is educational only and is not investment, legal or tax advice or a recommendation.

This article offers a guide to NFTs and digital ownership for investors. Non-fungible tokens, or NFTs, introduced a new model for crypto assets by making each token unique. Developers create them on a blockchain, with identification codes and metadata that tell them apart. An NFT can represent a digital or physical item, such as music, a video or a game item. In practice, buyers typically trade them using cryptocurrencies.

Cryptocurrencies, like physical money, are fungible: holders can swap one unit for another of equal value. NFTs, in contrast, are not interchangeable. For example, each carries a unique digital signature that lets the holder verify ownership. However, owning the token does not automatically grant copyright or title to the underlying item.

Where NFTs show up

Some projects use NFTs to represent real-world items, such as art or real estate. Supporters argue this can make trading more efficient and may reduce certain types of fraud. However, tokenized assets still depend on legal agreements, and counterfeit listings remain a known risk. For instance, Christie’s reported that a digital collage by Beeple sold for $69.3 million in March 2021. That sale was an outlier, and many NFTs sell for far less or may never find a buyer.

Current NFT markets

Much of the NFT market centers on collectibles, such as digital art and sports cards. In our view, NBA Top Shot, which sells tokenized NBA highlights, is among the most visible platforms. Meanwhile, NFT prices and trading volumes have been volatile.

Potential benefits and limits

Proponents often cite market efficiency as a potential benefit. For example, an artist can sell a digital work on a blockchain and reach buyers more directly, with fewer intermediaries. However, marketplaces typically charge fees, and buyers pay network transaction costs. In addition, NFTs can be illiquid, so selling at a desired price may prove difficult.

How to evaluate an NFT before buying

A careful review can help you avoid common mistakes. This part of a guide to NFTs and digital ownership for investors walks through the basic checks. First, confirm who created the token and whether the marketplace verifies the creator’s account. Next, read the terms that come with the NFT. These terms explain which rights, if any, the buyer receives beyond the token itself. In addition, check where the underlying file lives. Some projects store media on a separate server, and the link may break if that server goes offline. Finally, add up the full cost of the purchase, including marketplace fees and network transaction costs.

Protecting your wallet and tokens

Security habits matter as much as research. For example, a hardware wallet keeps private keys offline, which can lower the risk of remote theft. Never share a seed phrase, since legitimate platforms generally do not ask for it. Meanwhile, scammers often send fake links through social media and direct messages. Therefore, type marketplace addresses yourself instead of clicking unknown links. Above all, treat any offer that seems too good to be true with suspicion.

Setting realistic expectations

Price history in this market can mislead new buyers. Most importantly, a few headline sales do not reflect the typical outcome. Some investors choose to limit NFTs to a small share of their portfolio for this reason. As a result, a sharp drop in value would not threaten their broader financial goals. It also helps to set a budget before browsing listings. Next, keep records of every purchase for tax purposes.

Risks to weigh: a guide to NFTs and digital ownership for investors

Some commentators argue that blockchains resist tampering because many computers share the ledger. Of course, that design makes attacks difficult, not impossible. Instead, many losses stem from flawed smart contracts, phishing and stolen wallet keys. In other words, a secure network does not protect an NFT’s market value.

Finally, this article is educational and is not investment advice. NFTs are speculative, and investors could lose their entire investment.

On Thursday, April 28, the Colony Theater in Miami hosted an evening in honor of Espacio Anna Frank (Anne Frank Space). In other words, Activest sponsors Espacio Anna Frank benefit at the Colony Theater, and our team was proud to take part. The program included a play called The Cuban Vote. In addition, the play is a romantic comedy based on Shakespeare’s The Taming of the Shrew.

An evening of theater may seem like an unusual way to support education. However, stories on a stage can open conversations that a lecture sometimes cannot. A comedy, for instance, invites people to laugh together first and to reflect afterward. That shared experience fits the spirit of the organization the benefit supported. It also reminds us that serious ideas can reach people through joy as well as through study.

What Espacio Anna Frank does

The organization works to promote mutual respect. It focuses particularly on individuals and groups whose customs, origins, religions and ideas differ from those of the majority. For example, it develops educational and cultural activities. According to the organization, these activities aim to build knowledge that helps counter prejudice and stereotypes. They also address the consequences of those attitudes: hatred and discrimination against religious, cultural, ethnic or sexual minorities. Meanwhile, its current areas of focus are Culture, Education, Youth and Museum.

How culture and education work together

Each of these areas approaches the same goal from a different angle. Cultural programs, for example, can bring people from different backgrounds into the same room. Educational work, in contrast, gives young people tools to question stereotypes on their own. In practice, the two efforts can reinforce each other. A person who meets others through culture may find it easier to accept what education teaches about respect.

The story behind the name

Anne Frank was one of roughly one and a half million Jewish children the Nazis killed. That figure reflects widely cited historical estimates. Despite her short life, she left behind a diary written as letters to an imaginary friend. Many readers see it as an anthem to hope and to faith in the possibility of a better world. As a result, her story invites two questions:

• What can we do to help our society overcome prejudice and discrimination?
• Can we start with ourselves and our closest environment in order to overcome intolerance?

These concerns are the challenges that Espacio Anna Frank continually puts in front of its audiences. Of course, you can learn more about the organization at espacioannafrank.org.

Turning questions into action

Neither question has a simple answer. Instead, both ask each of us to look honestly at our own habits and assumptions. First, we can notice when a stereotype shapes the way we see someone. Next, we can choose curiosity over judgment in everyday conversations. Finally, we can support groups that make this kind of reflection part of their daily work.

Why Activest sponsors Espacio Anna Frank benefit at the Colony Theater

At Activest, we feel privileged to help families and institutions around the world with their investments. That work, in turn, allows us to contribute to the development of organizations such as Espacio Anna Frank. Most importantly, we view this support as part of a broader purpose. Hebrew calls this purpose Tikun Olam, or repairing the world, so that the future can be a better one. Therefore, we see sponsorship as one small way to act on that idea.

When people read that Activest sponsors Espacio Anna Frank benefit at the Colony Theater, we hope they see more than a single night out. Instead, the sponsorship reflects values we try to bring to our daily work with clients. Trust, respect and a long-term view matter in investing. Above all, they also matter in the way communities live together. We thank everyone who joined us for the evening.

Finally, please note that this post is for informational purposes only. It does not constitute investment advice or an endorsement of any organization’s services.