A new cryptocurrency called worldcoin wants to scan 1 billion people’s iris by 2023 to speed up digital currency adoption

Worldcoin's orb in Chile
Worldcoin’s orb in Chile.

  • A new crypto is aiming to fast-track mass digital asset adoption. To achieve this, they want to scan people’s iris.
  • Worldcoin has scanned more than 100,000 people from different countries through a device called the Orb.
  • It was founded by Sam Altman, Alex Blania, and Max Novendstern – and is currently valued at $1 billion.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The team behind a new cryptocurrency is aiming to fast-track mass digital-asset adoption – and to achieve this, they want to scan people’s iris. One billion by 2023 to be exact.

Worldcoin, which came out of stealth this past week, will give its cryptocurrency to each person who signs up. So far, it has scanned more than 100,000 people from around the world through a new device called the Orb. The coin will go live in the first quarter of 2022.

The spherical, silver hardware – about the size of a basketball – captures an image of a person’s eyes to determine whether the person is real and whether that person has already signed up in the past.

The new digital asset – founded by the former head of Y Combinator Sam Altman, along with Alex Blania and Max Novendstern – has raised $25 million to date and is currently valued at $1 billion.

Institutional investors include Andreesen Horowitz, Coinbase Ventures, CoinFund, while angel investors include LinkedIn co-founder Reid Hoffman and FTX founder Sam Bankman-Fried.

“We try to get crypto to mass adoption really, really quickly, and we have a very clear answer how to get there,” Blania told Insider. “And it seems to work really well.”

Worldcoin founders Sam Altman and Alex Blania
Worldcoin founders Alex Blania and Sam Altman

The iris scan

The team chose to scan the iris because it contains far more information than, for instance, a fingerprint, Blania explained. An age limit of 16 or 18 applies depending on the jurisdiction. Currently, there are over 30 Orbs in 12 countries across four continents.

Once the iris is scanned, a unique code can be used for claiming free digital tokens, which will be distributed via a wallet app generated by the Orb.

The team plans to ramp up production to distribute over 4,000 Orbs per month or 50,000 per year. The team licenses the Orbs, which were designed by former Apple employee Thomas Meyerhoffer, to contractors across the globe who go through rigorous interviews and verifications.

Each Orb, according to Blania, is operating “at capacity.” The team has yet to deploy Orbs in the US, citing regulatory uncertainty on digital assets.

And contrary to first impressions, he insisted the company won’t get anything in return for an iris scan, he said. Once the Orb scans both eyes, it will convert the iris image into a numeric code, which will then be deleted to protect the person’s privacy.

“It’s not an exchange,” he said. “You just verify that you have not shown up before and that’s a very different thing. We don’t want to know your name. We don’t want to see your passport.”

The new crypto

Traders who want to buy the crypto when it launches on the ethereum blockchain can do so even without having their iris scanned, Blania said. They will just not get their free share of the currency.

How much people will receive is still undecided. But the amount will range from $20 to $100, depending on when they sign up, Blania told Insider. “The earlier they come, the more they will receive.”

Worldcoin plans to have a fixed supply of 10 billion tokens, with 80% allocated to users, 10% to investors, and 10% to manufacturers, operators, and developers of the Orbs and the network.

“The numbers we see, and the excitement we see off the users we work with and we verify [are] extremely exciting,” Blania said.

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Cathie Wood explains her Tesla buy and profit-taking, how to play China stocks now, and where the next Apple will come from

Cathie Wood Ark Invest
Cathie Wood, Ark Invest founder and CEO.

Cathie Wood, founder and CEO of Ark Investment Management, offered some insights into her investing strategies – including recent moves with Tesla and Chinese stocks – and predicted what will be the next big thing to shake up markets.

The fund manager shot to prominence in 2020 thanks to her blockbuster performance driven by bets on mega-growth stocks. Her exchange-traded funds last year have delivered eye-popping returns, with her flagship ETF up more than 150% in 2020.

During an appearance at the Milken Institute’s 2021 global conference in California this past week, Wood offered perspectives on a broad array of topics. Here are some key points.

Tesla stock buying and selling

Wood is known for her bullish stance on Tesla stock – and has never wavered in that regard, even during the electric-car makers early days.

“For us it was easy,” she said, referring to her decision to invest in the company. “Tesla’s battery technology is unlike any other … Tesla is riding down the cost curve of the consumer electronics industry.”

She reiterated her $3,000 base case price target for Tesla by 2025, an eye-popping prediction first revealed in March 2021. It comes as shares set a new intraday Friday, hitting $910 for the first time, days after reporting strong earnings.

Despite her bullish long-term view, she sold some Tesla stock in September. At the Milken conference, Wood noted how EVs have been taking away massive market share from traditional gas-powered vehicles, and Tesla stock is “finally” responding to that.

Meanwhile, other parts of the Ark portfolio have been weaker. “This is called portfolio management. That’s all this is,” she said.

Where she stands on China investing now

Wood has caused some confusion with her vacillating stance towards the Asian superpower. She moved into Chinese stocks during the height of the pandemic, citing China’s “disciplined” monetary and fiscal policies during the crisis.

But in July she sold top China tech stocks as Beijing ramped up its wide-ranging regulatory clampdown. Then a month later, Wood bought them again.

Wood’s flagship Ark Innovation Fund still does not hold any China stocks, though the ARK Autonomous Tech & Robotics ETF holds some, such as JD.com.

Her stance now is to be “very particular” on which China stocks to own. Referring to Beijing’s “common prosperity” campaign to rein in outsized wealth and profits, Wood said she is targeting “very low-margin companies because margin is clearly not appreciated by the government anymore.”

Next Apple?

Toward the end of the discussion at Milken, Wood was asked “What is the Tesla of tomorrow? What is the Apple of tomorrow? Obviously we don’t know, but what is it in terms of the general technologies?”

She did not name a specific company, but she said artificial intelligence software is the “big, new frontier,” saying it cuts across fields like genomics, robotics, blockchain and transportation.

“AI is going to be a part of every industry,” she predicted, adding that companies that have not invested in enough innovation will be negatively impacted.

“I do believe when we rotate out value, we will come back into innovation,” she said.

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Should you buy a bitcoin-futures ETF versus actual bitcoin or crypto stocks? Experts weigh in on the advantages of each.

A gold Bitcoin seen on display with a stock market graph in the background
Bitcoin has pushed to an all-time high above $66,000.

  • Bitcoin futures ETFs burst onto the scene this week, marking a new milestone for the crypto market.
  • Insider talked to market experts about how the new ETFs compare to owning actual bitcoin.
  • ProShares and Valkyrie launched their ETFs this week, with VanEck set to follow.

A new type of exchange-traded fund sprang into the public markets this week with the arrival of ETFs tied to bitcoin futures.

Bitcoin futures ETFs invest in contracts used to speculate on future prices for bitcoin. They can be purchased and sold like a stock and don’t require buyers to hold an account at a cryptocurrency exchange or to have a crypto wallet.

The ProShares Bitcoin Strategy ETF, which tracks CME bitcoin futures, launched on Tuesday and quickly pulled in $1 billion in assets under management. Valkyrie’s Bitcoin Strategy ETF began trading Friday and asset management firm VanEck’s Bitcoin Strategy ETF looks set to debut next week.

“When you look at the market and its entirety, bitcoin is … one of the best-performing assets in history,” Christopher Perkins, president of blockchain-focused investment firm CoinFund, told Insider this week. “Now, as I look at this asset class, you have to ask yourself, if you’re an investment manager, ‘What’s the reputational risk of not being able to have exposure to the best-performing asset in eight of the last 10 years?'” he said.

As companies bring their products to market, Insider talked to three experts about the advantages and disadvantages of buying bitcoin-futures ETFs, the digital coin itself, or stocks in companies with exposure to bitcoin.

Bitcoin-futures ETFs

While the debut of the futures ETF was a momentous occasion for the crypto market, there are some important differences and complexities investors should be aware of.

According to Naeem Aslam, chief market analyst at AvaTrade, for mom-and-pop investors, “this is not the ETF for them.”

“A futures market trades on margin because you don’t have the actual product, you are trading on a synthetic price movement,” he said, and investors should anticipate that the price of bitcoin futures can differ from spot bitcoin prices.

While bitcoin futures ETFs give investors some bitcoin exposure they have “deficiencies” and can be complex products for many retail investors, said William Cai, a partner at investment firm Wilshire Phoenix, which has an application for a registered spot-bitcoin product under review at the SEC.

The key characteristic of futures markets is that contracts have expiration dates, said Cai, who previously traded commodities futures and other assets during his more than 10 years at JPMorgan. A fund has to roll contracts, meaning selling out the closest future before it expires, and then buy the next one.

“This process runs into trading costs and the potential for front-running issues where other market participants know you are going to do this and they can … position it to take advantage of your actions,” said Cai.

Bitcoin-futures ETFs “were so easy out of the gate to get some of that synthetic exposure,” to bitcoin, said Perkins, who before recently joining CoinFund was Citigroup’s global co-head of futures, clearing, and foreign exchange prime brokerage. “It’s not perfect cash exposure and costs do come with this … but by cash settling the future you don’t have to worry about custody because you’re not holding the assets,” he said.

Retail investors largely sat on the sidelines of the ProShares’ product launch, according to Vanda Research, which tracks retail investing activity. Retail investors may be aware of the ‘contango trap,’ Vanda said, referring to a market condition where prices for futures contracts are higher than the spot price.

In addition to the complexities of the underlying contracts, futures ETFs have some quirks. Strong demand for the ProShares Bitcoin Strategy ETF has already pushed the fund toward the limit of how many contracts it can hold, according to a Bloomberg report. The fund could spread out holdings into longer-dated contracts but that risks pulling the fund further away from bitcoin’s spot performance.

Bitcoin and crypto-linked stocks

Aslam, a London-based former hedge fund trader, said he may use bitcoin-futures ETFs in the options market for puts when the time is right to venture into more complex strategies. Puts give an investor the right to sell an underlying asset.

But Aslam suggested average retail investors who want bitcoin exposure purchase the digital currency itself. “The way that we have been buying bitcoin – through regulated exchanges, or exchanges that exist within those regulatory boundaries – is the best way to really go to buy bitcoin,” he said.

Many investors have gone the stock route to get exposure to bitcoin, including picking up shares of bitcoin miners Marathon Digital Holdings and Riot Blockchain as well as MicroStrategy, a data analytics company run by CEO and bitcoin bull Michael Saylor. The company held roughly 114,042 bitcoins as of last month.

“I think going into stocks is a second-hand exposure,” said Aslam. [Investors] are not going to get to enjoy the actual flavor of bitcoin, the actual momentum, or the volatility that we have in terms of bitcoin,” he said.

Buying crypto-linked stocks can add risks faced by individual companies along with systematic market risks, said Cai.

“If you go through … companies that invest a lot of their money in bitcoin, I would say that is a proxy. But sometimes proxies can be useful if don’t have access to other ways to do things you want to do.”

“But I would caution you really do have to know the risk that you’re taking on,” from buying crypto-linked stocks. “That is, it is only a proxy and not a direct reflection of bitcoin’s price. They can diverge wildly,” said Cai.

Read the original article on Business Insider

The ‘sustainable’ investing fad is based on a Wall Street-created myth

Businesses handling climate change and rising waters representing ESG investing and sustainability
There is no empirical evidence that investing in ESG funds helps mitigate climate change.

  • The latest investing fad is environmental, social, and governance funds that invest in “responsible” companies.
  • But there is no evidence that ESG funds help mitigate climate change.
  • Investors and the SEC should be wary of thinking these funds help the environment.
  • Bernard S. Sharfman is a research fellow with the Law & Economics Center at George Mason University’s Antonin Scalia Law School.
  • This is an opinion column. The thoughts expressed are those of the author.

Investing fads are nothing new. For example, in the 1990s the stock market was caught up in the dot-com bubble – a massive speculation spree where investors flocked to any and all stocks related to the internet. Eventually the fad faded, the bubble burst, and investors lost approximately $5 trillion.

The latest fad in investing is environmental, social, and governance (ESG) funds. The purpose of these funds is to invest in “responsible” companies as a way to push for social change – particularly for the purpose of mitigating climate change – while at the same time earning market returns. But the problem with this fad when it comes to climate change is that there is no empirical evidence backing up the idea at their core. In fact it seems fairly clear that an investment strategy of overweighting portfolios with securities of companies that produce a relatively low level of carbon emissions has no impact on mitigating climate change. The world just keeps spewing out emissions in spite of the rapid growth and level of investment in ESG funds.

ESG investing doesn’t mitigate climate change

People that understand the data on ESG acknowledge the lack of a connection between the popularity of the products and attaining their supposed goals when it comes to climate change. In a recent LinkedIn post by noted finance professor Alex Edmans of the London Business School, he agreed with my comment “that ESG investing doesn’t mitigate climate change.”

In another comment, Ashley Hamilton Claxton, the head of Responsible Investment at Royal London Asset Management, wrote, “ESG data is not data, it’s opinion. We can’t and shouldn’t claim direct impact in secondary markets. Investors are one cog in the wheel that turns the global economy. You can’t change the world or fix climate change by buying and selling shares and bonds.”

This understanding is also shared by Bill Gates, Boston College professor Alicia Munnell, and former BlackRock chief investment officer for sustainability Tariq Fancy, among others.

The idea behind ESG’s impact on climate change is that by moving money away from companies that spew fossil fuels, the funds can effectively make it cheaper for “clean” companies to raise money either through debt or equity offerings and more expensive for “dirty” companies. This sounds good in theory, but does not hold up in reality because the major effects of ESG funds are on the secondary market, where securities are traded but no new money is being raised. As explained by Fancy, investing in ESG funds does not provide new funding for those companies that would help mitigate climate change. “Instead, the money goes to the seller of the shares in the public market.” Basically, ESG products are buying stock in companies from other asset managers, not the underlying businesses, so they aren’t directly funding these firms at all.

Moreover, there are still plenty of investors out there who are willing to invest in the securities of high carbon emissions companies, allowing those companies to raise new funds at less-than-onerous rates. For example, if ExxonMobil, a company under attack for its policy of refusing to move into low carbon energy production and lobbying against legislation to mitigate climate change, were to make a $2 billion debt offering with a maturity of 30 years, it would probably only have to pay an interest rate of around 3% per year.

So, what’s with the ESG fad?

If ESG funds do not mitigate climate change, what is the motivation for marketing these funds to investors? The simple answer is that the investment industry, which includes large investment advisers, rating agencies, index providers, and consultants, makes a lot more money when investors purchase shares in ESG funds versus plain vanilla index funds where the management fees sometimes approach zero.

Of course, investors have a right to invest in anything they want, including the latest investment fad. However, in doing so, it is important for them to understand that investing in ESG funds will not result in the mitigation of climate change. What they are getting for their money are investment funds with higher management fees and potentially higher levels of unsystematic risk – due to a lack of diversification – relative to comparable non-ESG funds.

Finally, the SEC is moving forward on a proposed rule that will require a broad range of mandatory climate change disclosures, facilitating the providing of ESG ratings and the creation of ESG funds. For this to take place, the SEC must not only determine that it has legal authority to do so under the applicable legal statutes, which I discuss in my recent comment letter to the SEC, but also whether it wants to use its discretionary rule-making power in this regard.

In coming to a decision on the use of its discretion, I suspect that at least some of the SEC commissioners will be influenced by the presumption that by requiring mandatory climate change disclosures they are going to somehow help mitigate climate change. The incorporation of this presumption may encourage those commissioners to test the limits of their legal authority.

However, before doing so, I urge each commissioner to take a critical look at the empirical evidence – not just the marketing hype that is coming out of the investment industry. If they can find good empirical evidence demonstrating that investment in ESG funds provides a significant benefit in mitigating climate change, then it may be appropriate, depending on what the law allows, for the SEC to take a broad based approach to its new disclosure rules.

However, I doubt such empirical evidence actually exists, requiring the SEC to take a more restrictive approach in promulgating a new rule on climate change disclosures. In sum, before investors dive into ESG investing and regulators approve new rules that support such investing, I hope all parties take into consideration that such investing will not mitigate climate change.

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The founder of DeFi network avalanche says success for crypto will be bitcoin losing its crown to a stablecoin

Bitcoin crushed by US dollar
Bitcoin crushed by US dollar

  • “We are not anywhere near done until the number one coin is a stablecoin,” Emin Gün Sirer, CEO of Ava Labs, told Insider.
  • Stablecoins have an advantage because they can be tied to assets like the dollar, which makes them less volatile.
  • But stablecoins face questions from regulators about the quality of their reserves and transparency.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Emin Gün Sirer, the CEO of Ava Labs, believes the first sign of mainstream success for crypto will be when a stablecoin overtakes bitcoin to become the leading digital currency.

Sirer is the creator of the avalanche blockchain and its native token avax, which came out in September last year. He had help setting up the cryptocurrency platform from New York’s Cornell University, where he is a computer science lecturer.

The crypto space will have matured when a stablecoin – whose value is pegged to a real-world asset – has the biggest market capitalization among digital currencies, he told Insider in a recent interview.

“We are not anywhere near done until the number one coin is a stablecoin,” Sirer said. “That’s my indicator for real success.”

Right now, stablecoins have a total market cap of nearly $131 billion, according to CoinMarketCap data. Despite that hefty market value, it’s some way behind the single most dominant coin, bitcoin, with its $1 trillion figure.

What sets stablecoins apart from other cryptocurrencies is they are less volatile in price, as they are backed by assets such as the US dollar and gold. That makes them more practical for use in decentralized finance – for loans, for instance.

DeFi is a growing system of peer-to-peer finance built on crypto networks, that aims to cut out the centralized authorities that oversee traditional finance. Investors can earn interest on their holdings of digital currencies from borrowers, for instance.

Stablecoins carry the steady value of the assets behind them into the growing DeFi ecosystem, which means they could usher in more liquidity, according to Sirer. That could help them surpass bitcoin.

“It’s going to be amazing, for everybody in this space is clamoring for more cash, it’s clamoring for more value to come in,” the Ava Labs chief said.

“People want to borrow, and they want there to be more stablecoins.”

“So I expect the tethers of the world, the Circles of the world, to grow – and it’s going to be really exciting,” Sirer added.

Leading stablecoin tether and smaller challenger Circle’s USD coin are both tied to the US dollar.

Sirer argues that because stablecoins are anchored to other assets, their value is steady. “You know exactly how much will get you a burger at the corner store,” he said.

His comments come as what appears to be stablecoins’ strength may also be their Achilles heel. Regulators are concerned about the quality of the assets in their reserves and about how transparent issuers are with investors.

Tether was slapped with a $41 million fine by the US Commodity Futures Trading Commission for “untrue or misleading statements.” For more than two years, it said it had sufficient US dollar reserves to back every Tether or USDT token, when that was not the case.

Hindenburg Research, a short-seller that unveils fraud, offered a $1 million reward for anyone who can provide undisclosed information on what backs Tether.

Sirer argues that because stablecoins are anchored to other assets, their value is steady. “You know exactly how much will get you a burger at the corner store,” he said.

But the International Monetary Fund found stablecoins can be tied to crypto-backed assets, and they are often underpinned by commercial paper, a form of short-term corporate debt.

A few months ago, the price of stablecoin titan dropped in hours from around $60 to a fraction of a cent. The loss affected billionaire Mark Cuban, who later tweeted: “I got hit like everyone else.”

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The housing crisis and the labor shortage are linked: People can’t take jobs if there aren’t affordable homes nearby

Help wanted job opening sign
A “Help Wanted” sign hangs in the window of Gino’s Pizza on Main Street in Patchogue, New York on August 24, 2021.

  • The housing crisis and the labor shortage are linked. Fighting the former could help solve the latter.
  • Numerous studies show that affordable housing improves job growth, while expensive housing can damage local economies.
  • Investing in underserved neighborhoods and creating affordable housing in cities can boost hiring across the US.

San Francisco could learn something from Columbus, Ohio.

It’s a fairly simple concept: Though the Bay Area boasts abundant jobs, housing for the people to fill those jobs isn’t affordable. In Columbus, however, affordable housing can be found within a reasonable distance from the city’s largest job hubs.

San Francisco’s problem reveals the link between the housing crisis and the labor shortage. Columbus’s planning hints at a solution for both.

Across the US, businesses are struggling to fill job openings. The trend, now known as the “labor shortage,” has changed the game for employers and employees. Americans are flexing unprecedented bargaining power and demanding higher pay to return to work. Those with jobs are quitting at record pace for new opportunities, hoping to capitalize on the overwhelming demand for workers.

It’s working. Average wages have risen at the fastest pace in decades as firms scramble to rehire. Yet the shortage shows no signs of calming. More than 10 million job openings remained unfilled at the end of August, signaling the return to full employment will take some time.

At the same time, the US housing market is still white-hot. A shortage of available homes has led to frenetic bidding wars and the fastest price growth in 45 years. More houses are on the market than during pandemic lows, but it’s still well below what experts estimate is needed to meet demand.

The shortages are two sides of the same coin. Cities with the most job openings don’t have the affordable housing needed by many workers. And areas with cheaper housing don’t have the promising labor markets to make them attractive.

Fixing the housing market could be the best bet for fighting the labor shortage.

Housing and employment are fundamental to the American Dream

The gap between affordable housing and job access already has a name: spatial mismatch. The trend has been studied for years, but the pandemic’s effects on the labor market brought the term back into the limelight.

It also describes where San Francisco can learn from Columbus. A 2019 study by the Urban Institute found that, while the San Francisco Bay Area had an overabundance of job openings, there weren’t enough job seekers within a reasonable distance to fill them. It wasn’t until one looked far into the Bay Area’s surrounding neighborhoods that openings matched available workers. But that had more to do with fewer postings than more applicants.

The landscape is different in Columbus. While the city had more open job than people seeking work, those jobless people tended to at least live within a reasonable distance to work hubs. By creating affordable housing and placing it near transit, Columbus was able to connect low-income residents with employment opportunities.

Similar effects can help close spacial mismatches throughout the US, Christina Stacy, a principal research associate at the Urban Institute, told Insider.

“People need safe, stable, affordable housing in high-opportunity neighborhoods in order to have any upward economic mobility. Certainly having affordable housing near jobs will help us get there,” she said.

The equation works the other way around, too. Unaffordable housing poses “significant negative effects” on local employment growth, researchers at the Federal Reserve Bank of Boston said in a 2010 paper.

For example, California cities suffer a two percentage-point drop in employment growth for every one-unit increase in the Fed’s housing affordability ratio (higher ratios mean worse affordability). Metropolitan areas and counties faced 10-point drops in job growth for every one-unit increase. Despite varied housing markets across the country, the results “turn out to be remarkably consistent,” the team said.

Even housing uncertainty can harm local job markets. A survey of nearly 700 Milwaukee workers showed that experiencing a forced move increased the likelihood of losing work by up to 22 percentage points, according to a 2016 study by Harvard University researchers.

Improving housing affordability doesn’t just lift job growth; It keeps workers from losing the jobs they have.

Moving people to jobs and bringing jobs to the people

Cities have long offered the best job prospects, while poorer and less densely populated areas have been left by the wayside. The effect snowballed through much of the post-war period as home prices rose, low-income Americans were forced out, and wealthier workers brought fresh investment to gentrified neighborhoods.

The pandemic widened the gap even further. Home prices have skyrocketed through 2021 as a broad housing shortage fueled bidding wars across the US. The price surge was most intense in the most populous areas, making job hubs even less accessible to low-income workers.

Only eight states – including California, New York, and Hawaii – had more unemployed workers than job openings at the end of August, the Bureau of Labor Statistics said Friday. The remaining states had far more job openings than workers to fill them, the defining characteristic behind the country’s labor shortage.

The solution must be two-pronged, the Urban Institute’s Stacy said. City governments can leverage pandemic-era aid to create and preserve affordable housing. Transportation options like buses and train stops can connect affordable neighborhoods to job opportunities. And renter protections can stave off gentrification and ensure neighborhoods remain accessible.

“As we do invest in under-invested neighborhoods, we need to get in there and preserve affordable housing,” Stacy said. “Otherwise you’re just shifting people around and it’s not really helping with equity or reducing poverty.”

On the other end of the spectrum, governments can draw jobs to areas where homes are affordable. Policies like the New Markets Tax Credit and Opportunity Zone tax incentives can attract private businesses to affordable areas, she said. Governments can also stimulate employment directly through workforce training programs and public-sector jobs.

“The answer to all of this is that we have attack everything by every angle,” Stacy said. “This is a great opportunity point to be rethinking this and responding to all these demographic shifts.”

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Meet the childcare workers who love their jobs but are quitting over low pay and stressful conditions: ‘I just had reached a tipping point’

A teacher is reading to students. The teacher, children, and two other teachers are sitting on the floor and some children have their hands up to ask a question.
If childcare centers can’t find workers, parents can’t go back to work and the labor shortage gets even worse. It’s all a vicious cycle.

  • Childcare centers are having a hard time staffing up as workers leave for other industries with higher pay and better benefits.
  • Insider spoke to five current and former workers about what it’s like to work in early childhood education.
  • One former childcare worker said even though he enjoyed his job, he felt “mentally exhausted.”

A single mom in Missouri has worked as a childcare worker for nearly six years. She loves her job and the toddlers she works with. However, she’s at a breaking point and is applying for new jobs.

Like many Americans, she’s stressed, exhausted, burned out and underpaid. The lead toddler teacher, whose name and employment is known to Insider, said her job has become less rewarding during the pandemic, and she’s hoping to find a better way to provide for her two children.

The job search hasn’t been easy. She used to look forward to going to work every day, and she loved guiding them through developmental milestones. She’s grieving that loss.

“I love the connections that I used to be able to make with the families and with the kids,” she said. But, even so, “I just have to look out for my own well-being.”

She’s applied to apprenticeships in welding, carpentry, urban forestry, and manufacturing. With a few interviews under her belt, she’s hoping to get the training she needs to transition to a different – and better paying – sector.

Insider spoke with five current and former childcare workers, most of whom requested at least partial anonymity because they are still in the process of leaving their jobs. All of them said that while the work is rewarding, the low pay and high turnover make it stressful. With the pandemic creating even more tension and health risk, experienced workers like the Missouri teacher are thinking about leaving behind a job they just can’t afford to love anymore.

‘The job that I absolutely love doesn’t pay me what I need’

One contributor to the childcare labor crunch is that many workers are expecting more out of jobs than they did pre-pandemic – especially when it comes to money.

Sarah, a worker in Appalachia, said her coworkers are leaving for better paying jobs. “That causes a lot of instability for the kids as well, because they need to form strong emotional attachments with the adults in their lives,” she said.

Her workplace also is short staffed. She said they’ve had job postings up for months, but no one’s biting – probably because of the low pay: “We are living in poverty, and we’re not being given breaks.”

Sarah said childcare workers should get at least $20 an hour. Instead, the Bureau of Labor Statistics reports the industry’s median wage is $12.24 an hour, or $25,460 a year. Preschool teachers make $15.35 an hour – $31,930 a year. That’s far below the overall median annual wage of $41,950.

An analysis from the left-leaning Economic Policy Institute finds that raising the minimum wage to $15 an hour would benefit over half a million childcare workers. The Missouri teacher said she recently got a raise and now makes that. Still, “I don’t even make enough to qualify to rent a new place working full-time,” she said.

Leaving daycare to work with higher age-group students comes with a pay bump. Elementary school teachers have a median pay of $60,940 a year, per BLS data, and there are better benefits.

A lead preschool teacher in Ohio who has worked in the industry for over a decade and said that they “love it to death.” They love going to school each day, and how the children are always so excited to see them. But that doesn’t make up for the pay.

“The wage that I make does not support my life,” they said. “And unfortunately, the job that I absolutely love doesn’t pay me what I need.”

They’re looking for other opportunities, specifically somewhere where they can make more than the $13 an hour they make now. They just applied for a call center job that pays $16 an hour: “And I can’t really say no to that.”

Insufficient supplies, training, vaccines, or bathroom breaks

Childcare workers just want some relief.

In some cases, that’s literal. Sarah told Insider that at her job, she was initially expected to work up to six hours straight without a bathroom break. There’d be no one else to watch the kids.

The lead toddler teacher in Missouri said there’s not enough supplies, no vaccine mandate, and it has been harder to teach things like phonics with masks on. They try to distance so that they can pull down masks to read lips and emotions.

She added the place seems to be hiring teachers that don’t “possess the qualities and characteristics that an educator should.” She said she’s seen things like an increase in time outs and “practices that are not developmentally appropriate.” All of this is contributing to her decision to seek out new employment outside of the industry she once found rewarding.

Another worker in Massachusetts isn’t planning to quit, but said she’s seen others leave the industry because of pandemic-related concerns. She added she’s seen people become nannies and others leave for other education positions and other jobs where they could potentially make more.

“The requirements that you need and the work that you put in doesn’t necessarily match the pay,” she said about why she thinks people may be considering leaving.

Qualified teachers quitting means instability in these preschools and childcare centers. But, according to the lead toddler teacher in Missouri, attempts to attract new workers with sign-on bonuses may also result in bringing in people who are only interested in the money incentive but might not stick around.

She said with the sign-on bonuses, “you’re just setting these kids up for failure,” explaining that some want the job for the incentive, and then leave. “They have a different teacher every week,” she said. “And it’s not good for them.”

Shane Dilello is one of the workers who already left. He loved working with kids, but left his job as an assistant teacher just a few weeks ago.

“I just had reached a tipping point,” he said. He struggled with the stress of the job, the turnover, and low pay and benefits. They took COVID precautions, he said, but young kids are still inclined to put their fingers in their mouths or wipe their noses – which didn’t help with the stress. He said that he was “mentally exhausted,” and felt that he had little time and energy to give to his own children.

“I figured it was in my best interest in terms of my health to go ahead and resign and seek employment elsewhere,” Dilello said. “As much as I did enjoy the job, and as much as I cared and loved the children whose care was entrusted to me, I just couldn’t do it anymore.”

He’s since started a new job as a receptionist in the healthcare industry.

“We love kids, we’re doing this because we love kids,” Sarah said. “But the world is making it extremely difficult for us to work this job and continue to work this job.”

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15 million student-loan borrowers would be completely debt-free if Biden fulfilled his campaign promise

President Joe Biden at a podium at the White House.
President Joe Biden.

  • Fifteen million borrowers would have their student debt completely wiped out with Biden’s $10,000 forgiveness promise.
  • Data obtained by Sen. Elizabeth Warren also found 36 million borrowers would be debt-free if Biden were to forgive $50,000 per borrower.
  • Biden has yet to fulfill his campaign promise as pressure ramps up for broad student debt cancellation.

President Joe Biden campaigned on canceling $10,000 in student debt per borrower. He has yet to fulfill that promise, and Education Department data provided to Massachusetts Sen. Elizabeth Warren shows why so many borrowers are counting on it.

Warren, who has been a leading lawmaker calling for broad student debt cancellation, asked the Education Department in April for information on how many borrowers would benefit from various levels of loan forgiveness. The department delivered in August, showing that of the 45 million borrowers bearing the $1.7 trillion student-debt crisis, over 15 million would have their student debt completely wiped out if Biden fulfilled his promise.

Under Warren’s proposal to cancel $50,000 in student debt per borrower, more than 36 million would see their balances turn to zero.

“Cancelling $50,000 in student debt would completely wipe out student loans for 84% of borrowers, including more than 3 million borrowers who have been repaying their loans for more than 20 years,” Warren told Insider. “This is the single most effective executive action President Biden could take to jumpstart our economy and begin to narrow the racial wealth gap.”

The data also revealed that of the 10.3 million borrowers in default on their debt, 9.8 million of them would see their burdens completely forgiven with $50,000 in cancellation.

In nearly 100 days, millions of student-loan borrowers will have to start making payments on their debt after a close to two-year pause. Though the Education Department is reportedly preparing a “safety net” for borrowers to restart those payments, broad student-debt cancellation doesn’t appear to be one of the relief measures under consideration.

While Biden has canceled $11.5 billion in student debt so far for targeted groups of people, like those defrauded by for-profit schools and borrowers with disabilities, he has not responded to lawmakers’ and advocates’ calls for broad debt cancellation. The urgency of ths move is ramping up as the pandemic freeze on student-loan payments is set to lift on February 1.

The review on Biden’s legal ability to cancel student debt broadly has been in the works for over 6 months

White House chief of staff Ron Klain told Politico in April that Biden had asked Education Secretary Miguel Cardona to create a memo on the president’s legal authority to forgive $50,000 in student loans per person. White House Press Secretary Jen Psaki said in February that Biden would also ask the Justice Department to review his authority to use executive action to cancel student debt, but it’s unclear when the department began that review.

Given that details of the reviews had still not been made public, two weeks ago, a group of House Democrats led by Minnesota Rep. Ilhan Omar gave the Education Department 14 days to release the memo. They wrote in a letter to Cardona that with the pandemic pause on student-loan payments lifting in February, borrowers were “anxiously awaiting the administration’s actions.”

“The time has come to release the memo and cancel student debt,” they added, setting a deadline of October 22.

Psaki said during a press briefing earlier this month that she did not have any update on the memos, but that Biden would support legislation brought to him from Congress to cancel student debt.

But Warren previously said that she didn’t want to go the legislative route.

“We have a lot on our plate, including moving to infrastructure and all kinds of other things,” Warren said, adding: “The president can do this, and I very much hope that he will.”

Do you have a story to share about student debt? Reach out to Ayelet Sheffey at asheffey@insider.com.

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The Evergrande crisis is spreading. Here are other Chinese property developers that are in default or wobbling.

China property Evergrande
China’s property sector is central to its economy.

  • China’s Evergrande crisis is spreading to the rest of the property sector, with numerous companies defaulting.
  • Fantasia, Sinic and China Properties Group are among the other developers to have failed to meet payments.
  • Economists worry that contagion in the property sector could knock out a key engine of Chinese growth.
Evergrande

Evergrande
Evergrande is teetering on the brink of default.

China’s property developers have grown at breakneck speed over the last decade, powered by huge amounts of debt. Authorities have started to rein them in with strict debt limits, but snapping an addiction isn’t easy.

Evergrande is one of China’s biggest property developers and among the most indebted companies in the world, owing more than $300 billion. It’s creaking under the pressure and has recently failed to make numerous offshore bond payments.

Just before a 30-day grace period was set to expire, Evergrande wired $83.5 million Thursday to pay interest on an offshore dollar bond. But it faces more deadlines around missed bond payments, and $45.2 million in interest is due later in October. If Evergrande fails to cough up it will officially be in default.

The Evergrande crisis is now spreading to other developers and threatens to rock China’s real estate sector, which economists say makes up around 30% of the economy.

Fantasia

Pan Jun Fantasia property developer China
Pan Jun is Fantasia’s chairman.

Perhaps the most worrying default so far has been mid-sized developer Fantasia. Earlier this month it failed to pay a $206 million dollar bond maturing on October 4, according to a filing.

The default was troubling because the company had reassured investors only two weeks earlier that there was no liquidity issue, said Craig Botham, chief China economist at Pantheon Macroeconomics.

“A great many Chinese developers are in more fragile positions than their balance sheets might suggest,” he said.

Fantasia is smaller than Evergrande, with revenue of $2.76 billion in 2019, compared with Evergrande’s $69.15 billion, according to Bloomberg data.

Sinic Holdings

Sinic Holdings China property developer
Sinic Holdings defaulted on a bond payment on Monday.

Sinic Holdings defaulted on a bond and interest payments worth $250 million on Monday, Bloomberg reported. It’s another mid-sized property developer with revenue of $3.91 billion in 2019.

Evergrande-related stress has slowed sales in the property sector and driven up borrowing costs, adding to pressure on developers like Sinic.

The yield on riskier Chinese dollar bonds – which are big sources of funding for developers – soared to 20% earlier this month.

Fitch Ratings downgraded Sinic to “restricted default” on Thursday.

China Properties Group

Wong Sai Chung China Properties Group CPG China developer
Wong Sai Chung is managing director of CPG.

China Properties Group is considerably smaller than Sinic, but it is also in trouble. It said on  October 15 that it had defaulted on bonds worth $226 million, in a filing on the Hong Kong stock exchange.

There’s likely to be little respite for developers this year, according to UBS. The bank’s analysts said in a note Monday that it expects new property starts to tumble 20% year-on-year in the fourth quarter, “bringing further downward pressure on the economy.”

Modern Land

China property Evergrande
Modern Land is yet another developer under pressure.

Modern Land earlier in October asked to delay payment of a $250 million bond for three months to January, saying it wanted to take measures to “avoid any potential payment default.”

Yet the mid-sized developer, which owns 200 apartment and office properties across China, scrapped those plans late Wednesday. It said in a filing it is facing liquidity problems and is seeking to hire financial advisers.

The chairman and president of Modern Land have said they’ll pump around $123 million into the company.

Xinyuan Real Estate

China property developer construction
Xinyuan has been forced into a distressed debt swap.

Pressure on Xinyuan led it to swap $208 million of dollar bonds with debt that matures in two years’ time, in a distressed-debt exchange.

The ratings agency Fitch gave Xinyuan a “CC” score on Wednesday, meaning some kind of default is probable. Fitch said the mid-sized developer faces a “tight liquidity situation, with weak funding access and large offshore bond maturities in the next twelve months.”

Greenland Holding Group

Greenland Holding Group China construction property developer
Greenland is among the biggest property developers in China.

S&P Global Ratings earlier this month downgraded Greenland, a massive developer with revenues of $61.98 billion in 2019. It got a “B+”, meaning it’s currently able to pay its debts but is vulnerable to a shock.

Greenland is struggling as its borrowing costs shoot higher during the Evergrande crisis, with domestic and foreign investors now much less keen to lend to property companies.

“The company’s cash could continue to deplete over the next 12 months due to weaker sales and cash collection,” S&P said.

Insider contacted all the property developers mentioned in this article for comment but none responded.

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What is an index fund? A low-cost, low-risk way to invest in the stock market

index funds1
Index funds suit investors with a long-term time horizon and a preference for a passive, buy-and-hold strategy.

  • Index funds are financial vehicles that pool investors’ money into a portfolio of securities that mirror a particular market index.
  • Because they are passively managed, index funds have low fees.
  • Diversified by design, index funds are relatively low-risk, but their gains tend to be slow as well.
  • Visit Insider’s Investing Reference library for more stories.

An index fund is a type of financial vehicle that pools investors’ money to purchase a portfolio of stocks, bonds, or other securities. This portfolio is designed to mimic a particular financial market index – a select group of securities.

An index fund can be structured as either a mutual fund or as an exchange-traded fund (ETF). The term “index fund” applies to either, but it’s often used synonymously with an ETF, since so many ETFs are index-tracking instruments.

Index funds differ from other funds on the basis of their investment strategy. This strategy is to follow its benchmark, or designated market index – generally, a broad-based one that tends to perform well over time.

There are many different indexes tracking different sectors of the market. Along with the well-known S&P 500, others include:

  • Dow Jones Industrial Average (DJIA), which is made up of 30 large-cap companies
  • Russell 2000 (RUT), which consists of 2,000 small-cap stocks
  • Bloomberg Barclays US Aggregate Bond Index, (LBUSTRUU), which consists of bonds
  • MSCI EAFE (MXEA), which is made up of foreign stocks
  • New York Stock Exchange Composite Index (NYA), which includes all common stocks listed on the NYSE

How index funds work

When you invest in an index fund, you’re buying shares in all the companies that make up the index. Most index funds are weighted by market capitalization – the total dollar market value of a company’s shares. That means that these funds usually purchase more of the largest companies in the index than of the smallest companies.

The composition of the benchmark index determines the trading decisions of an index fund. By design, true index funds must follow their index. That means there is no room for fund managers to make decisions about which trades to make. Rather than actively picking stocks, they are practicing passive management.

Index funds are also referred to as “passive funds” or “passively managed funds.”

Some funds, called “active index funds,” largely follow an index but also allow the fund manager to choose to buy certain other individual stocks or sell others.

These are not true index funds because they do not necessarily follow an index. Over time, the portfolio of these funds may differ significantly from the index the fund purportedly follows.

Benefits of index funds

Many investors, especially beginners, prefer index funds to invdividual stocks for plenty of reasons. The main benefits of index funds include:

1. Diversification means you’ll usually win.

Up to 90% of active fund managers underperform compared to their benchmark index (that is, the segment of the market they loosely follow).

And if a problem for the pros, imagine what it’s like for the amateur investor. “Trying to pick winners, for most, is a loser’s game,” says Robert R. Johnson, Professor of Finance at Creighton University. “The solution is to invest in diversified funds.”

An index fund provides you with a diversified portfolio of stocks that, as a group, usually do well over time. For example, the Vanguard 500 Index Fund (the one that started it all) has seen a 5-year average return of 11%.

2. They are cost-effective

Diversification can be expensive to pursue by yourself with individual investments. Index funds offer more bang for the buck – a single purchase into its pooled portfolio makes your diversification more cost-effective. Some funds have minimums as low as $1.

3. They are passively managed

Many casual investors aren’t interested in managing their investment; they just want to steadily grow their money. Index funds don’t require any decisions, so they’re great for hands-off investors.

4. They have the lowest costs and fees

Index fund managers don’t make many investment decisions, so they don’t need to hire researchers or analysts. Those cost savings are passed on to investors through lower management fees and costs. The average expense ratio of an index fund is around 0.49% and some are as low as 0.03%.

Disadvantages of index funds

Index funds also come with disadvantages and risks:

1. They’re not great for short-term gains

A diversification strategy limits how much you lose if a single stock tanks, but it also limits your opportunities to gain on well-performing stocks. That’s why index funds don’t see the big upswings that some investors are hoping for.

If you’re looking to speculate on a skyrocketing star, you’ll want another type of product (perhaps penny stocks).

2. They’re vulnerable to the market

By their nature, index funds are tied to their index. If the benchmark is dropping, so will the value of your index fund investment.

And management’s hands are tied. “Index portfolio managers typically can’t deviate from the index holdings-even to take advantage of trends or market mispricings,” says Tricia Rosen, Principal at Access Financial Planning. And they can’t exclude holdings that are over-valued, either.”

3. They may not be as diversified as they appear

Brian Berkenhoff of Birch Investment Management notes that “an investor who has $1,000,000 in an S&P 500 index fund would seem to be diversified by owning 500 stocks. However, because most index funds weight investment by market capitalization, $220,000 of that might be invested in just five companies.”

Case in point: The top five companies in the S&P 500 are Apple, Microsoft, Amazon, Facebook, and Alphabet – all players in the tech sector. So if that sector tanks….

Before you invest in index funds

Rosen suggests that anyone considering an index fund should read the fund’s prospectus to understand:

  • What index the fund follows. There are many different indexes and some funds use a blend of indexes.

  • How rigidly the fund follows the index. True index funds rigidly follow the index, but some allow portfolio managers to deviate from the index to try to increase returns.

  • The fund’s fees and expense ratio. Typically these are low. But they may be higher in funds where the portfolio manager is allowed to do more active trading.

The financial takeaway

Index funds are popular because they are a low-risk, low-maintenance, low-cost way to see steady returns over time. But no investment is one-size-fits-all. To see if they suit you, ask yourself:

  • Am I looking to invest for the future? Index funds are best suited for investors with a long-term horizon: While the market historically rises over time, you do need time to weather the bumps..
  • Am I the buy-and-hold type? Index funds are ideal for those who aren’t interested in picking stocks.
  • Am I comfortable with slow gains? Index funds typically perform better than actively managed funds over time, but gains are usually moderate. Actively managed funds can sometimes see higher returns in the short-term.

Any investment has some risk attached to it, of course. But index funds rank fairly low on the risk spectrum – and are certainly more cost-effective than trying to buy stocks on your own.

“Investors simply can’t afford to make oversized bets on individual securities,” says Johnson. “Investing in a broadly diversified basket of securities is a more prudent strategy.”

5-step beginner’s guide to investing in index fundsPassive investing is a long-term wealth-building strategy all investors should know – here’s how it worksThe S&P 500 is seen as a gauge of the stock market itself – here’s how this widely watched stock index worksIndex funds vs. mutual funds: What’s the difference?

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