Topic: If your passive income beats inflation rate, deposit might be a better choice. (Read 452 times)

Don't forget about bank charge, withdrawal limit, freeze funds, and you can't withdraw all of your money, which will make you can't get all of your $162K.

Bank interest can't beat inflation because when the bank need to pay the interest amount, they need to print new money which will increase the inflation rate. Bank is smart enough since it make people willing to put their money on bank because they feel there's no reason to hold it alone or put in piggy bank since they wouldn't earn any interest. That's why middle and poor people always lose their money and they can't change their life.

I live in a world where you can't bend math, that's it!
If you have 100k sitting in a bank and you get 5% interest rate in 10 years you're going to have 162k
If a thing costs 100k and you have an inflation of 7% in 10 years that will cost 196k.
So, in order to buy now the thing you could afford with your money 10 years ago you will have to cough up another 34k.
And in no world does this end otherwise!

In addition to investing at the right time, we also need to know that in the past bitcoin has been profitable for many people but that does not mean that in the future bitcoin will also be profitable for us. What we are doing is just hoping bitcoin will rise again, there is no 100% guarantee. So don't just invest in bitcoin and see it as a lifesaver, we need to diversify, invest and deposit. Why choose only 1.

That is why the investment in bitcoin shouldn't be made thinking on short term. Investors must keep in mind it may be necessary to hold for few years until seeing some financial progress on their holdings. Remember there were also people who bought bitcoin during the ATH of 2017 (19,000$), saw their investments melting to 3000$ in 2018, but the profit finally came in 2020 for those who were patient.

In this case I think it's more about waiting the right time than investing in the wrong place.

Your thinking is actually quite good if it is carried out in a country that has a stable economic level and its currency does not experience inflation of more than 1%. but in which country is it? although there are definitely very rare. because in fact the inflation rate since 2020-2022 has increased rapidly in many countries. even in developing countries there are experiencing hyper inflation.

Earning 3% annual interest on depositing money in the Bank becomes unprofitable if our country's currency has depreciated. and inflation in the price of goods has exceeded 10% in a year. Even now, 10% inflation can occur within 1 month in several countries. and inflation in a year can exceed that figure.

for example in my country fuel prices during 2022 have increased by almost 40%. and the prices of daily foods such as rice and fruits have also increased by more than 25% in a year.
so that in my situation in my country which is affected by inflation. then choosing to deposit money into the bank is a bad choice. I prefer to invest in properties such as strategic land to be used as housing in a few years. because the price of a piece of land continues to rise even in times of inflation. in a year in my country normally a piece of land continues to experience a price increase of around 5-20% per year. and it depends on the location of the land. because the price of land that is on vehicle access routes and close to big cities can even increase by 20-50% per year. because it has good potential. especially if we build a housing on it. then the selling price can increase by hundreds of percent. but for land that is inland or far from big cities. then the increase is very small, only around 5-15% per year. but still better than depositing our money in the bank.

and setting aside a few percent of our money this year to invest in bitcoin isn't too bad either. because in the next year (2024) bitcoin is expected to experience a very good increase (bitcoin halving).

And if you invest in bitcoin from December 2021 and hold till now, your assets will decrease by 80% in value, i.e. just add another 20%, your assets will be zero. Investing or depositing has its pros and cons, don't just look at the bad side of something that evaluates. Investing is also risky and will sometimes make your money disappear forever if you invest in the wrong place.

And that is only the offcial inflation. Real life inflation is used to be superior to the official rates announced by the government. It's common to compare prices of a same product in the supermarket in a year time period and conclude it has been raised in 10%, 15%, 20% or even more... They will say there are another factors influencing this besides inflation, like rainy or dry seasons, but the fact is that prices never go back to original prices. So I guess besides inflation there is also some greediness from retailers and producers, especially when there is a government transition.

Investing in bitcoin is considered the riskiest investment, and there is no way for you to reduce your risk by just investing in bitcoin. Early bitcoin investors, they get huge profits, but there is no guarantee that our investment from now on will still be profitable without risk. As I said: there is no proof that bitcoin is 100% sure bitcoin will increase in the future, so to reduce the risk, you need to diversify other assets, bitcoin does not help you reduce risk.

If you are an investor, you need to consider the risks rather than ignore them, especially with a new and volatile asset like bitcoin.

A bank deposit has long lost its relevance, because the profit that you can get from a deposit, firstly, will be less than the inflation rate, which means that you will simply lose the purchasing power of your money, and secondly, it is also a risk of losing your money, because the bank is not the most reliable way to store your funds and sometimes it happens that you can not take them in full, at any time you need them.

Try to find more profitable sources of investment, bank deposits are a thing of the past. People who have been able to create capital will not deal with deposits, they already have an understanding of how to work with money for a good profit.

It is true that there will be risks behind the investment, say investing in bitcoin. But as long as we can figure out how to reduce the risk, we will not think too much about the risk but think about how we can increase our investment. Only faith and belief in bitcoin can strengthen us to hold on to bitcoin until its price increases and you have seen that bitcoin investors have been holding it for a long time and waiting for the right moment to sell their bitcoins. But for other investments, I don't know. And that's why before people invest in any type of, they have to learn everything so they will be able to manage the investment.

Total dependence on Passive income is not a good idea but passive income can be a good source of retirement income because it can provide a steady stream of income without the need to continue working. However, it's important to diversify your sources of income and not rely solely on passive income, as it may not always be reliable or sufficient to meet your living expenses. It's a good idea to have a mix of passive and active income sources in retirement.

In general, the return on bank deposits is lower than the rate of inflation, that's why I think it is a better idea to invest in Bitcoin on regular basis in bear market and wait for return of bull run to harvest huge returns which can be deposited in bank or use it for investing in real estate to increase passive income.

Saving in banks is just like keeping your money safe and secure but not earning interest.
The interest offered by banks are so small, it is deemed negligible even after a year of holding your money.
So yes, if you can diversify it with other investments like real estate, that would be better.
Because with real estate, we know most of them are increasing its value thru time.
Gold is a tangible asset also that is good to invest as it has been in this market since time immemorial.

Also, fiat is expecting to depreciate its value in the long, so why hold most of it? Even if banks will offer high interest rates, for me that would still be enough and will never be reasonable. Fiat will still create a big difference if you decide to invest it in potential investments like bitcoin, real estate and gold. The more you diversify your investments, the bigger the profits you are expecting to gain. Saving in banks is good, but it will be more helpful and profitable investing them in investments with high ROI.

The OP has valid ideology when it comes to his finances. The only problem on this analysis was he assumed that his expenses is fixed to value he gives which don’t give any room for additional expenses for improvement of his life like better apartment, food and other things to improved his life. Not to mention the future expenses for having a family and raising a child. The computation of OP only assumes a regular life that revolves on same routine until the end which makes him contented on a 3% bank interest rate over more chance of earnings for the money being stagnant on bank deposits.

In 2016, my father tried to deposit 10 million rupiahs or about $640 today, in a government bank for one year. And after a year had passed, my father's return was only around 70 thousand rupiahs or about $ 5 that had not been deducted from the fees from the bank.

From there, I thought that it is useless if we want to try to deposit our money in the bank because the interest or return is very small. If I, at that time, advised my father to invest in bitcoin with his 10 million and I held the bitcoin until 2019, my father would be very surprised because the value of his money had increased much and he had never imagined it.

Deposits are made to have funds for living or the things we will do and emergency purposes. But when it comes in investing it will not be a good option to grow our money, there are several options we can choose but none of them can really guarantee a higher return unless we tried having it, some properties can grow in value in time but depending on its location, golds will have a higher value the bigger it is and in crypto depends on where we will invest in and in what time we will actually buys it. Inflation will keep rising so we must not depend alone in deposits but must have investments too.

I agree that investing in bitcoin or any other investment is better than deposit in terms of profit, but in terms of safety, I don't think you are right. Once it is an investment, there is always a risk, not just a profit, if the investment is only profitable, we are already billionaires. What if bitcoin never rises again? Have you thought about that? Or do you have any proof that bitcoin is definitely going to grow? Everything is risky and what I mean here, it would be wise to know our asset diversifications, invest and deposit.

You get a lot of basics wrong in reality. Buy bitcoin, sure, but realize that you are speculating much more than investing and there are subtle differences. You don't really have a clue whether bitcoin will go up again or continue going down, there are a lot smarter people than us who lost (and made on the way up) lots more money than we could ever imagine - but they have the sense to know that what they were doing was essentially gambling. You open your message saying to "invest" in bitcoin, which brings absolutely zero passive return and then trail off into a story about banking deposits and rental income, there is no consistent thought going into your strategy at all.

But if you invest all your money, there is no guarantee that the investment will give you a return, the investment is not only profitable but also risky. So we need to diversify and deposit is also necessary for our life. Depositing is not only to create passive income, but also to help us solve unexpected work.
Inflation is like a bear market, it will peak and then drop and the economy will return to normal, inflation does not last forever. I don't know your country, but in my country this year inflation increased, but with it, the savings interest rate also increased, they are proportional to each other, perhaps the government policy is not the same. Savers are benefiting, while borrowers are struggling, and since then the gap between rich and poor has been widening.

It would be better for me to invest in bitcoin than to keep my money in the bank because, with so many fees that would be applied to my savings, I would never get good returns. The amount can reduce because of these fees. Unfortunately, the bank will not tell you what the fees are. They just said that it was an administration fee and others. Well, a lot of people believe that.

I have never tried to deposit at a bank, but based on my friend's story, if the money we used to deposit at the bank is a small amount, the amount we will receive is also small. That's why I've been trying to allocate some money to invest in bitcoin since I got to know bitcoin. And by waiting about 2-4 years, the return I received from bitcoin already exceeded the interest offered by the bank.