You sound like someone who makes a lot of guesses about a hypothetical situation in which he is not. A passive income of the amount that speaks, what people usually do is spend it instead of depositing it in the bank. There are two exceptions to this:
1) People so rich that passive income far exceeds their level of consumption, so they reinvest it, but never in a shitty bank deposit, unless for a short period of time (to buy when they see an opportunity in RE or shares of a company).
2) People still in the accumulation phase, who in this case reinvest the liability but in the same way as 1). It doesn't make sense to put it in a deposit unless it's short term.
The only reason that you think I am making a lot of guesses about a hypothetical situation is because you are not in that situation, but I am. What you said about the two exceptions proves that. You'll never understand.
Your words are good on the one hand, but suppose, for example, if inflation continues at rates such as 10%, then within 5 years you will not have enough capital to cover these expenses, or rather, your capital will be consumed so that it will not be able to generate additional income for you.
So the issue is not the return on investment, but rather the nature of that investment, as its value decreases faster than the interest on it.
Your words will make sense if we are talking about gold ROI.
3% interest rate from deposit is nothing compared to the inflation in most developing nations. Some nations are experiencing up to 30% inflationary rate and the interest rate from bank deposit is just useless. The best option for me is to invest on a product that have a high rate of return. Investing on a product that its cost increases with the inflationary rate might be a good option. I might think of investing in Bitcoin and patiently wait for the bull run. Bitcoin has proved to be a very good investment over the years.
You are right about 3% interest rate from deposit is nothing compared to some nations with insanely 30% infation rate but in my country, the inflation rate is only round 5% so it's still acceptable. There is no right answer since we are living in different places, which is normal.
Whatever percentage interest rate that we aim at in deposit or investment, we should invest in product that rises with inflation time and not policy ban. Product that are decentralised like bitcoin should be the best choice. If you have investment in rentage of house, you are also sure to meet up with the inflation rate. I think it is majorly about how we can take the advantage of inflation and not really to what percentage and guesses we make. We need some reality to survive in highly inflated economy. Don't invest in perishable things.
Agree. Surviving in any situation is the King. Anything else comes secondary.
@OP you already stated that investment in Bitcoin will give a better yield then why bother advising people to deposit their money on banks? Regular employee cannot avail the 3% interest per annum, they often stay in the bracket of 0.125% to 1% and besides 3% annual interest is somehow impossible in my country.
Take note only Php500,000 (approximately $9000) is insured on the deposited amount so I think it isn't worth the risk of putting huge amount of money on the bank. If you have a good amount of money, I believe it is better to set up a small business or invest it somewhere else than putting it on the bank. And if you wanted to bank your money why not be your own bank by converting your cash to Bitcoin and be in self custody.
Investing in Bitcoin is definitely the best choince and I am NOT advising people to deposit but simply discussing a possibility to have reaonable returns with the minimal risks. Because depending on where i live, most people with $1 million or half a million will deposit in banks and don't worry about money. Discovering more options is essentially helpful to make a better life. The purpose here is always to play safe, not make enormous money instantly. Chasing high yields is not everyone's choice.
