Generally speaking you should never hold more fiat than you need (eg. emergency funds for an emergency situation). After you deduct your expenses, however much fiat you are left with you should invest in something that can be considered a store of value while trying to diversify as much as you can.
In my opinion it doesn't matter how much your income is and how much interest rate your bank gives you, you still need to invest your fiat into something better.
Bitcoin, gold and real estate are the best choices in my experience. Things like stocks depend a lot on the economy and could crash hard while the risk of the same scenario is lower in those 3 markets I mentioned (it is not zero though).
Topic: If your passive income beats inflation rate, deposit might be a better choice. - page 3. (Read 376 times)
January 05, 2023, 07:54:13 AM
January 05, 2023, 07:34:44 AM
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.
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.
January 05, 2023, 05:57:49 AM
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.
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.
January 05, 2023, 05:24:02 AM
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.
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.
January 05, 2023, 05:06:44 AM
My previous post "Use your money wisely. Invest or deposit ?" is a very hot topic which receives over 3000 views and more than 240 replies. I read all of your replies and summarize to one common advice: invest in Bitcoin rather than deposit in banks. To be frank, I totally agree and believe this is a great option (of course not put all eggs in one basket). The question is that most people say that 3% of deposit interest rate is nothing compared to inflation rate so deposit would be the last option if they had that amount of money. Well, in real life, I think 3% is quite good enough for deposit only if your other passive income combined is more than your expenses. Please let me explain. Your passive income is $1000 per month, and your salary is $1500/month. Passive income comes from the rental of the house your parents gave you or left you. Salary is from your regular and stable job. Your monthly expenses come to $1000 to $1500. The annual interest from the $100,000 is $3000, which means $250 per month. The rental income plus the interst sums to $1250/month and this money can cover your monthly expenses. In this situation, why don't you deposit that amount of money and feel no worries about your finances ? See, your passive income here can pretty much offset the inflation but that 3% is actually a compound interest rate which brings you more money every year. Plus, your salary of $1500/month, can also be saved in your bank account to earn more money. You know my point here ? I am trying to implement this deposit thing in real situation and find a possibility to benefit from.
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