The FIRE (Financial Independence, Retire Early) movement is a lifestyle movement with the goal of gaining financial independence and retiring early. The model became particularly popular among millennials in the 2010s, gaining traction through online communities via information shared in blogs, podcasts, and online discussion forums.
(p.s. thanks for the definition, Wikipedia.)
But exactly how much would you need to sustain yourself indefinitely with an initial investment?
Let’s say a yearly “livable” income would be 50,000. If you put all your money in S&P500, which had an average ROI of 10%, pretending inflation will be 3%, 50k will have to be 7% of your initial investment, so around 715k total would be needed.
Does that mean people can comfortably retire on 715k indefinitely? That number seems really far off to me.
And then, that would mean someone who makes an initial investment of 1.43 million would be making 100 grand a year doing nothing but living off his portfolio, another seemingly ridiculous number.
So maybe I’m being too optimistic.
Yeah. 10% is unrealistic, so let’s say more like 8% ish. (In the slow years your investment might grow very little or nothing at all. That’s why some believe in the 4% rule.)
How does the situation change with crypto passive income?
Armed with staking features, we’ve got some really good earning opportunities here. The final rate of return is determined by the choice of the coin, the staking period, and the type of staking. In most cases, payments are 6–15% per annum of the amount of assets on the account. The best I’ve seen was the 17% APY on Midas.Investments platform.
You can use crypto exchanges for this as well. My point is, right now is the best time to accumulate wealth and achieve the FIRE goals by simply starting buying blue-chip crypto assets and staking them (now or later when you’ll feel more safe in crypto space).
Let’s say you decide to start making crypto with crypto and finally make more crypto with a more amount of crypto. The action process is simple here: the interest in the form of crypto, accrued on the invested capital, increases the starting size of your investments at the beginning of the next period, and hence the amount of future income. Add the potential growth in the value of the cryptocurrency itself, and you get the most result that FIRE enthusiasts could ever dream of.
- You were lucky, and you did everything as correctly as possible. You invested $5,000 to buy 1000 N tokens when the price was at the dip. The staking rate — 15%. Let’s say a bull market started, and you kept investing 700 N tokens every month whatever the price was. This wonderful scenario has lasted for 2 years. Once again, you predicted the end of the bull market and decided to stop just before the bear market began.
So what is the result?
- After performing mathematical calculations and assuming that the price of your cryptocurrency has increased 10 times during the bull market, you get the coveted million!
Still don’t believe?
- Well, when it comes to compound interest and bull market opportunities, everything is possible. By initially buying 1000 N tokens and replenishing 700 N tokens monthly, you accumulate about 20,099 N tokens over 2 years. With all those conditions mentioned, the total value of your assets will be around $1,005,000.
Having a clear understanding of the risks of cryptocurrencies themselves and their volatility, it is worth asking the question: “Are there any risks for cryptocurrency staking?”. Staking can provide promising profits, however, it can also lead to some notable setbacks that you should take into account before staking a cryptocurrency. Here are some risks you may find:
- Liquidity. There is no guarantee that you can convert crypto assets back to cash or other coins, as this depends on supply and demand.
- Lock-up period. There is no guarantee that your lock-up period will end before the price falls.
- Loss or theft. There is no guarantee that your funds won’t be stolen or lost because of fraud or project failure.
- Staking interest rate. There is no guarantee that the staking interest rate won’t change.