If your passive income beats inflation rate, deposit might be a better choice.

[BRINIRHA]

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).

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[uneng]

The annual interest from the $100,000 is $3000, which means $250 per month.

Basic financial planning says 3% APY on $100,000 earns less than 7% inflation. Resulting in wealth declining 4% annually.

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.

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.

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.

[MoonOfLife]

The annual interest from the $100,000 is $3000, which means $250 per month.

Basic financial planning says 3% APY on $100,000 earns less than 7% inflation. Resulting in wealth declining 4% annually.

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.

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.

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.

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.

[stompix]

~

What you said is all your "guess" but what I assume is actually what I am doing and having now. The difference is that we live in different worlds and I am just offering or exploring another possibility. That's it.

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!

[Jawhead999]

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!

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.