As mentioned in previous articles, the concept of compound and saving in bitcoins is an appealing feature to many who are looking into this new financial instrument. Many experts agree that compound interest can make a huge difference to the bottom line for any investor. Because of the high volatility in the price of bitcoins, many investors have looked for ways to compound and save more money. With the help of a compound annual growth rate calculator, they were able to see that they could actually earn more by investing more, not less. In this article, we will discuss how compound and saving in bitcoins can work for the average investor.
First, we need to look at the concept of volatility and compound annual growth rate. Volatility is a measure of market effect, where the rate of change of the asset or currency against another is a function of time, price, and risk. Compound interest can be seen on a graphical representation like so: the cumulative effect over time of compound interest rates on your investment. The higher the annual percentage, the larger the impact on your savings.
Another way of looking into the impact of compound annual growth is through the use of the Metaverse, which is a virtual "exchange" for all the currencies in existence. Let's say that you want to buy a hundred thousand USDT of the Metaverse with the Canadian dollar, then after two years you have saved five thousand dollars. This represents the rise in the value of the Canadian dollar against the US dollar, which we can call compound interest. If we take this further, the idea is still the same, but now we also have the concept of nft, which stands for non-finite factors such as demand, supply, and psychology of buyers and sellers, which cannot be quantified in a finite amount of time.
This is where the concept of saving in bitcoins comes into play. In the future, no finite factors will affect the value of your Meme coins, and therefore you should consider investing your savings in this manner. This is the reason why we use the nft or the non-finite factors of supply and demand, which is what drives the market in the general case. However, there are cases where the supply of the Fiat currency is higher than the demand, which again leads to non-finite factors. So in such a situation, the Metaverse could offer you some extra protection against possible fiat currency depreciation.
Now, lets go back to why it is so important to save in Bitcoins. Well, first of all, the value of each unit is increasing exponentially in the long term. This makes it impossible for any investor to blindly buy them and wait for the profits to increase their number. Therefore, it is important to make use of nft, which is the only true way of telling if you are making money from your investment. Nft shows you how many buyers are looking to purchase your units at a certain time, which is a definite indication that the value of your coins is going up.
Now, you may ask how does the nft work? It goes a bit like this. The price of each coin is given in US dollars. Every investor who is logged on to the Metaverse gets updated with the price of each coin. If you are logged on to the Metaverse but not paying attention, then you are likely to miss out on this valuable price update. However, should you pay attention and log on when you are supposed to, you would notice that the price of one coin has gone up by 10% from the last time you checked it.
This is the basic principle behind nft; it uses the principle of demand and supply. If more people are buying the coins, then their value automatically rises. Since the demand for the coins is high, then the price automatically rises. Hence, this is how nft makes you earn more from your investments in Bitcoins.
If you take it one step further, you can also use your compounding power and save some money in the process. You can invest your savings into some low risk stocks that will increase in value over time. Compounding and saving in bitcoins is the smartest way to make an investment with this virtual asset. Even if you are new to the world of bitcoins, it is easy to understand how this works. There are many different places to learn more about this topic, including tutorials, articles and more.
Bitcoin dollar-cost averaging: an example
Here’s a scenario: What would it look like for someone to take a 2.5% allocation in bitcoin with a hypothetical $500,000 portfolio, then dollar-cost average at $280 per month? What impact does this have on wealth over time, and is the risk worth the reward?
Under this scenario, you’d have the client save $33,600 over the next ten years, and that initial $12,500 investment would grow to be $2,181,625. Is that risking too much of the portfolio at 2.5%? Is $3,360 per year asking too much to save for someone with a $500,000 portfolio? You could likely fund the bitcoin dollar-cost averaging strategy with the income from that traditional portfolio. In my opinion, this is highly doable for most clients, and provides an outcome all of the clients I’ve talked with would embrace.
And what if you instead stick to what we’ve seen work – the S&P 500? If you did the same thing, you’d end up at the end of the decade with $136,654. (That’s at a CAGR of 15.30%, one of the highest over the last 100 years.) This begs the question of whether that’s sustainable – and that should be questioned, as the S&P 500 is arguably overvalued. (One could look at the price to earnings, price to sales, U.S. market value divided by GDP, or CAPE Ratio, for instance.) It’s hard outside of an interest rate model to find a valuation metric on which the U.S. stock market is not flashing red. The opportunity cost to not allocate to bitcoin looks massive when compared to the U.S. stock market.
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