I went into an Facebook investment group the other day and asked about what kind of safe assets people were buying with their crypto gains. The response was things like "You want safe returns, put some ETH in a margin lending account on Bitfinex. You'll get 10% p.a." I was stunned. This fellow's idea of a safe investment was to keep equity in an open source software project that is less than 3 years old, on an exchange 6 years old, with a history of being hacked, in an industry that is 9 years old, with a history of exchange failure. To put it lightly, I thought they had an unusual idea of what constituted "low risk investment".
This is the kind of risk-disposed behaviour you find in crypto investing. If you don't look for a broader perspective, you might not even realise that all your fellow speculators are sickbox cowboy gamblers willing to let it ride on black...coin.
The other problem is, when you start looking at safer investments, you realise that the kind of returns you get are, simply put, awful. Savings accounts in some countries are offering less than 1% per annum, and you're lucky to get even 3% on a term deposit or CD.
Here are a few assets to protect and grow your money, which you can be a little more certain won't vanish in a puff of smoke tomorrow. As always, I'm not telling you what to do with your money, and this information is presented purely for educational purposes.
When you pick up an ounce of gold or silver and feel the weight in your hands, there's something cool about it. The weight of it feels like wealth, like security - the comfort of a physical item that not even cold hard cash can give you. Buying precious metals, you generally don't expect to get a return, but at least if all other markets in the world go belly up, you'll still be able to touch your Austrian Philharmonics, Mexican Libertades and Aussie Kookaburras.
It is possible that PMs will see gains in coming years though. The silver market especially is heavily manipulated. It's likely that big banks are "naked shorting" silver, that is, they sell silver certificates without having any metal to back them up, increasing the apparent supply for silver and keeping the price down. That can work out well for them for a while, but there is demand for silver and gold in industrial uses in medicine and electronic devices which paper metal just cannot meet. In fact, for more than ten years, world silver demand has been greater than production. At a certain point, industrial buyers might find out that there isn't as much silver around as the price implies, and then it will break out.
If nothing else, it's likely they'll keep pace with inflation.
Exchange Traded Funds (ETFs)
You might have heard the term "ETF" before, but if you've never bought one, you probably don't know what they are. Basically, they're baskets of stocks or bonds. They're similar to the mutual funds which you probably have as part of your superannuation or 401k, with a couple of key distinctions. Mutual funds are normally actively managed, with the funds buying and selling stocks throughout the year. ETFs are passively managed, tracking an index like the S&P500 or a whole stock market, only buying and selling a couple of times a year. Also, ETFs are generally much cheaper than mutual funds - instead of charging 2% or more, they commonly charge less than 1%, sometimes as low as 0.04%.
2% might not sound like a big difference in the short term, but with the magic of compound interest, getting that 2% can mean being a millionaire at retirement, or being... not a millionaire. For example, if you invest $100,000 at 8% per annum for 30 years, you will end up with $1,006,000. If you instead got 6%, you will end up with $574,000.
Many ETFs pay dividends quarterly, and a few pay monthly, so you can reinvest them or build a passive income, and for some savvy investors that may mean a safe and stable earnings whereby they never have to work again if they don't feel like it. That is pretty cool.
Peer-to-peer lending can be risky, as you don't have any guarantee that the money will be paid back. If an individual or company goes into default, you may never see your capital returned to you. However, some platforms such as MarketLend offer insurance on some loans, giving you more confidence in seeing that cash. After fees and premiums, you may well see a return of 8% - with a guarantee attached, that's not too shabby at all.
I haven't yet used MarketLend, so I'm not recommending their services. However, you may find a similar service which is suitable for you.
Conclusion - A comfortable future
If you've made money speculating in a new market, perhaps 10x'ing your net worth, it makes sense to take some of it off the table. If you haven't yet made money from crypto, it makes sense to prepare for the day that you do.
History is full of people who did well short term in bull markets, only to lose most of it because they didn't see the tide turning. Protect yourself before the tide turns against you, and prepare for a wonderful, comfortable future.
My name is Kurt Robinson. I grew up in Australia, and for now, the world is my home. I write interesting things about voluntaryism, futurism, science fiction, travelling the world, and psychedelics. Remember to press follow so you can stay up to date with all the cool shit I post, and follow our podcast where we talk about crazy ideas for open-minded people, here: @paradise-paradox, like The Paradise Paradox on Facebook here, and subscribe to The Paradise Paradox on YouTube, and on iTunes.