Building a "compounding machine" for sustainable profit making
Important concepts for sustainable investing from my private notes
By Jelson25 (Own work) [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
- It is possible to build a "compounding machine".
- A "compounding machine" is a source of "passive income" from an "appreciating asset" which is "continuously reinvested" (used to purchase more sources of passive income).
A primary example of this could be dividend stocks in the form of a dividend growth machine. Which is defined as a portfolio of dividend growth stocks which are continuously reinvested by "DRIP".
Another example for people who do crypto, is the interaction between "peer to peer lending" and "cloud mining". Peer to peer lending results in some interest from loans which can then be invested into "mining contracts". So for example, compound interest is generated by swapping the profits between interest earned from lending, and mining contracts, as both pay out passive income in such a way which has a synergy to produce compound interest for both.
Compound interest seems to be the key to making money make more money. In the stock example, the stock market typically increases at a rate of 8% a year so the stocks alone are assets which increase in value faster than the rate of inflation (appreciating asset). In the example of mining contracts, the value of a mining contract depends on the price of cryptocurrencies increasing over time, and for the mining contract to remain profitable. If we think of mining contracts and dividend stocks as we think of real estate, then this makes sense because it is digital real estate, and interest is like rent.
Best practices for sustainable investing have been established and certain models are shown to work in even in crypto
- It is possible to build a compounding machine.
- If Steem reaches $100 as some believe it will then many accounts could be worth millions.
- If this happens then knowledge on how to compound wealth will become much more valuable as those who have large accounts may seek to diversify.
- Several from Steemit have already proven the viability of this in practice by getting passive income from HYIP/lending, or cloud mining, so this business model is proven to work in practice.
- Dividend stocks are much safer than HIYP and can do as well as 10% yield annually which can be reinvested into increasingly lower risk lower yield stocks over time.
These are just my private notes on how I think about investing. As always, I do not give any investment advice nor can I predict the market accurately. Do what is best for you with the money you have earned on Steem or anywhere else.
@dana-edwards - Well said. For people with fair sized cash pool but no time on hand for active investment monitoring, compounding sustainable profit schemes are the best. 'Making your money work' instead of it sitting idle in a savings account! These models are common in the real world but in crypto, we need to be very careful while selecting the model. Lending models and mining contracts have a high risk of scams in crypto as far as I have seen. However, if selection is done well, then appreciable growth can be realized.
Thanks. My account is small right now so I do not have to worry :) but some day, this will be useful. LOL
Upvoted full through steemfollower
Regards,
@vm2904
Great advice...make your money work for you. Passive income is how the rich preserve wealth. I just got my first distribution from KuCoin by holding their token KCS...I'm impressed. Great way to earn some passive income. You get a small percentage of each trade fee. Pretty genious. You should look into it.
If the steam arrives at $100... It's going to be a really historic thing, will be a going to change a look at life. Because it will be a large number of rich people and do not need money... And this is where creativity starts.
have a complete leader spirit bro😎
@dana-edwards Compounding Mashine Will make More Profit :) , Steem Can't Go To 100$ easly , we have steemit steepshot dtube ..... many Project & Steem Still Under 20$ , but SBD can Reach it easly because Of Total Supply it's just 4,863,573 SBD :)
Pound that interest!
very informative blog i have learned many things from your blog
This is the secret to financial freedom, but is unfortunately not well understood
Dividend income and rental income are perhaps the classic two, and now you can add to that additional income streams from delegating Steem power, staking PoS coins, renting out EOS (in future), running a couple of smart nodes etc
Compounding of dividends and rental income is pretty slow, but if you can replicate the process with assets growing as rapidly as STEEM has done recently, then you turbo charge the process to a life-changing degree
Cheers
Good read. I always admit I am no pro at crypto but have begun to devote a lot of time into research. I have a question..
"So for example, compound interest is generated by swapping the profits between interest earned from lending, and mining contracts, as both pay out passive income in such a way which has a synergy to produce compound interest for both."
Do you mean to somehow set up a rig where an account's interest income is continuously being deposited into an account also pumping out interest which is fed back into the first account? I may be confused..
But hey, would be pretty nice for a whole lot of people who would love to free themselves and others from the grips of debt if Steem shot to 100$.
Cheers!
I've had some experience with cloud mining and the results are between horrible and catastrophic.
Hashflare seems to be working for some people but the point being that if you get passive income and diversify then you go from one source to two, to three, to many. Cloud mining is just another source.
Agreed, the point was I would find another way to diversify in :p
Was it real cloud mining or some bullshit like USI Tech?
Hashflare and Genesis mining