How Do You Protect/Invest Your Fiat During This High-Inflation Period?
After reading @ph1102's post earlier today, I realized we don't need to make an effort to beat inflation in the crypto sphere using some simple instruments everyone understands and accounts under our control. All we need is something like HBD, which at 20% APR beats inflation for any country in the developed world.
But since HBD's peg is 1 USD worth of HIVE, if it beats the inflation for USD, that is enough. And it does. That is an exceptional instrument, for anyone in the world but especially for those living in a country experiencing hyperinflation.
Try doing that with your money in the bank! I have some liquid funds in my national currency at the bank for current bills, a buffer, and emergencies.
I'm currently losing 10% to inflation per year after they increased the interest to something like 5% annually. Yes, official inflation in our country is 15-16%. I lost track of their exact numbers put out because the reality in the market for people buying everyday stuff is much worse.
There is the option to lose "only" around 8% if instead of keeping the money liquid in the savings account you make a term deposit. But I rely on having my money liquid at any time. These funds at least.
Some months ago, our government issued two series of government bonds for the population at around 7-8% interest per year. At the time the inflation was below 10%. I considered buying into those (then, banks offered an interest of 3-4% max), but again, that meant blocking my current/emergency/buffer liquidities for 1 or 3 years, which I wasn't willing to do, not even partially.
I do have an account from where I can invest fiat in various financial instruments. But somehow, I found myself these days buying bitcoin CFD from that account too. And keeping some fiat for whatever else comes up. So, in the end, I circled back to cryptocurrency.
How do you protect/invest your fiat in these troubled times?
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HBD is powerful. Not only does it provide 20% return, it also hedges against one's currency loss due to the decline versus the USD.
Getting into USD denominated assets, including HBD, is a great way to protect oneself when the dollar is running.
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I certainly agree. I even thought to buy some (more) HBD with the buffer fiat I have in the bank, but I think of that as risky if the offramps become a (temporary) issue at some point.
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Thanks for the great advice. We all need ways to survive in these inflationary times.
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We'll get over it, even if it's not easy now.
Probably the best option now, especially considering that the bear market is over.
Yeah, that's what I was thinking, too much downside from here is improbable.
How do you buy HBD directly? Or the most straight forward way?
I think the most direct route is via Bittrex. If they reactivated HBD there. They are onramp for fiat and they have (occasional) support for HBD.
Any excess fiat I have is used to purchase precious metals (mainly gold and silver), I just keep stacking them instead of letting the unused fiat 'melting away' in the bank.
How are precious metals holding up value these days? I really don't know, since I don't own any of them as savings/hedging.
The spot price of gold (and silver also) has fluctuated during these periods of inflation and economic upheavals. However, its value as an asset class has remained relatively stable.
Ok, thanks.
All of my savings are only in Hive at the moment. God, if someone had told me that two years ago, I would have laughed. 😅 !LOLZ Now I laugh when people tell me about the risks of keeping their money under their pillow...
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Only keep enough in cash for day to day, DCA the rest in underpriced assets.
And if you need liquidities? What do you sell?
Rarely need liquidity. Day job pays good enough.
Can always sell stocks and mutual funds, or use credit line.
Goes back to, diversification and don’t risk more than you can afford.
Stock and other investment options are great way to protect our hard earned money against inflation. But, of course, there is also the option of converting them into stable coins - most specially HBD. 🙂
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I have an investment account, but instead of stocks (I don't have options there), I ended up buying bitcoin. :)
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Keeping my money invested into assets. I do think HBD is a great option but I don't know how long the 20% will last because I am sure it will drop in the future when there is more HBD in the savings/circulation.
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That sounds like a good strategy. In my case, I want these amounts liquid and preferably in fiat to avoid any potential issues regarding offramps when I need the money.
Thanks for the reminder! Indeed HBD is the tool
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Yes, HBD is a serious anti-inflationary solution. I will probably start adding more to my savings.
I think HBD is sorely underutilized by Hive members.
Its liquidity is not too bad, with only three days to take out of savings.
Good thoughts, Adrian.
!CTP
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Exactly. And that would be only one use case for HBD, the savings APR. We should extend it much more as a transactional token in the Hive ecosystem (at least).
If I wanted to cash out cryptocurrency from the centralized exchange I can use, I would need to wait 5 to 7 days for the transaction to clear. Many situations won't allow me to wait 5 tp 7 days.
This is one reason some people store wealth in precious metals. Although currently they aren't doing as well other asset classes in terms of gains or ROI, they can be liquidated immediately compared to Certificates of Deposit or even HBD (with its 3.5 day waiting period).
Gold and silver are always in demand. Even platinum and palladium have their buyers; if they didn't, there wouldn't be so much theft of catalytic converters.
In the end, Cash is King. When it comes to alternatives leading to cash, we need to use whatever we're comfortable using to get that cash on short notice. Not everyone believes this, but precious metals still have their place as a tool if not as part of a portfolio.
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I didn't know precious metals can be liquidated so easily. Do you mean the physical ones or the paper ones?
Yeah, that's why I hesitate to buy into anything else with those funds. I'd rather have them at hand immediately.
Physical-- paper is for the banks and other professionals, and paper is more of a speculative tool than an asset. For most of us here, physical metal is what we need; paper metal can always be cancelled or rendered worthless.
For people with "small" amounts of precious metals, a local coin dealer or pawn shop will buy the metals at around 90%+ of the spot price for "circulating" coins or spot price plus a smaller premium than the original for bullion and rounds. Precious metals purchased as numismatics or collectibles will have whatever their collectible price is at the time of sale.
What's a "small" amount of precious metals? I don't know exactly, but it's safe to say that enough for USD 3K is reasonable. It could be much more (maybe USD 10K), but it depends on the liquidity of the coin dealer or pawn shop.
If what you want to sell is out of the ordinary for a coin dealer or pawn shop (say, a 2 kilogram bar of gold), the transaction could take longer due to liquidity or trying to find a buyer for it. For most of us here, we would be dealing with "small" amounts.
Transactions take a bit of time due to verification of the metal's authenticity, but selling them for cash takes about as long as a lunch break: Walk in, sell, wait, get cash, then walk out. It's like going to a bank to exchange a roll of coins for cash. Speaking of banks, don't sell precious metals there-- they will go by face value, not spot price.
A bit of paperwork is involved at a local coin dealer or pawn shop, but that can't be helped.
(Jewelry is handled differently from coins, and I don't know how to deal with jewelry; someone else would need to explain the buying and selling of jewelry containing precious metals.)
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Thanks for the extensive explanation! I think in our country either small jewelry shops or pawn shops would buy precious metals. Not at all up to date with this.
If you have precious metals you want (or need) to sell, find out what the maximum is for the shop you visit, then plan accordingly.
If you want to buy precious metals, you can buy coins/rounds/ingots at whatever quantity makes sense for your needs. An example is 1 troy ounce of gold each month, or an equivalent local currency value of silver; you can scale up or down as you see fit.
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It sounds like you treat them as a savings account, except by cutting off banks from the equation and having them in their physical form. Buy regularly when you have an excess of funds, and sell when you need money.
That's what precious metals are for: savings and wealth preservation. Ideally you sell when the time is right (just as in cryptocurrency or any other market). Things like auto collisions or property damage leave a person with no choice but to sell immediately, regardless of the market price.
In a free and fair market, precious metals would be hovering near their ATHs. Paper-- where futures contracts-- is where the price manipulation takes place, but physical is what regular people need precisely because of the savings aspect of precious metals.
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