Many people get caught in the trap of "saving in USD" or "saving in stablecoins". This is particularly true in high-inflation countries like Venezuela where people escape the national currency by turning to the United States Dollar. The truth is, however, that the dollar is losing 5.6% of its value in 2021. That's not even counting taxes.
If you're earning less than the inflation rate, you're losing value
Governments print money. "Stablecoins" being "stable" doesn't mean their value is unchanging. Whenever the US government prints another trillion dollars, the value of all USD in existence goes down. That is: stablecoins, international reserves, dollar bank accounts in the US, dollar bank accounts in any dollarized country, your Paypal account, your Patreon account, etc. Here's a chart with the historical inflation rate by year.
If you have $10,000 saved up, in 365 days, it'll still be $10,000, but it'll be worth the same as what is currently worth $9,440, and by next year, it'll be worth what is now $8,930, and so on and so forth. That is if inflation doesn't continue rising.
If you're paying taxes on your property, you're losing value
Some people buy real estate and just let it sit. Then they have to pay taxes on it every year, and they don't rent it to anyone, or do anything with it that generates value. What this means is that if you buy a $300,000 place, if the market value of homes does not change, you're still paying taxes, condominium or HOA fees, etc., so if you pay $10k a year on it, even if the value of your property increased by 8% that year, you're still losing (10k is 3.33% of $300k, + 5.6% = 8.93%)
So in that situation, even if you think you're earning, you're sitting on almost 1% loss.
Even if you rented your $300k property for $3000 a month (as is generally recommended), not even counting the taxes on this rent, if your property does not change in value, and you're paying $10k in property taxes, repairs and fees, you will make $36000 that year from rent, lose $16.8k to 5.6% inflation, to a total loss of $26.8k, having you only make $9.2k for a $300k property, which is a tiny bit more than 3%. Any extra expense will remove any earning you have, and you're barely even maintaining value at that rate.
If you're earning less than you could, and you're not getting enjoyment out of it, you're losing value
As people say all the time, time is the most important resource we have, and also one of the most limited.
If you spend days caring for the house mentioned above, breaking your back and suffering over conflicts, repairs, fees, etc., and you're barely even earning 3% on that money when you could've put it to better use, you're spending an undue amount of time, and you're not earning as much as you could, therefore losing value you could've had and investing your health for extremely low returns. Read about Opportunity Cost.
Recommendation
Research how much inflation will affect your holdings, income tax, sales tax, etc. Even Hive has inflation (which is automatically compensated if you have it powered up). If you're earning less than you estimate you will lose overall during the same period of time... you're losing value.
I'm planning on making a post comparing available cryptocurrency staking / pooling / farming dApps. In the meantime, if you're not investing, but want to look into it, read about HBD saving, Hive staking, Hive curation reward optimization, etc.
Warning
Be extra aware that MOST staking "schemes" you will find online are scams. Ask around before putting money into apps you find on the internet. Even if it's a smart contract, it can steal your funds. Don't go wild, read about the Bitconnect scam and invest smartly.
P.S. Ask any questions you may have. I read every comment!
Very insightful post, and something I think we all need to be reminded of. Inflation is part of the reason why I'm personally a supporter of using crypto tied to the value of precious metals such as gold and silver held in a vault somewhere, like PAXG does, if I have to use stablecoins for anything. It removes the worry about the USD money printer situation, which I don't have much trust on the people in control of.
That's a great strategy! Although its value fluctuates, it's proven to stand the trial of time vs inflation. I don't know if the mining volumes have gone up with our modern technologies, but with the size of our population, I don't think that's going to be an issue. Keep an eye on crypto taking value from gold, though! It is the superior currency and store of value, after all ;)
I am planning on actually staking some stablecoins once we get past the mania phase instead of just holding them in a wallet until the market deflates enough so I can buy in the market again.
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What do you mean about the mania phase? Due to HBD having a value over $1? I thought they'd stabilized it already ehh. Or are you waiting till the market goes down in a few months so you get an advantageous price?
I really wish my Mom would understand this. She's almost completely in cash (checking account earning 0%) and I've brought it up numerous times - parents can be stubborn sometimes :/
Same here, people just keep their stashes and see them disappear with time, thinking there's only spenditure to think about, but they're getting taxed by two countries: their own government through taxes, and the US government through printing. And they just hold, never invest one penny into anything. I'll keep trying to fix that. Maybe one day we'll all be prosperous. :)