One of the areas web3 should really be working on is their risk tolerance level. By this, I mean making every investment opportunity here very realistic. That 100x, 10x or even 5x promises within a year or shorter won't save the day. This is pure gambling and an industrial speculation.
It is one advantage the traditional banking system is still using to hedge over this new tech. The faster it climbs, the faster it falls and Vice versa. Have you always observed how slow the fiat market is?. A good take home indeed.
Have you ever tried fixed deposits with banks? I could remember when I was trying to set up such an account and the annual interest was 3%. I mean, I was ALL hot with such a poor payout.
First, what is to be considered is how much I had to invest. $100 dollars means I will have a sum total of $103 dollars after 365 days. Including compounding, this should take me more than 20 years to achieve a 100% ROI. Not that juicy right? We will get back to this.
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Let me cite an example of what I came across today in one of my banking apps. It was an opportunity to invest in stocks that paid out some good dividends annually. Some paid 11%,15%, 20% and so on. There was this particular stock I saw that was paying up to 43% annually.
Ok, I had to click through to see what they were doing, before I even had to read too much, the heading warning was there, it was very unstable. Of course there could be a stock price decline before my 365 days Circle is even complete.
So what have I learned so far? The more the more the percentage ROI, the more the risk, the less the percentage ROI, the less the risk. This bounces me back to another very valuable question, how then can an investor stay in profit? Learn how to compound yourself out of risk.
You heard me right. The first move of every good investor is realistic timing to exit with profit. note the word ‘realistic timing’.
Yes, I must say, a good opportunity is closed in with good capital. Let's come back to the traditional banking sector first before going into the crypto space. Banking apps are NOW paying APR ranging from 15 to 20% annually.
This is one huge opportunity. This means with N1 million you could make an extra N1 million in three years or less. Does an extra N1 million look too small? Ok, it also means with N10 million, you are entitled to an extra N10 million 3 years or less (compounding effect).
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It makes sense from here, I have come to realize that the best way to risk is first finding a reputable opportunity and going long into a reasonable period with huge capital coupled with compounding tactics. So yes, investment needs capital, this is how you beat down risk.
So within a few years, you can get out your capital through smart compounding. All that is left is what you’ve compounded to start over with another compounding. I have covered an article concerning the need to think long if actually you are or perhaps want to become an investor. There is no shortcoming, you will have to exercise a reasonable waiting time.
It is left for you to decide how profitable you want the waiting time to look like. Even that 3% may look small, but turning $10 billion to extra $10 billion in around 20 years is a good business. You can retire if you want to, unless you are spending your days struggling for the world richest list. Us here, we just want to make the money and fulfill purpose, you can keep the list.
To conclude, let me add, as I earlier said, this is how web3 should behave. I so much thank the Hive ecosystem for introducing HBD APR.
Why I want to use it is that it has traditional characteristics bundled into the web3 ecosystem. 15% APR is a massive payout, it is left for web3 to change the mentality of new incoming investors. This is not an ecosystem of 20x, 200x or 2000x overnight. Web3 is not a casino.
The more we keep pushing for speculation the easier investors will lose attention for whatever is going on here. The idea is simple: for mature investors to stay and invest, promises, dividends, payout must be realistic both in finance and time frame. It will be left for them to compound themselves out of every risk. From here, money will be able to stay long enough in this ecosystem for proper growth.
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