Money is an integral part of life. We need it to purchase daily necessities - but when we start saving up, we recognize that money left in the bank will eventually lose its value. Year on year, if you just simply hold cash, it will devalue due to inflation. Thus, we use money to purchase assets to help us grow the value of our portfolio.
How do you know when you've made a good investment? With a combined 100+ years of investment experience at our team, we've tried almost every financial product out there and this is what we've learned.
The Key To Investing
When making an investment, we need to optimize for the following 4 factors.
Capital Gain
Does the overall value of your investment go up in price over time? Is it something with inherent utility and / or value that will be recognized by others when its time for you to sell?
Liquidity
Is your principal easily accessible to spend when need be? As mentioned, we need to spend money to thrive. Is it easy to take our money out without major penalties and spend freely?
Interest
What does it cost to maintain? Is there any risk involved? Do we have to spend money to keep the investment sound, or does the investment pay you interest?
Stop Loss
Is your principal protected? What happens if the value drops drastically, will it ever go down to zero?
Examples
Let's explore how common investments stack up within this matrix.
Watches
Many people buy watches hoping that they will retain their value and compound due to the rarity of the model. The liquidity is moderate, and a checkup once a year is enough to ensure the watch is well maintained and keeps its value.
Houses
We buy houses expecting capital gain. In Singapore, buying a condo in 2011 would have netted you an overall 30% increase in your capital. If you needed liquidity, you could get a mortgage. You can also earn from this asset through getting rental yield. Whether you make money depends on your cost of capital to maintain the investment, and the final price that you sold it at.
ETH
By itself, ETH is an asset that we purchase to benefit from the potential capital gain. In fact, if you purchased ETH in 2016, your investment would have compounded 1000x since. ETH is a very liquid asset, being able to convert to 100+ different crypto and fiat currencies at various exchanges, and it does not cost anything to maintain - nor do you earn anything at the same time. To earn from your asset, you have to put your ETH to work.
At staked.finance, we offer our users an opportunity to benefit from the upside of ETH's capital gain while earning double digit returns. You can get start and stop at any time, making it a 5 ⭐ investment across the 4 principles. And lastly, you're protected against big dips in ETH - you will have a stop loss to ensure your downside of ETH is not more than 15%. Wow.