Previously, for other posts encouraging readers to save HBD at 12%, we calculated that you need roughly $500 in HBD to generate $1 per week in HBD income. Another way to look at this is that you need roughly $3050 in HBD at 12% to earn $1 HBD every day.
The Value of Savings
One of the lessons in the book, The Richest Man in Babylon, is to set your purse to fattening. This is such a fundamental component of personal finance. You can't invest if you don't have anything to invest.
Even if you have some investments, it still important to have some savings set aside. One reason is that if you have an emergency, you can draw from your savings rather than have to liquidate your investment. Another reason for having savings is to take advantage of opportunities such as the present market dip. You can't buy the dip without money.
Ultimately, in cases where your savings can earn interest, such as we have on HIVE, you would have savings to generate some degree of passive income. With a 12% return, you are looking at a standard with which to measure investment opportunities. Any opportunity that occurs will have to have at least 12% or more in returns to be worthwhile. Otherwise, why bother?
Setting a Target
Our simple calculation of $3050 renders us a target for savings. It also serves as a number we can use to calculate other targets. If, for example, I need to earn $1.75 HBD daily, then we can simply do the following:
3050 x 1.75 = $5337.5 HBD
Or, let's say we target $17 HBD daily
3050 x 17 = $51850 HBD
Obviously, these are not small targets. What this leaves out is the fact that you would be earning interest all of the way to reaching your target. And, it also leaves out that the interest is compounded along the way. So long as you are consistently saving and reinvesting your earnings, you will reach the target that much sooner. And, finally, if you have a market dip, you would have HBD to take advantage.
Start with a $1 HBD daily goal.
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I would be interested to see a comparison with earning in/converting 100% to HP, and which one is a better investment. I prefer to keep increasing my HP every day than keeping it in HBD fiat, since I believe that HIVE price increases will far surpass 12% + since my vote value grows a bit every day, it is like my vote value is receiving a sort of daily compound interest.
The only time I would keep in HBD is if I think a crash was about to happen/while the prices are very low, as the same HBD can buy a higher number of HIVE during the period the prices are low.
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I constantly have that very debate. I understand that it would be greatly beneficial to power up Hive rather than convert to HBD. In fact, once I claim HP, it stays powered up. The Hive that gets converted to HBD is from leases, not from rewards. And, HBD rewards also get added to Savings. I am simultaneously growing my HP and HBD.
I decided that I prefer to start growing my HBD Savings to stabilize the value of my accounts. Prices have been rather volatile this past year. HBD is a means for countering some of that volatility. I am saving HBD for practical reasons rather than mathematical. I could never spend HIVE without incurring capital gains and the headache of calculating cost basis. Whereas every HBD has the exact same cost basis today as it will have in 10 years. And, every HBD in interest will also have the same simplicity
Another practical matter is that I don't post too frequently. Thus, my Hive earnings are not consistent. HBD interest, on the other hand, is more consistent than my writing. If I have to sit here and write a post every day to earn Hive, it takes the fun out of the activity. I want to be able to build at my leisure and leave it to grow itself.
I think, mathematically, powering up all earnings might be the better way to maximize earnings. However, given my inconsistency, there wouldn't be much earnings to maximize. So, saving HBD takes into account my lack of drive to churn out posts and comments every day. For more driven Hivers, the power up approach might be more appropriate.
That is a good point, it does indeed matter how often you post, that changes the value proposition greatly. While I do still think that powering up will give slightly better rewards in the long term, yes since you post more rarely, I do think for you the difference may be rather small. And if having the HBDs in your account gives you more comfort and less stress, that is reason enough to stick with mostly/all HBD. :) So just keep doing what is best for you my friend!
But yeah, it is fun to think about, as there are enough variables that the calculations can only be estimated and not pinpointed exactly. I like to do the same thing with "yield farming" in DeFi, I love working out different possibilities by calculating projections for different possible choices to find the best value, while still keeping my risk low by sticking to the blue chip coins only. Fun little hobby, problem solving is very satisfying, ha ha.
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HBD savings is a great investment opportunity especially for someone that hates the huge rises and dips of traditional crypto coins.
The compounding effect all the way up is really nice as well.
Sound strategy. Now if only Splinterlands would stop giving me Chaos Legion card pack FOMO.
I know how crazy is it that I want to buy as many packs as I can, lol
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