Frequent followers of Mr and Mrs Budget would know that over the past 5 months since November, we have started to invest in cryptocurrency. We started putting our funds into crypto as ways to partake in the bull market since everything is rising.
Fast forward to today, just 5 months after we started really investing into crypto, the profits from our crypto portfolio has taken over the total profits we have made in equity investment our entire life.
The size of our crypto portfolio has also swell to overtake our equity portfolio as we had recently just taken profit off some of our US stocks to pour them into cryptocurrency.
|Crypto portfolio in November 2020:||$24,374.26|
|Crypto portfolio in April 2021:||$268,984.90|
|Total Profit:||$142,493.90 (+112%)|
|Best performing asset class including equity:||BNB +530% since February 2021|
It is as if we have taken the red pill in matrix, where we are now exposed to a whole new world.
And we wanted to share some quick facts we learnt in cryptocurrency so that you have a very basic idea of what is happening in the crypto world.
High Yield Interest Accounts
Similar as how you would earn interest rates on your bank savings account, you can also earn interest rate for your idle cryptocurrencies.
Similar to the banking system, these companies who operate high yield crypto savings accounts generate their cashflow by lending out your crypto at a higher rate to institutions or traders. These crypto loans are all collateralised hence it should be quite safe as long as the underlying collateral (crypto) are still valuable. Borrowers have to pledge their crypto in order to borrow money, so your capital is backed with collaterals.
There are a few popular high yield crypto savings account: Nexo, Blockfi and Gemini, where you can earn up to double digit interest rate a year just by putting your crypto there.
The best part? These interest rates are depositted daily and you can withdraw your crypto and your interest anytime, anyday.
This is so much better than the traditional banks where you may need to go through certain hoops to earn tiered interest rates, and your interest rates are banked in monthly.
For example, DBS multiplier requires you to credit your salary and perform up to 4 “tasks” with the bank before you can earn the full 2% a year.
On the other hand, with Nexo for example, you just need transfer your bitcoin in and starting earning 5% per annum, with interest creditted daily. That’s all you have to do.
USDT earns up to 5% in Binance
For a lot of investors, many might be worried that crypto might crash and hence even if crypto gives you a high yield, if the value drops, you might lose everything and the earned interest would be worth nothing.
If you are worried about that, you will be happy to know that USDT, which is pegged to USD, earns more than 5% a year on Binance, the largest crypto exchange in the world!
What it means is that, you can convert your USD1000 to USDT1000, and simply put it in your Binance account (or Nexo) and earn 5% a year, with interest creditted daily!
Even if bitcoin crashes in value, 1USDT will always be worth USD1 (in most cases).
So USDT is actually a good currency to move your money to to earn up to 5-6% interest rate per year. This is actually even better than putting your money into CPFSA which locks you up for a lifetime.
|Earns >5% APY||Earns 4% APY||Earns 0.05 – 2%APY|
|Withdraw anytime||Withdrawal at age 55||Withdraw anytime|
|Interest creditted daily||Interest creditted annually||Interest creditted monthly|
To be honest, this changes our view of savings account and CPF voluntary top up entirely and we are thinking to move our fiat money into the crypto ecosystem even more.
Cryptocurrency can be staked to earn rewards
Another thing we learnt about the cryptocurrency world is that, your crypto can be used to “staked” to earn rewards. Simply put, staking is the act of locking cryptocurrencies to receive rewards.
Since we are on Binance, Binance offers staking services where you can “stake” or just “allocate” your crypto into upcoming projects and in return, you are rewarded with various rewards (usually coins of the projects).
You still own your “staked” crypto and you can withdraw it anytime, anyday. Think of it as a “flexible” deposit where you deposit your crypto into these projects.
Another way to think of it is that, instead of earning the normal 5% (depending on which you have) interest rate on your cryptocurrency, you can earn coins of other new projects which you can then sell them in the exchange or simply just hold them until the coin grows in value.
After discovering about staking, staking to me is like compound interest turbo charged – you stake your coins to earn other coins, and with the earned coins, you can then stake them again.
Tokenized shares with zero commission
Another thing which we found out is that, Binance recently launched tokenized shares with zero commission, starting with Tesla.
What this means is that, you can buy fractional Tesla tokens on Binance and the price of the Tesla tokens mirrors the actual price of Tesla.
These tokens are held in custodian accounts and is actually similar in nature in how you would buy shares on your Tiger Brokers or Saxo Markets.
The difference is that, with tokenized shares, you can buy fractional shares ($10 worth of tesla token for example). The best part? There are zero commission.
What it also means is that, you can now trade stocks using crypto.
Ending Thoughts And Moving Forward
So these are just some very basic things that is happening in the crypto world right now – and things that we have come to accept in the traditional finance world are all being disrupted and challenged in the crypto world:
- Why settle for 2% interest rate in the world?
- Why need to wait for your money to be transferred after 1-3 working days?
- Why do we need to pay a $1 – $25 brokerage fee for buying a stock?
- Why do we need to wait for monthly interest rate creditting?
- Why cant we buy $10 worth of Tesla share?
To be honest, we often ask ourselves too – are we in a massive crypto bubble?
To give more context, the total market cap of cryptocurrency is now over $2 trillion. The US stock market cap is at $49 trillion, and the gold market cap is at $11 trillion.
With the volume of crypto growing everyday along with the different financial use cases, I think we are still early in crypto and blockchain applications. Institutions are busy trying to buy more cryptocurrency, and bitcoin ETFs are being launched every other month.
Even if crypto crashes, it will find its way back into the financial system again because those that have had a taste of it, will never go back to the traditional finance world.
Another question that we use to reassure ourselves is that – are we late in the adoption of crypto? Not yet.
And we often ask ourselves, what if crypto is the future of the financial world? Are we willing to risk the upside gain?
Moving forward, we suspect we will continue to move our fiat currency into the crypto world to compound our money even faster. As we have already contributed to CPFSA this year, moving forward, we will have to make a stronger case of committing our annual top up to our SA account.
We will also be building up our crypto portfolio by averaging up on our current crypto holdings, as well as buying more coins.
BIG DISCLAIMER & REFERRAL LINK
And with all of our articles here, again we’d like to reiterate that we have no financial background and we are not licensed to give any advices.
These are just our thoughts and observations with the crypto world and obviously we are biased. Cryptocurrency investment is very risky and please do read up more about this before getting involved in the space.
And of course, this is the bull market for cryptocurrency and hence we may sound and look like geniuses and gurus. Hence we want to caution you what in a bull market – everyone is a genius, so do read up on your own. If the crypto market crashes now, we will instantly look like idiots. 🙂
PPS: If you do make some money and got started on crypto because of us, and if you are feeling generous, feel free to tip some BTCs over to us at wallet: 178mAi4Voyhv3M8AApjqqc4BriKsopfCoV
or zilinga (lowest transaction fee): zil1ums3wuqcarr30c83wmne8ujyp36nulrj7vycrr