Over the last few days, I decided to double-down on my SPS investment and buy some more, adding another 100K to my stake to take it to just shy of 750K. At 15% APR on SPS stake, this yields around 112,500 SPS p/y, or approximately 2350 dollar. That translates to 26 cents an hour.
Not a very good salary.
However, since this job is working 168 hours in a week, it translates into $45 a week in value gain at current prices. Around this neck of the woods, that isn't very much either, and is essentially a couple hours work at McDonald's. However, that yearly total works out to about a month worth of a low salary, which means it is an 8% payrise. However, I earn more than a low salary, so it is a smaller increase for me.
Maybe this is an interesting way to look at it, because the investment is currently valued at 15,500, which means that it is over 6 months of that low monthly salary, meaning that to get the value back, it will take 6.5 years at this rate. However, because of the APR of 15% getting rolled back into the stake, that would shorten the time to under 5 years. Which isn't a bad time for a break even on the investment, if the investment survives for that long. Of course, this is an "all things remaining equal" scenario and the hope is that at some point, SPS will increase in value as the Splinterlands economy shifts under the weight of the many variables that impact price.
But, because I am also playing the game and stake affects battle earnings, there is also some indeterminable (due to the many factors that affect outcomes) multiplier that means I will earn from the stake through APR, battle earnings and whatever else might be tied to it (like airdrops of some kind) in the future. It is hard to calculate what these things are worth, but if anything arrives on top, it is a bonus.
We all want a raise on our salary, but for most, the workplace isn't going to necessarily provide enough over the inflation rate, with most going well under at the moment. So, the increase has to come through personal investments and the percentage amount is determined by the willingness to expose ourselves to risk, speculating on the cost versus return. And, while it might not seem like it, essentially, this passive income is also work, because the capital that is invested was earned somewhere, by doing something.
If the investment fails, that work in the past was done for nothing. No benefit. This is why a lot of people don't want to invest and would rather spend, because at least then they get something out of the work they have performed, whether it be on living costs, entertainment, travel or drugs - at least there is something purchased. Whilst most people understand that an investment isn't throwing money down the drain, it doesn't come with the same dopamine kick of purchasing an item, making it harder to justify.
However, if we were to look at living off our investments, we'd have to consider what we needed to earn to cover costs without it eating into our capital. We'd also have to consider when we needed to earn, because for most, it isn't going to work to just take profits at the top of the bull, then wait five years for the next to come and do it again. There has to be a steady stream of income and there has to be some room and mechanisms in place to cover low periods also, as calculating income in the highs is not going to work out well in the lows, as we have seen many times over with people who choose to live off crypto.
Knowing our "floor" needs allows us to calculate how much we need to have incoming at the worst economic times, but at the best times of the economy, what provides the floor can provide far, far more. For instance, if SPS was to move to 10 cents in the bull market, the earnings shift to $1.30 p/h, $218 p/w and $11,300 p/y. At that point, the ROI is supercharged, with a capital payback period on todays prices at about 8 months.
Working out how much income you want is difficult, but working out how much you need is easy, as there is a floor value. Calculating all of those daily costs, monthly costs and covering for the extras should quickly find a baseline. From there, working out what kinds of capital are needed and where it needs to go in order to earn that amount is relatively easy, if understanding the risk and reward dynamics.
What makes it difficult however is that most of us will never have that lumpsum lottery win amount to invest, so we have to consistently not only save money, but be willing to spend money on investments. And this is hard because we don't get something directly for it, the return is in an unknown future and, there is a high risk for loss.
I know I might lose my investments in crypto and it would be very painful. However it also provides an opportunity to empower my family that I don't believe I have through traditional mechanisms. This is actually quite sad, because I am skilled and I do work hard, yet feel that I will never get rewarded adequately for it and will forever be tied to proving myself daily, never being able to find a balance point to rest. It is not a sign of a healthy economy when those who work hard, don't get rewarded, whilst some who do barely anything, get overrewarded.
This is not a complaint, it is actually the opposite. If we want to have a healthy economy, we have to build a healthy economy and that comes through supporting what we want, rather than what we don't. An economy that rewards positive activity is better than one that rewards negative activity or passivity. An economy that encourages broad ownership is better for all, than one that drives for monopoly. But, it is up to individuals to take ownership, which always comes with responsibility and risk.
One day, I hope I have enough capital investment returns to cover my needs in the bears. And enough understanding of what I need to do when the bull comes knocking, which is not what I have done in the past.
As it always does, Time will tell.
Taraz
[ Gen1: Hive ]
