Published via Ecency

So I did search the topic on Hive, but did not see anything recent on the topic.

OK, it is fairly obvious that there is not as much traffic on Hive as there should be, but that is a whole other story!

Bottom line - do people still attempt to store up a nice store of HBD savings for the purpose of earning interest?

I see that the APR is now at 12% which is probably better than a stick in the eye. Lower than it used to be, but still considerable enough that it must be factored in as something that must be considered.

I have been in that headspace on Hive where I am still here but real life things made me fall flat on my face and I went from being highly staked and valuable to where I am now. Losing the ground that I had gained over 4 years.

So I am still active on a weekly basis, but it is hard to pick yourself up from there again.

Looking at HBD Savings is something that may help me get there again. There are probably other, better things from me to stack my funds into to earn, but I also need something that is as passive as possible.

HBD Savings is very passive. I think we all dream about passive income earning us a decent sum of money or in a dream-come-true that passive income pays our living and that we can live like trust-fund babies.

Yeah right.

So of course I start doing the math and there in lies the rub.

APR is at 12%. So 12% interest earned in a year of stake. So 1% per month. Of course if you claim interest every 30 days than after a full year the true APR will compound into around... (doing math) around 13.38% APR over a year of compound and 30 day claims.

If you have $100 in savings, then the base APR says you will make $12, the compound then is $13.38.

Not bad percentage-wise for something that you have saved up and it is passive.

The thing to remember about active and passive income is that it requires many multitudes of effort to net a passive income result rather than working every day for active income. Each source of passive income must have a meaningful ratio to determine just what you will need to do, in order to earn a certain amount of passive income.

$100 in the example above is R1634 in South Africa at the time of writing this article. This is a significant amount of money. It is what is equal to a week's worth of groceries plus a few days of the electric bill.

Let's turn this around now into workable numbers.

$100 is $1 a month in interest, more or less. If we were to USE the interest then there would be no compounding. In order to use passive income as income, we can no longer compound, so we must discount it in this thought experiment.

So the next step is to determine what is necessary in order to create a meaningful passive income.

$1 a month means very little. R16.34 or R0.54c a day. I cannot do anything useful with this amount - So I must adjust my savings.

On the Pick n Pay (a local chain store) app, Albany Brown bread is R15.99, though I prefer Sasko R17.99 and if I prefer a Low GI Sasko at R23.99

So... I have a family of 5. For us to use a loaf of bread a day is not strange. I would need R480 a month for the Albany cheap loaf and R720 a month for the Low GI bread.

BTW, this is not the most expensive bread in the land here. If you are the top earners in South Africa and you do all your shopping at Woolworths, the paying R38 for a loaf of bread is possible, so that would cost around R1140 a month... just for bread.

Conversely, there are cheaper loaves of bread than the cheapest Pick n Pay loaf... but this is often highly processed toaster-bread loaves. The slices are tiny and would not satiate the hunger of a teenage boy to eat two slices and toppings. Let's use the Pick n Pay loaves as a happy medium.

So... if I wanted to afford a loaf of bread passively with HBD, how much would I need in savings? And we will pretend to live in a vacuum and only work on the static numbers for now and not worry about inflation.

12% APR makes it rather easy because it is 1% a month so you just need to x100 whatever it is you want.

For the Albany loaf R48,000 is needed in savings, approx 3155 HBD.
For the Low GI that I prefer I would need R72,000 or 4733 HBD.
(Or a whopping 7495 HBD for the most expensive bread at Woolworths.)

So... R72,000 vs R24 a day. The ratio is 1:3000.
I mean, I could have gotten there without using the bread and just gone for the pure math but it would not evoke context.

To clarify, if you work and get R1 a day, you need 3000x times this amount in HBD savings to do the same passively and live off the interest. But R1 is nothing and can't afford you anything so I will need to save up an amount that is in multiples of my monthly income in order to achieve a loaf of bread per day... passively.

So that is the thing that needs to be understood. Exactly how HUGE passive income is, even on a small scale.

Perhaps trying to afford something per day is too big an ask, maybe a monthly cost would be more simple.

If I took my one of my most basic monthly bills, like my fibre internet account, I will need to have a saving of R66,000 or 4339 HBD to achieve that passively. Thus, never needing to pay for internet out of my salary again.

BTW, having 4339 in HBD savings would put me in the top 160 Hive users with HBD Savings.

If I wanted to pay my Rent... I would need to be top 15... 68,376 HBD or R1,040,000 to live rent free. I would need around R2,000,000 to buy a house... and still pay property tax and rates... and pay for maintenance... so on that scale it is pretty good!

But nobody is going to give a loan for that amount of money and if they did, the repayment over 30 years would be double the amount needed to rent the same property... so that is not an option.

But, bottom line is, if you happened to make that sort of cash in a lump, the passive income to pay for accommodation seems to be better than ownership/liability in one way of thinking.

Anyway... these are some thoughts. I would be keen to hear from others what they think about this topic!

Thank you for reading!

Cheers!
@zakludick