Image by Steve Buissinne from Pixabay
My intention from the start of this account half way through May 2020 was to show how not only you can start an account from nothing and still grow very decently on Hive, but also grow it into an investment portfolio that generates passive income.
As a lot of posts on LeoFinance are aimed at investors who can invest a couple hundred dollars or more, I’d like to share with you some thoughts about investing when you have a lot less to spend. Perhaps, like this account, you invest only what you earn from blogging on Hive. I’m planning to write a blog post about how I grow this account without investing any fiat money, but that is not the purpose of this post. The purpose of this post is to share with you some thoughts about how you can invest the little bit of crypto you have in such a way that you have an effective and balanced growth strategy.
The most important factor when you are investing is risk. In general the more risk you take the higher your reward could be, but also the higher the chance that you could loose a significant part of your investment. Therefore investors usually take a balanced approach, where most of their funds are in quite safe investments that generate 5-8% profit per year (APY). Then depending on their risk profile they invest perhaps 20% of their porfolio into a more profitable and risky asset and a very small percentage in a high risk asset that could go to 0 or go 10-100x.
In general it is quite easy to get a pretty safe 5-8% APY on your crypto. Platforms like Nexo, Celsius and a whole host of other centralised services give you this kind of a percentage if you just move your funds into their wallet.
You could also try to provide liquidity on uniswap and its competitors and get 10-50% profit or more, but with more risk as well. But ethereum gas fees will be a problem for even a medium size investor. The new Binance Smart Chain (BSC), which is basically a centralised version of ethereum has much lower fees, so that could be interesting even for a small investor. I have no experience with that, but I will certainly try it out when I receive the CUB AirDrop from the Leofinance team for the CUB token that exists on BSC.
Something that is a lot more risky and potentially also massively more profitable is investing in a token that is very underrated and cheap, but has the potential to go 10x to 100x or more. Bitcoin will likely not do that this year, but perhaps the Leo token can. Or what do you think about the Sportstalk token that is trying out some decentralized governance for its token?
Let’s say you have accumulated $50 worth of hive and hive-engine tokens, then a 15% profit per year is only $7,50. That is not going to help you pay the rent or mortgage for your house anytime soon. But investing all of that in the Sportstalk token could also be a bad idea, as the token price could go down if for some reason some big investors loose faith in the project.
As a small investor risk is your friend. I will give you an example. I bought 1000 SPT, the splintertalk token. Currently this is not much more than another hive-engine blogging token, but it is related to the Splinterlands game and I have heard rumors that there are plans for it. I have no idea what those plans are, but as it only did cost 1,36 Swap.Hive to get 1000 of them, I chose to invest. If I chose the wrong time to invest and the token loses 50% of its value or more, then I have lost perhaps 1 hive. But if they manage to turn this thing around, then the price might increase a lot more than 50%.
During the Hive hardfork from Steem, the Sports token was extremely cheap. I had some hope that the tribe would move to hive-engine, so I took the gamble to buy 100.000 Sports for like 2-3 Steem. A year later the price has gone up significantly and the same amount of Sports is now worth 25+ Hive. Next year it might be 250+ Hive, who knows?
The point I am trying to make is that it worth it to invest small amounts in certain tokens, from which you expect that the price could go up. As long as it is a small amount invested, you cannot loose much, but when the price goes up, you make nice gains. The potential loss is small, but the upside is very big.
Obiously you can take the gamble and invest everything in one very cheap token and hope for the best, but I would suggest that it is better to spread your chances over a couple tokens that you believe in.
Then I also suggest that you invest a bit in the better paying dividends tokens like UTOPIS, BRO, DHEDGE, INDEX etc. This way, even though the small risky investments might not pay off, at least you get a 20-50% increase over a year.
Then finally when you have only a little bit of Hive power, delegate some to projects that give you a good return on investment like delegating to @leo.voter, @ctpsb or @thisisawesome for example.
This way you should be able to increase the dollar value of your portfolio quite a bit without too much trouble.
Thank you for reading and do let me know if you have any questions, if you know of cool projects that are worth investing in.