I’ve been studying how good it would be to park some money on some crypto defied projects and how much percent growth a sum of money would have if you get into some DEFI projects with Stablecoins. Let’s say, investing $10,000 USD in crypto in a risk-adverse way and what percentage of return you would get by lending it in crypto stablecoins, or providing liquidity to pools that have stable coin pairs. And how this compares with just investing that same amount of money in the stock market and getting dividends and capital appreciation.
It results that crypto would only get you so far. For example, lending the money would get you at 2% a year, or maybe even 3%. If you want to provide liquidity call Matt the percentage return gets way better, as long as you have a lot of volume in the pool. It would be fair to say that you can be in the 3% to five or even 7% range for a year.
Investing only in stable coins
Of course, we are assuming an investment only in a stable coins. Where we don’t get any redistribution of the coins, best known as in permanent loss, and also were the chances of having any situation where your money disappears is minimum.
This percentage of income wouldn’t be that bad for someone without the possibility of investing money in any other Also, this is accounting for the safest of the safest investments, as safe as it can be, considering that crypto is a pretty risky place.
How does a risk-adverse crypto investment compares with dividend stocks
Now, to understand and put in perspective this kind of percentage returns, you have to evaluate and compare against a more typical investment in dividend stocks. I have a sense that returns for the long term of about 8% to 12% would be normal for whoever is willing to take the risk of investing in stocks, where you typically get a percentage amount in dividends and the rest in capital gains.
Other types of investments, e.g. bonds, get a lower percentage, ranging 2% to 4% for long periods of times. So, bondholders will get less because they don’t want the capital to fluctuate, but the type of safety we are analyzing here doesn’t relate to the safety you get in bonds where your capital doesn’t diminish because of the volatility in the market. It is more related to the placing your capital in a secure place where you know it’s not gonna disappear.
How good are you at making money
I, myself, have learned that my money can produce about the same percentage as the average through the years, so an investment in Crypto where you stay risk-adverse doesn’t seem to match or even get close to this capacity that I have to gain of produce some more money with my capital.
Not that I am not recommending investing in Crypto with stablecoins, I say understand that some people around the world couldn’t even have access to a brokerage account. So, if crypto is your only option, I believe you’re still looking at a stable 2 to 5% return per year, which is pretty darn good.