I was just thinking...
If I was today to be faced with zero income, how long would my investments be a buffer for me before I was bone dry?
I am yet to do the math on this, but it isn't as long as I would probably hope - but what is?
It is hard with crypto since the fluctuations in value can be quite a wild ride up and down, but based on current prices and financial obligations, what amount of buffer is recommended - six months, a year, five years? Of course, the more the better.
One of the things with Hive (and a few other staking cryptos now) is the potential to earn on holdings, meaning that an income can be earned, even though there are no other incomes - kind of like a dividend of sorts. On Hive, earning via curation is like getting a dividend on staked tokens which will roughly return between 10 - 20 percent in tokens a year. For me though, I would need a "fair bit" more stake to be able to live off curation - but, in the push come to shove world of personal finance, it would be a welcome stream of income - although dicey due to price volatility.
What is interesting is that I read somewhere once that 40% of Americans are a paycheck away from homelessness, which is an incredible amount if true. While I don't know how they calculate this, it is scary to think that that percentage of people also are likely to have a relatively high person debt as well, meaning that losing a couple of paychecks will result in loan defaults and a potential knock-on collapse.
I don't know how many paychecks I am away from homelessness myself, but if I lost all work, I would be able to survive short-term, which will potentially tide me over til I found something else. While it would be scary AF to be in that situation currently, being able to survive immediately is somewhat of a relief.
The obvious problem is that if I was to lose all of my income, it would probably mean that the world is in quite a bit of turmoil and global economies are going to be highly uncertain. I guess the whole idea of investing to generate value is a process of risk management, trying to be prepared for an uncertain economic future in the same way that a prepper prepares for the future by stacking supplies. The idea of money is that one can buy those supplies without needing to store a large amount of them - but demand is of course going to push prices up, meaning one needs to be able to pay more than others are, if there is scarcity in supply.
With the recent Corona conditions, a lot of people started "stacking" supplies to make it through some period of time - mostly toilet paper. However, the shelves did empty of non-perishable and long storage food too.
I wonder how many looked to stack their investments too? Yeah, the stocks crashed and recovered fast, but how many moved across into an investment that they believe is "less perishable"?
I think that this is where crypto will come into play as while it has all the functionality of a currency, it can also have the attributes of a commodity like gold - but it isn't perishable and unlike gold where the "owned gold" is far greater than the actual gold in the world - owning crypto means to have the keys, to have the "physical" possession of it, even though it is only a few zeroes and ones.
Due to the current uncertainty, will more people be looking for the security of real ownership over that of conceptual ownership? Probably, which is why many people are looking to secure ownership of homes, even if they are a little pout of the way. It seems there is now a move toward ownership over lifestyle for some portion of the global population - Something that I think Hive encourages.
The changing reality we are now living is not only disrupting our physical lives, it is bringing into question all of our various concepts about why and how we do things - including what actually has value to us. While it is still going to be approached on a far-ranging spectrum - I think more people are going to start identifying holes in their approach to financial behaviors and look to shore up the weaknesses, with the major weakness being owning very little of value.
This will result in some percentage of people questioning what it means to actually own something and realizing that much of what they thought they owned, is not theirs at all as if they need it, someone can stop them from using it. It is much like "not your keys, it isn't yours" except this is where most of the value of investments lay - in areas that we don't actually have immediate access to.
This doesn't answer the question of how much is the minimum needed as a buffer, but I think that we should all be thinking about what constitutes ownership for us and how that is practically applied in times of need.
Taraz
[ Gen1: Hive ]