The Flare Perpetual Money Machine

[brianwalden]

Back in 2014 I made wallets for my kids and gave them some XRP (wait, one kid wasnt conceived yet, I must have done that one afterwards). I also send DAD (dadbucks issued by me) to their wallets when they get money for birthdays and holidays. But the money basically just sits there doing nothing.

With Flare (and with DeFi in general, but Ethereum's fees have always made it impractical for me with smaller amounts) I will now be able to put that money to work. They'll get FLR to match their XRP, they can convert their XRP to FXRP, and I can call back their dadbucks and send them a Flare stablecoin instead.

Between the rewards programs in Flare and the various DeFi apps, if that can grow 10% each year, that $10K becomes $320K after 50 years. I think 10% is a very reasonable return in crypto. If you hold cryptos, they appreciate in the long run, and you can earn interest/yield/rewards on top of that the various DeFi projects. Stablecoins are depreciating, but usually garner higher interest rates. If you take that original $10K and add $1K to it each year, it'll be worth over 2M in 50 years. That's the type of money where you can start drawing a full yearly salary from your money's yearly return.

Now, no one wants to scrimp and save until they're elderly. But if you can aim for 10% annual growth and diversify so that maybe you have one coin that moons and bumps your portfolio value up, then you start talking about real money sooner. Let's say that in that first decade of your plan, one coin has a good run and bumps your portfolio value up to say 200K after 10 years, it will now only take 35 years in total, instead of 50, (starting with $10K and adding $1K per year) to grow to about $2M.

The point I think I'm trying to make is that we can start thinking about not just getting rich and retiring, but making a source of wealth that can be passed down to our family for generations. If you can let it grow to the point where you can draw less from it then it earns in a year, you've got a perpetual endowment.

Note 1: Don't forget about taxes. Even if you're not selling you need to pay taxes on any interest, yield, etc. that you receive.

Note 2: Learn from the rich. When you need cash, don't sell assets from your portfolio. Use them to get a loan. That way you both avoid creating a taxable event and you don't spend the golden goose that's earning you money year over year. As long as your portfolio earns more than the loan plus interest, you can pay it off and still grow (just at a slower rate).

Edited April 22, 2021 by brianwalden

[CarsCoffee]

@brianwaldenGreat strategy!  If one does as you've suggested AND works a traditional 9-5 job for 20-30 years and stashes some payroll into a company matching 401k plan......one could live a very comfortable life. 

[Seoulite]

@brianwalden Thanks Brian for sharing your thoughts. I think one reason crypto is so attractive to many (especially younger people) is that the existing routes to asset/wealth accumulation are just so unattractive or impossible at the moment. Real estate prices are so high, and seem so inflated, that even if I had the money to buy outright right now I would be reluctant because the market seems overheated. Same with stocks. These current stocks prices are so obviously fake it's almost funny, but at some point reality has to assert itself. Crypto is one of the only areas where young people in big cities have a fighting chance of getting in and making some returns.

Now Flare comes along and says now you can have an asset that not only has the potential for appreciation but also gives you access to compounding interest. This is very attractive to me. Having money in the bank just seems like a mug's game now. That's not a good thing and I wish it wasn't so. I would've been happy with a boomer route of getting a job out of high school, buying a house, and raising a family on one income. But that's not how it is for us. We have to gamble with magic internet money.

[brianwalden]

9 hours ago, Seoulite said:

@brianwalden Thanks Brian for sharing your thoughts. I think one reason crypto is so attractive to many (especially younger people) is that the existing routes to asset/wealth accumulation are just so unattractive or impossible at the moment. Real estate prices are so high, and seem so inflated, that even if I had the money to buy outright right now I would be reluctant because the market seems overheated. Same with stocks. These current stocks prices are so obviously fake it's almost funny, but at some point reality has to assert itself. Crypto is one of the only areas where young people in big cities have a fighting chance of getting in and making some returns.

Now Flare comes along and says now you can have an asset that not only has the potential for appreciation but also gives you access to compounding interest. This is very attractive to me. Having money in the bank just seems like a mug's game now. That's not a good thing and I wish it wasn't so. I would've been happy with a boomer route of getting a job out of high school, buying a house, and raising a family on one income. But that's not how it is for us. We have to gamble with magic internet money.

Yes. And your strategy doesn't have to be super long like what I used. It's about getting to the point where you can draw money off your investment without depleting it. It might only take like a $200K portfolio to be able withdraw $10K a year from it every year while it still grows. You can use that to pay off debt or get a mortgage or whatever your goals are.