Hello Project Hope community, I hope you are all very well. Today I want to share a post that is more of a calculation exercise in terms of compound interest. Yes, what they mention as something magical for the generation of wealth, and in a way, I think it is.
For those who are not clear about this term, I would like to leave here a basic concept of what this is.
- "Compound interest (or compound interest) is the interest on a loan or deposit calculated on the basis of initial principal and accrued interest from previous periods." * Source
In simpler words, you start an investment with $ 100 at 10% per month, after that first month, you no longer have 100 but $ 110. For the second month of investment, interest will be calculated based on 110, so you would end that second month with $ 121. I hope this has made the concept of "compound interest" clear.
Well, with the rise of the DeFi system, and DeFi 2.0 specifically, this represents a great way to monetize. I recently made a post in which I talked about a way to generate passive income using WisteriaSwap as an example.
They recently included in the platform a tool they have called HourGlass, where you can make your projections and calculations of the "Potential " earnings you would get by investing. I say "Potential " because it is necessary to know that cryptocurrencies have a great volatility, which largely determines the real profit margins.
In the image above you can see the following:
- 1: Amount of WST you are going to invest.
- 2: Daily percentage of mining profit (remember that this % will decrease progressively).
- 3: Current price of WST.
- 4: Estimated price of the token in the future.
We can vary these values to have a better notion of the profit margins, we can even make calculations up to 365 days.
In the image above you can see the profit projection in 30 days, based on a token at $382, in 30 days,, applying compound interest, I would have $1015 in total, which is totally crazy. It is always good to consider, and I will stress, that these values will always be subject to change. The price of the token can vary (go up or down), the daily % will vary as more people enter, this is normal, until it reaches a point where it stabilizes.
In the image below you can see a series of images in which you can see the profit margin based on a projection of 30, 60, 120 and 365 days, at a price of $350 each Wisteria token. Unbelievable, right?
To conclude, I ran a test, with a 5-month (150-day) projection, with an initial investment of $18.65, based on the current price of $373 and with an assumed price of $100 150 days from now. And yet, with compound interest, despite the hypothetical loss of over 60% of the token's value 150 days from now, I would end up with $22.24, thanks to compound interest..
I want to highlight several things in this post:
- Medium or long term investments in general terms are almost always safer.
- Compound interest is a valuable tool when it comes to building capital.
With this I end my publication, thank you very much for reading, I hope you enjoyed and benefited from this post.
Note: this is not financial advice, it is a publication with didactic and informative purposes. Before making an investment, you should always do your research..🧐
Twitter | Instagram | Discord | Youtube | Telegram: @josevas217
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hello @josevas217,
one of the greatest forces on this planet is called "compound interest", i believe that with compound interest and discipline you can in a prudent time frame create a fortune. in our culture quick wins are the most desired, but those who are truly committed to building capital will always seek to master compound interest.
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Yes, you have to focus and be constant, to be able to achieve capital that allows us to be stable is not something that is done overnight, it requires time and intelligence.
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Hello friend josevas217, an interesting concept that applied to the DeFi seems an excellent way to generate passive income, it really is surprising the current margin that this platform is leaving, we would have to wait how the token behaves over time, but if the project goes well it seems to be an excellent option.
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The reality is that most of the time prices go down until they reach a point where they are maintained. But as a model it is interesting.
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Greetings @ josevas217
A very precise and didactic explanation of the compounding intenses, for investment purposes as long as the price remains more or less stable it is magnificent and your profit would be exponential. However in years ago in Venezuela debts were charged with compound interest and it is where the banks were fast cash and tangible assets because the stop paying a fee and this is capitalized to make it increasingly difficult to pay the loan.
Thank you very much for sharing your publication
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I didn't know about the compound interest charge on bank loans, how crazy. This makes it impossible to pay off a debt.
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That was many years ago. What I mean is that just as it was difficult to repay loans and very profitable to use compound interest for investments. The two sides of the coin.
Greetings and thank you very much for sharing such an interesting publication.
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Greetings dear friend @josevas217 I think the explanation you made about the compound interest, no doubt, we must have knowledge about it, about all who invest in that type of platforms.
So long, have a great weekend.
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Thank you for commenting. I hope I have clarified a few things.
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Hello @josevas217, happy new year..!
This phrase represents a strategy that we must take into account to build capital and even to review the possible investment risks, because certainly the prices of cryptoassets are volatile and highly variable.
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Volatility is the big detail here that would make recovering your capital and making a profit a bit of a chore. And it could take a lot longer than expected.
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An interesting post especially for those who like me are starting in the world of investment and always, well in my case I have the doubt, how to make the investment gain interest without losing capital and it is really complicated to make the calculation. Thanks for this informative post
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I believe that every investment has its risk, it is something that goes hand in hand with investing, but being measured and having plans, we could "almost always" have profits in investments.
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Thanks for sharing more light on what compound interest is all about.
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Thank you por commenting
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