Transferring wealth from crypto to abank account and other alternative investment strategies
As the crypto prices start to recover, some of us may want to take back a part of the profits and invest them, creating another source of passive income. But is this even possible in the current market? It is bearish all around us, not only in the crypto market. Why, would you ask? It is funny how, just 4 years ago, we were like fully recovered from the 2008 crisis, and the stuff was working well. We used to have 4-5% interest on bank saving accounts.
(St Paul Church - Bedford)
As for shares and mutual funds, let's take a look at the average return for S&P 500:
2008 -36.55
2009 25.94%
2010 14.82%
2011 2.10%
2012 15.89%
2013 32.15%
2014 13.52%
2015 1.38%
2016 11.77%
2017 21.61%
2018 -4.23%
2019 31.21%
2020 18.02%
2021 28.47%
As you can see, checking the past decade, through 2022, the annualized performance of the S&P 500 was 14.5%. 2008 was a rough year, but after that, we got double digits most of the years, except a 2.1% in 2011, a 1.38% in 2015, and a negative -4.23% in 2018. So, investing in shares long-term still seems to work, even with Coronavirus, the war in Ukraine, gas and petrol prices, and the incoming global crisis. If we look for even longer, checking the last 20 years (2001-2021), the average annualized return on the S&P 500 is 9.87%. This is not bad, compared with real estate. At least for the UK, London had a surprisingly low 2.83% rental yield, largely because of the insane property prices. As the experts considered a good property rental yield is between 5% and 8%, there are few regions where you can really get this, and they are:
Manchester 7.29%
Nottingham 7.28%
Portsmouth 7.07%
Bristol 6.88%
Birmingham 6.68%
Newcastle 6.47%
Leeds 6.22%
Cardiff£ 6.18%
Brighton 6.00%
Southampton 5.71%
Liverpool 5,66%
(Firestarter - by Dave Roth)
However, if you are not living in the same area, the alternative is to get a real estate company to manage the property, and this will cost you 7% of your rent. Which means that all of your profit is kind of going away. Renting real estate is a complicated thing, and luck is an important factor in it, as a broken boiler or a roof issue can take away your 5-year profit. Finding good tenants is also important, so, when I think about renting properties, you need luck, luck, and luck again.
Gold, silver, and other precious metals, I don't have a lot of experience here. Some people like to diversify into it, but, I do not see it as a viable alternative to fund your early retirement. Another kind of more outlandish investments, such as wine, whiskey, art, or even movies? I presume you need to really be a connoisseur, to know your stuff around it. I am a firm believer or the idea that you should only invest your money in business models that you understand, or to learn to understand your future investments before you start to invest. Goes both ways, but basically, if you do not know what that is about, stay away. Crypto is all good and potentially life-changing, but things can always turn 180%, with different governments now promoting it aggressively in their CBDC, so, by having a footing in the real world, and buying for example a small amount of let's say Vanguard SP500 mutual fund every month, you may be able to create a different kind of income too. The dividends allowance in the UK is £2000, and you pay no tax for it. This is easily achievable, if you think about it, especially if you made your millions in crypto (wishful thinking, but why now?). At a 10% average yearly return, that is only 20-30K invested in shares. This possibility is definitely worth exploring.
What about you, how do you manage your extra funds, and what strategy do you use to transfer wealth from online to real world?
