Understanding Passive Income Isn't So Passive
We all love passive income or at least the thought of it. But there's really no such thing. Every form of passive income method requires a number of things.
- Upfront investment
- Upfront production cost
- Time investment
- Continued time investment
and any other number of factors depending on what type of passive income methods you're after.
While it's important to know this and take note of this when planning out your passive income streams there's another topic within it that I've recently started to realize for myself.
Not every passive income method is worth it
Understanding when you should move assets and comparing the risks to rewards. Most if not all passive income comes with risk. The risk of that asset class going broke, that stock crashing, dividends stop being paid for whatever reason or lowered, an obsolete product which no longer produces or simply a new asset that immerges and offers a better return.
I'm sure many of you like myself only have so much in assets to move around be it $100, $1,000, $10,000 or $100,000+ it really makes no difference the only thing that matters is to take that money and compound it into MOAR money lol. As crazy as it sounds that's the game we all play in our lives be it with FIAT or Crypto acquiring assets is in our blood. The one thing against everyone however is... TIME yes time the age old thing that kills us all and limits what we can do.
Because of this huge factor you need to make sure you stack is earning as much as possible with as little risk as possible. This is the golden ticket and part of that is to realize when it's time to move from asset A to asset B by removing all, partial or most of the assets from A and moving them to B.
Let me run this example by you. Let's say you have $1,000 which is currently sitting in a dividend earning token and the APR on that is 25%. It provides you a good mix of other assets but the mix is so wide that it doesn't really amount to something or your simply not interested in those other ones.
Then a new project comes along offering up 30% APR it might not seem like much but by moving your assets to that project now nets you an additional 5% APR which compounds and increasing your value that much faster.
This is where passive income starts to be removed and why what I call API Active Passive Income comes into play. Yes the assets are passively earning you but you actively managing and moving assets as new opportunities present themselves. Playing this game right is going to pushing far ahead faster than someone that attempts to set and forget their passive income. Their 10% could be 3% next year and they wont even though it.
Of course you need to always manage the risks and keep those assets moving and tracked but I challenge you to try it out a bit with some of those passive incomes you're making.
What projects do you like in the crypto space right now?
They could be anything from CUBDeFi (DeFi Platform) to a Crypto asset in a game. Let me know in the comments.