The basis of any form of passive income is to be patient and keep regularity in place to help create consistency. The same goes for when you are exploring automated investing options for the new asset class. When you are taking this route to explore the crypto space, it is also a great idea to start compounding your returns.
The whole idea of compounding is not new. It is similar to the compound interest mathematical problems we solved in our childhood. Compound interest, often referred to as the storied financial concept has helped many reach their financial goals. Given the stronghold it has, it is surprising how often this method does not get the spotlight as compared to other methods that have the tendency to provide quicker returns.
To help understand compound interest, let us take an example. Imagine someone is preparing to roll a snowball down a hill. As it roll down, the size of the snowball starts to grow at an increasing rate. By the time it gets to the bottom, the snowball has the potential to get doubled, tripled, or even quadrupled in size. Similarly, as compound interest gets bigger, the gains it helps to incur become even larger. All that it takes to earn compound interest is time and patience.
What is Compounding?
Compounding is indeed one of the most powerful weapons in an investor’s arsenal. The beauty of this whole concept lies in the fact that it is quite simple to understand. But when you put it into practice, the impact can be immense.
Benefits of the Power of Compounding
One of the biggest benefits of compounding for investors is the value of time. With time, you could gain returns, and the yields on these returns can help you to generate further returns; thus, helping to increase your investments quickly. Saving money and earning a compound interest amount every year is a good thing. But what if you were to invest a fixed amount each month or even better, divide the total amount in weeks? This small step can boost your returns over time. When you regularly invest over time, your returns could accumulate at a much faster pace.
Additional Read: Crypto Investing Strategy
Why Does Compounding Work so Well in Crypto?
Investors can easily stake and earn compounds on select coins for big annual yields.
However, it is imperative to keep in mind that crypto, like any investment asset, comes with risks. Even more importantly, you can’t guarantee that the dollar value of your coins will not drop. The volatility of the crypto market and doing your own research are two factors that are an absolute must when diving into the crypto ecosystem.
The volatility of the market is one of the main reasons why compounding actually works so well for crypto assets. If you set up your wallet with the passive income from your base investments, that can become the set wallet balance for continued regular investing. Setting up an automated crypto investing module is the best solution! For example the Crypto Investment Plan or CIP by CoinDCX!
Additional Read: Dollar Cost Averaging in Crypto
What is Crypto Investment Plan or CIP?
CIP or Crypto Investment Plan acts as an automated investment plan that will eliminate the risk of delayed decision-making. You only need to choose the amount you want to invest weekly, in Bitcoin or other available crypto tokens. Not only that, but you can also opt for multiple CIPs for the same coin!
Simply put, CIP in Bitcoin & other crypto helps you invest with:
- Rupee-Cost Averaging: CIP lowers market volatility risk in the long-term period. When the markets are high, you buy less quantity of your crypto assets through CIP. When the markets are down, you buy more quantities for the same amount.
- Compounding: CIP installments smartly enable wealth creation over the long-term period. Your earnings are reinvested and you benefit from the power of compounding.
- Discipline: CIP installments are made at regular intervals, i.e. weekly on a predetermined day.
- Convenience: CIP is a hassle-free process as the amount is automatically debited from an individual’s account and invested in the scheme chosen by the investor.
- Flexibility: Investors can choose their preferred installment starting with an amount as low as INR 200 and can go upto INR 2000.
- No Lock-In Period: You can continue your CIP installments for as long as you like and cancel anytime as per your convenience.
Click here to explore CIP on the CoinDCX App, India’s safest and simplest crypto investment app.
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. In case you have any queries, write to [email protected].
The above information represent the independent views of Primestack Pte. Ltd, Neblio Technologies Pvt. Ltd, and/or their affiliate entities and are for informational & educational purposes only. The content, information or data provided above is not an offer, or solicitation of an offer, to invest in, or to buy or sell any interest or shares, virtual digital assets/ crypto products or securities, or to participate in any investment or trading strategy. Any statement or communication made above shall not be treated as a legal, financial, investment or tax advice by the reader. The calculations, data, risk-return formulations, performance or market capitalization indicators captured above are based on the independent data sourcing including collation of public information and/or analysis performed by analysts, advisors or employees of Primestack Pte. Ltd/ Neblio Technologies Pvt. Ltd and/or their affiliate companies and/or any third party. Past performance is not indicative of any future results. The reader(s) are hereby advised to consult their financial/ legal/ tax advisor(s) before making any investment.