Traditional assets, like ETFs charging a 1% fee, often see their dollar value increase over time. However, their underlying purchasing power diminishes. This is in stark contrast to deflationary assets like #Bitcoin. Even as you spend a portion of such an asset annually, its purchasing power can increase significantly due to its inherent price appreciation.
If you began 2020 with 100 bitcoins priced at approximately $7,000 each, your total would be $700,000.
Deducting a 1% fee annually without purchasing more bitcoins and projecting a 20% Compound Annual Growth Rate (CAGR) for Bitcoin, you'd possess 60 bitcoins by 2070.
With each Bitcoin potentially valued at $87 million, your total would be a staggering $5.2 billion.
While this example operates on silly assumptions, including a conservative 20% CAGR and the unlikely scenario where there isn't an adoption of a Bitcoin standard before 2070, it illustrates the power of deflationary assets.
Bitcoin's programmed price appreciation means that even with annual expenditures, the asset's purchasing power can grow exponentially.
The beauty of collaborative custody lies in its balance of risk and reward. It exposes investors to 99% of the potential upside without the looming threat of a 100% downside. By eliminating single points of failure, it ensures the resilience of your Bitcoin assets, safeguarding them from catastrophic security mistakes.
While fees and asset management are integral to any investment, understanding their implications in the context of deflationary assets like Bitcoin is crucial. With the right strategies and safeguards in place, the potential for growth is immense.
For comparison purposes with an ETF that charges 1% PA fees, with 8% CAGR and inflation at 2% you go from $700,000 in year one, to $20m in 2070 and lots of counter party risk. Buy Bitcoin and Self Custody!