Stop Listening to Interest-as-Income Advice by Crypto ‘Experts’ | Hacker Noon

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T.C. Gunter Hacker Noon profile picture

T.C. Gunter

Crypto enthusiast and freelance writer. I set out on my starship to explore the cryptoverse.

Are you tired of the same old advice? The same old warnings? The same old stories? It’s time to stop listening to interest as income advice by crypto experts.

So many people are investing in crypto that are doing well. Some may even be millionaires or even billionaires. The problem with “the experts” is that they don’t understand we are still at the beginning of the crypto asset class.

They’re just spewing out the same old information discussed for decades without any new insights added.

The only thing they do well is to dominate the scene with poor data.

Why? Because none of them have been rich. Or, they want to push whatever message sells their product.

Instead, you can use loans against your crypto assets as income. Or, you can also use a loan against an asset to further finance that asset. Loans aren’t taxed. But as soon as you convert your crypto to fiat, it’s a taxable event.

Therefore, you want to take out a loan and use the funds you get from it to spend on needs. In addition, you can also take out a loan and finance the purchase of a new asset and increase your net worth.

However, you need to be aware you will be paying back the loan plus interest. Still, this is an investment and not a cost, and you should never see it as such. We’ll see how that works in a minute.

So, stop listening to crypto experts telling you to invest in an interest-bearing coin, then live off the interest. It’s not the best advice.

Let’s get it.

Why should you use loans against your crypto assets as income?

Loans aren’t taxed. Also, if you leave your assets invested with little to no trading, you pay little to no taxes. The goal is to keep most if not all of the money you earn.

America has trained society to think of earning wealth as income-based. It’s not. You’ll never get wealthy from income alone. Nor will you get rich from saving. You can improve your wealth from investing, but that’s not the end of it.

Once you invest your fiat in crypto, you never want to touch the crypto again unless you must. So if you invest in an interest-bearing coin, reinvest your earned interest back into the coin.

Do not extract it as income. That’s a tax.

What you want to do instead is take out a loan from the same institution, if possible, against your crypto. You can even make more money by doing this.

For example, let’s say you buy $4000 worth of CRO and stake it. Then, you buy $6000 worth of USDC and earn interest at 12%. Next, you take out a loan at 4.5% for $3000. You are now funded tax-free, and you’re making more than you’re paying back. That’s it. Of course, you’d want to use more significant amounts, but this is an example.

Why would an institution be okay with loaning money against a crypto asset?

It’s a win-win situation for the institution. If you keep paying them, they get their money. If you default, they get their money. They’ll even allow you to take out loans in perpetuity, so you can live off loans until you die.

People are under the impression financial institutions don’t like to give loans. That is both true and untrue.

They don’t want to provide loans to people they cannot collect from. However, they love giving you loans when you come to them with an asset they can quickly liquidate.

It also looks good on their books to have loaned out to liquid collateral. It shows an equal measure of stability and liquidity so the institution can make its own investments.

But is using interest as income from crypto assets that bad?

No. It’s inefficient and doesn’t maximize your gains, but it’s completely viable.

So many people would be fortunate to reach even that point on their financial journey. And ss far as wealth building goes, what I’m discussing is the tip of the iceberg. Therefore, you really must get past the misinformation and start learning the real meat of gaining and maintaining wealth.

Understand, I’m not scolding anyone who’s at the point where they’re using interest as income—more power to you.

But start thinking about the next move to growing wealth. Get away from all those taxes sapping your portfolio.

Conclusion

Every bit of money you earn, you want to keep. You want to spend as little as possible and pay as few taxes as possible. All while having the money you’ve earned earn you more. That’s the way you build real wealth.

Unfortunately, education isn’t there for you. So, you must take it upon yourself to watch, listen, and read everything you can regarding wealth building. And you must look for the truths that slip between the cracks if not careful.

Therefore, I want you to consider switching from interest as income to loans as income. You don’t have to try it with considerable sums. You can start small. That way, you can see the results of the method with low risk.

Stay strong.

*I am not a financial advisor, and I don’t claim to be an expert. Remember to do your own research, always. Read perspectives from many different sources, then come to your own conclusion.