Investing is tricky. Even if you do it perfectly right and score that “average” 8% return year after year (lol no one does) there are hidden costs lurking in every corner. From repair costs to management fees to carrying costs, every single asset class has them in spades. Except for Bitcoin.
Bitcoin carrying costs are essentially zero. Not “low” or 0.8% p.a. Zero. While there are other costs associated with investing in Bitcoin, these are pennies on the dollar when compared to traditional investments.
If you invest, you need to wake up to this fact now. Discussions about costs might not be as exciting as chatting with your peers about how prices are going to the Moon… but it’s an incredibly important thing that’s not only under your control, but that will also give a huge boost to your wealth over the years.
What Are Carrying Costs?
Carrying costs are what you pay to hold an asset.
For example, real estate carrying costs include things like yearly rates, repair and upkeep costs or body corporate fees. Carrying costs – also sometimes called storage costs – are just a reality that every investor has to deal with. Every asset class has them and you can never escape them.
Houses have to be repaired. Index funds have to be adjusted from time to time as company valuations go up and down. Gold usually has to be stored in a bank which charges you for that service. Even keeping cash stuffed in your mattress has a carry cost as that money inevitably gets inflated away over time as more USD gets printed and your purchasing power is diluted.
The inflation rate in the United States between 2018 and today has been 18.93%. That means that $1,000 stored in a mattress 5 years ago would only buy $840 worth of goods today
Even if you’re not an investor, even if you just have your savings in a bank account and are going about your daily life… you’re still experiencing the problem of carrying costs. Your money is getting debased. Inflated away to nothingness the longer you’re a part of the system. It’s like a leach, sucking the money and life out of you but doing it so slowly that you don’t even notice or feel it.
Bitcoin’s carrying costs aren’t zero. But. They are pretty damn unbelievable in our eyes. As most investors don’t think or care about carrying costs it’s not something that many realise is such an amazing property of Bitcoin. Normally investors are only focused on the “return” while ignoring everything else. But just because no one thinks about it, doesn’t mean it doesn’t exist.
Your property might go up by $100,000 between the time you bought and sold it, but if you had to pay thousands in rates over the years, spend tens of thousands on maintenance, home owners association costs, storm damage costs or more then that amazing “return” isn’t quite what you think it is. Maybe you actually lost money?
Carry costs are important for investors even if you’d rather focus on the shiny things like share price or dividends. So what’s involved in Bitcoin carry costs?
