- Masternodes versus index funds or simply put,
crypto passive income versus traditional finance.
Which one is a better vehicle for making money?
- Crypto obviously right now getting crushed.
- Bitcoin hitting its highest level in about two months
- Apple shares are just getting hammered this morning.
- We're down by between three and four
and a half percent generally across these markets.
- Let's talk about the speed
with which we are watching this market deteriorate.
- To answer this question, I have the data compiled
on four top index funds
and crypto nodes that are arguably the most safest
and consistent way of making passive income in each sector.
And we'll be looking at the pros and cons of each as well
as how they rank in six different categories.
And by spending just 10 minutes watching this video
you're going to be able to make the best decision
on how to turn a modest savings account
into a life changing nest egg that will print money
while you sleep.
And stick around until the end
because I'm not only saving my favorites for last,
but I'm saving a bonus method as well.
An index fund is an investment fund that follows
a market index.
This means one purchase
in a particular index gets you access
to all of the investments in that portfolio.
For example, if you want exposure to some of the top stocks
you might go into the S&P 500
which is an index fund that's comprised
of the top 500 companies in the United States.
Or let's say you just wanted to focus on tech companies
you could get the Vanguard Growth ETF.
And ETFs and index funds are almost the same thing
with one key difference, and that's when you can trade them.
And as a shareholder in an index fund
some of those stocks are comprised of companies that pay
out dividends when the company profits.
And those dividends can be paid out monthly
or quarterly depending on the type of fund it is.
But the keyword is some, because not all companies do this,
but you can still make money
by the appreciating asset of the index fund itself
which is where the majority of the money will be made.
Master nodes, on the other hand, are entirely different.
Out of the 20,000 cryptocurrencies right now that exist
some operate on a system called noding.
And these are independently ran servers
or computers on the blockchain that store
and secure transactions and relay information
which is essential for the blockchain to function.
And because running these nodes is necessary,
incentivization is needed, so they pay out yearly, monthly
or sometimes even daily interests.
And there are a couple of different types of nodes.
There are just regular nodes
and then there's a special type of node called a master node
or a validator node.
And master node usually require a larger starting
balance to partake in,
and they have more authority than regular nodes as well.
If you're hosting a validator master node
not only are you going to earn a fixed interest,
but when people come stake their tokens to
use your validator, you can earn interest from them as well.
For our first index fund, let's look
at the Vanguard Total Stock Market Index Fund or the VTI.
This index fund tracks that return of the US stock market
which includes everything from large to small cap stocks.
This means that for under just $200 a share
you can gain exposure to the entire stock market.
The index holds over 4,000 different stocks
across multiple categories
and the average 10 year annual return is at just over 12%,
with a dividend payout of just over one percent.
And when it comes to gaining access
to any of these index funds I talk about today
it's relatively easy to do
you can hit up almost any accredited institution
and they'll have access to these.
I personally use Franklin Templeton.
But let's take a look at our first node.
First up is the Ethereum validator node
and it's the most expensive node on the list.
With the current price of Ethereum being $1,500
and having to stake 32 Ethereum just to be a part
of the validator.
That means the cost to partake is just under 50 K.
However, that's just the cost of the coins.
When investing in any validator
you have to account for the cost as well
because it's going to have to be kept active 80%
of the time in order to receive those rewards,
it's going to require wifi and power.
But there's a company called AVADO
that sells these very small quiet devices
for about 1500 bucks, and you can run all
of the nodes that I talk about today on this one device.
The payout on an Ethereum validator varies,
but right now a safe bet is around 5%
or about $2,200 per year at current price points.
And it's worth noting
that your node might get some unburnt Ethereum
from transaction fees, but that's yet to be announced.
There isn't a 10 year return
on Ethereum since it was created in 2016
but it's appreciated by about 1200% since March of 2020.
Next up, let's talk about REITs
which is short for Real Estate Investment trust.
These are real estate funds that produce income
that they share with their shareholders.
One that I really want to highlight is
the Vanguard Real Estate Index Fund.
And this index fund tracks the return
of the US investment market of the 25/50 index.
And this index invests in REITs for you
and shares their returns on over 171 individual REITs.
There's an entry cost of $92
and it has an annual 10 year return
of seven and a half percent
with dividend payments of three and a half percent.
This means that per $10,000 you invest
you get about $350 per year in dividends.
The next validator on the list is Avalanche or AVAX.
You'll need a minimum of 2000 AVAX tokens for collateral
which costs about $19 each.
So that means a validator node
for AVAX is just under $40,000.
There are over 1200 active nodes on the network.
And the reason why we need to know this is
because the more nodes active there are
the more those rewards have to be split up.
Right now, the average return
on an AVAX validator is about 9% per year.
You can also get those fees
from people staking on your node, which can range anywhere
from two to 10%, but you're guaranteed 180 AVAX tokens
by end of year, which is about $3,400.
It's also worth noting
that AVAX has a minimum staking period of one year
and it has one
of the most aggressive burn programs in crypto.
The project has only been around since 2020, but
since July, 2021, the project has appreciated by about 50%.
Now, our third index fund is one that's a bit higher paying
and it's the Schwab US Dividend Equity ETF.
And this index or ETF in this case
tracks the return of the Dow Jones US dividend.
And this measures the high performance
of high dividend yielding stocks
in the US that have consistently paid dividends
over the years.
The index holds 104 dividend paying stocks
including Pepsi Co, Coca-Cola, IBM, and Pfizer
and it's $72 a year.
The annual return on this index is just over 13%
and it has a dividend yield of just under 3%
meaning that if you were to invest $10,000
you would receive a $300 yield.
And since 2011, this ETF has appreciated by almost 300%.
Now, moving back to nodes, let's look at Flux nodes.
Flux is a decentralized cloud infrastructure that lets users
and projects use their cloud storage and facilities
and it's aiming to compete with Amazon Web Services.
Now, there are four different tiers to Flux nodes.
The higher you go, the higher the buy in costs gets
but the higher your rewards are.
The lowest node or the cumulus node is 1000 tokens
which costs just under $1,000 right now.
And the average return on this base node is about 11%
not including the cost of running the node.
And since 2021, this token has appreciated by almost 4000%.
And for the fourth and last index
I wanna talk about the Vanguard Information Technology Index
or the VGT.
And this index specifically tracks the performance
of information and technology stocks in the US.
It includes almost 400 stocks
some of them including Apple, Microsoft, and Visa
and it starts at $340 a share,
and has an average 10 year annual return of just under 19%.
The dividend yield on this one is just under 1%
but because of the high annual return
it's one of my favorite ones out there.
And the last, and one of my favorite nodes
on the list is the Fantom validator node.
And this one is down substantially in price right now
but it still costs more than a need validator.
And in order to get a Fantom validator node
you need 500,000 Fantom tokens, which costs about $120,000.
But because there are only 76 validators
on the network right now, the return is over 14%
which comes out to be over $17,000
per year at the current price Fantoms at.
And when looking at index funds
and master nodes across these categories
you can see that index funds are much safer
and easier to access.
However, when looking at the 10 year returns
on these master nodes, they're going to be much greater
because you're assuming more risk.
However, if you want a cheaper node to look into to run
there's one called presearch that has a 28%
yearly return, and it rewards people
in crypto for using their internet browser
and it only costs $280 to get into.
And there are entities out there that do something similar
to index funds where they create exposure
to a lot of different nodes
by just one buying cost that doesn't cost that much money.
Whereas some of these nodes are costing
10, 20, 100 thousand dollars
and the monthly returns can be anywhere from two to 10%.
So if you're interested in that, check out
some of my other videos on master noding right here.