What is passive income? An investment or asset that produces regular income without active management on the holder's part. It shouldn't devalue in time with inflation or as you receive the income, or it doesn't function well as passive income over a long period of time.
I know everyone says they want passive income. I want it too, to be clear.
But it only takes a spirit of observation to see that many people micro-manage their investments, they are impatient.
Building a passive income requires both a long-term perspective on the investments and the ability to turn off - or at least reduce drastically - our desire to take decisions regularly on our investments that we regard as passive income.
For example, a trader is not building a passive income by trading short-term, even if he or she makes a profit. If he uses some of that profit to invest in something long-term, that can become a passive income.
Let's take $HIVE for example, and its variant, HIVE Power (HP).
HP isn't really designed to be a passive income. Although, in the resourceful nature of our community, ways to make it more passive were created, by delegating HP for a dividend or automating curation.
HP has its passive component to it, and that is the interest paid to stakeholders. But HP really becomes valuable when it's used actively, for governance, for deciding who gets DHF funding, and for manual curation.
HBD, on the other hand, is perfectly suitable as a passive income, when added to savings. While some attention is required to the debt level and the APR offered (if it changes), and even if the HBD remains close to the peg or not, that is mostly income created on auto-pilot, with minimal attention needed.
But if, for example, you start swapping between HIVE and HBD to try to get more HBD or more HIVE. that's active micro-management, and HBD stops being a passive income.
Some people can make a very clear distinction: these are my long-term holdings and I won't touch them, and these are my play money and I give myself a free hand on what I do with them (usually risky investments or active micro-management, like day trading).
I have a different approach. I have my long-term holdings for which I generally have goals set (and some for which I don't have goals set), and I have everything else. The second category, including both liquid and non-liquid assets, can be subject to radical decisions, even if they are not fully substantiated.
For me, at this time, HBD (in savings or liquid) is the token that helps me buy more HIVE. I don't think about its passive income potential. Even if it's 20% APR. Actually, 22%, with monthly compounding.
If, for example, we would have the option to lock HBD for much longer periods (with or without bonds at the second layer), my decision process would likely be different. Add HBD to savings with a longer lock duration, as a passive income option, and with a 3-day lock for my current operations as I use it now.
Of course, we can do this ourselves, right now, by using a spreadsheet. Say you have 1,000 HBD in your savings. When you do your spreadsheet, part of that goes to long-term holding (passive income) and part of that to cash on hand. Since the entire amount is on a 3-day withdrawal period, you are the one who has to enforce the limits onto yourself.
Who knows? Maybe I'll do that in the future... But I'd rather start doing it once the bull market begins, until then, I still want to buy HIVE while it's on offer.
That, of course, means I expect to use my HP actively. Only a portion of it is slated for passive income, to build up two of my stakes: $LEO and BRO.
For BRO, I will probably stop once I reach a certain limit I have in mind, but LEO is still way behind my multi-year target. However, we need to remark that among the two, BRO is passive income, LEO is not, or not to the same degree (will be more once the ad revenue distribution begins).
And yet, LEO may become very valuable in the future. We need to actively be involved for that to happen, though. Every single stakeholder and user.