Afternoon all
New 2 BTC and investing in general - wanting to take advantage of the new world I entered at a very small 0.2 BTC @ 5.7k. Have plenty of funds and considering buying 1 - 2 whole btc as I'm gathering confidence that it'll return to 10k+
Discuss and help a newb out.
Welcome, Here4Gainz. You might need to provide more information about your particulars, but surely your own research would be part of any BTC plan.
I generally recommend that newbies figure out their cashflow for 6 months, and then make an investment budget that is spread out during that kind of timeline that allows them to continue to learn about BTC while they are investing by dollar cost averaging, buying on dips and perhaps frontloading their investment a bit.
Accordingly you can take your current cash available for budgeting towards bitcoin and add it with your cashflow that you expect to dedicate to invest in bitcoin over the next 6 months. Divide that into three and invest 1/3 immediately and dedicate 1/3 respectively to DCA and buying on dips.
Of course, you can employ other variations of such recommended strategy to account for all of your own specific conditions, including your cash flow, other investments, view of bitcoin as compared with other investments, risk tolerance, timeline and time and skills for trading, managing your portfolio or researching into bitcoin (including tweaking from time to time).
Thanks for that.
All makes sense and useful going forward. I suppose my situation varies slightly - I have a lump sum cash amount which I don't need for the next 5 years minimum.
Surely, I did not flesh out all of the possible capital considerations because in part, not only did you characterize yourself as a newbie, you also are asking for investment advice through a quasi-anonymous interwebs thread, which largely indicated to me that you might have some hesitancies regarding the value proposition of bitcoin. Accordingly, DCA investing has a few advantages in terms of attempting to make sure that you spread out your investment while you might be attempting to learn about the underlying asset, and also your potentially ongoingly assessing your own situation in such a way that you are NOT investing more than you are willing to lose, in the even that bitcoin goes to zero (which should be a kind of acceptance for investing in any highly volatile asset, and bitcoin surely fits that highly volatile category).
There are aspects of your coming into bitcoin that are not that much different than my own, at least in terms that you already have a lump sum that you are willing to invest; however, I came into bitcoin in late 2013 when I already acknowledged that there had been nearly a 100x price increase, so that may have framed my own investing that I largely ended up spreading over the upcoming year, though I ended up have two 6 month investment periods before I had established my then desire to reach a 10% stake (meaning that 10% of my quasi-investible assets had gone into bitcoin by the time late 2014 came, and I had therefore felt that i had reached my investment stake goal, even though it largely took me a year to both accomplish that goal and to actually confirm with myself about what my goal was going to be).
So, surely the context of coming into bitcoin can affect how you chose to invest, and what percentage you choose to 1) lump sum in right away, 2) dca and 3) allocate towards buying on dips. I had already told you that my off-the-top of my head allocation would be 1/3 towards each, and I was kind of already assuming that you would be able to come up with your own budget concerning how much value you had that you were allocating towards bitcoin. No matter what, too, if you have expenses (unless you are living with grandma), then you should have a cashflow over a period of time that should be accounted for, too.. that is just pure good budgeting...
Let's say, for example, that you have $12k that you have already decided that you want to budget towards bitcoin. With my 1/3 each example, then you would invest $4k right away, and then you would set up DCA for the next 6 months, which would be $667 per month or $154 per week. I also recommend setting up the buying on dips in advance, so if you believe that BTC prices could dip to $3k or lower, but you believe that it is questionable if BTC prices will go below $4k, you might still just set buy orders down every $250 price drop down to $3k. So that would be 12 buy orders of $333 each, at $5,750, $5,500, $5,250, etc.. all the way down to $3k.
What is considered a dip? The one a few days ago to ~4.5k is an obvious one but is there certain % drop considered a dip worthy of investment? I suppose any dip is a good dip
When you get into BTC, you should establish these amounts for yourself, and of course, you can reassess from time to time, too. My above example of buying every $250 down could be one possibility, or you might choose to buy every $333 or every $500 or whatever. Of course, you are correct that you could make your buy increments in terms of percentages, instead of dollar amounts, which might be more accurate, but sometimes might be harder to keep track.
Your decisions regarding what is a good dip, may also have quite a bit to do with your assessment regarding where you stand regarding risk tolerance and even your view of BTC fundamentals and also if you have already invested quite a bit at a certain price, then that might affect what your future price targets are, which should not only be a product of whether you have already bought at that price but also a product of the passage of time, which might cause you to change your views about whether it would be prudent and practical for you to invest more dollars into BTC at any given price arena.
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