DCA is how a moderate wealth is formed.
Deep value bulk buy and hold is how typically a larger wealth is formed, it is just a fact, albeit this is more risky.
As usual, more risk, more reward.
Of course, you can do a combination of bulk buy and DCA.
Then, there is something that I call a VC approach-a relatively small $ number for many very early/risky projects/stocks/whatever.
In this case, most will not pan out, but some will work great if you can choose them wisely. It's difficult to do and wait times could be more than a decade.
In this approach, you would have to intentionally limit your initial allocation and wait (could do small DCA) longer.
My main conundrum, though, are not with the investments themselves, but with cashing out. It seems that in most cases it is never a good time to cash out, but then, how to monetize holdings?
As we already know, typical means did not pan out in "our" area-witness Celsius, Blockfi, etc., etc.
Selling an asset with basically unlimited potential such as bitcoin seems stupid, although I did sell as needed here and there (not at tops or bottoms).
In a current environment it is simple: just have a large cash account and collect 4, soon 5% in interest, no need to sell anything, but once we drop to 2-3%, money would move toward more risky assets again.
TL;DR It is psychologically difficult to peel off money for consumption from assets such as bitcoin.
For example... buy 20 BTC in mid 2015 at around $250 per BTC ($5k invested), and then just sit on them and wait for them to become $10 million per BTC.
How's that working for you?
I am not totally against either the idea of lump sum investing or even supplementing DCA with buying on dips and lump sum investing, but there remains a quite a bit of value in terms of DCA investing in terms of the ability to potentially be more aggressive in a longer period of time without really feeling the psychological pressures of putting a lump sum amount into an investment.
Let's say that you started investing in BTC at the top of the BTC price in late 2013, but you decided to be somewhat aggressive in your DCA approach, so you decided that you were going to DCA at $240 per week for four years, so the amount invested would have been 10x the amount of the $5k lump sum that you made in 2015 to buy those 20 BTC.. so instead you end up
investing $50k over 4 years, and you end up with around 104.5 BTC with around a $50k investment. Seems pretty good to me... around $1k per month, $12k per year spread over 4 years and ending up with more than 100 BTC.
I think that my main point is that DCA can allow you to be more aggressive over a longer period of time and not necessarily feel psychological and financial pressures of a lump sum investment, even if in the longer term you may well end up spending more per BTC on average, but you may well end up with a larger BTC stash too.
Right now, would you rather have
Option 1: 20 BTC that you purchased for around $250 each for a total of $5k
or
Option 2: 104.5 BTC that you purchased for around an average cost of $480 each for a total of $50k...
Yes, option 2 cost you way more and was spread over 4 years to attain it, but if we are looking 10 to 20 years further down the road, which one is going to give yoiu more options in terms of what to do?
And, don't be telling me that you could have just bought $50k when the BTC price was $250 because that was not even an option. People do not tend to be able to have that much free cashflow (lump sum) that they are willing to put into a risky investment like BTC, but if they invest over several years, they are able to establish a sufficiently aggressive position that they would have never been able to accumulate if they would have had to rely on making lump sum investments of something like $5k at a stretch.. They are just not able to do it.. but they can do $10 per week or maybe even up to $250 per week with more aggressive approaches, and even if the more aggressive approaches might put some financial and psychological strain on them, it can be a manageable of financial and psychological strain or they can cut back a bit on their weekly amount to make their DCA into a sufficiently aggressive amount that is within their financial and psychological budget. .and spread over something like 4 years (or whatever other timeline that they deem to be reasonable.. maybe they have to spread it over 10 years or maybe they can put it into a tighter front-loading time period, but even if they end up investing $10 per week over 10 years, that can surely bring them to a place that they would have not been able to achieve with lump sum investing because they do not have those kinds of lump fund levels that are at their disposal at any given time).
F dca'ing, buy the dips and sell the rips!
Have fun staying poor with your IBonds or whatever it is that you are supposedly buying, if anything.. actually more likely that you are failing/refusing to buy.. even if some people in your same position will be laughing at you 4-10 years down the road when they compare their $10 per week into bitcoin while you were spending your $10 per week on Lattes or whatever it would have been that you would have been doing with such $10 per week cashflows that you could have been putting into my lil precious. .and whining about DCA no doesn't work... blah blah blah.
Good post from Jay...
I'm also in favor of DCA and would recommend it to noobs (and everyone, really).
Having said that, and knowing what I know now about this space, and considering the current Bitcoin price and time point relative to the Halvings, I'd say to the brave ones to go all-in, if they have the guts. Had I gone all-in back in 2015 when I started, my stash would now be at least 10 times larger.
But yeah, DCA is the safest approach. Win-win really.
All in is really difficult to do... both psychologically and financially... even if someone has a good-sized lump sum that they are able to invest into BTC, and even if they have equity in their house that they are able to use.. it is just really difficult to do, and also difficult to feel comfortable that the bottom is in and all of the psychological and financial problems that can end up coming with that too, especially if it ends up NOT being true...
Remember member AverageGlabella at around $34k went all in (would have been early 2022, no?).. and then looked like a genius while the BTC price stayed above that amount for several months, until it did not.. and I am not even saying that AverageGlabella did the wrong thing, but sometimes there can be some advantages to just DCAing which might even work better when the BTC price is down or going down or flat.. but surely there can be some nervousness that comes into play to be DCAing when the BTC price is going up.... and in those times, lump sum investing is objectively better, but we never can really know for sure that the BTC price is going up or that the bottom is in until several months (and maybe even a year or more later).
@ JJG you tell him.
@ everyone else be like JJG just DCA.
I got 10 weeks in a row going for 11 next Friday.
The more I DCA the easier it is to do.
About mid 2021, I suggested that a then nocoiner person that I know in real life who was around 61 years old at the time to DCA $100 per week, and she said that she could ONLY afford around $50 per week. I said that every new purchase that she makes, she will need to have at least a 4-year investment timeline on each of those purchases in order to feel that she is not going to need to access that money, and her investment may or may not be profitable, but she should consider 4 years or longer for each purchase of BTC that she makes, and even if she is ONLY able to invest over the next 4 years at $50 per week, then those later purchases would still need a 4 year time line from the time that she buys them.. so in some sense I was attempting to suggest that she front loads her BTC purchases with her use of her DCA. Anyhow, we know that BTC prices are way cheaper now than they were in mid-2021.. so pretty much her whole period of DCA purchasing (presuming that she is still doing it) would have been while the BTC price is continuing to go down. I have not touched base with her for a few months, so I am not 100% sure that she is still buying $50 per week.. which surely would be good if she can continue to buy $50 per week or even to increase her amount, but of course, whatever she does is up to her, and she would be around 62 years old now and presumptively turning 63 in 2023.
The longer the timeline the better, and I had conversations with people in their 70s in regards to bitcoin, and surely there are age dynamics with that too.
I did have another person in my life who largely I got into bitcoin in her early 60s in 2014, and she had bought a bit more than 20 BTC over a few years, and had largely spent less than $10k and likely sold more than $120k of coins at various times until in 2021 some of her coins around 9 BTC or 10 BTC had gotten taken from her because of a phishing attack (and her being dumb about thinking that Coinbase support was helping her to fix her supposed Coinbase account issues... blah blah blah).. and then so far she lost maybe around 3.5 BTC because of Voyager issues that started around June 2022... So she made a lot of money, but she lost a lot too... so one thing is having a long time horizon, and another thing is sufficiently and adequately protecting any of the BTC that any of us accumulate (I know that you Phil seem to have some decent cold storage solutions, but still we all have to be careful that a lot of the hard work that we are doing to accumulate BTC does not just go poof because of our becoming vulnerable in the various ways that we are attempting to maintain our coins once we accumulate them including considering our avenues for liquidation when we are getting older, too).
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