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This is quite striking, it seems that an important part of our investment journey lies in this little discovery of what our discretionary income is, and from what you have said its not too good to be overly aggressive until we have found a balance or are able to some point to figure this out a little do we don't end up having or putting ourselves in instabilities like having to dip our hands in our emergency funds to cover up for expenses or our reserves and we miss out on opportunities or not having enough floats to carry around, and all this are also important part of our investment and are our various backbones in investing that would enable us maximise our investment in bitcoin, yes its better we allocate smaller amounts as newbies untill we have this calculations set out, then beign aggressive isn't an issue.
It is quite likely that nearly every single adult person is going to have a pretty good idea about how much extra money s/he has each month for spending - which is the discretionary income... So if I come across any random person on the street and they agree that they want to maximize their investment into bitcoin this month, and I ask them how much they are going to be able to invest into bitcoin this month, they will be able to give me a rough number that may well range anywhere between $10 and $1,000.
Part of the challenge comes in terms of figuring out how much on a rolling basis would be feasible and sustainable without putting any large strain on the rest of their finances or their psychology. There are some people who are already used to some level of saving and/or investing, so those people might have better ideas about how much they are able to set aside each month; however, a lot of them might also be a bit sloppy with the level of their commitment to their investments/savings, and they may even be treating some or all of their investments/savings as an emergency fund,
so in that sense they would need to prepare (and put into practice) some higher level skills if they actually can recognize and appreciate that whatever value they are putting into bitcoin on a regular basis, they are not going to have access to that money for 4-10 years or longer. There is a certain level of need to commit to that idea of locking away the value for every new injection of money has a commitment timeline of 4-10 years or longer, which means that the extra money is truly extra.. they do not need it in the next 4-10 years, and they also realize that they could end up losing the money if their bitcoin investment does not go favorably.
Of course, we should be making a commitment to the investment - yet in the back of our mind knowing that we are truly in charge of our own self, our own commitment and we know that we can completely abandon our bitcoin investment at any time that we choose to do so.. and no one can stop us in terms of our own being in charge of our investment and deciding what to do from our own perspective about what is best for us and for our own situation.
So yeah, the more that we put these kinds of systems into practice, the more that we will be able to tailor the amounts to the particular circumstances and variabilities of our situations.. and also the more that we are going to know how aggressive that we are able to be without crossing over any threshold that is putting our investment or other parts of our life (or our well-being) at risk.
So we likely should realize that the bitcoin portion of our investment should be the most important out of any investments that we have, and even if we might ONLY have bitcoin and cash as our only two assets, and even though cash does not seem to be working for us because is it NOT providing yield or interest, yet at the same time, the BTC might sometimes be fluctuating in value and/or moving against us so that sometimes we might not be able to measure that the bitcoin portion is actually working for us.. because sometimes it might be losing value and moving against us.
No one can guarantee us that we are doing the right thing by focusing on and prioritizing bitcoin as our main investment, so we have to figure out a position size that is sufficiently comfortable for our own finances and psychology that we are o.k. if we lose it all, but at the same time, it is enough that we feel comfortable that we put in enough if it ends up going up 2x, 5x, 10x , 100x, 1,000x, 20,000x - and that is part of the nature of an asymmetric bet. It is possible that any of us could lose 100% of what we put into bitcoin, yet as long as we did not leverage, we are not going to lose more than 100% of what we had put into it. Yet, bitcoin would have to go to zero for that outcome to occur (which is not a non-zero probability of happening). At the same time, part of the aspect of an asymmetric bet and likely one of the best asymmetric bets currently available is that it continues to have upside possibilities.. and surely something like a 20,000x price improvement from here puts satoshis at $1 each (and bitcoins at $100 million per BTC), so those are not only long shots in terms of any of our life times, but also could be scenarios that could take 50 to 200 years to play out - if such a scenario were to play out.
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Yeah, it is better that as a new investor that don't have much faith in bitcoin, but wants to invest in it should start with a small amount that would not make him get worried. And after the first year, he must have improved in his bitcoin knowledge, amd have built more faith on bitcoin. Then he can increase the amount that is is using for his regular DCA weekly or monthly so that he can buy more Bitcoin than before.
You are raising a slightly different topic from the one that we were talking about @Frankolala. View of bitcoin and bitcoin's prices is ONLY one aspect of what a person needs to learn about his psychology and finances in terms of how aggressive that he is able to be (in terms of
the 9 factors to consider), and in some sense, we are already assuming that the guy is bullish about bitcoin and has confidence in bitcoin, so therefore he is committed to investing into bitcoin, and so therefore the remaining questions revolve around his own abilities to manage his cashflow/expenses and his discretionary income in such a way to be able to be as aggressive as he can in regards to investing into bitcoin without over doing it.
When he has built strong faith in bitcoin and he has the opportunity to buy aggressively, then he has to do that so that he can acquire more bitcoin within a short period of time since he is still in his accumulation journey, but he should not overdo it, to the extend that he has no funds enough as his emergency funds, otherwise, he will go back and sell from his bitcoin, which has defeated the aim of constant buying and building to Hodli for long-term.
This part surely is true, and I think part of our discussion was around how aggressive a person can be has to do with not only some of his various set ups of emergency funds, reserves and float.. but also just his going through a process of getting used to how these kinds of applications matters play out in real life practices rather than merely just thinking about them.. and so the process of actually going through a year or two or three of putting the theory into practice will likely inform further learning about how aggressive any of us might be able to be in terms of trying to make sure that we do not over do any of it.
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Sir I think someone can have a good finance but out of poor management would still have a bad psychology towards beign aggressive, its not very easy to draw the line between when your aggressive and overly aggressive when investing in such terms,
Exactly. That is why it makes way more sense to put these matters to practice so that you can tailor to yourself rather than talking about them in the abstract, and sure there is no problem in thinking through matters, but individually applying such practices is going to end up helping to teach you your own actual boundaries rather than your theoretical boundaries and putting it into practice also going to show you where you are making mistakes.. and to give you better real world understandings of the concepts.
let's say I've got a monthly income of 300$ and I'm still living with my parents so I don't have much monthly expenses and I round it up to 100$, let's say I use 60$ budgeted for expenses and the left 40$ as a float in case of extra, now I have decided to invest 100$ into bitcoin on a weekly basis and yeah I have to send about 60$ into emergency funds and 40$ left to building reserves,
Your numbers do not quite add up.. because if you have $300 per month of income and $100 of expenses, then you ONLY have $200 as your discretionary income per month.. but yeah if you were talking about $200 per month and $100 is going into bitcoin then that is $25 per week into bitcoin... and yeah the other $60 is building your emergency funds.. and the $40 can be used for buying additional bitcoin or just held over... Now if $60 per month is going into your emergency funds, it is going to take you around 5 months to build up 3 months of emergency fund (which is $300) and 10 months to build up 6 months of emergency fund (which is $600).. so yeah.. all of that sounds doable, and I am not sure if you would be expecting your situation to change within the next year or two, so there might need to be some preparations for possible changes, too... But yeah, $25 per week going into bitcoin and $10 per week that is reserves that could be used for buying on dips but if you don't use the $10 per week, it will keep building up until you are ready to employ it.
but the issue now is thigns may never go as planned and I can't go dip my hands in my emergency funds if I find out my budget went over for the week,
How could things not go as planned? If you end up having more expenses or things that you want to do then you have to take that from somewhere, so your float would be used first, and then your reserves and then you would not be able to buy bitcoin because you are using that and then your emergency fund, and then once you exhaust everything, then you end up dipping into your bitcoin investment, which was the thing that you were trying to avoid.. so you should have hierarchies in terms of which funds are used first for any loss of income or extra expenses that you might have..
and, so I don't know how you can save yourself from those kinds of situations except for either increasing your income or cutting your expenses... and if you are not able to accomplish those kinds of things then that means that you do not have a disposable income that is high enough to buy bitcoin.
so in situations like this I find I hard to know if I'm beign overly aggressive or not
Being over aggressive happens when you cannot follow your plan because surely you could have variance in your income or your expenses, but if you are frequently not able to follow your plan then you might be buying too much BTC, and instead of buying $25 per week, you are ONLY able to buy $10 per week until you get your shit together. Because the fact of the matter is that if you are planning to invest into bitcoin for 4-10 years or more, you have to have systems in place so that you do not have to ever dip into your bitcoin and you exhaust all the other categories of your funds prior to having to sell any of your bitcoin, and if you are frequently not even able to follow your categories of funds and to build those categories, then you have to figure out how much you are able to invest into bitcoin without causing those kinds of needs to violate your systems. .and you question whether $25 per week is too much and if you might be better off to just do $10 per week and then wait until the whole month runs and if you have extra money at the end up of the month then you can invest that extra money once the new money comes in for the new month... there should be ways to carry out these practices so that you are able to follow your systems and to feel good about what you are doing.
cause this has been my budget planning for the month and it normally goes smoothly leaving me my floats back and some weeks it doesn't go as planned, so yeah I'm still quite in that struggle of figuring out what I'm doing wrong or right having a clean plan like this.
You might have to hold your whole investment into bitcoin until the end of the month in order to make sure that you are not making mistakes in terms of figuring out your income and/or your expenses which affects your allocation amounts.
For sure, if you are able to measure the difference between your income and your expenses, then that amount would be your discretionary income, and surely if you are new to making those kinds of calculations, you might not have a good way to categorize your discretionary income properly, so you will make mistakes, and you should not be spending 100% of your discretionary income on bitcoin investing because if you end up making a mistake, then you are might end up going beyond your discretionary income. which surely would be categorized as overly aggressive, rather than merely being aggressive. When you are more organized and more experienced, then you will already know how aggressive you are able to be without crossing into being overly aggressive.
I guess figuring out the exacts numbers for each month or week concerning expenses is something that is bound to differ from time to time and I might well get it this month or week and the next week it doesn't work, so what I'm thinking right now would be to increase my budget for expenses and floats in such a way that I would have a 30% increase over the normal amount so that anyhow it might go I know that I am overly allocated to that side and if I have some left overs good then I can use them invest I to bitcoin.
Well the main thing is if your income varies an if your expenses vary so that then would determine how much income that you have to work with and so then you prioritize where to put each of them, and you can ONLY buy bitcoin if you know that you have money that is extra that you are not going to need, so if you are simultaneously building up all categories then that does not really make sense, because your emergency fund and your investment into bitcoin could be built simultaneously, and so if you have 3 - 6 months in your emergency fund, then you are at more liberties to build the rest. Once your emergency fund is established, you should not need to dip into it, and if you do, then the emergency fund is likely going to be prioritized to be built back first... and yeah there is a pretty fucking BIG difference between an emergency fund that is for 3 months versus an emergency fund that is for 6 months and in your example that is $300 versus $600, and so sometimes it can take a while for guys to build up their emergency fund, and you have to decide how much you need in that fund.. which is generally in anticipation of dried up income or some unexpected increase in expenses, but once the emergency fund is established, then you should not be dipping into it, and you likely should not be having emergencies for years and years at a time without having to dip into it.. it is a financial cushioin that shoud be available for true emergencies and so you would have other funds that you would use for the regular variations in your income and your expenses.. and so once the emergency fund is established, then should have a lot more liberties with maintaining the other categories whether that is investing into bitcoin and/or holding some back for buying on dips (in something like a reserve fund)...
No one can really tell you how to do these things or how much to allocate to each category, but it seems to me that your emergency fund is way more important as you continue to build the size of your BTC holdings so that you are trying to prevent that you ever have to touch your BTC holdings, and part of the reason that you never have to touch your BTC holdings is because you never have to touch your emergency funds and part of the reason that you never have to touch your emergency funds is because you are good at managing your reserves and your float. So there are priorities and there are reasons for keeping several of the financial cushions, but only you can establish the reasons for actually dipping into funds that might be there for certain reasons. and priorities that you establish, perhaps in terms of wanting to be able to build a BTC stash that you never have to touch, except for at a time that is of your own convenience and that is usually thought of as 4-10 years or longer, but if you are still living with your parents, then your timeline might well be 20-30 years before you will need to start to dip into your BTC... and yeah that is all up to you, but I think that it takes a real long time to build up a long term investment, and if you are merely investing $10-$50 per week, it is going to take you real long time to make really meaningful progress. .and sure maybe your fuck you status is less than 1 BTC in 20 or 30 years, which surely might well be reasonably achievable with persistent and ongoing BTC buying, even if the amounts are seeming to be relatively low.
IMO it's better to invest with peace and a sence of stability than to be unsure if you have done it right,
Well, yeah, you don't want to over do it.. So part of the idea is to ONLY invest with what is truly extra in your income... but if you want to make progress, there are reasons to try to be as aggressive as you are able to be.. but you have to figure out those boundaries/thresholds for yourself.
so keeping extra amounts allocated to spending might do a lot of good and would help you not to be overly aggressive since you have well feed the only reason that would have counter that decision which is when you find yourself running out of cash to fix to spend on other stuffs.
It is not good to run out of cash, and you have to be able to enjoy your life... So it is not going to be easy for anyone to figure out those kinds of balances for you, and if there might be ways for you to increase your income or to decrease your expenses.. but at the same time, having enough saved up so that you can prioritize buying BTC regularly without running out of money that you might need or want for other purposes... but again , we likely should get back to the idea that if you have figured out that bitcoin is a priority and a long term investment, then you want to make sure that you have various kinds of funds and systems in place so that you never have to sell any of it once you have bought it (except maybe several years down the road when you reassess your situation and you might at some point assess that you have enough BTC and you are in a place to be able to start to draw upon it).
the DIP category actually depends on each person how to judge it. so if as you say, it could be a 1% or 2% drop from ATH according to you it is already DIP. yes, and that can happen if you keep bbitcoin for years until bitcoin touches the new ATH several times. but for me personally, DIP is wider or when bitcoin corrects deep enough from ATH.
and what I mean by buying the whole here is not buying all the bitcoin available in the market at that time. if you are a so-called whale it might be possible. but what I mean is buying the whole 1 BTC alone not split into small parts.
there's a strategy I learned from sir JJG , is about spreading out your reserved funds to buy the dip without going all at ones. Like most time that dip we may consider the dip may not be the dip , like for instance when bitcoin price dip from the price range of $73k to $65k alot of individuals may think that $65k is the dip stop , before the price would surge again, then lateron it experience further Dip to price range of $58k . So instead of buying all the dip at once you could spread out your reserved funds like buying the first dip with some certain percentage of your reserved funds and lateron if it further dip you could still purchase with another percentage of your reserved funds. Like doing DCAing without waiting for weekly or monthly to buy.
Exactly, and you might have already established some various dip points that you would buy certain amounts of BTC that might be extra to your DCA amounts or it might be a substitute for your DCA amounts, and you are not really going to know how far the dip is going to go and for how long it is going to last, but it is likely better if you already have a bit of a plan in place, even if you end up deviating from your plan, it is better to have a plan rather than not having a plan..
A certain number of guys are so early to bitcoin that they are buying BTC at no matter what the price and for several years, but there still can be situations to attempt to take advantage of dips, when they do happen. and they are surely not guaranteed to happen, even if some guys say bitcoin always dips back down blah blah blah blah.. and some of those guys did not buy in August, September and October 2023 when BTC spent quite a bit of time between $25k and $27k, and guys took it for granted that coins could be bought at those prices, and any dip that we have had since October has not even come close to those kinds of prices, and it is starting to seem more likely that those kinds of prices will never be seen again.. including it is also possible that sub $40k might never be seen again - even though there are no guarantees..
Another thing is that we are at higher prices right now, so guys take for granted that these prices might be revisited again, even if the BTC price goes up, which may or may not end up being true.. We cannot really know with any level of certainty, so there are a lot of guys who just keep buying, and then maybe at some point they will have more luxuries to feel comfortable buying on dips and slowing down on their DCA purchases... yet most likely those kind of guys have to get to a certain stack level first and perhaps mostly be in profits (although the level of profits might not really matter so much, even though everyone feels better when they are in profits, but sometimes there can be some failures to appreciate the difference between simple profits and profits that have been doubled upon each other several times.. .. which is even a more comfortable place to be when such dynamics might be possible).
When I am back to the market, I was impressed by Bitcoin's movement. I expected that to happens before I left the market a few days ago. Now is still a good time to buy more Bitcoin, either buying directly or continuing to run DCA.
With this price drops, many investors have entered the market to buy more Bitcoin. However, some investors are still buying for small amounts because this correction can continue. Be careful when buying Bitcoin. Don't forget to analyze market conditions before deciding.
Now if you do DCA then you will benefit the most. Investing in Bitcoin only with the DCA method is successful because the risk is the same with long-term investments. You have accumulated money and you can quickly deposit bitcoins using the DCA method. Because the DCA method controls the average price, you will never experience a loss when buying Bitcoin, because Bitcoin must recover after four years.
Neither of your points are true.
There is no guarantee that DCA controls the average price in such a way that you would be better off to DCA rather than front loading and lump summing when those opportunities are available.
Also, it is not guaranteed that BTC will recover after 4 years... bitcoin is a great asymmetric bet, so there likely are no periods of greater than 3 years of strict and/or steady DCA in BTC that would have ended up in the negative, yet historical results do not guarantee BTC's future performance.
The reason that DCA is so wonderful relates to both financial and psychological conditions of investors who frequently do not have lump sums available and even if they do they may well still end up preferring to DCA rather than to put it all in at once, and DCA is really advantageous for anyone who is new to investing or who does not want to try to figure out how to balance various aspects of combining lump sum, buying on dips, front loading and DCA, so sticking with a more strict DCA can resolve some of those kinds of potentially confusing considerations.. ..
especially for someone who might have a 4-10 year investment time horizon or longer. and some folks might well be thinking 30-40 years, but then one of the surprising things with bitcoin is that if there is ongoing investment into it, the timeline for actually getting to a point of having enough or too much or even fuck you status might end up playing out way faster than with traditional investments, including potentially cutting those longer timelines in half so then it could become feasible for a person with a 30-40 timeline to be able to get into fuck you status in half the time, such as 15 to 20 years... even though surely those kinds of results are far from guaranteed..
