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Yes, your first task is to ensure you have a steady and stable income. However, this doesn't mean you can immediately start investing once you have it. The point is, first check to see if you have any income left over after you've covered all your monthly living expenses. If there isn't, I don't think you should force it.
You don't have to have steady/stable income in order to start to invest in bitcoin.
However, it may be better to have some form of steady/stable income in order to project abilities to pay expenses into the future, which can be a concern if we are deciding to put some money into bitcoin and also that when we buy bitcoin we are locking that money up for 4-10 years or longer so there likely are some needs to have some expectations of future income even though steady/stable income is not necessary to get started buying bitcoin.
In regards to taking out a loan, it surely seems that steady/stable income is needed to have some assurance of abilities to repay the loan, and surely some folks can get loans with the encumbrance of collateral or maybe based on personal credit worthiness.. but if the loan is not repaid, the collateral could be sacrificed and personal credit worthiness could be harmed.. and people do not tend to appreciate folks who do not pay their loans, especially if the loan is gotten from family and/or friends.
Personally, there are several things I need to fulfill before I start accumulating Bitcoin. First, I need to have a stable income, set aside an emergency fund,
Emergency funds/back up funds do not need to be built prior to getting started in bitcoin beyond making sure that discretionary funds are available, so back up funds can be built up at a similar pace as building up the bitcoin... and each person has to figure out how steady is his future income and/or expenses to determine how much back up funds to build up, and if a person has greatly fluctuating income and/or expenses, then there would be needs for higher quantities of back up funds in order to cover the more likely happening of situations of decreased income and/or higher expenses.
and also have other businesses outside of my main job.
Sure.. more than one job can include more expenses too, in the context of a business, yet sure some businesses do not require a lot of capital, so there can be various sources of income that can be taken into account in terms of calculating income/expenses and also considering back up sources of funds.
The goal is simple: if something unexpected happens that requires me to spend money, I won't have to touch my Bitcoin assets because I have an emergency fund and income from my side business to cover the problem.
Nothing wrong with that, yet if we are investing in bitcoin, we still have to determine on a regular basis the extent to which we are putting money into bitcoin versus putting money into our business and/or determining how much back up funds to keep based on both personal expenses and also business expenses (as you mentioned). I doubt that any of the matters are simple, even though guys can get into routines in which they are largely balancing all of their income and expenses and they are still able to build their bitcoin investment and to build up their back up funds, so the skills and knowledge might be relatively basic (or simple) but there still may well be advantages in practice and learning how to balance levels of chosen aggressiveness based on practice. It is likely more comfortable when we have built up work and even cashflow management systems that generate decently high levels of discretionary income versus if we might be struggling to make sure that our income covers all of our monthly expenses (both business related and personal related).
Yes, your first task is to ensure you have a steady and stable income.
I understand your point clearly but I guess you saying it like this looks more like you are trying to convince beginners to ensure that they have stable income before they start buying Bitcoin.
However, based on my little knowledge, I believe that all you need is your discretionary income, having multiple income only helps you to increase the amount you are DCA'ing with or buy Bitcoin aggressively if you have spare an unexpected money or excessive funds which
you won't be needing till the next 3 - 4 years time. Investing in bitcoin is 4-10 years or longer.. not 3-4 years. If you are thinking about 3-4 years, you may well be thinking of trading or trying to play the cycle.
What are your reasons for proclaiming a 3-4 year timeline?
Why are you buying bitcoin for 3-4 years? You going to sell your bitcoin and buy something else? And when you buy bitcoin are you lump sum buying or are you DCAing?
You say that you are DCAing, so if you DCA buy bitcoin for 3-4 years, then at the end of the period, you are going to have some bitcoin that you bought 3-4 years earlier and you will have other bitcoin that you had bought a couple of years earlier and other bitcoin that you bought in the last year. How are you going to deal with the differing timelines of each of your buys?
From when does your 3-4 years count? From each of the BTC purchases, or from when you started DCAing into bitcoin?
Maybe you are afraid to commit to bitcoin for longer?.. but if you are really thinking through the idea of investing rather than than trading, then you may well need to consider your own situation in terms of why you seem to be having difficulties in thinking about bitcoin in longer than 3-4 year timelines.
To be honest, everything can not just be perfect. Well my point is that if you wait till you get everything sorted out, you might end up waiting forever without buying any Bitcoin because most times things doesn't work the way we expect them to be. So what's why it's important to start immediately you have spare money to buy Bitcoin.
Sure. That part is true and many times guys are not able to buy bitcoin in large amounts. They just have to figure out how much extra discretionary funds they have each week and to figure out how much of those discretionary funds they are wanting to put into bitcoin, versus back up funds versus discretionary consumption.
Actually it is very important to learn and develop the mindset of investment early so that you will achieve your targets earlier as well.
Do you expect to achieve your targets in 3-4 years?
Although no time is late but the perfect time to start investing into Bitcoin is when you have the spare money to buy it (no matter how little it is).
Honestly, with the bold part of your comment I think it can discourage beginners with low source of income to start buying Bitcoin, as you already stated that they should ensure that they have stable income.
That is true. Steady/stable income is not needed to get started, even though it may well be helpful to continue to invest.
However, this doesn't mean you can immediately start investing once you have it.
You can not buy Bitcoin with the money for your survival because you will end up selling at loss. So before buying Bitcoin all you need to do is settle all necessary expenses, and also keep some funds for emergency situations, then if after all the necessary bills has been sorted out and you have some leftover money (no matter how little it is), what you need to do is invest with it.
Sure, if a guy gives high priority to bitcoin investing then a certain portion of his discretionary funds should be allocated to bitcoin, and perhaps buying every week, if possible.. yet there could be situations in which it might be difficult to buy every week.
Historically, I had personally tried to set up systems so that I was able to buy bitcoin every week, no matter what, especially in my first year of bitcoin accumulation (which was from late 2013 to late 2014), yet for me, after I was in my 2nd and 3rd year of bitcoin accumulation (2015 and 2016), my bitcoin buys with new money were more erratic due to my own then financial (and psychological) circumstances, and even my then ways of assessing the extent to which I had invested enough or more than enough into bitcoin.
Over the years, I had changed some of my own ways of assessing targets, and surely each person has to figure out how to assess his bitcoin accumulation targets, and my own presumption is that an overwhelming majority of guys are building up their bitcoin from their income, and even if they might have some other investments and/or savings, they generally are not able to put great quantities of value into bitcoin in their early years, even if they might strive to do some level of front loading of their investment, they still will likely have to spend one or two cycles or more to really get to a point in which they might start to feel as if they are getting close to reaching a reasonably good bitcoin accumulation target.
I do also tend to believe that for many guys it is going to be practical to figure that there is going to be a bit of a gap between being in a bitcoin accumulation period and going into the employment of some forms of sustainable withdrawal.. so perhaps in that period of maintenance, there could be some practicality to engage in some price based sustainable withdrawal even though the accounting can sometimes become too much of a burden
(I talk about the difference between price-based sustainable withdrawal and time-based sustainable withdrawal in my sustainable withdrawal thread).... yet I think that the main point would be that even a guy who might be able to invest 17% or more of his income into bitcoin (which is a fairly high rate), he may well end up investing a couple of cycles before he is starting to feel that he is getting close to having enough bitcoin, and then he still might have a couple of years before it might start to seem practical for him to start to employ some variation of sustainable withdrawal, whether price-based and/or time-based.
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Borrowing to invest in Bitcoin doesn't necessarily mean that person doesn't know how to figure out or sort out their discretionary income but rather the reason why an investor will borrow or take loan to invest in Bitcoin is because they may be out of discretionary income to use in their accumulation because it will be unwise for an investor to borrow or went to take loan when they already have discretionary income to invest or accumulate with.
"Being out of discretionary income" does not sound like a good justification to take out a loan to buy bitcoin.
Perhaps a reasonable justification would be that a person wants to use the proceeds of the loan to front load his investment.
Let's say that a guy generally invests $100 per week into bitcoin, so over a year he ends up investing $5,200 into bitcoin, yet he wants to get a loan for $15k that he is going to pay over 3 years, and maybe he will need to pay the loan back at $110 per week for the next 3 years or maybe he would pay the loan back and also continue to invest $30 per week into bitcoin during the period that he plans to pay back the loan. If his interest rate is 3-5% or less, then that would be a good interest rate, yet many times, loans will not have such favorable terms, so there can be a bit of a dilemma in regards to if the costs of the loan would be worth it rather than just employing his usual investment method that would spread the investment over three years.
The other example that
New Judgement gave is not necessarily a bad one. So for example, a person had been investing $100 per week, and he knows that he is getting a raise and in the future, he will be able to invest $200 per week based on his anticipated raise (increase in income and/or cutting of expenses), so for reasons based on great confidence in future income going up, he could get a loan and front load his bitcoin investment with a fairly high confidence level that his future income will be more than enough to both pay back the loan but also to pay the extra costs of the loan too.
Of course, any loan and buying of bitcoin with the loan proceeds runs the risk that the BTC price might go down or even fail to go up, so even though a person is more advantaged if the BTC price goes up after the time of the purchase, reasonable investors can still come to reasonable conclusions that they are willing to take the chance that their front loading of their bitcoin investment may end up paying off or maybe it will not pay off... but they are ready, willing and able to take such chances. .and they are covered whether the BTC price goes up, down or sideways.
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Your point is spot on. People can’t just strip out discretionary spending and still expect life to keep running smoothly, they still have to eat, they have to move around, maintain relationships, and have some breathing room and if they don’t do this things, everything can start to feel unsustainable pretty quickly.
discretionary consumption versus basic consumption relates to wants versus needs, so the categories can sometimes overlap.
Sure, there could be aspects of eating that are wants, such as going to a restaurant versus eating something more basic. Sometimes relationships cost money and other times there are ways to maintain relationships without costing money... some expenses can be deferred and some expenses have to be done right away (or maybe suffer additional expenses if they are not resolved).. so for example, if a pipe is leaking and needs to be replaced, there can be some temporary measures and abilities to put off the expense until a later date, or if a car breaks down that expense might need to be resolved right away if the car is used every day for work, and even with a car, there are a lot of luxury expenses related towards keeping and maintaining a car that may or may not be needed.. yet we still might choose certain living standards and even categorize some of our wants as if they were needs... which those are our choices, even though we might want to recognize those various kinds of costs if we might be trying to prioritize investing into bitcoin and figuring out various ways that we might be willing to cut some or our costs and perhaps other ways that we might not be willing to cut our costs, since sometimes there can be some additional value in paying for a luxury version of something, such as having a smart phone rather than a regular phone and having a data plan versus having the basic services. Sometimes the luxury might pay for itself in terms of if we become more capable in communicating and/or transporting ourselves to certain locations that might cause us to get greater employment or even to mingle into higher quality circles that might contribute towards our obtaining higher paying jobs... so the trade offs are not always apparent in regards to which expenses might be basic, necessary and even contributing greater value to us as compared with how much they cost us.
The same thing with debt, minimum payments are non-negotiable, you must at least pay the minimum amount required on your debt every month, anything above that is where you actually have some flexibility. And you’re also right about not treating all debts the same, it doesn’t even make sense to treat all debt the same way. Low-interest debt can sit there without much pressure, but high-interest debt is a different story because it grows on you fast and quietly eats up your money over time.
At the end of the day, it all comes down to tradeoffs, you’re constantly trying to balance between living your life, clearing obligations, and trying to grow your money. None of this things exist in isolation, so the right move usually depends on your specific situation, not a fixed rule.
It seems that when we are in the early stages of building our wealth (or building our bitcoin), we may well be advantaged by organizing our finances and even reigning in some of our expenses, yet sometimes we might not know exactly the utility, and there may well be some value for young people to make certain social connection during their youth, and even if they are looking for a life partner, there can be extra expenses that might be optional, but there still might be some needs to spend in certain ways that will help with both present and future relationships.
Someone else might consider their own situation and put $200 in debt and $50 in Bitcoin. Again,if someone has a low interest rate on their loan and a good backup fund, they might put more of it in Bitcoin.Can give. In a word,the same rule does not apply to everyone. You have to decide for yourself by understanding your own financial situation.But I just tried to explain with an example.
This portion is fair, and largely similar to what I was saying above in regards to considering the terms of the loan, the strength of the cashflows and perhaps even considering how much bitcoin had already been accumulated.. guys who are early in their bitcoin journey may well be wanting to give higher priorities to building bitcoin as compared with guys who might have had been already building their bitcoin stash for more than a whole cycle or longer.
I think people tend to overthink this by trying to turn it into fixed rules when it’s really not that deep in practice. Once someone is honest about how much they earn, what they owe, and how stable their situation is, the right allocation usually becomes pretty clear on its own.
Bottom line is that, it’s less about competing categories and more about balance and making sure you’re not putting yourself under pressure while still leaving room to grow.
There may or may not be value in categorizing our various expenses, and perhaps after we categorize them, then we might be better able to see areas that we might cut or maybe areas that we might need to spend more, and yeah, some of the spending will come naturally, but then if we categorize, we also might be able to figure out if there might be a bit of excess that we might be spending in certain kinds of expenses. If we already have good habits, we might not find any areas in which we need to make adjustments or that we want to make adjustments, so sometimes it can be difficult to know how much value might come from going through the various ways that money is spent or considering the various kinds of income that exist or if there might be future income in new categories.
Sometimes if we project out our income/expenses for 6 months or more into the future, we might see that some kinds of places in which there are short falls or even reasons why we might end up in a dilemma (or short of money) at certain times, and we might come to realize that some of the short falls are coming from our failure to keep enough of a cash cushion and it may be helpful to see the income and expenses that are available at one glance. Another thing that we might end up seeing is that we overestimate our income and we underestimate our expenses, so if we learn how to accomplish the opposite of underestimating our income and overestimating our expenses, then by the time the month plays out, we will end up having extra money at the end of the month (or whatever pay-period) to be able to invest in bitcoin and not having to go through the stresses of not having any money remaining in our cash cushion.
If we are really considering investing, then we likely need to build from our basics first to make sure that we are investing from our discretionary funds, and if we don't have regular funds or even some source of income that is coming in from time to time, then it is going to be difficult to maintain our bitcoin investment, and the desires to earn money from our bitcoin by putting money into it and then cashing out when the bitcoin price goes up, that tends to be a fairly risky proposition, even though surely some guys have been able to make short term profits when they invest into bitcoin in those kinds of trader/gambling ways - and really they are not investing and they are just wanting to generate income from bitcoin, so they may well not realize the value of generating income outside of bitcoin and then using the extra money (after expenses) to build up the bitcoin holdings in such a way that there is no plan to tap into the bitcoin for 4-10 years or longer, and with younger people, they are likely going to be better off to have bitcoin investment timelines that are either longer than 10 years or even considerations of how to make sure that they are holding onto bitcoin for the totality of their lives.
Good, you have actually highlighted a very important point, and I agree with you that before someone to starts investing in bitcoin, one should truly focusing on building thier financial stability and also making sure that they are actually investing thier discretionary income.
Yeah, but. I doubt that I said or meant to say what you are saying that I said. I think that it is important to get started, and of course, it is important to determine the extent to which discretionary funds are available, since investment into bitcoin can only come from discretionary funds that are available and sufficient enough for the person to determine that it is o.k. to put that money into bitcoin, lock it up for 4-10 years or longer and perhaps not even ever to get it back.
I think that anyone who starts investing into bitcoin will be incentivized (or should be incentivized) to ongoingly improve the strength of his cashflow management systems/practices so that he can also continue to build up his bitcoin stash at the same time.
Guys can get started investing into bitcoin from various states of skills, knowledge and/or experiences, and none of those things are required to be at a high status in order to either get started and/or to continue to invest in bitcoin, so long as determinations that discretionary funds are available and being used to make the weekly buys (or however frequently the bitcoin buys are being made).
Using discretionary income to invest in bitcoin is actually a safer approach without any emotional stress and it also prevent panic selling during the market volatility. Also if someone doesn’t have the a steady source of income regularly,it will actually becomes more difficult for the person to hold Bitcoin for long-term growth.
I never said that a steady source of income is needed to buy bitcoin... even if there are benefits in having a steady source of income, it is not needed to get started or even to continue to buy bitcoin as long as bitcoin is being bought from discretionary funds.
Sure, the more discretionary funds that are available, then the more options in regards to how much to invest into bitcoin and also how much to put into savings and/or discretionary consumption, but strong discretionary funds are not necessary to start to buy bitcoin or to ongoingly buy bitcoin as long as such discretionary funds are available at any of the times that bitcoin purchases are decided to be made.
Many people tends to enter the market with the aim of making quick money by buying at lower and sell higher. But to me that approach Is very risky and sometimes seems as gambling to me instead of true investing.
Even though overall, we likely expect to be selling ur bitcoin at higher prices than we bought them for, and sure we like to be able to buy more bitcoin for the same amount of money (such as buying on the dip), yet with bitcoin, there likely is a need for the overwhelming majority of normies to get the fuck started in terms of building their bitcoin holdings, and if they either do not have any bitcoin (no coiner status) and/or they have some lower quantities of bitcoin (low coiner status), there likely are needs to accumulate bitcoin and to not be overly preoccupied by the price, since most likely investment timelines are going to be 4-10 years or longer, and there also tends to be little to no ability to really know if the short-to-medium bitcoin price is going to go up, down or sideways, so there tends to be quite a bit of value in focusing on ongoing accumulating rather than concerns about the price, and surely if a person ends up ongoingly buying bitcoin for 4-10 years or longer, there likely are good chances that they are going to be better off for their having had accumulated such bitcoin rather than if they had not... Sure, no guarantees, but probably not a bad way to place extra income.
And, yeah, in the end, each person has to decide for themselves in regards to the extent to which bitcoin accumulation becomes part of their financial planning and management of their personal finances - even if they might come accross opportunities to spend bitcoin or even spend and replace their bitcoin.
In addition, many people now eventually realized that it's good to also make money outside Bitcoin and consistently use thier extra funds to accumulate and hold for long-term or over may years. It's just requires patience and proper cashflow management.
Of course people are in different places in their lives in terms of whether they might get extra work or training or even to attend school to learn new skills, and sometimes people might be in positions in which they consider that it might not be a good use of their time and money to train for new skills. And, normal people sometimes might be in positions in which they are tempted to enter into businesses or partnerships, which could be ways to leverage their labor and also could be ways to suck their capital without paying off in terms of returns on their time, energy and/or value.
My own ways of describing bitcoin investment does tend to give credit towards the ability to spend time, energy and value on building bitcoin stack sizes, even though frequently there can be competing ways to use the time, energy and value, and individuals have to figure out if they can do both or if they might be better off to prioritize one over the other.
Bitcoin is a volatile asset, the price change up and down, if the match go down deeply, the pressure might be too much, that’s why it not advisable for anyone to take a loan to invest in bitcoin. People who understand bitcoin prefer to invest with the money they can afford to lose or money they will not need anytime soon. It’s better to build your accumulation gradually with the money you can afford, instead of taking a loan and end up worrying yourself if the market does not operate the way you expected.
Taking a loan to invest in bitcoin is not the problem, but taking a loan and hoping to repay the loan with proceeds from the bitcoin investment is where the problem is, and that’s what we are against. You don’t have a problem taking a loan to invest in bitcoin, provided you have other means of settling the loan and the interest of the loan outside the bitcoin you are accumulating with the loaned money. For instance you did a contract and your payment is due in two months time, but as of today you saw an opportunity in the market which you want to capitalize on, you approached a friend to loan you some money that you will repay him in two months time when your contract money is due to be paid to you. He loaned you the money, and you invested it in bitcoin. Two months later, your contract money arrived your account, and you repaid your loan and the interest to your friend. No long talks and no delay. In cases like this, it is not wrong to obtain a loan, for the purpose of investing in bitcoin. People are only discouraged on taking a loan to invest in bitcoin when they don’t have other laid out plans to repay the loan.
The example you gave as payment for contract work, where payment is given after 2 months, I look at it a little differently. First of all, it would never be right to make a decision based on short-term opportunities within those 2 or more months. If you want to accumulate Bitcoin with a long-term mindset, you have to invest in Bitcoin depending on cashflow, not on what the price of Bitcoin has been.
I assume he has the ability to repay the loan, but it will be after 2 months. In that case, he will wait for these two months and start investing after two months. Because the situation may change after taking a loan from a friend. Especially, the client may not pay, unexpected expenses may come, and even the relationship with the friend may deteriorate. So in such a situation, an investor should wait for some time and adjust his position and then start investing. There is no need to take any unnecessary risks.
You seem to be fighting the hypothetical that New Judgement gave, which was an example of expecting to get paid in 2 months and taking a loan based on such expectation.
Sure, he might end up not getting paid, but it still seems to be a reasonable example, even if guys might make different judgements in terms of whether their future income is sufficiently enough guaranteed to justify the loan.
