JJG’s Outline of Bitcoin Investment Ideas

[JayJuanGee]

Dividing discretionary income into 3 parts may not be a logical decision for everyone, because the same formula may not work for every investor. For example, there are two users who have $300 of discretionary income per month. The first of them may already have an emergency fund and a stable income. The other does not have an emergency fund and even his income is uncertain. In this case, the same 1/3, 1/3, 1/3 formula may not be realistic for both of them. Because the first person may be comfortable giving $200 in Bitcoin. But the second may be more concerned with putting a larger portion of his discretionary income into an emergency fund or reserve fund.

Each person needs to make a decision based on their situation and financial situation. A person who already has an emergency fund ready does not need to create a new emergency fund. These decisions should be taken by the first person you imagine according to his situation. A person whose income is unstable and does not have an emergency fund can divide his income into three levels. Each person should take each decision according to his own convenience, another person has done one thing does not mean that it will be right for him to take the same decision.

But yes, the more our fund, the better or more secure our holding will be. For example, we can divide our funds into how many levels, such as emergency fund, reserve fund, other fund, the more our number of funds, the more our security level will increase. But yes, it is not necessary to keep the same amount of money in each fund. We can use the emergency fund as our main, protective, layer and in the emergency fund we can keep an amount equal to 3 months of expenses or we can keep an amount equal to 3 months of income. We can keep some less money in the reserve fund and in other funds we can keep less money than the reserve fund.

I hope you guys know that the 1/3 sharing formula is not fixed?, it’s a suggestive guideline for how investors should spend their discretionary money while investing. That is invest, save and spend.

Yes, I agree that individuals make financial decisions based on their situations and circumstances, a person who has emergency funds built already might focus more on bitcoin, that is not to say he’ll stop adding to his backup funds. As our investment portfolio increases so too the need to protect it. So someone who has 3-6 months of basic expenses or income may still top up his backups from time to time.

I think that priority may change depending on the situation but it’s not good to entirely stop or remove one from the 3 ratios.

It seems to be a bad habit for guys to be describing 3-6 months of back up funds as if that is normal, and it is not. It is also generally a waste of resources to keep that much back up funds unless a person already has a large bitcoin investment amount.

Let's try to be more reasonable in our descriptions in terms of where a guy might start.

Guys might start with 1-2 months of back up funds  and then build their bitcoin at the same time.  And, sure there are exceptions, but we should not be describing the exceptions as if that were the more typical way that guys might build up their bitcoin and their back up funds at the same time.

For example, if a guy comes to bitcoin and has absolutely no bitcoin, yet he has 3 months of back up funds, he probably needs to allocate half of his back up funds to bitcoin, whether he buys right away, DCAs over a few months and/or he buys on dips.  Three months is likely too many back up funds for starting out if guys have absolutely no bitcoin.. so let's stop talking as if guys have 3-6 months of back up funds unless they already have a bunch of bitcoin too, since that 3-6 months of back up funds sounds like way too much cash to be holding, especially for a beginner bitcoiner, unless there are some special circumstances that would justify keeping so much cash, and I have difficulties imagining too many typical circumstances to justify holding that much cash, especially since we are talking about building bitcoin in this thread and balancing that bitcoin building with our cashflow management and other individual particularities...  

[BluebloodCXVI]

As long as you have been able to take care of your essential expenses, if you happen to have some emergency cushion available to you at that point in time, putting in a small portion of genuine surplus into Bitcoin can let you have some exposure without putting yourself under too much financial pressure.

Just because you have some emergency savings doesn't mean it's safe to buy Bitcoin. Because if your emergency savings are very small, you may need to sell Bitcoin if your income or expenses suddenly stop. Then investment risk and financial-security risk come together. However, there is no rule that prohibits taking Bitcoin exposure until your financial security is 100% perfect. So first decide what is right for you according to your ability. Because what is right for Lil may be risky for X.

On the other hand, if the price of Bitcoin drops by 50% and you don't have to sell Bitcoin to anyone for months or years, will he/she be able to handle their essential living expenses and emergencies? This answer will not be the same for everyone.

Similarly, if the answer is yes, then investing a small portion of your surplus in Bitcoin is quite reasonable. But if the answer is no, then it is more important to strengthen your financial cushion first than to buy Bitcoin.

Look bro, as long as the amount you’re putting in into bitcoin is at a level of risk that you can afford to handle given your overall financial situation, it doesn’t matter whether you have large emergency funds or not before you can buy bitcoin; as long as you have atleast some reasonable amount of emergency buffer available to you, you’re good to go.

An allocation that is modest and comes from a genuine surplus can be very reasonable even if you have a relatively small cash buffer.
Whereas in some cases, putting in a large portion of your wealth into bitcoin may be reckless even when you have a substantial amount of emergency funds.

Why do i need to worry myself with trying to choose between building my financial cushion and investing when I could just do both simultaneously and adjust the proportions as my financial situation continues to improve ?

You need to understand that financial responsibility is not about trying to eliminate every risk before you can start investing, you just gotta make sure that any risk you take will not threaten your ability to meet your essential obligations, simple as that.