JJG’s Outline of Bitcoin Investment Ideas

[abaeze]

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 ?

When investing sometimes you have to make trade offs to stay within your ability. However, building a financial cushion and investing in Bitcoin are not mutually exclusive and you can do both in parallel. But you should not put so much money into Bitcoin that if its value drops significantly or your income suddenly stops, you would be forced to sell it to cover your essential expenses. In other words, you need to take the risk of forced selling into account.

[sotelorene]

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 ?

When investing sometimes you have to make trade offs to stay within your ability. However, building a financial cushion and investing in Bitcoin are not mutually exclusive and you can do both in parallel. But you should not put so much money into Bitcoin that if its value drops significantly or your income suddenly stops, you would be forced to sell it to cover your essential expenses. In other words, you need to take the risk of forced selling into account.

I disagree with you because this is trading and not investment and in Bitcoin investment you don't need any trade offs unless you have gotten to your overaccumulation stage where you will have to relax yourself and won't be putting so much effort to grow your portfolio because you are their already. You words can mislead newbie who want to invest in Bitcoin, they don't have to or need to take the risk of force selling because they are not traders only traders should consider and take it into account.

[Son Of Blockchain (SOB)]

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I disagree with you because this is trading and not investment and in Bitcoin investment you don't need any trade offs unless you have gotten to your overaccumulation stage where you will have to relax yourself and won't be putting so much effort to grow your portfolio because you are their already. You words can mislead newbie who want to invest in Bitcoin, they don't have to or need to take the risk of force selling because they are not traders only traders should consider and take it into account.

I wonder if it's because the OP made thread in a trading discussion board, that's why some people feel they can trade and invest in Bitcoin at the same time, I'm here wondering how it's possible because while on the accumulation stage people don't need distractions that would hinder them from building their portfolio to overaccumulation stage.
 We all can agree that the lose in trading is bigger than the gains and those discretionary funds that was lost while trading could've been used in accumulating more Bitcoin, that's like a waste of discretionary funds cause what's lost in trading is lost forever whereas Bitcoin has shown us that it able to improve after short term dips.

[Different patterns]

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.

There is no reason to focus more on back up funds than bitcoin, unless a person already knows that he does not have stable discretionary funds.

So if a guy has situations in which he knows that his income might be low and/or his expenses might be high, then he has to make sure that he is prepared for that financially (and psychologically).

Yet if the guy has steady discretionary income, then it is more than reasonable (as I already outlined above) that the bitcoin newbie should be able to divide his discretionary funds into three parts and to build his bitcoin and his back up funds at the same time while keeping some money for discretionary spending

I agree with your view, because the important aspect is get to understand your personal financial position, because two goals no need to compete with one nd another. If there’s stable discretionary income,  there’s no need to choose btw building bitcoin or backup funds. Is to just separate the available funds, while keeping something separate for normal spending. But if your income is unstable then having a strong backup fund that will make sense, because you do not have to sell your bitcoin investment when facing some challenges, but once your expenses are steady covered then to build bitcoin position and backup at the same time is the best approach, there’s no need to put backup funds first and ignore the main investment which is bitcoin. Both can be build together along.

[Agbam]

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...  

I understand that it takes years to build backup of that amount. I’m not making light of that, I was just giving an example of different guys and their different financial situations especially someone who has already built a standard back up not one just starting out, to drive my point.

Yes everyone can’t be in the same position or situation. Backup funds aren’t necessarily for only Bitcoin, so a guy who has no investment in bitcoin but may have several other businesses or other investments can still have up to 3-6 months of expenses set aside. And if that person decides to invest in bitcoin he doesn’t need to put priority on building backup funds.
For someone just starting out he can just build his backups as he invests, as much as he can. It all depends on the investor and where their priorities lie; they can decide to be more aggressive with building their bitcoin portfolio or building a substantial backup.

What I said in the previous comment was to drive a point that even if you’ve built a sufficient backup of 3-6 months you don’t need to totally stop adding to it. Because as your investment grows so too does the amount you have exposed to risks and the need to protect it.
A large holding requires a large buffer.

[SmartCharpa]

divide your discretionary income into three use part, part A for investment, part B for emergency funds and part C for your discretionary consumption, after getting all this, you increase your investment when you have increase in your income or in your discretionary income, so that you continue to accumulate more bitcoin.

You’re mixing your discretionary income with your earnings. How can you still divide your discretionary income into three different ways when the money alone is meant for investing? That’s the money you can afford to lose because you have taken care of your expenses. From the moment you start to invest in Bitcoin, the money you invest with, that’s your discretionary income. You can increase your discretionary income along the way to any amount you feel comfortable investing.

Emergency funds are different from discretionary income, and there is no way you can remove your emergency funds from your discretionary income. It’s not necessary to increase your discretionary income if you do not reduce your expenses or get a payment increase from your income. You may end up investing more than you can afford. Just maintain your investment plan and continue buying.

[ejikeme24]

I wonder if it's because the OP made thread in a trading discussion board, that's why some people feel they can trade and invest in Bitcoin at the same time, I'm here wondering how it's possible because while on the accumulation stage people don't need distractions that would hinder them from building their portfolio to overaccumulation stage.
 We all can agree that the lose in trading is bigger than the gains and those discretionary funds that was lost while trading could've been used in accumulating more Bitcoin, that's like a waste of discretionary funds cause what's lost in trading is lost forever whereas Bitcoin has shown us that it able to improve after short term dips.

It is almost impossible for a person to be trading Bitcoin at the same time investing in bitcoin, because the main reason why a person will chose to trade is due to the fact that they are looking for quick profit, how did you think that  such person will be doing the both at the same time when all they think of is how they can make quick profit?

Even if a person would want to give it a trial by doing the both at the same time, there willl come a time when they will prioritize Thier  trading over  Thier Bitcoin investment probably because they are making little profit from Their trading. at that point they will start saying that what they are looking for in Long term they have gotten it just Within the space of two months or there about, not knowing that it's just a trap or a way to get them to put all Thier focus in trading.

 I personally would advice that instead of starting the both at once we should first of all give attention to building our Bitcoin portfolio and HODL for Long term maybe after which we have gotten to our investment target and / or the status of overaccumulation then we can decide to use our discretionary funds to do whatever we wants to do with it as long as our Bitcoin portfolio is in a better position.

[Obulis]

Knowledge is no doubt important but I think the  most important thing someone need before they start buying bitcoin is discretionary income, because with discretionary income you know you extra money left after you might taken care of all basic need that you invest with and hold for long without fear.

Knowing that you need discretionary income to use in making your investment in Bitcoin and equally how to be strategic with your accumulation consistently buying is also knowledge. To have a discretionary income you must have a paying job or a business that gives you income.

Bitcoin investment is not all that difficult for a newbie not to grap and be in the right direction in term of investment approach to use and timeframe for the Bitcoin accumulation maturity. All that is required to gain the knowledge is learning and this can also be done while the Investor is already accumulating.

This issues of learning reminds me of my tribe and neighboring tribes and culture where those days (50 years ago plus) going to school was basically having the ability to learn and understand coded language and also coding our language (that's writing). In this matter if you check, to a high extent having the ability to understand coded language (writing) is enough to start with Bitcoin. So many terminologies known before now are the same like buy, sell, lump sum, volatility, Averaging etc. Having understanding of this terms must not necessarily be because you learn about Bitcoin, this are things you know already so that makes starting with Bitcoin much easier in the first place not like a medical or engineering degree etc that requires so much time and efforts.

[Joeboy]

~snip~

I disagree with you because this is trading and not investment and in Bitcoin investment you don't need any trade offs unless you have gotten to your overaccumulation stage where you will have to relax yourself and won't be putting so much effort to grow your portfolio because you are their already. You words can mislead newbie who want to invest in Bitcoin, they don't have to or need to take the risk of force selling because they are not traders only traders should consider and take it into account.

Do you actually understand what trade-off means, I don't think you actually do... Fyi trade-offs dosen't mean trading in the actual sense...If folks have limited amounts of discretionary income due to the nature of their job( a low paying job), and such an individual is trying to consistently invest, while also building an emergency fund in the process, as well as reserving some for consumption, there will naturally be a trade- off in deciding how much amount goes into your investment, emergency savings as well as consumption. Assuming you concluded to put let say about 50% of that your Discretionary income into Bitcoin, then 40% into emergency funds, you will be left with 10% which is a lesser to use for discretionary consumption.. This also is the case when lesser amount in put into Bitcoin and emergency funds, and more in put into discretionary consumption. This is actually the trade-offs, since you are choosing btw some available options, knowing fully well that if you give more resources to one, lesser resources will be available for the others.. Surely I am not saying that you must always have to choose btw your Investment, consumption and saving, since folks can very well just allocate the same percentage of money into investment, savings and consumption) or building the funds from them simultaneously...

[Razmirraz]

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 ?

When investing sometimes you have to make trade offs to stay within your ability. However, building a financial cushion and investing in Bitcoin are not mutually exclusive and you can do both in parallel. But you should not put so much money into Bitcoin that if its value drops significantly or your income suddenly stops, you would be forced to sell it to cover your essential expenses. In other words, you need to take the risk of forced selling into account.

Building an emergency fund and investing in Bitcoin is not an "either-or" choice. In fact, the two should go hand in hand. An emergency fund ensures you never have to sell your Bitcoin at the wrong time. The real problem isn’t Bitcoin itself. It’s putting all your money into it without a reserve. That’s speculation, not investing.
If you invest for the long term with money you can afford to lose and accumulate over time, you won’t be forced to sell when prices drop or your income stops. That’s a trader problem. They operate daily or weekly, so they have to worry about liquidation. With the right strategy, there’s no reason to fear forced selling.

[cocadalcan]

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 ?

When investing sometimes you have to make trade offs to stay within your ability. However, building a financial cushion and investing in Bitcoin are not mutually exclusive and you can do both in parallel. But you should not put so much money into Bitcoin that if its value drops significantly or your income suddenly stops, you would be forced to sell it to cover your essential expenses. In other words, you need to take the risk of forced selling into account.

I would not view Bitcoin investment as a risk-taking mistake because if someone does not take risks in their investment, they will not get the expected profit they want. Taking risk depends on the financial capacity of an investor. You should invest in Bitcoin with an amount that you do not need on a daily basis or within the time frame that you have set for your long-term investment goal.

My recommendation for Bitcoin investment is to use the amount that does not create financial risk for you without investing the entire amount of your excess funds. For example, if you have $500, save $400 in Bitcoin and keep the remaining amount in cash, either to create an emergency fund and some reserve fund.

Emergency fund and reserve fund should be separate because the rules of operation of the two funds are different. Emergency fund is for protecting Bitcoin holdings. In case of job less or any health problem, you may need medical funds to maintain your good financial position and solve financial problems without withdrawing Bitcoin holdings. The function of the reserve fund is to keep it in cash to meet your daily extra expenses and in some cases, use that fund in times of emergency.

[Nwaswago]

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 ?

When investing sometimes you have to make trade offs to stay within your ability. However, building a financial cushion and investing in Bitcoin are not mutually exclusive and you can do both in parallel. But you should not put so much money into Bitcoin that if its value drops significantly or your income suddenly stops, you would be forced to sell it to cover your essential expenses. In other words, you need to take the risk of forced selling into account.

Building an emergency fund and investing in Bitcoin is not an "either-or" choice. In fact, the two should go hand in hand. An emergency fund ensures you never have to sell your Bitcoin at the wrong time. The real problem isn’t Bitcoin itself. It’s putting all your money into it without a reserve. That’s speculation, not investing.
If you invest for the long term with money you can afford to lose and accumulate over time, you won’t be forced to sell when prices drop or your income stops. That’s a trader problem. They operate daily or weekly, so they have to worry about liquidation. With the right strategy, there’s no reason to fear forced selling.

What mostly causes selling off bitcoin before the actual long term investment goal is the use of funds that you can’t afford to loose or leave for a long period of time,I think what also causes that is the mindset of putting more funds so if there is an upturn, the profit will be more not knowing that in bitcoin investment it's better off to accumulate little by little than put more and the rest you keep as emergency funds is then not enough for your basic needs and emergencies, so at that point you will be let with no options than to sell off your bitcoin.

[Nwaswago]

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 ?

When investing sometimes you have to make trade offs to stay within your ability. However, building a financial cushion and investing in Bitcoin are not mutually exclusive and you can do both in parallel. But you should not put so much money into Bitcoin that if its value drops significantly or your income suddenly stops, you would be forced to sell it to cover your essential expenses. In other words, you need to take the risk of forced selling into account.

Building an emergency fund and investing in Bitcoin is not an "either-or" choice. In fact, the two should go hand in hand. An emergency fund ensures you never have to sell your Bitcoin at the wrong time. The real problem isn’t Bitcoin itself. It’s putting all your money into it without a reserve. That’s speculation, not investing.
If you invest for the long term with money you can afford to lose and accumulate over time, you won’t be forced to sell when prices drop or your income stops. That’s a trader problem. They operate daily or weekly, so they have to worry about liquidation. With the right strategy, there’s no reason to fear forced selling.

What mostly causes selling off bitcoin before the actual long term investment goal is the use of funds that you can’t afford to loose or leave for a long period of time,I think what also causes that is the mindset of putting more funds so if there is an upturn, the profit will be more not knowing that in bitcoin investment it's better off to accumulate little by little than put more and the rest you keep as emergency funds is then not enough for your basic needs and emergencies, so at that point you will be let with no options than to sell off your bitcoin.

[Barikui1]

What mostly causes selling off bitcoin before the actual long term investment goal is the use of funds that you can’t afford to loose or leave for a long period of time,

I agree with you that investing more than you can afford to lose can make an investor sell prematurely, because such investor will always panic anytime their is a dip in the market, but that is not the only thing that may compel a Bitcoin investor to sell his holdings even though he invested from his discretionary income.

When you invest in Bitcoin from your discretionary income and you fail to put down emergency and reserve funds in place to protect your bitcoin investment from any real life emergencies, you may be forced to sell your Bitcoin investment prematurely even when you never wanted to because emergencies can come and wipe out your holdings already accumulated, that is why putting down emergency funds is a must to develop a strong holding hands.