I don't know the kind of orientation some people get that will make them want to build emergency funds before starting investing in Bitcoin, I am not disputing that emergency funds is not good no but rather I am just trying to let some folks know with this mentality that it is not the best or right thing to do because your priority as an investor especially as no coiner is to start growing or purchasing Bitcoin first and then grow your emergency funds along side.
Sometimes it's not just about poor orientation or any of them being misled, but it may be that the newbie investor is doing what I call ITK, which is "I too know" when they knows nothing. Such types of people believe that common sense can help them figure out everything the right way all the time, without knowing that they are just trying to fuck themselves up by applying common sense on everything.
An inform investor knows that Bitcoin accumulation and putting down your backup funds in place is done simultaneously, not by pay more attention to one and neglecting the other.
I’m still trying to figure out where you stand @Futurexxx, are you against the use of common sense in bitcoin investment or what ?, because that’s what your write up seems like to me.
Or is that you’re confusing overconfidence with using common sense? Cos there’s a big difference between a person assuming that they know everything and someone applying ordinary reasoning to make sensible financial decisions, this should be obvious to you already but i wonder why it’s not.
Don’t you know that having
common sense and basic financial reasoning are actually part of what makes someone a responsible investor in the first place?, you don’t need to be a financial expert to know that you must have a source of income that is more than your expenses so as to be able to have a surplus from it to invest with, it’s common sense, same way you don’t have to be told that you must not invest with money meant for your basic expenses, it’s not rocket science, it’s just common sense.
Ironically even your argument about accumulating Bitcoin while building backup funds simultaneously still requires the same use of common sense that you’re seemingly dismissing, so what you on about buddy?
A person may or may not have basic financial reasoning when he gets started buying bitcoin, yet hopefully, his common sense would help him to arrive at the conclusion to invest less into bitcoin if there might be basic areas that the person is lacking in knowledge, skills and/or experiences.
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Many people (investors) usually forget to cut some shares for their discretionary spending while splitting their discretionary income, some might want to use Their reserve funds when they need money to buy anything. And I don't think if there's anything wrong with that rather, it will make our reserve funds not to grow bigger of which our reserve funds is meant to be in a position where it will be enough for us to buy as aggressive as we like during the dip, especially if there's no enough discretionary funds at the time. So to avoid complications it is wise to split our discretionary income into 4 parts, emergency funds, reserve funds, and discretionary spending while the leftover can be use to make our normal routine buying of bitcoin.
emergency funds and reserve funds are both part of back up funds, so there is no need to create separate categories for them.
When you are holding back money to buy the dip, then that is part of reserve funds, and sure I don't recommend changing levels of aggressiveness based on bitcoin prices, yet of course, guys can do whatever they like.
So to avoid complications it is wise to split our discretionary income into 4 parts, emergency funds, reserve funds, and discretionary spending while the leftover can be use to make our normal routine buying of bitcoin.
Your discretionary income should be split into three equal size which is the first 1/3 for your regular DCA overtime, the second 1/3 to build your emergency funds and the last 1/3 for your discretionary consumption.
Guys can split their discretion into whatever proportions that they want.
Many guys use 1/3 in each as an easy reference point, even though in the end, each person has to decide his proportions in each of the categories of 1) invest, 2) save and/or 3) discretionarily consume.
Common sense tells what is right to do and what isn't right to do but to invest in bitcoin what is needed is your discretionary funds and common sense and nothing more than this. Instead creating an emergency funds will hold us not to start investing asap we can start if our discretionary funds is ready and later create an emergency funds along with buying bitcoin, but in a situation where an investor already have their emergency funds at first it's also a win win for such an investor because at end of it all an investor still need an emergency funds to keep their bitcoin investment safe and it will also strengthen them to hold their bitcoin for a long time, while we shouldn't be waiting to start if our discretionary funds is ready but no emergency funds yet.
Procrastinating is the reason some people haven't yet invested in bitcoin, they Keep on postponing investing in bitcoin when they can get started with just their discretionary income. Because you don't have an emergency fund doesn't mean you cannot invest in bitcoin as both your emergency fund and investment can be build up the same time. People should stop using lack of emergency fund as an excuse to delay their investment.
Such an excuse is baseless since they can build both their emergency fund and bitcoin investment simultaneously by splitting their discretionary income in half. One half can be used for investing while the other half can be use for building their emergency fund.
Oh? You only use your discretionary income for investing and savings? Nothing else?
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Basic knowledge cannot be omitted in Bitcoin investment or any other investment, in fact basic knowledge is the key to becoming smart or experienced in Bitcoin investment, it helps to understand investment mistakes, that alone should be understood by us. That's right, even if no professional investor says so, basic knowledge about investing will convince the novice investor that it is not necessary to build an emergency fund before starting to invest and the first thing that is needed is to find out the discretionary income which I learned from JJG's analysis.
I never assert that guys need basic knowledge before investing in bitcoin. I repeatedly assert that guys need discretionary funds and common sense to invest in bitcoin.
Common sense is not the same as basic knowledge since common sense does not presume any particular knowledge except that maybe the person will take into account their circumstances and exercise good judgement about what he might know or need to know and how much he should invest, if anything.
It is possible to start investing in Bitcoin even if there is no emergency fund and even if there is no source of income one can start collecting Bitcoin in some alternative ways so it should be understood at this stage that one should not delay in buying Bitcoin.
You have to have discretionary income to start buying bitcoin, so if a guy starts buying bitcoin and he has absolutely no back up funds, then he is going to consider if that makes sense, since he might be investing beyond his discretionary funds since he has to have enough money to cover his basic expenses until the next time he gets paid.
Basic knowledge cannot be omitted in Bitcoin investment or any other investment, in fact basic knowledge is the key to becoming smart or experienced in Bitcoin investment, it helps to understand investment mistakes, that alone should be understood by us. That's right, even if no professional investor says so, basic knowledge about investing will convince the novice investor that it is not necessary to build an emergency fund before starting to invest and the first thing that is needed is to find out the discretionary income which I learned from JJG's analysis.
Basic knowledge cannot be overlooked because, when it comes to holding the knowledge that you need, it is just the basics because you don't need to do too much then, after the basics, you have to understand that you need to buy more through the process of doing DCA or even more.
What is the basic knowledge that you need beyond determining whether you have discretionary funds?
When it comes to investing, you have to apply wisdom because, after the first buy, the next thing should be how you want to buy more, because that is what most holders do, and that is why they will tell you to have everything planned out, like even having emergency funds. Because investing is just not about the first buy it is more than that.
Each time you buy you have to make sure that you have discretionary funds.
So if a person knows that he has $100 in discretionary funds every week, then he can plan to buy a certain amount of bitcoin every week that is less than $100.
However, if the guy does not know his discretionary funds or when he is going to get paid next, then he might determine that he cannot buy bitcoin because he feels that he does not have enough certainty in his discretionary funds.
It is possible to start investing in Bitcoin even if there is no emergency fund and even if there is no source of income one can start collecting Bitcoin in some alternative ways so it should be understood at this stage that one should not delay in buying Bitcoin.
For those who are really disciplined, they can actually do without emergency funds, at least they know how their funds will be corrected.
NO you cannot not have any emergency funds (or back up funds), since if you do not have back up funds, then you cannot know whether you are spending beyond your discretionary funds.
Maybe you can explain how a guy is going to invest in bitcoin without any back up funds.
Go ahead. Try to not make your explanation too stupid. In other words, try to make your explanation make sense. Go ahead. Explain. How does a guy buy bitcoin without back up funds and still assure that he is not spending beyond his discretionary funds? Or are you presuming that guys can use non-discretionary funds to buy bitcoin? Are you in the correct thread?
The other way round, I feel like everything still depends on themself, but even then I still suggest you have an emergency fund.
You sound retarded. First you say that a bitcoin investor (presumptively bitcoin newbie) does not need emergency funds, and then you say that even though a bitcoin newbie does not need emergency funds, you still recommend that he he has emergency funds. How does what you are saying make any sense?
