JJG’s Outline of Bitcoin Investment Ideas

[Bright0515]

There’s nothing wrong with taking profit from your investment,

Honestly, this is the mindset of a trader.
There's always something wrong to take profits from your Bitcoin investment when you haven't reached your target. One of the reasons why it's important not to take profits when you habt reached your accumulation target is that you might not ever reach your target anymore as you have already tampered it earlier. After taking the little profits you have made from Bitcoin investment, the price might keep on rising and obviously you have missed that chance at that moment. So long as the price goes up after you might have taken the little profits you made earlier, you will definitely regret it. Actually, taking profit whenever you want to will definitely spoil your initial long term plan. One obvious thing about those who take profits whenever they want is that they probably end up using it for unnecessary things that won't add up any value to them. Talking profits whenever you want can literally make you hold only little Bitcoin in your portfolio.

A long term investor on think of how to accumulate more Bitcoin and how to be more consistent with accumulating Bitcoin, they don't consider taking profit until they have reached their accumulation target of 10 yeard or more.

[Razmirraz]

There’s nothing wrong with taking profit from your investment, but if you have not reached your accumulation target, then there is no reason to take profit since that was not your plan from the beginning. May be you planned to hold for a long time regardless of the market condition, and all of a sudden the market increases, your profits double, and you now want to take profit from it.

To me, your statement above sounds a bit confusing since it seems you are on two different pages without clarity. You initially pointed out that there is nothing wrong with taking your profit in Bitcoin, and later stating that there is no need or reason taking your profit since it was not your original plan.

If I'm not mistaken in interpreting the bold text you quoted above, @SmartCharpa wants to explain that investors should not deviate from their initial plan (selling investments to take profits) if the profit target they want to collect has not been achieved. This principle is very commonly held by Bitcoin investors, especially for the long term. The points from the article you quoted include Investors must stick to the initial plan, avoid decisions based on emotions and accumulation disorders.
Taking profits midway will damage the accumulation process and slow down investors progress in achieving larger financial targets. To make it easier to understand, don't change your initial plan midway so that your investment has time and space to grow until it reaches its final goal.

[Nheer]

If a person has an income of $30k per year and he decides to invest $100 per week into bitcoin (17.3%), then maybe after 5 years he had invested $26k into bitcoin, and if bitcoin suddenly goes up 5x to be worth $130k in a fairly short period of time, the guy might not know how to deal with that situation.  Is he going to keep buying bitcoin?  Stop buying bitcoin? Or is he going to be tempted to sell some of his bitcoin?

Maybe he never had any investment that was worth that much money, so he has to learn how to deal with having that money and knowing that the price is volatile and that he can sell the bitcoin at any time that he wants.  Building up a habit of ongoingly buying bitcoin can help in these circumstances, but also building up back up funds can help in these types of circumstances, too.

That absolutely a high percentage of bitcoin returns that comes after constant accumulation of bitcoin for over 5years. But I’m a bit loss right now so what should be the investors decisions here or does it totally comes down to the investors to decide on what to do with the bitcoin or is there any positive way to approach a situation like this.
I’m just so curious because with high amount of bitcoin like this then such investors would be totally confused so what should be his decision here. Keeping up with more accumulation? Or selling off all his holdings? Or even maybe selling some and securing it what should be the decision here @JayJuanGee.

Well? I made that example with a set of facts that presumes a shooting up of the BTC price after the hypothetical guy had already spent 5 years investing in bitcoin and then the price 5x'ed after that... which surely could happen again, but we are not in that kind of a place currently...

So it could be that I would have to change the timeline in order for hypothetical the facts to work out.. I don't like to get too far off of the facts with my actual numbers, so let me give you some more facts related to the hypothetical, and perhaps you can answer the question regarding what the guy should do.

I am going to reframe the timeline so that the hypothetical guy had started accumulating $100 per week of bitcoin in September 2018, and by September 2024, he had already been accumulating $26k worth of bitcoin, which actually only added up to 1.32 BTC.  His average cost per BTC would have had been right around $20k at that time, in September 2023.

At the time in September 2023, the guy did not know that the BTC price was going to go up 6x from his cost per BTC in October 2026.. so it seems to me that the guy does not have enough bitcoin in September 2023 in order to conclude that he can modify his bitcoin accumulation practices of ongoingly buying $100 per week.

If he continued to accumulate bitcoin at $100 per week between September 2024 and now, he would have had invested another $9k and accumulated another 0.104 BTC (which would be about 1.424)... So why not continue to accumulate?

Since the guy is currently earning $30k per year, does the guy want to get to a point that he can quit his job and earn the same $30k per year from his bitcoin? or does he want to get to a higher amount of income from his BTC?

You should be able to decide these kinds of personal preference matters.

If the guy merely wants to be able to get $30k per year from his bitcoin with a 7% per year increase, then he still would need to have at least 4.91 BTC right now in order to be able to accomplish that..

The amount of bitcoin that he needs to sustain the same level of dollar income, such as $30k er year, will continue to be less and less with the passage of time, if we might be learning to valuate our bitcoin based on the 200-WMA or some other kinds of conservative bottom number.

Well said and honestly it's a much more reasonable approach. A lot of people get it wrong and assume that a huge increase in Bitcoin price is enough reason for them to stop accumulating even when their target is not yet reached. Price movements alone shouldn't affect your accumulation plan and even though the amount of Bitcoin needed to sustain a person financially could decrease if the price keeps rising yet it's still important to remember how volatile Bitcoin can be and should see any increase as extra benefits but not a reason to stop accumulating since they're yet to reach their target.

That mindset can be risky because a heavy correction could easily push them backwards again. The goal should be building enough holdings that can actually support the kind of life they want in the future instead of getting too focused on the current fiat value of the portfolio.

[Dogedegen]

[edited out]

Then you are the one who is mistaken and I am sure that @JJG would agree with this. If you start buying Bitcoin aggressively without backup funds which means it is beyond your discretionary income, you are a gambler. That is the difference between gambling and investing. It is even more the case for people who are not familiar with Bitcoin or investing in general that they should never do this. When they buy aggressively they will create positions that are too large for what they are able to happen and then when a bad day comes like we have had that crash a few months ago, this will lead them to panic and liquidate at a loss. There have been thousands and thousands of such stories and cases which proves that people should not be doing this.

Users should accumulate with a DCA strategy within their means. Only advanced users who are familiar with what they are doing should consider adding other things or doing other things. For example they could add well timed lump sum purchases on top of the existing DCA when appropriate.

This is exactly correct Dogedegen. One of the only ways for guys to accomplish aggressive buying of bitcoin in a responsible way is to have back up funds.  Yes, the level of aggressiveness within the quantity of discretionary funds is an option, yet if guys are maximizing out their discretionary funds by buying bitcoin, and failing/refusing to maintain adequate and/or sufficient back up funds, then they seem to be engaging in gambling rather than investing.

Even if guys have well paying jobs that provide them with a decent amount of discretionary funds, if they have no back up funds, they are fucked if they don't receive their pay or some other matters happen in regards to their pay.  And, they could even have several sources of income, and all of the various sources of income could dry up, which causes them to be fucked as well. Guys try to be smarter than everyone else and not have back up funds, and sooner or later, they are going to get themselves into trouble from such practices.

Of course, many times we talk about having something like 3 months of expenses in cash as our back up funds, yet surely guys who build their assets for long periods of time, they are going to have all kinds of back up funds that likely go beyond 3 months of their expenses. They will have cash, other assets (investments), friends/relatives who will give them money, a credit line, and even well backed up folks might make mistakes, yet it may well not hurt them to make mistakes in ways to take them out of their bitcoin, since they have the various back up funds (and back up resources).  

Guys who are not rich, and maybe they only have a strong income, they have to purposefully make it a point to build up their back up funds prior to becoming aggressive in their investment approach, otherwise they are just gambling with their bitcoin, as you mentioned Dogedegen..

And gambling might work out several times, until it doesn't.. and there are so many guys who could have had, would have had and should have had many bitcoin, yet they screwed it up at various points along the way because they got into a rush or they wanted to have "all of their money working for them" and various other bullshit excessive risk taking practices that ended up taking them out of the game to become a no coiner (or at least greatly reducing their bitcoin stash size to become a low coiner) based on matters that they could have had controlled - and the practice of building and maintaining back up fund is a key way to deal with variations (fluctuations) in the income and/or the expenses that are not always completely known in advance...and having a back up fund provides for an ability to be aggressive in the choice of how much to invest from the discretionary funds.

I don't know what is going on with users here but sometimes when I read a few posts I see many mistakes, what we are discussing in particular now is basic knowledge and I have seen it talked about many times! Aggressive accumulation is fine if one wants to do it for some reason, but that does not mean that one should turn into a gambler. What exactly is aggressive accumulation will mean different things to different people but what it should never mean is to engage in gambling behavior such as investing without backup funds.

I have actually in some thread said that taking out loans that can be paid back through regular income to buy Bitcoin is alright if someone wants to do that, even if many users mistakenly fought back against this idea since they don't make differences in the details. Using this example I demonstrate the difference, but there are many other options too:

• Aggressive accumulation investing: Taking out a loan where the monthly rate is easily covered by current income and living costs. This is within discretionary income limits and also there exist backup funds.
• Aggressive accumulation gambling: Taking out a loan with the expectation to pay it back with gains from Bitcoin. This is beyond discretionary income and there exist no backup funds.

The difference is clear but many don't get it. The first option is just investing within your discretionary income at a faster time. So instead of waiting 12 months to buy 12 times within the discretionary income, you may buy it all this month and pay back the loan over the same time period. This for me is perfectly fine and actually when you think about what people use these kinds of loans for, this could be considered one of the best uses...

The second one is never fine! There are some cases where it worked out as you mention too in the last paragraph, some people gambled and they won but we rarely hear from people who gambled and lost and these are the majority. I remember a few old friends who put in most of their coins Bitcoin and shitcoin stacks into NFTs right around before the time they started declining. This gamble ruined their Bitcoin journey. So while sometimes gambles can work out they are extremely risky, it is like playing the lottery and should not even be mentioned in any relation to investing at all.

Backup funds are a must, managing discretionary income should be a daily habit.

[Jewan420]

There’s nothing wrong with taking profit from your investment,

Honestly, this is the mindset of a trader.
There's always something wrong to take profits from your Bitcoin investment when you haven't reached your target. One of the reasons why it's important not to take profits when you habt reached your accumulation target is that you might not ever reach your target anymore as you have already tampered it earlier. After taking the little profits you have made from Bitcoin investment, the price might keep on rising and obviously you have missed that chance at that moment. So long as the price goes up after you might have taken the little profits you made earlier, you will definitely regret it. Actually, taking profit whenever you want to will definitely spoil your initial long term plan. One obvious thing about those who take profits whenever they want is that they probably end up using it for unnecessary things that won't add up any value to them. Talking profits whenever you want can literally make you hold only little Bitcoin in your portfolio.

A long term investor on think of how to accumulate more Bitcoin and how to be more consistent with accumulating Bitcoin, they don't consider taking profit until they have reached their accumulation target of 10 yeard or more.

Why are you trying to spread propaganda against someone? The post you quoted is a distorted or fragmented part that conveys a different meaning, but in fact the person said the opposite. You are trying to present a negative by cutting out a positive word.

Anyway, why is taking profit always negative? And a sign of a trader? If there is ever a life-threatening situation for you or someone else before reaching the goal and your backup funds are not enough to handle that situation, would taking profit from an investment still be viewed negatively? I think it is not a negative thing, but rather an acceptance of the situation. Or if there is an opportunity in life from which you will be able to earn a lot of money and your discretionary money supply will increase to the point that with your discretionary money you will be able to accumulate that amount of Bitcoin in just a few months or half the time (the total time of your savings), would you view it negatively if you have to sell some of your funds or sell the profit?

I think that if money is not used properly at the right time, then that money has no value. Selling investments unnecessarily or taking profits from investments (before reaching the target) is definitely not positive, but it can be done in special cases, I don't see anything wrong with it. Taking profits from investments before reaching the target is wrong, but it is not always the case.

[JayJuanGee]

[edited out]

I get your point better now, and I actually agree with a lot of what you said. I think I probably didn’t explain my original point as clearly as I intended to. I wasn’t trying to say that people need to already have specific knowledge before they start, or that they should sit around waiting until they become experts before learning anything, my point was more that “common sense” can sometimes look different depending on the person and their level of experience, you understand?

It may well be the case that we are saying similar things, yet it seems to me that when we get into the practice of describing some specific kinds of knowledge, then it starts to seem that there might be some kind of a suggestion that the specific knowledge is part of common sense when it may well merely be the case that if a person happens to have a specific kind of knowledge, then the common sense may well suggest that he would treat that information within a range of ways, and if the person did not have that specific kind of knowledge then he would end up having to take that lack of knowledge into account when he is trying to figure out how to proceed.

For example, if a buy preliminarily recognizes that his most likely starting sources for buying bitcoin might be one or two different exchanges that he had identified, then common sense might suggest that he looks into each of those exchanges to see what kinds of requirements that they might have for putting value on them, such as if he might have to link a bank account.  If he had never linked a bank account before, then his lack of experience might cause him to hesitate, and he is using his own common sense to determine the level of comfort that he has with the process of sourcing his first coins.

Common sense does not necessarily tell a guy how to proceed, even if he might already accept the idea that he needs to get started buying bitcoin right away, he still might not want to go beyond his comfort level, and he might end up getting stalled based on his own comfort and/or how much time that he has to look into the matter based on other things going on in his life.

Even if newbies might understand that there is a need to get started sooner rather than later, they still might need time to figure out some of the logistics of how to get started exactly within their own comforts and time availability.

Take for example, someone who has been dealing with investments or managing cashflow for years, taking certain decisions may feel natural and less complicated but for someone who is completely new, those same things may not feel nearly as obvious because they’re still trying to understand risk, discretionary income, and what level of exposure they’re personally comfortable with.

That is exactly true.  There are some guys who might have had been managing their cashflows since they were a teenager, and they are in their 20s, and they already have a lot of experience in figuring out their discretionary income (funds) and making decisions based on such discretionary funds availability... and there may be other guys who never think  about their income versus expenses, and they spend money when they have it, until it is gone and they take out loans without really planning how those loans are going to affect them down the road, and then the one guy is very organized and thoughtful in regards to his cashflows and the other guy is frequently putting out fires when he has income short falls and extra expenses that seem to come up without his realizing them to be pending.

I do agree with your point though that common sense should push people to recognize what they don’t know, start small, learn gradually, and avoid unnecessary risks rather than jumping in blindly. I also agree that being psychologically ready matters just as much as being financially ready.
I think the point I was trying to make is that things like budgeting, emergency funds, and cashflow principles can give people some structure while they’re still building experience and confidence in their investment journey. So I think we’re actually closer in our views than I initially thought. I was focusing more on a structure helping people during the learning process, while you were focusing more on judgment and learning through experience.

Sure.  Perhaps we are not too far apart in our ideas, just expressing them in a different way.

And yeah, maybe we are not very accustomed to using our common sense to work out problems and to exercise good judgement, and surely if we might be new to investing and managing our cashflows, then we may well have to error on the side of caution as we get used to these new kinds of activities.. and I personally tend to presume that guys tend to operate with a bit of a cash cushion in their own ways of dealing with their income and their expenses (maybe they have 2-6 weeks of their expenses that they keep as a cushion?), even prior to investing in bitcoin, yet once they are investing in bitcoin, there is more reason to manage cashflows better and to keep more back ups funds (whether they are all in cash or not, the basic 1st month or so should be in cash in the local currency), since bitcoin tends to be very liquid and very volatile, so guys can be tempted to sell their bitcoin or fail to ongoingly buy bitcoin based on their own failures in their cashflow management (and their building and maintenance of back up funds).

I think the point about Bitcoin exposing weaknesses in cashflow management is interesting. When an asset is highly liquid and volatile, poor financial habits can become more visible because people may feel pressure to sell during difficult periods or stop accumulating altogether. I’d only add that not everyone starts from the same financial position, some people already operate with a cushion, while others are building their own from the scratch.

If a person has an income of $30k per year and he decides to invest $100 per week into bitcoin (17.3%), then maybe after 5 years he had invested $26k into bitcoin, and if bitcoin suddenly goes up 5x to be worth $130k in a fairly short period of time, the guy might not know how to deal with that situation.  Is he going to keep buying bitcoin?  Stop buying bitcoin? Or is he going to be tempted to sell some of his bitcoin?

I think all three things you mentioned are realistic, and that’s kind of the whole issue.
If Bitcoin 5x happens quickly, what the person does next really depends on their mindset and whether they had a plan before it happened. Without that, he’s basically making decisions in the middle of emotions instead of following a clear direction.

If a guy had been accumulating bitcoin for 5 years and then the BTC price went shooting up 5x, then I am still not sure how he could conclude that he has enough to change his plan.  Maybe you want to outline a scenario in which he would have had gotten to enough or more than enough bitcoin in order to create a potential dilemma about what to do.

He could keep buying if he still believes in long-term accumulation and doesn’t care much about short-term price moves. He could also stop buying if the new price feels too expensive than compared to what they used to buy before.

Yeah, but does he have enough bitcoin?  You are suggesting that he is going to be affected by the BTC price because he is not getting as much bang for his buck if he keeps buying bitcoin at prices that are 5x higher than what they were.

Or he might be tempted to even sell some simply because seeing that kind of profit of $130k in real time can change how they feel psychologically, especially if it’s their first time experiencing something like that.

What is the purpose to selling?  In order to try to buy back cheaper?  How is that going to help the stack size and getting to the bitcoin accumulation goal?

So I think it’s less about which option is correct, and more about whether the person already decided ahead of time what they are trying to do. If there’s no plan in place, then all three reactions start to feel reasonable in the moment, and that’s where people usually get inconsistent.

Maybe you don't have a plan, since you just registered here for a month, yet you think that a guy with 5 years of buying bitcoin would have a better plan?

So caution makes sense early on, but there’s also a balance, if someone becomes overly focused on building larger and larger backup funds, they could end up delaying investing indefinitely. The challenge is finding a level of preparedness that reduces unnecessary risk without creating paralysis.

Hopefully newbies who are involved in this thread are figuring out ways to get started investing in bitcoin, and simultaneously building their back up funds and ultimately acting rather than waiting.  So guys have to figure out how to help themselves and to figure out their position size in regards to bitcoin whether they are buying weekly or otherwise, and sure at the same time making sure to build and maintain some quantity of back up funds.

Yeah, I agree with you, especially on the idea that people should actually start instead of just thinking and overanalyzing everything.
For most beginners, the hardest part isn’t even buying Bitcoin, it’s just figuring out how to fit it into their own money situation in a way that feels safe and sustainable. So things like choosing a position size they can stick with, while still keeping some backup funds aside, really matters.
Once that is in place, people usually learn a lot just from experience over time. The main thing is avoiding both extremes and going in too hard emotionally, or waiting forever for the perfect time that never really shows up.

Sure that sounds great, yet the BTC price is capable of going up more than 5x in a short period of time, which was the case between late 2022 and late 2025.. Sure the price was not sustained at the higher prices of $126k, yet there still could have had been guys who had average costs per BTC of less than $20k who experienced 5x in their holdings, yet what they do probably still depends in part upon how much BTC that they had accumulated at points that they are making their assessments of what to do.  I doubt it helps to fantasize about your holdings going up 5x unless you have already stacked enough holdings that your holding size helps to tell you what to do, yet are you going to react to the spot price or are you going to have some better ways of valuating your bitcoin holdings in order to attempt to give you some meaningful groundings about what you might do or might not do, such as using the 200WMA?

[Morayoam91]

That one big mistake some people make, when it comes to bitcoin investment we should know that when an individual is driven with the sole aim of making profit then He is a trader, and when an individual is driven with the sole aim of investing to have a good future then he is regard as an investor, immediately a person who invest with the aim of having a reasonable future begins to think about making profit then his mindset have changed from being an investor  to a trader. So sometimes this cases are common and we know notice that we should the name to tag the person with.

When you busy buying with DCA And you are being consistent about it, so far you are using your discretionary income you won’t be tempted by profit withdrawal because your basic needs are being carted for.

There are many who first consider themselves investors, but later, out of greed, they think of quick profits and then their mentality becomes like that of a businessman. A skilled investor is a person who is patient, ready for all situations and remains steadfast in the long run. Even when he sees the price fluctuations increasing, he restrains himself from being greedy and considers it normal when the market falls. On the other hand, we should always remember this fact. The real purpose of investment is not only current profit, but it also plays a big role in creating financial security for the future. A real investor never allows himself to deviate from long-term plans.

[JayJuanGee]

[edited out]

Your math is perfect. When the portfolio matures after 5 years of DCA, the new $2,000 doesn't make much of a difference in overall value (only 3%). This phenomenon is called the "Law of Diminishing Returns" in portfolio theory.

At this point, it is wiser to keep the excess money as 'dry powder' or liquid cash until the market goes into a deep dip, rather than distributing it to regular DCA over the next 5 weeks. When Bitcoin crashes by 30% or 40%, this $2,000 lump-sum investment will help to bring down the average buy price of a large portfolio more effectively. But I agree with you, whatever the strategy, having surplus funds gives an investor the biggest psychological advantage in the market.

Whenever a guy has a lump sum, he has options, and he can employ any of the three of the techniques.  1) buy right away, 2) defer by time (DCA) and/or 3) defer by price (buy on dips that might not happen).  There are trade-offs to each approach and the guy can decide based on his then situation which of the techniques (or all three) that he wants to apply and how.  If he is in doubt, he could just allocate 1/3 in this case $666.67 to each of the categories.

As a Bitcoin investor, I disagree with your third point. Putting away a third of your cash just hoping for a dip often results in an 'opportunity cost'. Because in a bull market, if the price doesn't go down, that money sits idle and loses value due to inflation.

I am referring to a lump sum situation and not "a third of your cash" as you are describing.  Let's say a situation in which a guy had been investing $100 per week for a whole year (which means that he had already invested $5,200 into bitcoin), and he was continuing to invest $100 per week for as long as he could into the future, unless he were to receive a raise of find some area to save money that would allow him to increase his weekly amount.  If that same guy got a $2k bonus, then he can consider all three categories (of buy right away, DCA, and buy on dip) for that $2k amount and perhaps even allocate 1/3 of the amount for buying on dips as I mentioned.  There is nothing outrageous about deciding in the way that I described, even if there are trade offs as you referred to in your disagreement.

So in my opinion, it would be wise to convert strategy number 3 into a Dynamic DCA or Value Averaging, rather than leaving it completely idle.

The amount ($667 in this example) is not completely idle, if it is allocated for buying dips.  It could have various target levels.  Sure, I am not a fan of setting money aside for buying dips, but if a person had already invested a bunch at a certain price or maybe if he had already been investing in bitcoin for a long time, then there is no great sacrifice to hold back some value for buying dips (that may or may not happen).. and we could even go more extreme and say that a guy could be in a situation in which he had already been investing $100 per week into bitcoin for a whole cycle (which would mean that he had invested $20,800 into bitcoin over the years) or maybe even longer such as 2 cycles which would mean that he had already invested $41,600 into bitcoin, so then when he receives a $2k lump sum, he has options how to treat that lump sum, as I mentioned, and buying the dip should be one of the considerations, even though the guy might reject it or minimize it, but if if you are ignoring any of the three options, then you are likely not tailoring your bitcoin buys to your actual circumstances.

That is, if the market is normal, the normal DCA will run, and if there is a big crash or dip, then a large buy order will be executed from that accumulated fund.I have had good results using this hybrid model myself. Your idea of ​​dividing this $666.67 into three parts will be a great help for beginners to control their emotions and avoid FOMO.

Buying the dip can make people feel good, even though it may well not have any real material difference, especially after a person had been buying bitcoin for 10 years or longer, then each of his individual buys might have had been spread over 500 or more buys (if he had weekly buys), so any one buy might not make any big differences, even though surely many of us likely realize that trying to buy aggressively from the beginning is good, even though it may take time for guys to strengthen their cashflow management systems/practices and it may also take time for guys to even improve their discretionary income by increasing their income and/or cutting their expenses.

[Different patterns]

I am referring to a lump sum situation and not "a third of your cash" as you are describing.  Let's say a situation in which a guy had been investing $100 per week for a whole year (which means that he had already invested $5,200 into bitcoin), and he was continuing to invest $100 per week for as long as he could into the future, unless he were to receive a raise of find some area to save money that would allow him to increase his weekly amount.  If that same guy got a $2k bonus, then he can consider all three categories (of buy right away, DCA, and buy on dip) for that $2k amount and perhaps even allocate 1/3 of the amount for buying on dips as I mentioned.  There is nothing outrageous about deciding in the way that I described, even if there are trade offs as you referred to in your disagreement.

I really get your point more better now, in that kind of situation, that person is already practicing normal regular DCA with the $100 weekly investment. So that extra $2k bonus become another opportunity to apply different strategies wisely. Like to share the bonus into different categories, like buying immediately or to continuing DCA process gradually, and also keep some for possible dips. it actually make a lot of sense because it balances market exposure, it is not about the DCA but about using additional money in  more strategic way. 

Many folks misunderstand lump sum investing as the entire funds must go in at once no matter the market conditions, which is not, in reality investors can still manage the lump sum intelligently depending on market situation. But the must important thing is that the person is already accumulating consistently and not completely relying on timing the market.

[Grace333]

That one big mistake some people make, when it comes to bitcoin investment we should know that when an individual is driven with the sole aim of making profit then He is a trader, and when an individual is driven with the sole aim of investing to have a good future then he is regard as an investor, immediately a person who invest with the aim of having a reasonable future begins to think about making profit then his mindset have changed from being an investor  to a trader. So sometimes this cases are common and we know notice that we should the name to tag the person with.

When you busy buying with DCA And you are being consistent about it, so far you are using your discretionary income you won’t be tempted by profit withdrawal because your basic needs are being carted for.

There are many who first consider themselves investors, but later, out of greed, they think of quick profits and then their mentality becomes like that of a businessman. A skilled investor is a person who is patient, ready for all situations and remains steadfast in the long run. Even when he sees the price fluctuations increasing, he restrains himself from being greedy and considers it normal when the market falls. On the other hand, we should always remember this fact. The real purpose of investment is not only current profit, but it also plays a big role in creating financial security for the future. A real investor never allows himself to deviate from long-term plans.

In as much as times change and our experiences increase we should stick to the goal. Though sometimes life can happen and people would feel very disconnected from their initial goal in such that they feel like quitting because their worlds has turned upside down. Well in this case I hate to say it but bitcoin isn't more important than our lives, you have to find yourself first before you continue investing in bitcoin. But sometimes when things like that happens, if you had saved up enough backup funds you could literally use that to sustain yourself probably for like 2-3 months before you bounce back to your usual self. And that is exactly why we advice investor try as possible to secure at least 3 months of their monthly spending as emergency fund. What you saved up and end up saving you.

[B-BossMan]

Take for example, someone who has been dealing with investments or managing cashflow for years, taking certain decisions may feel natural and less complicated but for someone who is completely new, those same things may not feel nearly as obvious because they’re still trying to understand risk, discretionary income, and what level of exposure they’re personally comfortable with.

That is exactly true.  There are some guys who might have had been managing their cashflows since they were a teenager, and they are in their 20s, and they already have a lot of experience in figuring out their discretionary income (funds) and making decisions based on such discretionary funds availability... and there may be other guys who never think  about their income versus expenses, and they spend money when they have it, until it is gone and they take out loans without really planning how those loans are going to affect them down the road, and then the one guy is very organized and thoughtful in regards to his cashflows and the other guy is frequently putting out fires when he has income short falls and extra expenses that seem to come up without his realizing them to be pending.

I agree with this. We are individuals differences with different thinking capacities,  there are people who are very smart right from thier younger age, they treat money like system instead of treating it like suprise, they actually understand what comes in and what goes out and also what remains after every important responsibilities while growing up, they can budget for thier little things like clothes, airtime and others. Because of that that mindset they, they do not confuse having money available with having money safe and spend they clearly understand that discretionary income is the money left for investing, which is the type of money that's suitable for long-term Bitcoin investment.


However, this gives the stronger advantages when using DCA strategy because their financial foundation is well stable, they can consistently buy thier bitcoin without panicking during market volatility or even an unexpected expenses, and less thier stress. While some folks simply spend thier money as it comes in without identifying or separating thier needs, wants and savings, because there's no well proper financial planning or cashflow structure, investing becomes difficult for them because there's nothing to rely on. Moreover building wealth slowly through DCA is not actually mainly about having a high income, but managing money deliberately instead of allowing money problems to controls your financial decisions.

[Cyber_warrior]

Snip

There are many who first consider themselves investors, but later, out of greed, they think of quick profits and then their mentality becomes like that of a businessman. A skilled investor is a person who is patient, ready for all situations and remains steadfast in the long run. Even when he sees the price fluctuations increasing, he restrains himself from being greedy and considers it normal when the market falls. On the other hand, we should always remember this fact. The real purpose of investment is not only current profit, but it also plays a big role in creating financial security for the future. A real investor never allows himself to deviate from long-term plans.

In as much as times change and our experiences increase we should stick to the goal. Though sometimes life can happen and people would feel very disconnected from their initial goal in such that they feel like quitting because their worlds has turned upside down. Well in this case I hate to say it but bitcoin isn't more important than our lives, you have to find yourself first before you continue investing in bitcoin. But sometimes when things like that happens, if you had saved up enough backup funds you could literally use that to sustain yourself probably for like 2-3 months before you bounce back to your usual self. And that is exactly why we advice investor try as possible to secure at least 3 months of their monthly spending as emergency fund. What you saved up and end up saving you.

It's true one's well being shouldn't be ignored or over looked while investing but I really don't see any serious reason for any of this to happen as long as you are investing the right way with your discretionary income and taking care of your expenses first before investing then even if the goal should change I don't think there's any serious change in your investment that will affect your life. Your expenses are always on the front line and then your discretionary income is meant for your investment and any back up funds so it's always easy when the discretionary income is barely enough you can just pause your investment for the time being until when you have discretionary income to invest again. If the goal changes it's easy to always replan without any need to stop your investment if you have discretionary income.

[Abbatty]

Take for example, someone who has been dealing with investments or managing cashflow for years, taking certain decisions may feel natural and less complicated but for someone who is completely new, those same things may not feel nearly as obvious because they’re still trying to understand risk, discretionary income, and what level of exposure they’re personally comfortable with.

That is exactly true.  There are some guys who might have had been managing their cashflows since they were a teenager, and they are in their 20s, and they already have a lot of experience in figuring out their discretionary income (funds) and making decisions based on such discretionary funds availability... and there may be other guys who never think  about their income versus expenses, and they spend money when they have it, until it is gone and they take out loans without really planning how those loans are going to affect them down the road, and then the one guy is very organized and thoughtful in regards to his cashflows and the other guy is frequently putting out fires when he has income short falls and extra expenses that seem to come up without his realizing them to be pending.

Honestly I get the point now, timeframe at which a guy is being expose to cashflow really really have an impact on decisions they make, because someone who is expose to cashflow at a very young age might have that compose when making such decisions and won’t be freaked by the amount of money that is at his disposal. Unlike a person who have not have such cashflow at his disposal, definitely he his tend to make mistakes and panic when such cashflow hit him.

So In this case we can agree that having a good bitcoin investment goes beyond having patience, consistency and even discretionary income but also exposure matters too, because it helps you make good and better decisions during your investment journey.

[laspol65]

Take for example, someone who has been dealing with investments or managing cashflow for years, taking certain decisions may feel natural and less complicated but for someone who is completely new, those same things may not feel nearly as obvious because they’re still trying to understand risk, discretionary income, and what level of exposure they’re personally comfortable with.

That is exactly true.  There are some guys who might have had been managing their cashflows since they were a teenager, and they are in their 20s, and they already have a lot of experience in figuring out their discretionary income (funds) and making decisions based on such discretionary funds availability... and there may be other guys who never think  about their income versus expenses, and they spend money when they have it, until it is gone and they take out loans without really planning how those loans are going to affect them down the road, and then the one guy is very organized and thoughtful in regards to his cashflows and the other guy is frequently putting out fires when he has income short falls and extra expenses that seem to come up without his realizing them to be pending.

Honestly I get the point now, timeframe at which a guy is being expose to cashflow really really have an impact on decisions they make, because someone who is expose to cashflow at a very young age might have that compose when making such decisions and won’t be freaked by the amount of money that is at his disposal. Unlike a person who have not have such cashflow at his disposal, definitely he his tend to make mistakes and panic when such cashflow hit him.
So In this case we can agree that having a good bitcoin investment goes beyond having patience, consistency and even discretionary income but also exposure matters too, because it helps you make good and better decisions during your investment journey.

Holding Bitcoin investment for a long time will definitely bring profit, but it depends on the patience of each investor the most. Investing in Bitcoin in the current position is a good plan because as we move towards the future, the more Bitcoin usage and price are increasing. So investing in Bitcoin at the moment is the only good plan, according to this plan, if Bitcoin can be held for a long time by following the DCA method, then there will definitely be a chance to make the most profit. The current time for Bitcoin investment is the best, the cash flow helps the investor to accumulate more Bitcoin.

[Charcol]

There’s nothing wrong with taking profit from your investment,

Honestly, this is the mindset of a trader.
There's always something wrong to take profits from your Bitcoin investment when you haven't reached your target. One of the reasons why it's important not to take profits when you habt reached your accumulation target is that you might not ever reach your target anymore as you have already tampered it earlier. After taking the little profits you have made from Bitcoin investment, the price might keep on rising and obviously you have missed that chance at that moment. So long as the price goes up after you might have taken the little profits you made earlier, you will definitely regret it. Actually, taking profit whenever you want to will definitely spoil your initial long term plan. One obvious thing about those who take profits whenever they want is that they probably end up using it for unnecessary things that won't add up any value to them. Talking profits whenever you want can literally make you hold only little Bitcoin in your portfolio.

A long term investor on think of how to accumulate more Bitcoin and how to be more consistent with accumulating Bitcoin, they don't consider taking profit until they have reached their accumulation target of 10 yeard or more.

Anyway, why is taking profit always negative? And a sign of a trader? If there is ever a life-threatening situation for you or someone else before reaching the goal and your backup funds are not enough to handle that situation, would taking profit from an investment still be viewed negatively?

From what I understand from your post, you have actually mixed up the two concepts of profit taking and forced selling in an emergency. On the one hand, you are showing an emergency situation and on the other hand, you are also giving the argument for taking profit by selling. I want to tell you that selling in emergencies like medical emergencies, life risks or family crises is not a strategy for taking profit. Rather, if you do not have enough backup funds or emergency funds, then it is a forced financial decision. In such a situation, there is a high possibility of selling at a loss rather than thinking about profit. That is why it is advised that an investor should create an emergency fund along with investments.

I think it is not a negative thing, but rather an acceptance of the situation. Or if there is an opportunity in life from which you will be able to earn a lot of money and your discretionary money supply will increase to the point that with your discretionary money you will be able to accumulate that amount of Bitcoin in just a few months or half the time (the total time of your savings), would you view it negatively if you have to sell some of your funds or sell the profit?

If you enter the market with the mentality and logic of selling after seeing a good opportunity, then this decision may be wrong. Because if you enter the market with such a mentality and logic, many people can break their own accumulation. In fact, I think it is difficult to say whether they will be able to return to their previous position later. Did you know that many opportunities may seem big from the outside, but in reality they may be speculative? If someone tries to find an opportunity from the savings stage, they should think about whether this opportunity will really increase their future cashflow, or is it just an excuse to reduce accumulation. They should also think about whether they will be able to deposit the same amount of Bitcoin back? Or will they lose their previous position if the market goes up after selling?

[Abbatty]

Take for example, someone who has been dealing with investments or managing cashflow for years, taking certain decisions may feel natural and less complicated but for someone who is completely new, those same things may not feel nearly as obvious because they’re still trying to understand risk, discretionary income, and what level of exposure they’re personally comfortable with.

That is exactly true.  There are some guys who might have had been managing their cashflows since they were a teenager, and they are in their 20s, and they already have a lot of experience in figuring out their discretionary income (funds) and making decisions based on such discretionary funds availability... and there may be other guys who never think  about their income versus expenses, and they spend money when they have it, until it is gone and they take out loans without really planning how those loans are going to affect them down the road, and then the one guy is very organized and thoughtful in regards to his cashflows and the other guy is frequently putting out fires when he has income short falls and extra expenses that seem to come up without his realizing them to be pending.

Honestly I get the point now, timeframe at which a guy is being expose to cashflow really really have an impact on decisions they make, because someone who is expose to cashflow at a very young age might have that compose when making such decisions and won’t be freaked by the amount of money that is at his disposal. Unlike a person who have not have such cashflow at his disposal, definitely he his tend to make mistakes and panic when such cashflow hit him.
So In this case we can agree that having a good bitcoin investment goes beyond having patience, consistency and even discretionary income but also exposure matters too, because it helps you make good and better decisions during your investment journey.

Holding Bitcoin investment for a long time will definitely bring profit, but it depends on the patience of each investor the most. Investing in Bitcoin in the current position is a good plan because as we move towards the future, the more Bitcoin usage and price are increasing. So investing in Bitcoin at the moment is the only good plan, according to this plan, if Bitcoin can be held for a long time by following the DCA method, then there will definitely be a chance to make the most profit. The current time for Bitcoin investment is the best, the cash flow helps the investor to accumulate more Bitcoin.

Why you so speaking as if making profit in bitcoin is certain, and beside the discussion here is about how being expose to cashflow helps in making better decisions in bitcoin investment.

From your statement I can clearly say you are one of those that solely invest to make profit, well just so you know investing in bitcoin is not about profit making but making sure you have a well planned future, a future that bitcoin can stand for.

Those that are moved by profit making are those that have the mindset of a trader, those that tend to invest in a very short period of time.

[GhostOfBitcoin]

[edited out]

Your math is perfect. When the portfolio matures after 5 years of DCA, the new $2,000 doesn't make much of a difference in overall value (only 3%). This phenomenon is called the "Law of Diminishing Returns" in portfolio theory.

At this point, it is wiser to keep the excess money as 'dry powder' or liquid cash until the market goes into a deep dip, rather than distributing it to regular DCA over the next 5 weeks. When Bitcoin crashes by 30% or 40%, this $2,000 lump-sum investment will help to bring down the average buy price of a large portfolio more effectively. But I agree with you, whatever the strategy, having surplus funds gives an investor the biggest psychological advantage in the market.

Whenever a guy has a lump sum, he has options, and he can employ any of the three of the techniques.  1) buy right away, 2) defer by time (DCA) and/or 3) defer by price (buy on dips that might not happen).  There are trade-offs to each approach and the guy can decide based on his then situation which of the techniques (or all three) that he wants to apply and how.  If he is in doubt, he could just allocate 1/3 in this case $666.67 to each of the categories.

As a Bitcoin investor, I disagree with your third point. Putting away a third of your cash just hoping for a dip often results in an 'opportunity cost'. Because in a bull market, if the price doesn't go down, that money sits idle and loses value due to inflation.

I am referring to a lump sum situation and not "a third of your cash" as you are describing.  Let's say a situation in which a guy had been investing $100 per week for a whole year (which means that he had already invested $5,200 into bitcoin), and he was continuing to invest $100 per week for as long as he could into the future, unless he were to receive a raise of find some area to save money that would allow him to increase his weekly amount.  If that same guy got a $2k bonus, then he can consider all three categories (of buy right away, DCA, and buy on dip) for that $2k amount and perhaps even allocate 1/3 of the amount for buying on dips as I mentioned.  There is nothing outrageous about deciding in the way that I described, even if there are trade offs as you referred to in your disagreement.

So in my opinion, it would be wise to convert strategy number 3 into a Dynamic DCA or Value Averaging, rather than leaving it completely idle.

The amount ($667 in this example) is not completely idle, if it is allocated for buying dips.  It could have various target levels.  Sure, I am not a fan of setting money aside for buying dips, but if a person had already invested a bunch at a certain price or maybe if he had already been investing in bitcoin for a long time, then there is no great sacrifice to hold back some value for buying dips (that may or may not happen).. and we could even go more extreme and say that a guy could be in a situation in which he had already been investing $100 per week into bitcoin for a whole cycle (which would mean that he had invested $20,800 into bitcoin over the years) or maybe even longer such as 2 cycles which would mean that he had already invested $41,600 into bitcoin, so then when he receives a $2k lump sum, he has options how to treat that lump sum, as I mentioned, and buying the dip should be one of the considerations, even though the guy might reject it or minimize it, but if if you are ignoring any of the three options, then you are likely not tailoring your bitcoin buys to your actual circumstances.

That is, if the market is normal, the normal DCA will run, and if there is a big crash or dip, then a large buy order will be executed from that accumulated fund.I have had good results using this hybrid model myself. Your idea of ​​dividing this $666.67 into three parts will be a great help for beginners to control their emotions and avoid FOMO.

Buying the dip can make people feel good, even though it may well not have any real material difference, especially after a person had been buying bitcoin for 10 years or longer, then each of his individual buys might have had been spread over 500 or more buys (if he had weekly buys), so any one buy might not make any big differences, even though surely many of us likely realize that trying to buy aggressively from the beginning is good, even though it may take time for guys to strengthen their cashflow management systems/practices and it may also take time for guys to even improve their discretionary income by increasing their income and/or cutting their expenses.

Thanks for your excellent explanation. Your strategy is very realistic for additional capital like a one-time bonus ($2,000). I agree with you that dividing any sudden large funds outside of the regular ongoing DCA into three parts (immediate, DCA and deep-buy) is a great way to control emotions and FOMO for beginners. However, from a financial perspective, one thing to consider is that when someone is already DCAing $100 per week for a long time, then if the bonus money is left idle for a few months, it can reduce the overall dynamics of the portfolio. Because due to the upward trend of Bitcoin in the long term, 'lump-sum' or immediate large investment has historically proven to be more profitable than prolonged DCA.

Still, your hybrid model for risk management and peace of mind is undoubtedly commendable.

[Morayoam91]

It's true one's well being shouldn't be ignored or over looked while investing but I really don't see any serious reason for any of this to happen as long as you are investing the right way with your discretionary income and taking care of your expenses first before investing then even if the goal should change I don't think there's any serious change in your investment that will affect your life. Your expenses are always on the front line and then your discretionary income is meant for your investment and any back up funds so it's always easy when the discretionary income is barely enough you can just pause your investment for the time being until when you have discretionary income to invest again. If the goal changes it's easy to always replan without any need to stop your investment if you have discretionary income.

If you invest without understanding your financial situation, you are forced to sacrifice your normal lifestyle or peace of mind. In fact, if you have financial discipline, investing will never become a burden for you, but rather it can bring you security for the future. However, if you invest beyond your means, you will lose the possibility of taking your investment to the long term. Stop short-term plans for investing and adopt a long-term path for yourself. The important thing is to maintain consistency and move forward with an understanding of reality and at the same time it is important to build an emergency fund, because life is not always the same. You can find yourself in any situation where you may need a lot of money and if you cannot meet your needs with your savings, then you can go towards selling the Bitcoin you have and meeting your needs, so building your emergency fund before investing is also important because it will keep your investment intact.

[Tongley]

I am referring to a lump sum situation and not "a third of your cash" as you are describing.  Let's say a situation in which a guy had been investing $100 per week for a whole year (which means that he had already invested $5,200 into bitcoin), and he was continuing to invest $100 per week for as long as he could into the future, unless he were to receive a raise of find some area to save money that would allow him to increase his weekly amount.  If that same guy got a $2k bonus, then he can consider all three categories (of buy right away, DCA, and buy on dip) for that $2k amount and perhaps even allocate 1/3 of the amount for buying on dips as I mentioned.  There is nothing outrageous about deciding in the way that I described, even if there are trade offs as you referred to in your disagreement.

I really get your point more better now, in that kind of situation, that person is already practicing normal regular DCA with the $100 weekly investment. So that extra $2k bonus become another opportunity to apply different strategies wisely. Like to share the bonus into different categories, like buying immediately or to continuing DCA process gradually, and also keep some for possible dips. it actually make a lot of sense because it balances market exposure, it is not about the DCA but about using additional money in  more strategic way. 

Many folks misunderstand lump sum investing as the entire funds must go in at once no matter the market conditions, which is not, in reality investors can still manage the lump sum intelligently depending on market situation. But the must important thing is that the person is already accumulating consistently and not completely relying on timing the market.

There is nothing wrong with dividing the three levels in this way, but for a new person, it may be a bit risky. @JayJuanGee said that this method can be very effective for people who have been investing for a long time and are consistently investing. But for a new person who has just entered the investment or has been investing for 15 weeks, this method can be beneficial, but it can also be a disadvantage.

If he invests a small amount of money at once and if the market falls, he may be afraid, if he waits for the fall, he may miss the opportunity to buy. If he continues to invest his DCA method with his bonus money mixed or combined, then this may be the right decision for him. Not everyone has the same risk tolerance and not everyone has the same financial situation or cash flow management. So, a person who has been investing for several days and is in a consistent position can invest in these three levels if they wish.

[DubemIfedigbo001]

The difference is clear but many don't get it. The first option is just investing within your discretionary income at a faster time. So instead of waiting 12 months to buy 12 times within the discretionary income, you may buy it all this month and pay back the loan over the same time period. This for me is perfectly fine and actually when you think about what people use these kinds of loans for, this could be considered one of the best uses...

I share this sentiment with you, if you can pay from within you means, then you can go ahead to get a low-interest loan to lump sum or front load you investment. I like to lay emphasis on the low-interest part of the loan, so you don't take up something that would ruin your finances and before taking it, you must have calculated the duration for the repayments and ensured your regular buying amounts would cover up for the repayments of it and the interests. Since the loan was used to purchase bitcoin, it is still the same thing when you use your buying amounts to consistently repay the loan. This is surely a good use case, as long as you know what you're doing.

I also have the belief that even though you're still building your backup funds, you can still go for it, provided your consistent investment fund covers for the repayments, you would still be putting the share of your discretionary funds going to savings into continuous building of backup funds the protect your investment while you repay the loan.