Note: I just found this post that I drafted yesterday, and I thought that I had posted it yesterday.... yet for some reason I did not post it.
In my won perspectives. I don't think someone must completely finish building a huge emergency funds before buying even $5 bitcoin, and at the same time I do not also think, it's wiser to put all thier extra money 100% of it into bitcoin and ignoring backup funds completely, moreover the best is to just to be building backup funds slowly and also take an advantage bitcoin accumulation gradually.
As a beginner starting Bitcoin investment, an emergency is not a reason to avoid investing because to some people it seems that because there is no emergency fund, there is no need to invest in Bitcoin. An emergency fund can come later after a good amount of Bitcoin has been accumulated; it's something you need to plan for, and it doesn't just happen immediately when you want to start Bitcoin investment.
Any newbie or beginner that is very serious to invest in Bitcoin, an emergency fund is not a reason for the newbie or biginner not start his Bitcoin investment because investing in Bitcoin to a certain extent without the availability of an emergency fund is very much allowed, anyone who believed if there is no emergency fund, people cannot invest in Bitcoin or there is no need for people to invest in Bitcoin, the person does not know the importance of having an emergency fund in Bitcoin investment. I agree an emergency fund can come later but it should not come after you have accumulated a good amount of Bitcoin because you do not know how long it would take you to accumulate a good amount of Bitcoin, if an emergency happens the period you are trying to accumulate a good amount of Bitcoin before you build an emergency fund, you will be force to sell your Bitcoin to take care of you emergency. For you not to experience this, i advise you to build your emergency fund 1 month or 2 months into your Bitcoin investment or rather you can build an emergency fund as you are investing in Bitcoin.
In the beginning of investing into bitcoin, guys do not need to start with 1-2 months of expenses in their back up funds. They can start with nearly zero as long as they are building their bitcoin and their back up funds at the same time in the beginning.. and perhaps they can prioritize in one direction or another, and they have to determine for themselves what the priority should be, if any.. Yet, if they screw up, they will suffer the consequences for whatever screw up they make, so each of us is in charge of figuring out a practical balance that seems sufficiently reasonable for our circumstances.
I think what we should prioritize in our Bitcoin journey is our discretionary income not really our emergency funds not that emergency funds is not important but the major thing is our discretionary income because it is what allows us to purchase and hold without our discretionary income there will be no Bitcoin investment ( I mean there will be no funds to accumulate). I don't know about others but if I'm using my discretionary income to accumulate whether there's emergency funds or not I won't be force or move to touch my investment because of Dip because already I have it in mind to hold for long.
Emergency fund is definitely important, but we have to start investing first, and we have to do this investment through discretionary income. Any investment requires discipline, if we can control everything through our financial management with discipline, then we can definitely continue investing. Investing is a long-term journey, so we should invest by ensuring our long-term holding and being prepared for emergencies, and investing definitely requires consistency, this is the most important thing.
An emergency fund is indeed that important, especially if your goals are long-term. Long term planning, of course, requires a stable income to maintain consistency. While there's no pressure to be consistent, maintaining consistency will maximize your potential returns after completing your investment planning.
Honestly, I haven't been completely consistent so far. I sometimes miss allocating funds due to financial issues, but I always strive to maintain and maximize that consistency, such as by taking on a part-time job.
There is nothing wrong with trying to invest in bitcoin (and/or build your back up funds) when you can, but also having to figure out ways to balance your various ongoing changes (and maybe tightness) in the quantity of your discretionary funds.. which might relate to fluctuations in your income and/or in your expenses... sometimes getting more income through other work can help to resolve matters and sometimes trying to find higher paid work.. but, yeah, there can surely be challenges to even be able to get more work (since there are ONLY so many hours in the day) and we need to maintain our health, too.
It seems like you do not understand what sir jayjuangee said here, because he did not say that timing the market at times do matters, what he was saying is that it's not a bad idea if you have at least a small amount of emergency funds or backup funds available while starting, because it stands as a safety net against any unforseen emergencies.
When you have your discretionary income available for a start, making some provisions for emergency and reserve funds right away from there is very important because it helps to give your Bitcoin investment that needed security from the start.
I think this particular argument and counter argument has been over stressed, why do not buy the idea of having a back up funds or emergency fund before starting up Bitcoin investment is that some persons might end up not going into Bitcoin at all but the way @JayJuanGee put it out is understandable, one can have have a little of the emergency funds and back up funds respectively I think his reason for this statement is to counter any thing that will come as an obstacle in form emergency at that starting point but the main build up of the funds for safe guilding our Bitcoin investment should start along side with our investment proper.
Each guy has to exercise his judgement.
There may be guys who have pretty set expenses and pretty set income levels and he does not have to worry about delays in his pay, so maybe he would ONLY have around a week of expenses when he starts buying bitcoin, and other guys might have to keep a bit more.
Now, in the hypothetical that we were describing, we were in a situation in which the guy was already in a practice of NOT keeping back up funds, so the ONLY funds that he had in front of him was funds from his discretionary income.. so maybe if he gets paid every two weeks, and his income was around $1,250 and his basic expenses were around $750, then he has $500 to work with until his next paycheck. As a default, he could put $166 into bitcoin, $166 into savings (back up funds) and $166 into discretionary consumption... yet in the end, it would be up to him how to divide it, yet in this hypothetical his $500 for two weeks seems enough to get started. .. if we have the assumption that his income/expenses are relatively consistent.
Of course, the real world is not so consistent, yet guys are still responsible to figure out how much they have to work with and to have realistic ideas about their income/expenses. If they are struggling to figure out their income/expenses, then they might need time to figure it out to make sure that they are calculating in a reasonable way... .. and of course, sometimes guys might he so lost in regards to their own finances, that they feel that they have to start out by keeping extra cash, just so that they don't end up spending beyond their discretionary funds, yet if they become more organized in their own projections of their income/expenses, then they would be in a better position to manage it, and maybe even to invest into bitcoin more aggressively based on their having had achieved better organization and perspective about their income/expenses.
I think what we should prioritize in our Bitcoin journey is our discretionary income not really our emergency funds not that emergency funds is not important but the major thing is our discretionary income because it is what allows us to purchase and hold without our discretionary income there will be no Bitcoin investment ( I mean there will be no funds to accumulate). I don't know about others but if I'm using my discretionary income to accumulate whether there's emergency funds or not I won't be force or move to touch my investment because of Dip because already I have it in mind to hold for long.
A good point, all funds are important but to ensure that we meet our target as investors then the discretionary funds is the utmost priority cause that's what's used for investment an not any other, the emergency funds has it own role to play which is solving emergency situations, it's not like it's not important but concerning Bitcoin investment the discretionary funds is what matters most.
Investor should know how to differentiate between both and know how and what to use them for, some people feel it's right to use the emergency funds for investing in Bitcoin, forgetting that life is unpredictable and anything can happen at anytime so if they invest with the emergency funds, what then would they use to solve emergency situations when it occurs, the discretionary funds?
The way you are lining up the discretionary income and the emergency fund like these are things from very different sources is wrong, they are from two different sources but what needs to be understood is that your emergency fund comes from your discretionary income the same way you invest with your discretionary income as well.
Your discretionary income is like the main source from which your investment is funded, your emergency fund and the rest of your backup funds are also funded so yes you are right when you say that people shouldn't use their emergency fund to invest in bitcoin because doing that will defeat the very purpose of having an emergency fund in the first place but when making statements like this it's better to actually know where your emergency fund comes from so you don't just dismiss the discretionary income when talking about your emergency funds.
Emergency funds and reserve funds (two kinds of back up funds) are built from discretionary funds, either past discretionary funds or discretionary funds as they are being earned through income... of course, if we spend our emergency funds we should replace them fairly promptly but if we spend from our reserve funds, we may or may not need to replace them.
Let's say for example, I was saving to go on vacation in late June with my girlfriend, and I was putting that money into my reserve funds. I figure that the extra costs for the vacation were going to be around $1,200, and so I had been putting around $300 per month, and the fund had close to $1k in it, and let's say that I had a fight with my girlfriend and so I decided to cancel the vacation and I also decided that I was going to use $700 out of that reserve funds in some other way, and maybe to buy bitcoin with the $700. Once I spend the $700, I can decide whether or not to build the fund back up.. and yeah, maybe I left $300 in the fund, and that $300 might be flexible in regards to how I might reallocate it, even though maybe I have not yet dedicated it to anything specific.
The emergency funds and reserve funds that I have were built from discretionary funds, and sure, they might have designations, yet they are still part of my discretion in terms of how to use them, and in regards to my emergency funds (let's say that my emergency funds are $4,500 based on 3 months and $1,500 per month of basic expenses). I don't want to spend any emergency funds, unless I run out of other funds, and yeah, the longer I am in bitcoin, I might have some funds in other places, too.
Your implication that some guys might have various kinds of funds or even back up incomes that might help to support him and/or his expenses in cases that his income might go down and his expenses go up. If a guy were to ONLY have various sources of income, yet those sources of income rely upon his ability to work to be able to generate income, then those would not be sufficient as holding at least some back up funds.
It is good when some guys might have gotten themselves into situations that they have various sources of income, yet there are also guys who also who might purposefully fail/refuse to build and maintain back up funds because they are trying to maximize their attempts to put their funds to work in all places and subconsciously (or perhaps consciously) they consider all funds in cash to not be sufficiently "working" and so they are attempting to maximize their "working" money, but then that may well end up getting them into trouble when they are not holding a sufficient amount in cash (since cash is how their bills are denominated).
Surely we can shoot to have 3 months of our expenses in cash as our back up funds, yet we have to figure out a balance that works for us and yeah, we might not always know when we get into some kind of an extended period in which our income might have had gone down and/or our expenses go up, so then if we are really trying to place a priority that we do not have to tap into our bitcoin at a time that is not of our choosing, and sometimes we might even be mislead that it is O.k. to tap into our bitcoin based on bitcoin appreciating in price and "being in profits," which surely can end up inadvertently screwing up our building of our bitcoin holdings and some guys will never end up reaching anything close to overaccumulation status because they either do not put good cashflow management systems in place, they do not prioritize their own abilities to generate discretionary income and they are too unable to defer gratifications, so they cannot resist tapping into their bitcoin holdings so that they might not have to do the otherwise hard things of maintaining a job and otherwise striving to increase their discretionary income.
Perhaps one of the most important points that I can pick out from everything you have said here is that having multiple income streams doesn’t always mean that someone is financially secure, and you see especially when all those incomes still depend on the person still being actively working, you can never really know, things can change quickly when unexpected situations come up.
If we are still in a part of our lives that we are accumulating and building our bitcoin holdings, then it seems that we may well be working rather than getting our income from largely passive sources, and part of the objective of bitcoin may well be trying to get our bitcoin holdings to a large enough size in which working becomes optional, since if we are at overaccumulation status then we may well have the option to start to draw from our bitcoin...and yeah, maybe we go through our accumulation phase and then we have a period of a few years before we might transition into a place in which we are starting to draw upon our bitcoin.
I’ve also noticed that most people sometimes get too focused on making every of their penny to work but in doing that, they forget that cash itself is what provides stability during difficult periods and that being forced to sell your bitcoin because of poor planning is very different from you selling because you just want to sell it.
Sure, if your expenses are in dollars (or some other fiat), then each of us is paying our expenses every month, yet we might either be ongoingly building our bitcoin and not drawing upon our bitcoin for several years after we had built up our bitcoin stash.
Guys may well want to be efficient with their discretionary income, yet of course, the higher the discretionary income then the more room they have to work with, so I am not sure if everyone is necessarily penny pinching, even though earlier in the investment journey there might be more desperation to build, yet as wealth is built, whether in bitcoin and/or in various back up funds, the options tend to increasingly increase, even before a guy reaches overaccumulation status (and before he starts to cash out on his bitcoin).
Let's say that a guy has an income of $30k, and he is investing $100 per week (17.3% of his income) into bitcoin. After 10 years investing, he likely has a lot more options than what he had at the beginning of his investment, especially if he had been building both his bitcoin investment and his back up funds at the same time. Some guys start with more of a headstart than others, and some guys may well have to struggle 20 years or more before they start to feel a sensation of being rich.. so most guys cannot invest 17.3% of their income into bitcoin, and they may well be lucky to invest 7.3% of their income into bitcoin, so it is going to take those guys much more time before they might start to feel that they can relax based upon their investment choices and their investment abilities.
There are some guys who get involved in shitcoins and trading and maybe those guys never really make any progress, and then after 20 years or more, they seem that they are in a place that is quite similar to what they had been 20 years previously.
There is going to be some variation, even though perhaps in the beginning years (even the first whole cycle) there might be difficulties to really measure which of the guys is making the most progress in terms of building wealth and building future options for himself.
Perhaps one of the most important points that I can pick out from everything you have said here is that having multiple income streams doesn’t always mean that someone is financially secure, and you see especially when all those incomes still depend on the person still being actively working, you can never really know, things can change quickly when unexpected situations come up. I’ve also noticed that most people sometimes get too focused on making every of their penny to work but in doing that, they forget that cash itself is what provides stability during difficult periods and that being forced to sell your bitcoin because of poor planning is very different from you selling because you just want to sell it.
You are right, no matter how big or small our source of income is, if it is not in line with our expenses or cannot provide discretionary money, it cannot provide us with security. Be it real life or investment, we need discretionary money. Only with discretionary money can we take appropriate steps to deal with difficult situations or protect our investment funds.
In terms of income sources, we can have two types of income sources if possible, one is an active income source and the other is a passive income source. If ever we become incapacitated due to an accident, then the passive income source can be our hope. It is necessary to try to improve the active income source as much as possible, if possible, we can create a passive income source as an alternative income source. Passive income sources strengthen our security base a little more.
Bitcoin has the potential to be a passive income source, yet it has to be built first, and it is likely built with active income sources, so perhaps one guy is able to invest in bitcoin for 4-6 years before he becomes no longer able to work, and another guy is able to invest in bitcoin for 10 years or longer, and so surely the longer that a guy had been building his bitcoin holdings, then the more likely it would be able to passively support a higher level of income...
So guys should be able to calculate based on their own income and their own projections of their future income and even attempt to create realistic goals.. and yeah, some guys have weird ideas that they have to sort through so that they are calculating within realistic parameters rather than living in a fantasy in regards to their projections of future income, future expenses and even how much money that they might need for their bitcoin to generate in order for their bitcoin to be sustainable..
So maybe the guy who had been earning $30k per year for many years and was ongoingly buying bitcoin with as much of his discretionary income as he was able to spare, and the guy was expecting that his bitcoin was going to be able to sustain him at $80k per year, yet at some point he becomes no longer able to work, yet his bitcoin holdings at the time that he is no longer able to work is only going to support him at $20k per year based on how much he had been able to put into his bitcoin holdings over the time that he was building his bitcoin holdings.. He still has something to work with, even if the amount might not have had ended up being as high as he thought the amount was going to be.
Many guys make the mistake of calculating spot price rather than something sustainable, yet if a guy is investing into bitcoin for many many years, then he should be able to figure out what his sustainable withdrawal rate is rather than being unrealistic in terms of how to treat his bitcoin holdings.
I agree with you there is no point delaying your investment because you want to build a backup fund's, I understand how important having a backup fund's is in our accumulation journey but the best thing to do is to build your backup fund's along side your bitcoin investment, you can decide to invest 70% of your discretionary income into your backup fund's and then 30% to your Bitcoin investment you can run it through this way for just few months by then you have built a strong backup fund's and then you can start using your 100% discretionary income to invest in Bitcoin.
Bitcoin investment is not a do or die thing,
It’s not necessary to have a backup fund before investing in Bitcoin, the most important thing is having discretionary income. If an individual cannot get discretionary income from their earnings, it is not encouraged to invest because the person has more responsibilities than their income, and they may end up using funds for other things for their investment.
We have many investors out there who can afford to build their backup fund before they invest, and we also have those who can build their backup funds within a month, so it definitely depends on your earnings. Bitcoin investment is not something you must do with all your income, you can buy according to your earnings, and don’t invest everything in Bitcoin. Even if it’s just $10 or $20 you can afford monthly or weekly, it can grow in value over time.
Guys cannot start investing into bitcoin with absolutely no back up funds otherwise they cannot be sure that they are investing into bitcoin within their discretionary funds and not with money they need for their expenses.
