Another thing is to invest with unnecessary money, or use money that you can afford to lose or leave for a long time. The main reason for panicking in market volatility is lack of knowledge and weak mentality. To improve your mentality, increase the scope of knowledge by acquiring knowledge regularly and practice it regularly.
It's true that investing with money you won't need in the short term is a wise approach because using discretionary income gives investors the patience to hold through market downturns without being forced to sell.
Why are you trying to dumb down the expression?
We invest
money that we can afford to lose, since there are no guarantees that the bitcoin price will go up or that we will not lose the money.
Sure we can take safeguards with the money that we invest so that we will have greater confidence that we will not lose the money and that we will be advantaged by our bitcoin investment, yet even if we are merely locking away the money 4-10 years or longer, there should be abilities to not be too attached in regards to short-to-medium BTC price performance.
Each of us still has to figure out how much we are going to put into bitcoin, and even if we put small amounts into bitcoin, they add up with time, and surely many bitcoin investors will ongoingly increase the amounts that they put into bitcoin, so maybe over several years, they end up putting 1-2 years or even more of their annual income into bitcoin, and it can take time to really build up their bitcoin investment, so the amounts may well seem to be more than what we can afford to lose, even though surely we are covering our living expenses and sure maybe we are also making sure that we have various ways to support ourselves outside of just bitcoin. We have to be careful in regards to putting all of our eggs into the bitcoin basket, even if we have a lot of confidence in bitcoin as an investment.
However, I don't fully agree that panic during market volatility is caused only by lack of knowledge and weak mentality. Because while those factors play a role, financial pressure is often an even bigger reason. Someone who invests money meant for rent, food, emergencies, or other essential needs is much more likely to panic, no matter how much they know about the market.
A person does not need to spend beyond their discretionary funds in order to feel attached to the money that they invest into bitcoin.
When a person invests, they are choosing not to save and/or to discretionarily consume, so there are trade offs with investments. We are deferring gratification with a realization that we might not get the money back at a later date, even though we are investing in bitcoin because we have confidence in bitcoin, yet we still are not guaranteed that we will be better off for having had invested into bitcoin as compared to if we had not invested into bitcoin.
While knowledge and emotional discipline are important, they do work best when supported by proper financial planning.
Adjusting our position size in accordance with our weekly (or monthly) budget is also likely helpful, and perhaps ongoingly buying of bitcoin on a weekly basis (Or whatever is our buying frequency?) during price corrections can be helpful, too. We reinforce our commitment to bitcoin buying by buying every week no matter what.
Building an emergency fund, investing only what you can comfortably leave untouched,
Yes, ongoingly building back up funds is good, and the expression is to invest no more than we can afford to lose. You seem to want to continue to imply that there is some guarantee that you get money back, when there is not.
and having a long term erm plan all help reduce emotional decisions during market swings. Because a strong investor mindset is not built on knowledge alone it is also built on good preparation.
I don't know about preparation prior to getting started, yet I do agree that it is good to ongoingly be studying bitcoin to make sure that we are comfortable with bitcoin and comfortable with whatever investment plan that we are following and perhaps tweaking from time to time.
Another thing is to invest with unnecessary money, or use money that you can afford to lose or leave for a long time. The main reason for panicking in market volatility is lack of knowledge and weak mentality. To improve your mentality, increase the scope of knowledge by acquiring knowledge regularly and practice it regularly.
The bolded part of your statement is always controversial to me as it makes investing in Bitcoin appear like gambling.
Sure, you @Odohu, seem to ongoingly have a problem with this concept, and I am pretty sure that I have responded to you in the past. You are fighting the concept, and the expression is "not to invest more than you can afford to lose." It does not have to do with gambling or trading, and even if any of us believes that bitcoin is amongst the best, if not the best investment, the concept of "investing no more than you can afford to lose" applies to bitcoin too. There is no guarantee that you are going to be profitable, and there is no guarantee that you won't lose it all, whether due to executional reasons or even macro reasons that many of us consider to be unlikely to happen.
Bitcoin investing is not gambling neither is it the same as investing in shitcoins that the founders can dump and ran away leaving the investors with bags of worthless coins.
You are overreacting. The expression of "not investing more than you can afford to lose" also applies to bitcoin as well as to other investments, trading, and even gambling as you mentioned.
Yeah, bitcoin is way the fuck better than those other places to put our money, but the expression of "not investing more than you can afford to lose" still applies to bitcoin.
Bitcoin is not going to die anything soon, so we should make some distinction between Bitcoin and those other schemes.
Sure bitcoin is a great investment and we can make some distinction, even though that expression of "not investing more than you can afford to lose" still applies to bitcoin.
The only time you lose your money, not even completely, is when you intentionally decide to sell due to impatience, fear or whatever reason.
Sure. Selling too much too soon is one of the ways to lose money on bitcoin, yet there are many other ways that guys can lose money from their involvement in bitcoin.
You want to proclaim that there is some ways that guys can make sure that they don't lose money with bitcoin, and therefore bitcoin is guaranteed to not lose money? That seems a bit much of a claim or an impression to create.
There is execution risk and there are macro risks, and sure there are a lot of strong fundamentals with bitcoin, and there are plenty of guys who have decently large percentages of their wealth invested into bitcoin, yet bitcoin still is not guaranteed to be successful.
For sure, I don't want to overstate negative scenarios since I tend to be a fairly large advocate of bitcoin, yet the various go to zero or even go to some number that is largely negative from here are not zero % odds. Maybe if we look at a 10 year timeline or greater, then the going negative from here odds are less than 10%.. I don't know. None of us can assign exact odds that would be universally acceptable, even though we could spell out various possible negative scenarios and then assign odds to the various scenarios at various timeline points,
perhaps how I had attempted to do it in my December 2021 and May 2022 posts in which I had assigned price odds and also timeline odds for both upward scenarios and for downward scenarios.
If you hold on to your precious Bitcoins even in terms of decline, your Bitcoin quantity still remain intact and with time the price will always correct and give you profits.
You think that bitcoin will always give profits.
Sure, we can develop strategies in which we are ongoingly buying bitcoin, including that we can continue to DCA a certain quantity from our paycheck, and if the BTC price continues to go down, then our BTC stash will be guaranteed to continue to get larger, and our average cost per BTC will continue to go down. And, so there are scenarios in which the bitcoin price does not recover, even though we continue to buy as the BTC price is continuing to go down. We are not guaranteed that the BTC price will recover higher than our average cost per BTC, even though if we continue to buy bitcoin while the BTC price is continuing to go down, we will continue to accumulate higher quantities of BTC and our cost per BTC will get lower and lower and lower.
Yes. So far in bitcoin's history, it has always recovered, yet past performance does not guarantee future results.
Each of us who are ongoingly buying bitcoin, we have to decide how much bitcoin we are going to buy and whether we feel that we have reached a point of having had invested enough into bitcoin or more than enough.
It can be difficult to continue to buy bitcoin on the dip, yet at the same time, there are guys who have such a small amount of discretionary funds, so that even if they are buying during ongoing bitcoin price dips, it is still going to take them a lot of time to build their bitcoin stash to such a point that it is enough or more than enough.
I have told this story before in which I recall during the 2015 down period, bitcoin prices were in the mid $200s for so much of the year, and I had done quite a bit of bitcoin investing in late 2013 and throughout all of 2014, yet towards the beginning of the year, my average cost per bitcoin was still close to $600 per coin. In late 2014, I was starting to feel like I bought enough bitcoin, yet I still bought some more bitcoin in November, December and even January 2015, but then in January 2015 I had some issues with my business and my business partner that caused me to not have any more extra money, and I had to dedicate any money that I had at the business.
I also had a non-work related trip in February 2015, so largely between late January and the middle of 2015, I had some pretty severe cashflow issues that made it difficult for me to buy any more bitcoin, and those were great times for the bitcoin price, but I was locked out from being able to buy any bitcoin at that time - yet I did not sell any bitcoin during that time, either. And, slowly by the time we got to June or so, some of my extreme cashflow issues started to resolve themselves, and there were some periods in which I would start to get some extra cash come in, whether it was $20 or $200 or various other amounts, then I would dedicate 1/2 of any of the extra cash towards buying bitcoin, and the other half I would put into my monthly budget to address any of my expenses at the end of the month... so surely since the BTC prices were quite low during those times, my ongoing buying of bitcoin during that time ended up paying off, even though surely there was not any guarantee that the BTC prices were going to go up rather than either continuing sideways or going down, and it seems that the same is true today. We have to figure out some amount that we are ongoingly willing to put in bitcoin, while realizing that we are not guaranteed to be profitable on any of the bitcoin buys that we end up making, even though our bitcoin stash will continue to get larger for every time that we end up buying bitcoin.
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Let us not push this idea that people should invest what they can afford to lose because it will make people invest in fear, never trusting Bitcoin and sometimes never investing any significant amount of money.
Do not invest any more than you can afford to lose is the proper expression, so it seems more problematic to be dumbing it down and creating a false sense of guarantee regarding the bitcoin price and/or its future performance.
This will not create the future millionaires that Bitcoin has the potential of making.
Huh? We have some goal of producing future millionaires?
Frequently, I suggest that guys invest into bitcoin as aggressively as they can without overdoing it, yet they still have to figure out how to invest what they can afford to lose.
You are suggesting that guys might choose not to invest in bitcoin unless they have some guarantee about its future performance?
You @Odohu seem to be the one who is off on your fight against the proper expression and you seem to be suggesting that we need to give some kind of guarantee to newbies so that they will have confidence to invest into bitcoin in sufficiently aggressive amounts.