JJG's Bitcoin Investment Ideas (Sustainable Withdrawal / Portfolio Maintenance)

[bitmover]

So yeah figuring out an allocation to bitcoin could be something like 5% to 25% of your investment portfolio to be allocated into bitcoin, but surely if you are more of a beginner in terms of building your investment portfolio, you may well be considering ways to accumulate bitcoin that revolve around 1) dollar cost averaging, 2) lump sum investing and/or 3) buying on dips. I am also not much into trading and/or selling bitcoin in an attempt to accumulate more, which gets us back to the topic of this here particular thread presuming that if you are considering either maintenance and/or various forms of sustainable withdrawal, then you have already spent a decent amount of time accumulating BTC.

I have about 30% in bitcoin. I was worried about that as I considered it a lot.

However,  after recents discussions with you JJG, and some recent thoughts about the market , I stopped selling for a while. I will try to increase it.

I regreted not have accumulated more before 2020 or in 2022... I will keep accumulating what I can now, but I believe the future is very bullish. No reason to sell for now.

[JayJuanGee]

So yeah figuring out an allocation to bitcoin could be something like 5% to 25% of your investment portfolio to be allocated into bitcoin, but surely if you are more of a beginner in terms of building your investment portfolio, you may well be considering ways to accumulate bitcoin that revolve around 1) dollar cost averaging, 2) lump sum investing and/or 3) buying on dips. I am also not much into trading and/or selling bitcoin in an attempt to accumulate more, which gets us back to the topic of this here particular thread presuming that if you are considering either maintenance and/or various forms of sustainable withdrawal, then you have already spent a decent amount of time accumulating BTC.

I have about 30% in bitcoin. I was worried about that as I considered it a lot.

However,  after recents discussions with you JJG, and some recent thoughts about the market , I stopped selling for a while. I will try to increase it.

I regreted not have accumulated more before 2020 or in 2022... I will keep accumulating what I can now, but I believe the future is very bullish. No reason to sell for now.

The percentage of allocation can quite vary depending on individual circumstances, including questions about whether you have other investments, and surely if you are starting your first investment with bitcoin, then all that you are going to have is bitcoin and dollars, but if you are starting your investment with an already existing diversified portfolio (referring to traditional assets, not shitcoins), then you may well consider an initial target of 5% to 25% in bitcoin would be a good target.. for example, a guy who might come into bitcoin and already have $50k invested in index stocks or something like that... then he might consider an initial target of 5% to 25% in bitcoin would be something like $2,500 to $12,500 - but then if his allocation in bitcoin grows based on bitcoin growing rather than his putting more into bitcoin, then he may well consider how to treat that growth and whether it is worth it to allocate in other assets or just grow his bitcoin portion until it reaches some kind of a meaningful size..

so if his annual income/expenses might be in the ballpark of $40k per year, then maybe he is going to want to get his bitcoin holdings up to 1 or 2 years of his annual income/expenses prior to considering any kind of need to diversify into other assets.

For sure, these are not easy choices, but there are likely folks who might already have various kinds of traditional investments who decide to ONLY focus on bitcoin in terms of their new accumulations of investments, even though they surely might let their traditional investments ride.

Another problem is that some western countries have is the existence of 401k-like products, which are both tax free but also those products might have employer matching contributions, and so with those folks, they may be tempted to invest into those 401k-like products, and they might not even have a lot (if any) discretionary income remaining after they had already allocated to those 401k-like products (and which products are ONLY recently potentially getting bitcoin ETFs as one of the allocation options within them).

But, yeah, folks who do not have any of those employer and/or government-sponsored products, they may well come to investing and they may well start investing into bitcoin, and bitcoin is largely their only investment, so they are merely diversifying (or slightly de-risking) the amount of their BTC exposure by figuring out how much cash to keep.. so they are largely just BTC and cash, so they may well end up having 70% to 90% in BTC and the other part in cash and/or various kinds of cash alternatives (again not necessarily referring to shitcoins - even though some folks in poorer countries might not have a lot of investment options outside of the "crypto" space)....

..so then if the holdings in the overall investment portfolio are mostly just bitcoin and cash or cash equivalents, then at some point - maybe after 1-2 years worth of income and/or expenses is starting to build up into the BTC /cash holdings.. there may well be some concerns that the cash portions are not working enough.. so even though BTC is quite volatile, the BTC portion might still be considered as "working" so there may well. be some desires to have more of the cash portions to be working also, which in some senses justifies the concept of diversification into a variety of other assets.. maybe adding one new asset at a time ever year or every few years.. .... or there might be some other considerations that a person might have based on the investment options that he considers to be available to him.. and hopefully no more than 10% of the value of bitcoin will go into any shitcoins.. even though people have to make those kinds of choices for themselves based on their perceptions of options... and if they might consider whether they are able to invest in stocks, property, commodities, bonds or other forms of cash/cash equivalents.

[bitmover]

How much BTC and/or value to use:   Of course, I am very much into the idea of using fuck you status and suggesting that default entry-level fuck you status could be considered as $2 million in western location.  However, with this particular tool, I started out with 21 coins in a bit of a random way, and if we use the tool, and we look back to September/October 2022, we see that 21 BTC were then worth $490k-ish in terms of the 200-WMA, but the spot price was then below the 200-WMA at $403k-ish, so at that time with the use of the tool (or the formula), the withdrawal authorization amounts were quite extensively reduced (even if we were to have had used this tool back then), and even in my own hypothetical presentation, the withdrawal amounts were even way below the limits, so I had a lot of reluctance to be selling and/or withdrawing BTC during that time (in terms of the hypothetical example that I used). 

I have been thinking a lot about this fuck you status recently

Do you think an overall portfolio of 2 mi USD is enough to retire? Fuck you status? If so, how much btc would be healthy? 30%?

I have been making many btc price projections, and it looks like Bitcoin is likely to reach 100-150k after trumps election.

[JayJuanGee]

How much BTC and/or value to use:   Of course, I am very much into the idea of using fuck you status and suggesting that default entry-level fuck you status could be considered as $2 million in western location.  However, with this particular tool, I started out with 21 coins in a bit of a random way, and if we use the tool, and we look back to September/October 2022, we see that 21 BTC were then worth $490k-ish in terms of the 200-WMA, but the spot price was then below the 200-WMA at $403k-ish, so at that time with the use of the tool (or the formula), the withdrawal authorization amounts were quite extensively reduced (even if we were to have had used this tool back then), and even in my own hypothetical presentation, the withdrawal amounts were even way below the limits, so I had a lot of reluctance to be selling and/or withdrawing BTC during that time (in terms of the hypothetical example that I used). 

I have been thinking a lot about this fuck you status recently

Do you think an overall portfolio of 2 mi USD is enough to retire? Fuck you status? If so, how much btc would be healthy?

My own thinking has been evolving on the topic, so I am not really sure how to say it in ways that are really clear, since I think that each of us has to find our spot and our formula for when and how to start to employ something like a sustainable withdrawal.. not only in terms of the amount needed, but also who much could be withdrawn once we figure out that we have enough of a pot to be able to sustainably withdrawal.

Sure the dollar value of target is going to continue to move because of the ongoing debasement of the dollar - yet I still prefer not to let the ongoing and inevitalbe debasement of the dollar to interfere with my own calculations regarding how BTC can play a role in sustainable withdrawal, since it seems to me that bitcoin is not being debased at the same rate as fiat (that is if bitcoin is being debased at all since it has the opposite monetary policy that does not involve actual debasement but instead a fixed supply and a known rate of issuance.

So that $2 million comes from traditional ideas of a 4% withdrawal rate (which would therefor result in a $6,666 per month withdrawal - $80k per year), and since I am more and more inclined to believe that bitcoin bitcoin can sustain a 6% to 10% withdrawal rate, then that means that not as much bitcoin is needed to be able to achieve that same withdrawal amount of $6,666.  So right now presuming that 6% is sustainable, then that would mean that you would need $1,333,333 in order to get that same withdrawal of $80k per year and/or $6,666 per month, and if you are presuming that 10% is sustainable then you would only need $800k of BTC to obtain that same withdrawal of $80k per year and/or $6,666 per month.. ..

So using the 200-WMA, $2 million is 56.3 BTC, $1,333,333 is 37.5 BTC and $800k is 22.5BTC.  You can look for yourself at https://bitcoindata.science/withdrawal-strategy

So then the question becomes how much do you believe either the formulas being sustainable or alternatively that you might need some other kind of a cushion.. including if you have calculated your own income needs correctly.

30%?

I am not sure what you mean by 30%? 4% is the sustainable withdrawal rate for traditional investments, and I am thinking that 10% is sustainable for bitcoin, but yeah you could come to some other conclusion, but I would be hesitate to employ a really high withdrawal rates, such as 30%..

I have been making many btc price projections, and it looks like Bitcoin is likely to reach 100-150k after trumps election.

Yeah, but I don't base my own actions on spot price, unless you are considering some kind of a raking that you might want to do. and surely, with something like raking, you can set various prices that you would like to make withdrawals, such as every time the BTC price goes up 30%, you withdraw up to 3% of your BTC holdings.. again that would presume that you have overly accumulated and you are not necessarily withdrawing to buy back but instead you are selling in order to rake off some profits - and yeah, 3% every 30% might start to add up to selling way more BTC than you would have had wished, unless you had already decided that you had reached a status of over accumulation of BTC.

Regarding you presumption of Trump's election? and then whether that would cause a certain BTC price direction.  I am not sure about all of that.

Personally, despite USA politics, I am thinking that odds are pretty decently that BTC prices would end up bouncing around somewhere between $120k and $180k in 2024 (and yeah that is not much different from what you are saying), and that in 2025, the BTC prices are likely to reach higher levels than 2024.. I hate to personally attempt to be any more specific than that, yet in any event the main measure (from my point of view) of the 200-WMA is continuing to go up and currently going up right around $42 per day.

But yeah, if you are thinking about selling or shaving off some BTC, you are thinking in terms of how much spot price you are going to get rather than 200-WMA.. so I understand those spot price kinds of framings are important to folks (normies/hodlers).

[bitmover]

I am not sure what you mean by 30%? 4% is the sustainable withdrawal rate for traditional investments, and I am thinking that 10% is sustainable for bitcoin, but yeah you could come to some other conclusion, but I would be hesitate to employ a really high withdrawal rates, such as 30%..

I was asking your opinion about how much %of btc is health in a 2 MI usd portfolio?
30, 50%?

In a diversified portfolio with bonds and etf.

I am asking because you said before that you were already retired and had a diversified portfolio when you got to btc.

[Aanuoluwatofunmi]

I am not sure what you mean by 30%? 4% is the sustainable withdrawal rate for traditional investments, and I am thinking that 10% is sustainable for bitcoin, but yeah you could come to some other conclusion, but I would be hesitate to employ a really high withdrawal rates, such as 30%..

I was asking your opinion about how much %of btc is health in a 2 MI usd portfolio?
30, 50%?

In a diversified portfolio with bonds and etf.

I am asking because you said before that you were already retired and had a diversified portfolio when you got to btc.

Following up with you both is interesting and enlightening as well because one of the things am also considering on this is to set a model on the percentage I will be considering on by bitcoin portfolio later in the future after considering other asset as second plan on my investments, anyone having a future or long term plan for himself will have to consider some of the points raised from this discussion as being relevant because they can also build their own decision from them and still follow up the trend.

[MusaMohamed]

Yeah, but I don't base my own actions on spot price, unless you are considering some kind of a raking that you might want to do. and surely, with something like raking, you can set various prices that you would like to make withdrawals, such as every time the BTC price goes up 30%, you withdraw up to 3% of your BTC holdings.. again that would presume that you have overly accumulated and you are not necessarily withdrawing to buy back but instead you are selling in order to rake off some profits - and yeah, 3% every 30% might start to add up to selling way more BTC than you would have had wished, unless you had already decided that you had reached a status of over accumulation of BTC.

Consider to withdraw when Bitcoin price goes up 30%, then withdraw 3% of BTC in portfolio.

Could you explain more like you will withdraw by selling 3% of your bitcoin in portfolio when BTC price goes up 30%?

My thinking for it is

I will sell my bitcoin, wait for price correction to like 5% or 10% and buy bitcoin. By this I will have +5% or +10% more bitcoins, and I will withdraw it with 3% of a new number of bitcoin in my portfolio. I will have +2% or +7% more bitcoins after that withdrawal round.

What do you think?

If I worry that I take profit too low, I will wait for BTC price rise like 50% to use this strategy.

[JayJuanGee]

I am not sure what you mean by 30%? 4% is the sustainable withdrawal rate for traditional investments, and I am thinking that 10% is sustainable for bitcoin, but yeah you could come to some other conclusion, but I would be hesitate to employ a really high withdrawal rates, such as 30%..

I was asking your opinion about how much %of btc is health in a 2 MI usd portfolio?
30, 50%?

In a diversified portfolio with bonds and etf.

I am asking because you said before that you were already retired and had a diversified portfolio when you got to btc.

Of course there are different ways that you can treat you overall investment portfolio, and probably until the last year or so, I had been hypothesizing that even if bitcoin might have a higher potential return rate as compared with other assets in your portfolio, you could well treat the withdrawal rate similarly - however, I think that a lot of our more indepth sustainable withdrawal discussion, including how the sustainable withdrawal tool really shows how very much higher withdrawal rates can be maintained with bitcoin as compared with other assets... so even when we developed the sustainable withdrawal tool, I had already hypothesized that 6-10% would be quite sustainable - and I suppose that I am becoming more and more convicted in regards to that, especially after you had gotten the historical tracking to be working.

I am considering that none of us necessarily purposefully diversify into other assets, but yeah surely there might be some point where it makes sense to diversify into other assets, since it might not be comfortable to ONLY have investments in bitcoin and cash..so yeah, I cannot really say how much property, stocks, commodities, bonds or other investments to have, especially since mine has largely just been to let my BTC ride, and not really doing much if any diversifying. so largely the Bitcoin portion has grown to dwarf my other investments.. even though they already exist and I am largely just considering that package other investments as having a withdrawal rate of around 4% and the bitcoin to have a 6% to 10% withdrawal rate, even though I personally still have not been withdrawing out of my bitcoin at anything close to that high of rates since my various other funds continue to support me, even though surely there are times that I try to spend more.. or to increase my spending budget in order that I can spend more bitcoin proceeds.

I have not updated my own disclosures of my percentage of allocations since mid-2022 - but you can see how my bitcoin versus other assets have evolved with my largely starting out in bitcoin with about 13.5% in late 2014 in bitcoin and most of the growth came from bitcoin appreciation rather than reallocating... so yeah maybe now my bitcoin is in the 80% to 90% territory.. and I see no real reason to purposefully sell my winner to diversify into losers (relatively speaking), and so I have difficulties answering regarding how much others might be justified to invest into various other assets.

Yeah, but I don't base my own actions on spot price, unless you are considering some kind of a raking that you might want to do. and surely, with something like raking, you can set various prices that you would like to make withdrawals, such as every time the BTC price goes up 30%, you withdraw up to 3% of your BTC holdings.. again that would presume that you have overly accumulated and you are not necessarily withdrawing to buy back but instead you are selling in order to rake off some profits - and yeah, 3% every 30% might start to add up to selling way more BTC than you would have had wished, unless you had already decided that you had reached a status of over accumulation of BTC.

Consider to withdraw when Bitcoin price goes up 30%, then withdraw 3% of BTC in portfolio.

Could you explain more like you will withdraw by selling 3% of your bitcoin in portfolio when BTC price goes up 30%?

I was trying to figure out what bitmover was talking about, and I misunderstood him, but yeah, I stick by my comment of some kind of a reasonable rate of withdrawal that someone might consider once he has gotten his BTC holding to a high enough amount... and so frequently I try to use 10% for every 100% increase in BTC price as a kind of potential guideline, so then we could also do 1% for every 10% rise or we could do 3% for every 30% rise and still stay within the parameters of that same formula... and yeah currently I am not withdrawing that high of a rate.. but I can understand if someone might want to use something like that rate as a ballpark guidance of potential reasonableness.

My thinking for it is

I will sell my bitcoin, wait for price correction to like 5% or 10% and buy bitcoin. By this I will have +5% or +10% more bitcoins, and I will withdraw it with 3% of a new number of bitcoin in my portfolio. I will have +2% or +7% more bitcoins after that withdrawal round.

What do you think?

You are talking about trading and expecting to be able to buy back, so I am not talking about that.  Sure I have some locations that I mention that you could buy back if the BTC price drops, but I am not choosing my amounts to sell or even guiding to sell with the purpose of being able to buy back.  From my thinking, if you have purpose of buying back or some kind of a need to buy back, then you are doing something different from what I am suggesting.. since my suggested sales both relies on reaching a status of overaccumulation and also has no expectation of being able to buy back cheaper..

If I worry that I take profit too low, I will wait for BTC price rise like 50% to use this strategy.

Sure nothing wrong with giving some kind of a extra cushion to the point in which you might start to sell your bitcoin, but if you are considering being able to buy back cheaper, then you are thinking about the matter different from my own thinking about how to set up my sales decisions (if any)..