The money we earn on a daily, weekly or monthly basis is stable income.
I’m not suggesting that someone must be financially stable before they can invest in Bitcoin. The most important is having a source of income, because without it, there is no way you can set aside a discretionary income. If you don’t have money left after covering your needs, you will face difficult challenges in your investment journey. You might miss some chances just because of other expenses. But sometimes it is not about how stable your income is, but about how you balanced yourself with your investment.
The money that is left after meeting our basic or urgent needs such as food, clothing, housing, education, medical expenses from stable income is discretionary income. From this discretionary income, we build investments, emergency funds and savings.
You can build both savings and an emergency fund while investing in Bitcoin, but it all depends on how you manage your money. Discretionary income is the money left after paying for other expenses. If someone is not financially stable at all, it will be difficult to save, invest, and build an emergency fund at the same time. But at the end, everything will work out on how we manage our discretionary income.
A person can try to work towards making himself more financially stable, and bitcoin is one of the tools that are available, yet just investing into bitcoin won't be enough if a person cannot generate discretionary income and/or to have some form of income that is available to pay expenses and then to have left over funds (discretionary funds) to be able to invest.
Sometimes unstable situations are temporary, and sometimes they last a long time. .A person could start out stable and then go unstable for a period of time, and then work himself back into being stable again. There are a lot of scenarios in which aspects of an investment into bitcoin might either be interrupted or at least challenged in terms of being able to continue to invest into it, and if there are cashflow problems, then adding to the bitcoin investment may well need to be temporarily suspended ..
Ideally we create and maintain our cashflow management systems/practices to lessen chances that unstable periods of our finances and/or our psychology will have negative impacts and/or to mitigate any negative impacts that they end up having on our bitcoin investment.
It seems to me also if a person can get through a whole cycle of investing into bitcoin (like 4 years), it is likely he would have built stronger cashflow management practices and built his bitcoin investment during that time too - and also he will hopefully become better informed by his 4 years of investing in bitcoin and building his cashflow management systems to prioritize investing in bitcoin and to tweak and/or to improve in any areas that he might determine as necessary to improve - and many times 4 years is not going to have had been enough for a person who is just investing regularly, and it is likely there will be a need to continue to invest and/or build beyond 4 years.
Of course, the more that a person had been able to front load his investment into bitcoin (such as he comes across other money or he starts out by having some other money sources), then perhaps he would be in a better position to have had gotten to a bitcoin stash size in which he might determine that it is justified for him to slow down on his bitcoin accumulation process.
Let me give an example of the past 4 years and an example of the past 8 years, just to show how a bitcoin investment might progress, even though surely past performance does not guarantee future results.
4-year investor: Let's say that a person was able to invest fairly aggressively at a rate of 25% per year of his income into bitcoin for the past 4 years, so that is about as aggressive as anyone is able to reasonably expect to be able to do, and he needs to have that money as part of his discretionary income. Additionally, he is going to have to have fairly strong cashflow management skills/practices to accomplish an ability to ongoingly invest around 25% of his income into bitcoin, and if this guy earned an income of $30k per year, then over 4 years he would have had invested $30k, which would have been about $150 per week.
In such a scenario, this 4-year investor guy would have had accumulated right around
0.83 BTC which currently has a spot price value of right around $93k and a 200-WMA value of around $44k, and so surely his investment is doing well, yet it is not quite close enough to really change his practices of ongoing BTC accumulation, and he likely would want to and need to continue to invest, since a 200-WMA value of $44k would likely only support around a $4,400 per year income, and maybe this guy has goals to get to a point of doubling his income to something like $60k or even to get his investment up to an ability to withdraw $80k per year. So perhaps he is not going to withdraw any of the bitcoin until it adequately reaches his threshold target level of being able to generate something between $60k and $80k per year of income.
8-year investor: Sometimes the investment just needs to run its course a bit longer to start to feel more solid results. Let's say that a similarly-situated guy with a $30k per year income and investing 25% of his income at $150 per week, had followed the same plan as above for the whole past 8 years, yet the only difference was that he started investing in 2017 (4 years earlier, for a total of 8 years investing), and so he had invested $60k over the past 8 years and accumulated 4.55 BTC.
Right now 4.55 BTC has a spot price value of right around $508k and a 200-WMA value of around $238k, and so surely his investment is doing better than the guy who had ONLY been investing 4 years, and so right now if we look at his 200-WMA valuation, we can see such $238k 200-WMA valuation would currently support an annual income of $24k (and so surely he is getting closer and closer to his goals), but he had not yet reached his goals
Even if his goal is to get his income up to $80k per year, before he might start to draw from his bitcoin, he can see from
my latest fuck you status table that it is likely that somewhere between 4.55 BTC and 5 BTC (in case he wants to continue accumulating) would get him to an ability to withdraw $80k per year in early 2029, which surely would not be bad for a person who had started out with ONLY an income of $30k per year, but a persistence in his desire to accumulate as much bitcoin as he could do.
Of course, if he had been able to lump sum buy or buy bitcoin earlier rather than later, then he might have had been able to accumulate more bitcoin at a faster rate, yet the fact of the matter is that so many normal people struggle to ongoingly have money to invest, and more likely scenarios involve guys who are just ongoingly taking from their income (and from their discretionary income) in order to figure out how aggressive they are able to invest into bitcoin without overdoing it.. .
and yeah, of course, the examples that I gave can be adjusted for whatever might happen to be our own particular income level.
We also consume with our discretionary income... We can choose to consume right away or we can delay our consumption by investing and/or saving.
Dear JJG I think it is wiser to save or invest discretionary income for later consumption rather than consuming it immediately.
Of course investing is built on a premise of deferred gratification (deferred consumption), yet there is still a balance that each of us has to try to reach depending on a variety of our personal circumstances. If we do not spend any money on anything except the absolute necessities, then maybe we might suffer in a variety of ways in our social lives, and we also might have responsibilities to others, such as friends and families.
I am not opposed to the idea of greatly cutting out consumption, yet we still have to realize that even if we take care of our basic expenses, there may be ways to cut back on some of our expenses, yet sometimes some of our spending actually causes us to be more productive, so we have to be careful regarding cutting back too much, and maybe if we live in a bad neighborhood and if we wear used clothes, we might have more difficulties getting ahead because frequently we have to be liked and/or to present well in order to gain access to some limited resources, whether it is jobs or whether it might be getting invited to parties that might allow us to properly network and perhaps lead to more opportunities.
Because we do not know if we will always be able to earn. There may come a time in our life when we can no longer earn but we have to live our lives. Then the previous discretionary income that we had saved or invested will come in handy. As the saying goes, "Thinking about the future is the work of wisdom."
Some young people may well be better off to gain certain skills, knowledge and/or experiences while they are younger and that may lead to better employment options and/or opportunities as compared with a person who had already worked his whole life.
Also, some older folks might be better off to retrain and to get into some other kind of work, even though it might cost money to do that.
Thinking about the future is indeed the work of wisdom. I have seen ants store food for the winter in other seasons. Because if they go out in search of food in the winter season, their lives are at risk. We are healthy and strong now and can earn, but if at some point we get sick and our income stops, we will still have to find food. Think about it, how will you live your life if you do not have a proper amount of money in reserve?
You cannot assume that everyone is at the same stage, even though surely there can be some commonality with younger people who might be first moving away from home and starting from whatever social circles that they have, but then there can be a certain amount of baggage that comes from folk who might have had been working for a while already, and some have already been trying to invest, and maybe some have made better progress than others. You are preaching to the choir in terms fo my own preference that guys figure out ways to build various life and/or employment skills at younger ages, and bitcoin is merely one part of that, yet there can be aspects of bitcoin that conflict with wherever a person might have had previously thought that he is going, yet when he comes across bitcoin, then bitcoin might have had helped him to change plans or even created conflict in regards to what kind of profession that he might pursue, in the even that he is a young person still trying to decide what is going to be his profession.
Now people may say yes, I understand that we should invest or save, but why should we invest in Bitcoin? Why people should invest in Bitcoin -
▫️ Bitcoin provides more security to our assets than other investment avenues.
Bitcoin is still a relatively new asset class, so people have to figure out how much time, energy and/or value that they might choose to put into bitcoin versus something else, and they might already have other investments.
Of course, even if we assume that many people have not taken adequate measures to invest prior to hearing about bitcoin, yet we cannot completely presume the status of other investments that bitcoin newbies might have in the beginning and some of the juggling that they might have to make in terms of considering bitcoin as compared with other assets that they have or as compared with other assets that they might invest into. I am not referring to fucking around with shitcoins, even though surely there are plenty of folks who get distracted into shitcoins, especially if they might be starting without much or any other investments.
▫️ Investing in Bitcoin means that I will have sole control over my assets, no third party like a bank has any hand in it.
Yes, of course, holding your own bitcoin should be the goal, yet people may well not start holding their own keys. They might work their way up to such a status, and it may well take some time for them to get to a point in which they are holding an overwhelming majority of their bitcoin.. such as greater than 90% of their holdings is self-custody.. yet there are a lot of people who might not even know the difference between owning bitcoin and holding it with a third party or buying exposure to bitcoin through a bitcoin ETF or by owning something like Microstrategies.
▫️ It provides the highest profit compared to other investment avenues with long-term investment and proper management.
Historically bitcoin has provided the most profits, and sure it could continue to be the best risk-adjusted investment, yet bitcoin's future price performance is not even close to being guaranteed.
Many people think that should we invest our entire discretionary income in Bitcoin? No, Bitcoin investment advisors never ask you to invest your entire money in Bitcoin.
You are flip flopping. You said that there is no reason to consume and then now you are saying to NOT invest all of your discretionary income in bitcoin.
Rather, they say that you should keep buying Bitcoin in the DCA method with a part of your discretionary income and when there is an opportunity to buy in DIP, if possible, buy aggressively and enrich your Bitcoin portfolio. And you can invest in other areas according to your choice, in addition to building an emergency fund and other funds with the other part of the income.
It is unclear what you are saying here.
Maybe you could give an example of what you mean. We also know that if we describe a hypothetical person, then that hypothetical person might not capture a variety of circumstances, so it might be good to compare one hypothetical person to another, especially when you seem to be saying more than one thing and almost contradicting what you said in the first part of your post.
However, everyone's life situation is different and it can be very difficult for someone to hold on for a year. So if someone thinks that one year is long-term, it is only their personal matter, which cannot be said to be bad at all.
I disagree with you to accept from anyone that one year bitcoin of holding bitcoin and selling is a long-term even if they claim it is. One year is not investing because you will still be a low coiner. That person is a trader and not an investor because he is only after profit and not after building, growing and norturing his bitcoin investment to a certain level in future. A lot of people into bitcoin are traders because they holdi not up to a circle and take profits but they claim to be investors. They're in this forum.
What will such person benefit from being a low coiner and move backwards to a no coiner despite the little profit that he made. That person will end up regretting in future when bitcoin price will be very expensive because he was busy selling what he was supposed to be growing and increasing in value overtime.
Bitcoin investment should be for a long time and I prefer ten years above as long term. As for me, I will continue buying bitcoin till I reach my over accumulation stage because bitcoin is a good investment for the future. I think that people with age and/or health considerations could still categorize themselves as an investor if they are planning to have an investment timeline of 4-10 years (meaning less than 10 years)..
I think that anyone coming into bitcoin with less than a 4 year timeline is trading rather than investing, even though surely some folks might come into bitcoin with less than a 4 year timeline, but then change their mindset after spending some time investing into bitcoin and learning further about it.
I think that some folks might come to bitcoin with greater than a 4 year investment timeline or even greater than a 10 year investment timeline, but sometimes life circumstances might force them out of their position, even if they had intended to be in bitcoin for a longer period of time.
.......Smart investors hodl between 4 to 10 years and more by then they're sure that atleast two bull circles have come. Holding for the long term and choosing to sell after ATH is a good investment plan.
That does not sound smart to me. Bitcoin has proven itself as a good thing to own, which is likely going to continue to be true in 10-15 years from now and thereafter, so even if you may have done a lot of the accumulation of things right, and you accumulated bitcoin for two cycles and then maybe you waited another cycle before you started to contemplate selling, and then you sold most or all of your bitcoin, then what are you selling them for?
Where you going to put that money? At that point you are planning to buy back, especially if you are selling upon an ATH?
What do you mean by using your extra income to invest in Bitcoin? I don't really know what you meant by extra income but I want to let you know that what is supposed to be used in our investment is our discretionary income and you dare not use any money outside this to invest in Bitcoin else you will have yourself to be blamed and secondly you don't use extra income to invest aggressively what you use to invest aggressively is your discretionary income anything outside this means you are not following the principles and you might end up not achieving your goal or target. Borrowing money to invest is a very big mistake someone will ever make especially in investment like Bitcoin that has to do with long term, if you don't have money work hard and make it then later you invest.
I get your point, borrowing to invest in bitcoin maybe risky because of the nature of bitcoin, bitcoin is volatile in nature and such noone can predict the market correctly. So if the market isn't going as we speculate and it happens that we borrowed money to invest them we will end up been in debt to repay. However taking loan can really be a leverage when we are confident with the strategy we are investing with and also when we are expecting money to pay the loan. So it only becomes a problem when there is no proper risk management. Therefore it is always good to invest with our own money.
Using a loan is a form of front loading an investment, and sure there are risks that the BTC price will go down rather than up during the term of the loan, so it is likely best that the person taking the loan has means to pay the loan without expecting the BTC price to go up. It also is likely better if the loan is a longer term loan rather than a short term loan, and it is likely better if the terms of the loan are reasonable with reasonable fees and a reasonable interest rate
