So you really want people to use all their available discretionary income to buy Bitcoin? No backup funds in ground at all? What plan do they have for building it? If you are going to hype lump sum investing, atleast give them the full picture. Don't just tell them to put the whole lump sum into Bitcoin. Explain what they should do about having a financial cushion. What happens if they put everything into Bitcoin and then emergency comes up?
Once you invest in bitcoin without no emergency funds, you are actually gambling with your entire Bitcoin portfolio because in the end when emergency situation comes, you are going to sell your Bitcoin investment even when you don't want to,
so if an investor want to invest in Bitcoin from his discretionary income, he have to invest like 50% of his discretionary income, keep like 20% for emergency funds, 20% for reserve funds and the remaining 10% for consumption. That way his investment will be secured from any emergency that came up in the future.
You are being a bit superficial and perhaps even overly prescriptive in your assessment of what kinds of proportions of discretionary funds might be broadly useful for guys investing in bitcoin, and the fact of the matter is that guys are coming from all kinds of places in regards to their finances and their various other
individual factors, and perhaps a couple of the most relevant considerations in figuring out proportions of discretionary funds that should go for each category would relate to how much bitcoin the person had already accumulated and also how strong his back up funds are at the time that he begins such process of investing in bitcoin in accordance with considerations of dividing up his discretionary funds in what he considers to be reasonable proportions.
I personally like a default starting category as 33.33% into each, and then any guy can adjust from there.
The three categories are 1) invest, 2) save (which would include all back up funds such as your two categories of emergency funds and reserve funds) and 3) discretionarily consume. In your category of 10% to discretionary consumption, you are presuming that guys can engage in considerable amount of abstinence from consumption, which surely could be the case, yet at the same time, there is some value in accepting guys (perhaps bitcoin newbies?) from where they are at rather than imposing our own expectations on them without really knowing their particulars.
So you really want people to use all their available discretionary income to buy Bitcoin? No backup funds in ground at all? What plan do they have for building it? If you are going to hype lump sum investing, atleast give them the full picture. Don't just tell them to put the whole lump sum into Bitcoin. Explain what they should do about having a financial cushion. What happens if they put everything into Bitcoin and then emergency comes up?
Once you invest in bitcoin without no emergency funds, you are actually gambling with your entire Bitcoin portfolio because in the end when emergency situation comes, you are going to sell your Bitcoin investment even when you don't want to, so if an investor want to invest in Bitcoin from his discretionary income, he have to invest like 50% of his discretionary income, keep like 20% for emergency funds, 20% for reserve funds and the remaining 10% for consumption.
That way his investment will be secured from any emergency that came up in the future.
In a situation where by we want to start our investment in bitcoin and we have just our discretionary income which isn’t enough for both the emergency funds and reserve funds what should the investor do?
Huh? What the fuck are you talking about? If a guy has discretionary funds, then he has enough for investing, back up funds and discretionary consumption. What would not be enough? $10? If he has $10, then he has $3.33 for each category.
If you are referring to Homemade-IQ's division of back up funds into both Emergency funds and Reserve funds, then sure that makes sense that it might not be practical to put $1.67 into each or whatever he might be expecting.
In situations like that since there isn’t availability for an emergency funds that shouldn’t stop us from investing in bitcoin, as long as we have our discretionary income then we can buy bitcoin and start without an emergency funds but as soon as we buy our main priority should be focusing on an alternative for an emergency funds so our investment wouldn’t be at risk, no time to waste or find an emergency funds when we have a discretionary income already. We can start right away
Your way of phrasing this still comes off as a bit strange @Big Dirams, since you seem to be suggesting that there might be some value in focusing exclusively on bitcoin buying in some pay periods and perhaps focusing completely on building back up funds in other periods, so I am not sure if you are having troubles considering a practice of building the bitcoin and the back up funds at the same time?
Of course, many of us have recognize that buying the dip (or holding back to buy the dip) may well not make any sense, even in a case that reflects the example that I gave that might involve splitting the $3.33 into a category of buying regularly and a category that waits for the dip. Sometimes even for logistics (not based on BTC prices) a person might want to wait until his $3.33 per week (or whatever is the time period) gets up to a certain amount (something like $20) before he actually uses the amount to buy bitcoin, yet at the same time, he would not be waiting for any dip, but instead he is waiting to accumulate enough money in which it seem logistically reasonable to engage in the bitcoin buying transaction - depending on how he is getting his bitcoin and what kinds of possible fees and/or limitations that are involved - some exchanges will not allow transactions less than $5, for example, and some exchanges might have flat fees or they might base their fees on percentages.
It seems to me that the fees for depositing and/or buying bitcoin tend to be less onerous than the fees for withdrawing, which also is part of the justification that guys might allow for the amount of BTC that they accumulated to get up to a certainly large enough size to be able to justify both the withdrawal fees and perhaps also take into consideration future UTXO management to the extent that they might not want to have a bunch of small UTXOs in their private wallets.
Newbies who are encouraged or advised to buy the dip whose Bitcoin accumulation starting time is just delayed are even lucky because the encouragement or advice to buy the dip can become a total discouragement. While waiting for these perfect buying time, something can come up that may warrant them using up this funds because Bitcoin investment through waiting for the dip will look not real to them and so discouraging. A newbie doesn't need this encouragement that can turn to discouragement.
How does waiting for the dips serves as an encouragement to new investors.
There isn’t anything like buying at the perfect time and waiting for the dips is just a form of delay procrastination which that isn’t a good idea. Every time is perfect to buy bitcoin either at lows or highs, so far the aim is on the future and long term growth then we can buy at anytime with DCA but buying the dips doesn’t serves as an encouragement instead it delaying.
I cannot disagree with you in regards to any of this stuff @Big Dirams, since many of us do have a tendency to suggest that it is way better for newbie bitcoiners to be buying all the time rather than employing waiting strategies such as buying dips that might not happen. Of course, the more money a guy has, such as if he has large discretionary funds or maybe he comes accross some large amount of money all of a sudden, then in those kinds of situations, there might be some value in supplementing (or even hedging) bitcoin buys with dip buying, especially if he might have situations in which he feels that he is buying large amounts of bitcoin at once and he becomes nervous about buying so much and then subsequently experiencing bitcoin price dips.. so then in those kinds of cases, there could be some value to purposefully hold back some amount of money that is purposefully flagged for the buying of dips that may or may not end up happening.
So you really want people to use all their available discretionary income to buy Bitcoin? No backup funds in ground at all? What plan do they have for building it? If you are going to hype lump sum investing, atleast give them the full picture. Don't just tell them to put the whole lump sum into Bitcoin. Explain what they should do about having a financial cushion. What happens if they put everything into Bitcoin and then emergency comes up?
Once you invest in bitcoin without no emergency funds, you are actually gambling with your entire Bitcoin portfolio because in the end when emergency situation comes, you are going to sell your Bitcoin investment even when you don't want to, so if an investor want to invest in Bitcoin from his discretionary income, he have to invest like 50% of his discretionary income, keep like 20% for emergency funds, 20% for reserve funds and the remaining 10% for consumption.
That way his investment will be secured from any emergency that came up in the future.
The fund you plan to manage for long term Bitcoin accumulation through discretionary income is fine but as time and your financial capacity increases the allocated fund will need to be revised.
A new investor can definitely start Bitcoin accumulation without an emergency fund. There is no mendetory for you to have an emergency fund when starting out. Build up a reserve fund and an emergency fund by following the method you plan to organize your fund management. Plan to keep this process long-term for 4-10 years or more.
It is not certain whether an emergency will occur in the future but you need to be prepared for this situation financially and mentally. Keep a reserve fund available at the all time.
Even though you are technically correct @Olatundespo, your post is still misleading. Sure, a bitcoin newbie does not have to have any kind of extensive back up funds in order to get started buying bitcoin, yet he does need to have at least a bare minimum quantity of back up funds so that he does not accidentally end up buying bitcoin beyond his discretionary funds.
Think about the matter. If a guy had absolutely no back up funds and he used whatever he believed to be his discretionary funds to buy bitcoin, and maybe he uses up all his money and he knows that he is not going to get paid for 1 or 2 weeks, so then what the fuck happens if he has some other expenses that come up in that time, and/or when he is supposed to get paid does not end up happening? Then what is he going to do? In that example, he has absolutely no money, and he would be forced to cash out some or all of the bitcoin that he had just bought based on his lack of keeping enough back up funds in order to account for events that have fairly decently good odds of happening. That comes off as irresponsible (and maybe even gambling?) to me.
I doubt that any of us can really know exactly how much back up funds that a guy needs to be comfortable that he is sufficiently protected from using discretionary funds to buy bitcoin and not going beyond his discretionary funds, yet there is also value in guys starting to buy bitcoin from whereever they might happen to be, even if some of us would likely never allow our finances to get into a position that we were to have absolutely no back up funds.. yet at the same time, if a guy is already used to living like that he is also going to be improved if he figures out ways to reasonably begins to build up both his bitcoin and his back up funds at the same time, and investing into bitcoin justifies an ongoing building and maintenance of back up funds, even for guys who historically had not been in the practice of doing so... especially since bitcoin is an investment of 4-10 years or longer that guys should shoot to protect, especially if he has intentions of investing into bitcoin rather than trading,... and even though in the very beginning the newbie bitcoiner might not realize that bitcoin is an investment rather than a trade, yet none of us should want to present bitcoin as if it were a trade rather than an investment, even if they newbie might not have had yet internalized the idea that bitcoin is an investment and not a trade.
Personally, I don't encourage any newbies to trade or gamble with bitcoin, even if they might seem to have those inclinations and they may well end up trading and/or gambling with bitcoin, those end up being their choices, yet I personally strive to present bitcoin as an investment and to talk about bitcoin as an investment, and if I happen to have a bitcoin newbie as an audience who happens to be receptive to my ideas, then I will likely continue to share them, yet if they ongoingly go down the trading and/or gambling road in their discussion, then I am quite likely not to participate in such conversation, and I will even tell them that I don't think about bitcoin in those kinds of ways, so they are likely going to need to find their own path if they are going to want to continue to consider bitcoin in those kinds of ways.
In any event, even if I guy were to come to bitcoin and decide to get started in bitcoin, and he has done a quickie assessment of his cashflow situation and he sees that he has absolutely no back up funds, yet he is pretty confident that he has $100 per week that he is able to use to buy bitcoin from now and into the future, then perhaps as a default starting position, I would suggest that he starts out by investing $33.33, putting $33.33 into his back up funds and discretionarily consuming $33.33, and then to continue to do that each week until he determines some other allocation that he might consider to be better for his situation, yet at least in that situation I would have had felt that I had been helpful to get him started buying bitcoin and if he were to end up following the same system for 1 year (52 weeks), he would end up having had invested $1,733 into bitcoin, saved $1,733 and discretionarily consumed $1,733, and surely I would consider him to have gotten himself into a better position at the end of that year so that he could continue to build, and perhaps during that year, he would have been incentivized to both look into bitcoin and into cashflow management so that he might be in a position to better tailor his own actions of buying bitcoin and building back up funds towards his own circumstance, goals and perhaps even better accounting for his own
9 individual factors.
so if an investor want to invest in Bitcoin from his discretionary income, he have to invest like 50% of his discretionary income, keep like 20% for emergency funds, 20% for reserve funds and the remaining 10% for consumption.
Your discretionary income should be share only into three parts and not four parts and it's good to share your discretionary income into three equal parts. The first 33.3% for your weekly DCA, the second 33.3% for building your emergency funds and the last 33.3% for your discretionary consumption because it's good to make a balance between your bitcoin investment and emergency funds in the beginning as an investor without any form of backup funds on ground.
It's is after you have finished building your emergency funds of three months of your monthly expenses, that's when you channel that money to build your reserve funds. Emergency funds is built first before reserve funds and you don't build your emergency funds simultaneously with your reserve funds. Instead, you build your emergency funds simultaneously with your bitcoin investment because emergency funds is more important than reserve funds since, it's the life wire to your bitcoin investment.I don't completely disagree with the points that you are making in your second paragraph @Sim_card, yet I think that it is important to note the practicality of the matter, which you well know, too.. is that if we are aiming to get to building 3 months of emergency funds, it may well take 1-2 years to get to that amount or perhaps even longer if guys are not even able to save/invest 10% of their income.
The practicality of the matter is that there is almost no one who can stay so rigid as to not touch their various back up funds in 1-2 years while they are both building up their bitcoin and they are building up their back up funds (prioritizing the Emergency portion of that). The practicality of the matter is quite likely that they are going to be building up emergency funds and reserve funds simultaneously, even if they are trying to place a lot of emphasis on the emergency funds side of those back up funds.
It seems to me that a large portion of normie bitcoin newbies are going to both want and need some flexibility in their back up funds, even if they are trying to rigidly get the emergency portion of that fund to add up to 3 months .. .and even from my own perspective, I consider that so many normie newbies might not even have a very good practice of keeping back up funds that are in a form that is both liquid and non-volatile (which largely would be cash that is not working in any way), so many of them are likely going to get nervous to have so much cash on their books (or however they are holding it) that they perceive to be not working, so they may well be reluctant to even actively grow their back up funds at the same pace that they are building up their bitcoin holdings, which surely may well put their bitcoin at some level of increased risk that could result if they end up going through extensive periods of loss of income and/or increases in their basic expenses, yet the fact of the matter even young folks might well be quite cocky in this whole process, especially if they have decently good skills, marketability and even a reasonable history of being able to obtain work that provides reasonably good sized amounts of discretionary funds.
I remain reluctant to push guys in terms of suggesting that they have to rigidly emphasize emergency funds - even though it is quite likely that as their bitcoin holdings grow, they are likely going to naturally become less and less concerned about the non-working aspects of the cash that they are holding and accordingly be willing to hold more of it and even to be inclined to spread out their back up funds into a variety of ways that might not completely rely on holding cash, yet still holding a sufficient amount of cash while having confidence the other ways that they are holding their back up funds continues to tend to be sufficiently liquid (meaning accessible) and sufficiently not volatile (meaning closer pegged to the dollar - or their local fiat - as compared with the relative great volatility of bitcoin and/or other places that value might be kept).
