Balancing Financial security and Bitcoin Accumulation

[Grease5000]

I greet all of you my country people. I know there may be a few other topics that emphasizes on the importance of an Emergency fund to an investor. Yes, everybody knows say Emergency funds dey important, but that's not what I'm here to talk about. With the help of this thread I'm aiming to give a detailed and step by step guide on how to simultaneously build an emergency fund while also accumulating Bitcoin. This is to prevent the excuse of having to waste more time building an emergency fund before getting started with one's accumulation journey.

DETERMINING YOUR FINANCIAL PRIORITIES

1. Emergency Fund: An emergency fund like we already know should be at least 3 to 6 months of our living expenses and this is what we should aim for. The final amount usually varies from individual to individual so focus on your financial situation and allocate 20% of your income to a readily accessible savings account. You may also choose to diversify a lesser percentage of your Emergency fund to Bitcoin too. Note that this is by choice and not really necessary.
2. Bitcoin Accumulation: 30% of your income should go to your discretionary spending, you can choose to use all 30% to accumulate Bitcoin or use a lesser percentage, it's totally up to you, but note that it should be a reasonable amount.

I know some people might already be tempted to as where the other 50% of your income should go. Take a chill pill, we'll also come to that. Now, we move to another segment which is...

TIPS FOR BUILDING AN EMERGENCY FUND

1. Automate your savings: sometimes having to manually save money can be very tiring, you might even forget sometimes and before you know it, you've used the money for something else, so automating your savings can be a pretty helpful tip to ensure you stay religious with your savings.
2. Make use of the 50/30/20 allocation rule: 50% of your income allocation should go to taking care of essential expenses and immediate needs. The mistake people often make is neglecting this aspect, forgetting that it is actually inevitable and unavoidable, even when you manage to avoid it today, it'll come back tomorrow bigger, and you'll be forced to still sort them out, thereby messing up your plans. 30% goes to your discretionary income and the other 20% towards your savings and also for debt repayments.


TIPS FOR INVESTING IN BITCOIN

1. Dollar-Cost Averaging (DCA): This is a very popular strategy and every true Bitcoin enthusiast should have heard or known this strategy. Now the reason I'm bringing up this strategy is because, if you're to achieve building a portfolio and an emergency simultaneously, then you need to marry this strategy, because it's the only strategy I know that gives you the kind of flexibility to achieve this. So prioritize investing a fixed amount from your discretionary income/spending at a regular interval that sits well with you, regardless of the market's performance.
2. Start small: Starting small is very important, especially if you're a low income earner, don't look at how much you plan to achieve just yet and just start with a manageable investment amount and then you can gradually increase your pace/amount overtime.
3. Diversify your portfolio: for starters, this isn't actually very mandatory but I just wanted to include it because there are some unique situations that may likely arise that may potentially lead to diversifying your investment beyond Bitcoin in order to minimize risk.

BALANCE BOTH GOALS

1. Your Emergency Fund should come first (for now): If you're hoping to achieve both goals simultaneously, then your focus should be more on stacking up that emergency fund FIRST, and then you may allocate more funds to your BTC accumulation.
2. Adjust your allocations: This may not also be very necessary for some, but periodically review your income allocation and should the need arise, make some necessary adjustments in order to ensure you're actually meeting the goals.
3. Be Patient: this is actually the most important one, building an emergency fund and a Bitcoin Stash at the same time takes a lot of time and so requires lots of patience, because sometimes it might look like you're not even getting it right, but as long as you're following the above steps, just keep going and being patient.

These steps may not really look like pretty much but I assure you that these steps and tips can actually help anyone (with a steady income source) to build a robust Emergency fund while also accumulating Bitcoin regularly. And don't forget that staying disciplined, patient and informed is also key to achieving this goal.
Pls you can also include other helpful tools if you've got any.

This is good, I like the fact that the steps which one can use to build emergency fund and stack up Bitcoin is well outline, it's gives newbies  a direction and first hang knowledge on how build emergency fund and stack up Bitcoin.

[JayJuanGee]

Yes, it is not a must, you are right. Many investors are having different misconception on diversification and over accumulation. The reasons for diversifying can differ to another investor. The same thing goes for over-accumulation.

After investing in Bitcoin, which i think should take over 50% of your total portfolio, it is also good to diversify, I will recommend low risk asset that can give you profits yearly. It should be an investment that helps protect your bitcoin investment from tampering it.

I disagree because diversification doesn’t always reduce risk the way people think it does. Many assets people diversify into.....stocks, equities, even some bonds....often fall at the same time during market downturns. So when Bitcoin drops, those assets may also be down, meaning there’s no real “balance” happening. That creates a false sense of safety. Also, volatility alone isn’t real risk if you understand what you’re holding. Bitcoin’s price swings are normal, and reacting to dips by diversifying can be more emotional than strategic.

Another issue is spreading money too early. If someone has a clear Bitcoin target and strong belief in it, dividing funds before reaching that goal can slow down real accumulation. Concentration is often how wealth is built, while diversification is better for protecting wealth after it’s built. On top of that, many people don’t truly understand stocks, bonds, or other traditional assets either....they just assume they’re safer. Diversifying too early can also mean moving money away from a high-growth asset too soon, which comes with a real opportunity cost.

What are you recommending Menele001?  Why don't you give some examples in regards to what to do?

How about start with the circumstances of the guys in these two examples to explain what you mean?

Example 1.  Guy is brand new to investing, and is 25 years old with a $30k per year income ($2,500 per month) and $1,500 in basic expenses each month.  Therefore he has a $1k per month discretionary income.  His back up funds are currently about $1k (about 66% of a month of his expenses)

Example 2.  Similar guy as example 1 in terms of income and expense, except this example 2 guy had already been investing in various non-bitcoin investments for 10 years (so his age is 35 years) (and maybe we can presume that his traditional nonbitcoin investments are currently worth around $45k), and so how is this second guy going to approach his bitcoin investment. what is he going to do..  I will give you another hint.. This guy in example 2 had built up his back up funds and so currently his back up funds are about 5 months of his expenses ($7,500)  

Describe how each of these two example guys should approach concentration versus diversification?  and how does bitcoin fit into the mix?

[edited out]

The purpose of diversification is to reduce risk by spreading our income into different assets. However, some people do make the mistake of diversifying into assets that are correlated. For example you want to diversify your assets in bitcoin to other crypto currency, this is wrong because the prices of this crypto currency do correlate with bitcoin. Diversification is meant to reduce risk but when it happens this way it purpose will not be achieved.

What are you suggesting?  Maybe answer in light of the same two above examples that I gave to Menele001

[gracreavix]

Yes, it is not a must, you are right. Many investors are having different misconception on diversification and over accumulation. The reasons for diversifying can differ to another investor. The same thing goes for over-accumulation.

After investing in Bitcoin, which i think should take over 50% of your total portfolio, it is also good to diversify, I will recommend low risk asset that can give you profits yearly. It should be an investment that helps protect your bitcoin investment from tampering it.

I disagree because diversification doesn’t always reduce risk the way people think it does. Many assets people diversify into.....stocks, equities, even some bonds....often fall at the same time during market downturns. So when Bitcoin drops, those assets may also be down, meaning there’s no real “balance” happening. That creates a false sense of safety. Also, volatility alone isn’t real risk if you understand what you’re holding. Bitcoin’s price swings are normal, and reacting to dips by diversifying can be more emotional than strategic.

Another issue is spreading money too early. If someone has a clear Bitcoin target and strong belief in it, dividing funds before reaching that goal can slow down real accumulation. Concentration is often how wealth is built, while diversification is better for protecting wealth after it’s built. On top of that, many people don’t truly understand stocks, bonds, or other traditional assets either....they just assume they’re safer. Diversifying too early can also mean moving money away from a high-growth asset too soon, which comes with a real opportunity cost.

What are you recommending Menele001?  Why don't you give some examples in regards to what to do?

How about start with the circumstances of the guys in these two examples to explain what you mean?

Example 1.  Guy is brand new to investing, and is 25 years old with a $30k per year income ($2,500 per month) and $1,500 in basic expenses each month.  Therefore he has a $1k per month discretionary income.  His back up funds are currently about $1k (about 66% of a month of his expenses)

Example 2.  Similar guy as example 1 in terms of income and expense, except this example 2 guy had already been investing in various non-bitcoin investments for 10 years (so his age is 35 years) (and maybe we can presume that his traditional nonbitcoin investments are currently worth around $45k), and so how is this second guy going to approach his bitcoin investment. what is he going to do..  I will give you another hint.. This guy in example 2 had built up his back up funds and so currently his back up funds are about 5 months of his expenses ($7,500)  

Describe how each of these two example guys should approach concentration versus diversification?  and how does bitcoin fit into the mix?

Concerning these two examples you gave, I will just share how I feel both of them should approach their Bitcoin investment.

First thing first, we have to acknowledge that these two guys are not in the same financial condition, Yes, both of them can still do well in Bitcoin accumulation, but their approach would not be the same at all.

Now for the second guy , the one earning $30k per year ($2,500 monthly) with $1,500 expenses and already having traditional investments.   I believe he clearly has more advantage than the first guy. Because the way he can approach Bitcoin will be a bit more aggressive compared to the first guy..

Why? The reason is because he has already built non Bitcoin investments worth around $45k, and he has about $7,500 as backup funds (around 5 months of expenses).   That alone already reduces financial pressure on him. Because of that, he can concentrate more on Bitcoin accumulation using a bigger part of his discretionary income..

There is also the possibility for him to move maybe 5–10% of his non-Bitcoin investments into Bitcoin..  Since he has been investing for about 10 years, he likely has some experience and has seen how different assets grow over time. By comparing the growth of his previous investments with Bitcoin growth over the past 10 years, he can make a more confident decision to allocate that 5-10% (or even more) into Bitcoin, alongside his monthly DCA.. All this gives him room to be more aggressive than the first guy.

Now for the first guy, all he really has is his $1,000 monthly discretionary income.  And realistically, all of that can’t go into Bitcoin.  He still needs to build emergency funds and stronger reserves so he does not end up pulling from his investments when life happens.

Maybe making a structure like this: maybe 50-60% ($500–$600) monthly into Bitcoin, then around 15% ($150) into emergency funds, another 15% ($150) into reserve funds, then keep like 10% cash on hand for family support, small needs and necessary gifting.  That way he is still accumulating Bitcoin but also building stability, which the first guy already have.

So in a nutshell, their concentration will just be different because their foundations are different.  The second guy would have more concentration toward Bitcoin, while the first guy should will still have to balance Bitcoin with safety nets first.  Both will obviously win long term, just with different pace..

[Obulis]

I don’t really think there is any problem if you are diversifying your investment to other assets maybe you can actually diversify to gold or Silver which is actually not a bad idea, considering that gold is having a good impact in the stock market right now and also Silver hitting its all time highest price value, but my question would be why are you diversifying because when you’re still in your accumulation phase of Bitcoin there is no reason for you to be diversifying immediately when you’re still in your accumulating stage of Bitcoin, well you can think about diversification when you’ve gotten to your over-accumulation and you have enough bitcoin in your portfolio where you have been holding for completely 2 circles, perhaps outside from that I don’t think there is obviously any reason to diversify to whatever you might think it’s worth investing.

It's not a must that you must reach an over accumulation stage before you can diversify if you want to diversify. You can diversify when you have accumulated half of your bitcoin target if you feel it's too risky to have only bitcoin investment because the reason why we diversify is to reduce the risk in only one investment because if bitcoin isn't doing fine that's the price dips, the other asset might increase in price to balance your loss.

If you must diversify, it should be an investment that you understand and knowledgeable about. You can diversify into bonds, stock, cash equivalents and, equity.

Honestly in as much as Bitcoin accumulation target is a personal decision, halving your accumulation target before investing in other assets is a nice move. The specificity of diversifying into other assets makes it a different things unlike just talking about diversifying into another thing where personal business can follow. Before diversifying along the lines of your accumulation target, question(s)like the reason for doing that will give a clear picture of what to do exactly. Some people might just want to have another asset thereby spreading their gain potential and whatever reasons.

[Regardme]

Yes, it is not a must, you are right. Many investors are having different misconception on diversification and over accumulation. The reasons for diversifying can differ to another investor. The same thing goes for over-accumulation.

After investing in Bitcoin, which i think should take over 50% of your total portfolio, it is also good to diversify, I will recommend low risk asset that can give you profits yearly. It should be an investment that helps protect your bitcoin investment from tampering it.

I disagree because diversification doesn’t always reduce risk the way people think it does. Many assets people diversify into.....stocks, equities, even some bonds....often fall at the same time during market downturns. So when Bitcoin drops, those assets may also be down, meaning there’s no real “balance” happening. That creates a false sense of safety. Also, volatility alone isn’t real risk if you understand what you’re holding. Bitcoin’s price swings are normal, and reacting to dips by diversifying can be more emotional than strategic.

Another issue is spreading money too early. If someone has a clear Bitcoin target and strong belief in it, dividing funds before reaching that goal can slow down real accumulation. Concentration is often how wealth is built, while diversification is better for protecting wealth after it’s built. On top of that, many people don’t truly understand stocks, bonds, or other traditional assets either....they just assume they’re safer. Diversifying too early can also mean moving money away from a high-growth asset too soon, which comes with a real opportunity cost.

What are you recommending Menele001?  Why don't you give some examples in regards to what to do?

How about start with the circumstances of the guys in these two examples to explain what you mean?

Example 1.  Guy is brand new to investing, and is 25 years old with a $30k per year income ($2,500 per month) and $1,500 in basic expenses each month.  Therefore he has a $1k per month discretionary income.  His back up funds are currently about $1k (about 66% of a month of his expenses)

Example 2.  Similar guy as example 1 in terms of income and expense, except this example 2 guy had already been investing in various non-bitcoin investments for 10 years (so his age is 35 years) (and maybe we can presume that his traditional nonbitcoin investments are currently worth around $45k), and so how is this second guy going to approach his bitcoin investment. what is he going to do..  I will give you another hint.. This guy in example 2 had built up his back up funds and so currently his back up funds are about 5 months of his expenses ($7,500)  

Describe how each of these two example guys should approach concentration versus diversification?  and how does bitcoin fit into the mix?

[edited out]

The purpose of diversification is to reduce risk by spreading our income into different assets. However, some people do make the mistake of diversifying into assets that are correlated. For example you want to diversify your assets in bitcoin to other crypto currency, this is wrong because the prices of this crypto currency do correlate with bitcoin. Diversification is meant to reduce risk but when it happens this way it purpose will not be achieved.

What are you suggesting?  Maybe answer in light of the same two above examples that I gave to Menele001

For the 1st example guy, 1k emergency fund covers less than 1 month of basics ($1,500 expenses) and that’s bad. He’ll have strong emphasis on diversification because no room for big concentration bet since his back up funds are low and on that note, one emergency might force him into debt or even selling investments at loss. His major aim should be him building his back up funds firstly by using most of the $1k surplus (discretionary income) for about 3 to 6 months or even more. So he should be building stability more and not aggressive growth. Once he has secured the back up funds, he may then proceed to invest in bitcoin knowing too well that he has a safe net once emergency rises.

For the 2nd example guy, he is more in a stronger and better position. Same income ($2,500/month) and expenses ($1,500), so $1,000 discretionary, but he’s 35 with 10 years of investing under his belt and a $45k non bitcoin investment. And his emergency fund is solid at $7,500 which is a 5 months worth his expenses, this alone has given him a stronger edge against surprises. As such, I think he can afford a bit more concentration than the 1st example guy, that happens even more if he’s bullish on bitcoin. So with his back up funds set aside, I could confidently dive into bitcoin investment, probably using most of the discretionary income into investing in bitcoin, and as such gives him a larger shares than the newbie

[PhilosopherKing]

basically what is needed and advisable for use in  buying bitcoin is just a discretionary income and not really the extra income.

Discretionary income and extra income after expenses what's even the difference man? People can buy Bitcoin with either of them because they are pretty much the same thing.

The point is that people shout quit sitting around and waiting for discretionary income to come when they already have an extra income left after expenses. People should take the extra cash they got and ongoingly buy bitcoin.

Discretionary income is the same thing as extra income or left over cash . Do not allow the terms used in describing it to deceived you. After meeting up with all your expenses whatever money you have left with you is your discretionary income, be it an extra cash from a friend it is still discretionary income. Anyone that is waiting for a discretionary income when they have left over or extra cash that they won't be needing is actually confusing themselves.

Of course, if we are investing in bitcoin with discretionary income, there likely is some dividing point that a person chooses to make, since when a person is investing in bitcoin, the money is supposed to be locked up for 4-10 years or longer.

A person choosing to invest in bitcoin needs to be psychologically willing to understand that the money is locked up and probably also it is better to consider the money that is so much extra that you are willing to lose it.

There are ONLY three ways that discretionary funds can be used which are invest, save or consume... so if a person has an income of $30k per year ($2,500 per month) and he has $1,500 of expenses, then he has $1k remaining for his discretionary income.

He could choose to invest/save/spend $333 in each category - or he can choose some other balance that is psychologically comfortable.

Perhaps up to a point, the spend will give pleasure right away, yet the invest might never come back or it might result in greater pleasures in the future.  The saved part allows for security and comfort and even flexibility in terms of when it is spent, even though the savings is likely losing value at about 3% to 12% per year depending on the currency.

People that investing in bitcoin should be constantly be aware that such that money should be left alone for years, at least a cycle, and not less than that.

If then they cannot handle such idea then they should not even be investing in bitcoin.

Which is why people should invest with discretionary income as it is only what can make you to leave it for a long haul. Investing with any money other than discretionary income usually end bad in regrets.

[Proty]

People that investing in bitcoin should be constantly be aware that such that money should be left alone for years, at least a cycle, and not less than that.

If then they cannot handle such idea then they should not even be investing in bitcoin.

Which is why people should invest with discretionary income as it is only what can make you to leave it for a long haul. Investing with any money other than discretionary income usually end bad in regrets.

Yes people that intend to invest in bitcoin for a long term they should have this in mind that they  won't have access to the money till  have reached there investment timeline. With this they will have a good understanding why it is advisable to invest in bitcoin using discretionary income rather than money that we will needing for our daily expenses. If our discretionary income is locked for years it won't affect us or we wont be pushed to temper with our investment but if it is money that we will be needing, whenever the need arise we will be force to fall back to our bitcoin investment.

[Gost ms]

People that investing in bitcoin should be constantly be aware that such that money should be left alone for years, at least a cycle, and not less than that.

If then they cannot handle such idea then they should not even be investing in bitcoin.

Which is why people should invest with discretionary income as it is only what can make you to leave it for a long haul. Investing with any money other than discretionary income usually end bad in regrets.

Yes people that intend to invest in bitcoin for a long term they should have this in mind that they  won't have access to the money till  have reached there investment timeline. With this they will have a good understanding why it is advisable to invest in bitcoin using discretionary income rather than money that we will needing for our daily expenses. If our discretionary income is locked for years it won't affect us or we wont be pushed to temper with our investment but if it is money that we will be needing, whenever the need arise we will be force to fall back to our bitcoin investment.

An individual can sell the investment before the expiry of the investment tenure. There is no such condition or clause which states that the investment cannot be sold before the expiry of the investment tenure. However, it is never a good idea for an individual to sell the investment before the expiry of the investment tenure. It is always necessary to invest with discretionary income. If you invest with necessary money, then you may be forced to liquidate your investment before its expiry.

[ASloveapg]

People that investing in bitcoin should be constantly be aware that such that money should be left alone for years, at least a cycle, and not less than that.

If then they cannot handle such idea then they should not even be investing in bitcoin.

Which is why people should invest with discretionary income as it is only what can make you to leave it for a long haul. Investing with any money other than discretionary income usually end bad in regrets.

Yes people that intend to invest in bitcoin for a long term they should have this in mind that they  won't have access to the money till  have reached there investment timeline. With this they will have a good understanding why it is advisable to invest in bitcoin using discretionary income rather than money that we will needing for our daily expenses. If our discretionary income is locked for years it won't affect us or we wont be pushed to temper with our investment but if it is money that we will be needing, whenever the need arise we will be force to fall back to our bitcoin investment.

An individual can sell the investment before the expiry of the investment tenure. There is no such condition or clause which states that the investment cannot be sold before the expiry of the investment tenure. However, it is never a good idea for an individual to sell the investment before the expiry of the investment tenure. It is always necessary to invest with discretionary income. If you invest with necessary money, then you may be forced to liquidate your investment before its expiry.

Basically, this only creates negative potential, we have to hold on until the goal we set is met, and to be fully qualified in this regard, we first have to ensure discretionary income, if we invest through discretionary income, there is very little chance of being forced to sell unexpectedly, because in unexpected times we will only be forced to sell when the invested money is necessary for us. But when we are sure about this in advance, we will not be forced to sell under any circumstances, but we also have to pay attention to the emergency fund, because having this emergency fund ensures protection for us in any unexpected situation.

[Merit.s]

What are you suggesting?  Maybe answer in light of the same two above examples that I gave to Menele001

The first guy needs to start his bitcoin investment by putting 50% into bitcoin which is $600 and $300 into his emergency funds because he already has $1k on ground as his backup funds. While he uses the leftover $100 for his discretionary expenses. He can continue like this overtime till he has built his backup funds up to three months of his expenses and divert the money into his reserve funds when that is done, he can invest aggressively for ten years and above. This guy needs to focus on building his bitcoin portfolio without distractions and shouldn't think of diversifying till he has accumulated up to 60% of his bitcoin portfolio before thinking of diversifying if necessary.

The second guy has enough flexibility because he already has a good size of  backup funds on ground and a large discretionary income with an ongoing traditional business. He will easily invest aggressively and if possible front load his bitcoin investment because he has other funds/business that can stand for his emergency funds he can diversify from his traditional business into bitcoin investment if he likes without any problem. This guy will reach his bitcoin target faster than guy A.

As for concentration both of them needs to concentrate in order to achieve success.

[Frankolala]

For the 1st example guy, 1k emergency fund covers less than 1 month of basics ($1,500 expenses) and that’s bad. He’ll have strong emphasis on diversification because no room for big concentration bet since his back up funds are low and on that note, one emergency might force him into debt or even selling investments at loss. His major aim should be him building his back up funds firstly by using most of the $1k surplus (discretionary income) for about 3 to 6 months or even more. So he should be building stability more and not aggressive growth. Once he has secured the back up funds, he may then proceed to invest in bitcoin knowing too well that he has a safe net once emergency rises.

For the 2nd example guy, he is more in a stronger and better position. Same income ($2,500/month) and expenses ($1,500), so $1,000 discretionary, but he’s 35 with 10 years of investing under his belt and a $45k non bitcoin investment. And his emergency fund is solid at $7,500 which is a 5 months worth his expenses, this alone has given him a stronger edge against surprises. As such, I think he can afford a bit more concentration than the 1st example guy, that happens even more if he’s bullish on bitcoin. So with his back up funds set aside, I could confidently dive into bitcoin investment, probably using most of the discretionary income into investing in bitcoin, and as such gives him a larger shares than the newbie

From my little understanding on this topic, you don't need to wait till you build up your backup funds for at least three months of your expenses because time and bitcoin price waits for no one. He is even lucky to have $1k backup funds already.

He should start his bitcoin investment first with 80% of his discretionary for the first two months and on the third month he can put 90% of his discretionary income into his bitcoin investment and emergency funds using DCA and invest for 4-10 years and above. You need to give your bitcoin investment more priority because emergency may or not come.

The second example guy can mix all three methods of accumulation and invest aggressively without being bothered of his emergency funds because they are already on ground in cash and in his traditional business. He will achieve success faster and a larger size of bitcoin portfolio overtime.

[JayJuanGee]

[edited out]

[edited out]

Concerning these two examples you gave, I will just share how I feel both of them should approach their Bitcoin investment.
First thing first, we have to acknowledge that these two guys are not in the same financial condition, Yes, both of them can still do well in Bitcoin accumulation, but their approach would not be the same at all.

Of course, the guys are in slightly different situations based on the first example being brand new to both bitcoin and investing and the second example being brand new to bitcoin but not brand new to investing ....

And part of my point was to attempt to get Menele001 to be more specific in his discussion rather than just rambling out some random ideas about what guys are supposedly supposed to do.

Now for the second guy , the one earning $30k per year ($2,500 monthly) with $1,500 expenses and already having traditional investments.   I believe he clearly has more advantage than the first guy. Because the way he can approach Bitcoin will be a bit more aggressive compared to the first guy..

Why? The reason is because he has already built non Bitcoin investments worth around $45k, and he has about $7,500 as backup funds (around 5 months of expenses).   That alone already reduces financial pressure on him. Because of that, he can concentrate more on Bitcoin accumulation using a bigger part of his discretionary income..

Sure, the second guy has his discretionary income (which, for the sake of ease of presentation, is the same as the first guy) and the second guy also has funds that he could potentially consider to allocate into bitcoin.
 

There is also the possibility for him to move maybe 5–10% of his non-Bitcoin investments into Bitcoin..  Since he has been investing for about 10 years, he likely has some experience and has seen how different assets grow over time. By comparing the growth of his previous investments with Bitcoin growth over the past 10 years, he can make a more confident decision to allocate that 5-10% (or even more) into Bitcoin, alongside his monthly DCA.. All this gives him room to be more aggressive than the first guy.

Well, if the second guy had been investing for 10 years and reached 1.5x his current salary, then historically he had probably averaged putting at least 10% of his income into his investments.
 

Now for the first guy, all he really has is his $1,000 monthly discretionary income.  And realistically, all of that can’t go into Bitcoin.  He still needs to build emergency funds and stronger reserves so he does not end up pulling from his investments when life happens.

That seems pretty risky to put 100% of discretionary funds into bitcoin.  You know the two other categories are consume and save... So there are 3 ways that discretionary funds can be spent.
 

Maybe making a structure like this: maybe 50-60% ($500–$600) monthly into Bitcoin, then around 15% ($150) into emergency funds, another 15% ($150) into reserve funds, then keep like 10% cash on hand for family support, small needs and necessary gifting.  That way he is still accumulating Bitcoin but also building stability, which the first guy already have.

Your categories of emergency fund and reserve funds are both savings (two kinds of back up funds), so they are largely the same category.. even though I don't object to your allocation quantities.  The consumption proportion of 10% seems a bit small in terms of practicality, even though sure it might work, since each of us has to figure out what is financially and psychologically comfortable for our own situation and what we believe might come up and even including considering how much time there might be between paychecks... Of course, there might also be certain monthly bills that come due on a certain date of the month.
 

So in a nutshell, their concentration will just be different because their foundations are different.  The second guy would have more concentration toward Bitcoin, while the first guy should will still have to balance Bitcoin with safety nets first.  Both will obviously win long term, just with different pace..

It is not guaranteed that they will win, even though they can come up with decent ways of managing their money that will help them to improve their chances of "winning.".. and yeah, maybe we frequently can proclaim that even in the process of organizing our finances, we already create situations in which we are already winning because we create situations in which we have options in regards to financial matters because ideally with the passage of time our bitcoin holdings become larger and also our back up funds likely become larger too... even though it could be that once our back up funds get to a certain level, we might focus more on building our bitcoin, as you had mentioned, gracreavix.

I don’t really think there is any problem if you are diversifying your investment to other assets maybe you can actually diversify to gold or Silver which is actually not a bad idea, considering that gold is having a good impact in the stock market right now and also Silver hitting its all time highest price value, but my question would be why are you diversifying because when you’re still in your accumulation phase of Bitcoin there is no reason for you to be diversifying immediately when you’re still in your accumulating stage of Bitcoin, well you can think about diversification when you’ve gotten to your over-accumulation and you have enough bitcoin in your portfolio where you have been holding for completely 2 circles, perhaps outside from that I don’t think there is obviously any reason to diversify to whatever you might think it’s worth investing.

It's not a must that you must reach an over accumulation stage before you can diversify if you want to diversify. You can diversify when you have accumulated half of your bitcoin target if you feel it's too risky to have only bitcoin investment because the reason why we diversify is to reduce the risk in only one investment because if bitcoin isn't doing fine that's the price dips, the other asset might increase in price to balance your loss.

If you must diversify, it should be an investment that you understand and knowledgeable about. You can diversify into bonds, stock, cash equivalents and, equity.

Honestly in as much as Bitcoin accumulation target is a personal decision, halving your accumulation target before investing in other assets is a nice move. The specificity of diversifying into other assets makes it a different things unlike just talking about diversifying into another thing where personal business can follow. Before diversifying along the lines of your accumulation target, question(s)like the reason for doing that will give a clear picture of what to do exactly. Some people might just want to have another asset thereby spreading their gain potential and whatever reasons.

You talk like a shitcoiner Obulis.

Diversification is likly a tool to preserve your wealth rather than grow it.. which is part of the reason that many of us suggest to start out with bitcoin and dollars first, and then consider diversifying later.  It may be healthy to consider diversification in relation to bitcoin as a way of diversifying the cash portion of your holdings rather than the bitcoin portion... since the longer that we are in bitcoin, the larger and larger we may want our back up funds to be so that we never have to dip into our bitcoin at a time that is not of our choosing, yet when cash starts to get to 5-6 months or more, it might start to feel like some of that value could up getting put to work and still serving as back up funds, but performing better than the dollar since the dollar (and all other fiat) is known to be ongoingly being debased.

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For the 1st example guy, 1k emergency fund covers less than 1 month of basics ($1,500 expenses) and that’s bad. He’ll have strong emphasis on diversification because no room for big concentration bet since his back up funds are low and on that note, one emergency might force him into debt or even selling investments at loss.

Your use of the term diversification makes it sound like you don't know what you are talking about.

His major aim should be him building his back up funds firstly by using most of the $1k surplus (discretionary income) for about 3 to 6 months or even more.

Don't many of us ongoingly suggest that one of the most important things in bitcoin is get the fuck started, especially once you know that you have discretionary funds.  The example shows that the guy has discretionary funds, yet you want to be so retarded as to believe that some value comes from building back up funds?  He already has $1k in back up funds, which is 66% of his monthly expenses. In this example, his back up funds are not zero, yet his bitcoin is zero.

So he should be building stability more and not aggressive growth. Once he has secured the back up funds, he may then proceed to invest in bitcoin knowing too well that he has a safe net once emergency rises.

You sound retarded.

The guy has $1k per month in discretionary funds, so how much of that do you want him to put into his back up funds?  If he puts $500 a month into his back up funds, then it is going to take him right around 7 months for his back up funds to reach 3 months of his expenses.  You want the guy to fuck around building dollars for 7 months?  

From my perspective you seem to have a bit of a lack of understanding of what is bitcoin, and sure of course, people can do what they like.  We have a lot of poor people who are always saving up cash, and guess what happens, they never stop being poor since their building up of their cash tends to debase about as fast as they are building it up, especially once it starts to get to larger quantities that might be more than 2-3 months of their expenses.

We tend to still suggest building up back up funds to be more than 3 months of expenses, yet I think that part of the presumption is that such back up funds are being built up at the side of building up of a bitcoin investment, so in the context of bitcoin, the back up funds are serving purposes of protecting the bitcoin - even though the back up funds are likely ongoingly being debased.. which is not fair.. but since the back up funds are likely being kept in our local currency.. they are both liquid and not volatile in terms of being able to be used to pay various of our expenses that might come up in event of loss of income and/or increase in expenses.

For the 2nd example guy, he is more in a stronger and better position. Same income ($2,500/month) and expenses ($1,500), so $1,000 discretionary, but he’s 35 with 10 years of investing under his belt and a $45k non bitcoin investment. And his emergency fund is solid at $7,500 which is a 5 months worth his expenses, this alone has given him a stronger edge against surprises. As such, I think he can afford a bit more concentration than the 1st example guy, that happens even more if he’s bullish on bitcoin. So with his back up funds set aside, I could confidently dive into bitcoin investment, probably using most of the discretionary income into investing in bitcoin, and as such gives him a larger shares than the newbie

Well.  He has $1k per month of discretionary income, so you want him to put all of it in bitcoin? What about discretionary consumption?  What about the $45k that he had already built up?  What is he going to do about that?  Do you want him to continue to build the $7,500 of his back up funds or to just maintain the $7,500 at that level?

What are you suggesting?  Maybe answer in light of the same two above examples that I gave to Menele001

The first guy needs to start his bitcoin investment by putting 50% into bitcoin which is $600 and $300 into his emergency funds because he already has $1k on ground as his backup funds. While he uses the leftover $100 for his discretionary expenses. He can continue like this overtime till he has built his backup funds up to three months of his expenses and divert the money into his reserve funds when that is done, he can invest aggressively for ten years and above. This guy needs to focus on building his bitcoin portfolio without distractions and shouldn't think of diversifying till he has accumulated up to 60% of his bitcoin portfolio before thinking of diversifying if necessary.

That sounds like a pretty intense plan in terms of  not diversifying, even though I am not sure what you mean by accumulating 60% of his bitcoin portfolio.

Are you suggesting that if, for example, the guy had a bitcoin portfolio size target to be able to live off of bitcoin at $80k per year, then right now he would need 13.8277 BTC, so then if right now he were to have at least 8.3 BTC, then at that point he could start to diversify - and it would not be recommended for him to diversify before reaching that level.

By the way, it seems to me that a guy who right now has 8.3 BTC, he would not need to accumulate any more bitcoin and by mid 2028 (in my updated not posted projection table), the guy would have enough to start to withdraw at $80k per year... .so, in other words, 60% of the way there gets a guy within right around 2.5-ish years from being at his goal without even having to stack any more sats (of course there could be a bit of variance in the specifics of the projections which is sometimes part of the rationale to overshoot so that mistakes are not made and cushions are in place).

I personally think that the building up the back up funds likely serve as a better reference, yet I am also not sure when diversification might be allowed to start, including maybe if a guy had already put 1-2 years of his income (or maybe his target income) into bitcoin... then at that point he might be able to start to slow down in his BTC accumulation intensity.. which allows diversification into other investments.

The second guy has enough flexibility because he already has a good size of  backup funds on ground and a large discretionary income with an ongoing traditional business. He will easily invest aggressively and if possible front load his bitcoin investment because he has other funds/business that can stand for his emergency funds he can diversify from his traditional business into bitcoin investment if he likes without any problem. This guy will reach his bitcoin target faster than guy A.

As for concentration both of them needs to concentrate in order to achieve success.

You are lacking a lot of specifics in regards to this second guy.  The second guy has absolutely no bitcoin, and you can't tell him what to do?   You seem to be just suggesting in fairly vague ways that such guy can invest aggressively into bitcoin?  What does that mean with specifics?  

The reason that I gave these examples was in order to attempt to inspire guys try to grapple with specific situations or maybe to create their own specific situations that describe staring points and how to proceed with such starting points, which tends to justify that guys might need to attempt to be more specific in their descriptions about how to proceed.

Of course the second guy has more flexibility in what he can do based on his having had already built up an investment portfolio and built up his back up funds, yet he still doesn't have any BTC and he is 10 years older than the first guy, too... so he does not have as much time to build up his bitcoin holdings and/or other aspects of his investment portfolio as compared with the first guy.  Where do you think that the second guy wants to be by the time he is in his 50s or in his 60s? presuming that potentially he is able to keep his job for a bit more time while he is building the bitcoin portion of his investment portfolio.

For the 1st example guy, 1k emergency fund covers less than 1 month of basics ($1,500 expenses) and that’s bad. He’ll have strong emphasis on diversification because no room for big concentration bet since his back up funds are low and on that note, one emergency might force him into debt or even selling investments at loss. His major aim should be him building his back up funds firstly by using most of the $1k surplus (discretionary income) for about 3 to 6 months or even more. So he should be building stability more and not aggressive growth. Once he has secured the back up funds, he may then proceed to invest in bitcoin knowing too well that he has a safe net once emergency rises.

For the 2nd example guy, he is more in a stronger and better position. Same income ($2,500/month) and expenses ($1,500), so $1,000 discretionary, but he’s 35 with 10 years of investing under his belt and a $45k non bitcoin investment. And his emergency fund is solid at $7,500 which is a 5 months worth his expenses, this alone has given him a stronger edge against surprises. As such, I think he can afford a bit more concentration than the 1st example guy, that happens even more if he’s bullish on bitcoin. So with his back up funds set aside, I could confidently dive into bitcoin investment, probably using most of the discretionary income into investing in bitcoin, and as such gives him a larger shares than the newbie

From my little understanding on this topic, you don't need to wait till you build up your backup funds for at least three months of your expenses because time and bitcoin price waits for no one. He is even lucky to have $1k backup funds already.

He should start his bitcoin investment first with 80% of his discretionary for the first two months and on the third month he can put 90% of his discretionary income into his bitcoin investment and emergency funds using DCA and invest for 4-10 years and above. You need to give your bitcoin investment more priority because emergency may or not come.

I appreciate some aspect of your spunk, Frankolala - yet there is something off about your suggestion.  

You are suggesting 80% or 90% put into bitcoin and 10% or 20% into back up funds, yet at the same time, you are suggesting  discretionary consumption is 0% and you also seem to presume that the back up funds just automatically build themselves, even though you are ONLY suggesting to put 10% to 20% of the discretionary funds into them for 3-ish months?  That's ridiculous.

Think about it.  Currently, the guy ONLY has $1k in his back up funds, and if he wants to get his back up funds up to 3 months of his expenses, then the total is going to be $4,500 for his back up funds.  So even if we were to split the baby and consider that you might be saying to put 15% of the discretionary funds into the back up funds, then that is $150 per months, and it is going to take 23.33 months to build those back up funds an additional $3,5000 (that is $3,500/$150).

Another thing is you are completely silent on discretionary consumption. Do you expect the guy to be completely deprived of discretionary consumption?  That does not sound healthy for his psychology.  It sounds unrealistic.  To attempt to be realistic and even sustainable, for everyone, even those tight-wad curmudgeons, there needs to be some budget for discretionary consumption.

The second example guy can mix all three methods of accumulation and invest aggressively without being bothered of his emergency funds because they are already on ground in cash and in his traditional business. He will achieve success faster and a larger size of bitcoin portfolio overtime.

So you are suggesting that he invest 100% of his discretionary funds into bitcoin, and just keep his back up funds at $7,500 forever and ever?  What about the $45,000 that he has already built up?  Just leave that?  Continue to build it? or cash it out and reallocate it into bitcoin?

By the way, I did not say anything about the second guy having any business as both you and Merit.s seemed to have had plugged that additional dynamic into that hypothetical. I mentioned that the guy has a $30k per year income (just like the first guy) and that he had built up an investment of $45k - presumptively something like stocks or some assets that are somewhat liquid even though I did not specify beyond saying that they were prior to his getting involved in bitcoin.