It is not sensible for someone to use all their discretionary funds for accumulating bitcoin, this is been over aggressive and it is not good at all especially for long term holding of bitcoin. Sometimes it is not just about buying or accumulating a huge stash of bitcoin but rather to be able to hold it for a long time without selling it. So it will be unwise for an investor to used up all their discretionary funds for buying bitcoin without setting up an emergency funds and even reserve funds. There is need for an investor to always set aside some percentage of there discretionary funds incase of an unexpected expenses that may arise in the future.
Since discretionary income is money left after necessary expenses; what an individual decides to do with that money depends on his financial situation.
You cannot just say that putting all of it in Bitcoin is “over aggressive” or “not good at all”, nahhh… Someone with stable/multiple income, low expenses and enough savings may find it comfortable putting large part of their discretionary income into Bitcoin, while someone with little savings and an unstable income may need to put much less into it.
The issue is not whether a person uses 20%, 50% or 100% of there discretionary income, the question is if they’re investing money they can afford to leave invested for many years. And if using that money means they will struggle when unexpected expenses comes, then they are probably investing too aggressively for their situation. Another thing is that, someone that’s already built a reasonable emergency funds does not necessarily need to keep putting in the same percentage of their discretionary income into it forever
I think you are forgetting that there is something called discretionary spendings, these are not part of the bills you need to pay for before you get your discretionary income meaning that you pay to them with your discretionary income, so if you invest with bitcoin using 100% of your discretionary income after already setting up your emergency fund you will end up not being able to pay for your discretionary spendings and also set up your reserve fund as well, you might be able to do it for a while but eventually you won't be able to sustain it.
Discretionary income and discretionary spending are different things. Discretionary income is the extra money left over after meeting mandatory expenses. And discretionary spending is spending that leftover money on things like entertainment, extra purchases, or planned future expenses.
Once the emergency fund is fully built, investing 100% of discretionary income in Bitcoin may not be sustainable for many people. It may also be necessary to allocate money for a reserve fund. If the entire remaining money goes into Bitcoin, there will be no separate money for other optional expenses and future planned expenses. It can be continued by reducing or temporarily eliminating expenses for some time. But in the long run, that pressure can destabilize the budget.
The purpose of an emergency fund and a reserve fund is different. An emergency fund is for unexpected emergencies. And a reserve fund is for planned large expenses in the future. So just because two funds are built, the entire discretionary income does not become investable.
Discretionary income should be divided into Bitcoin investment on the one hand, discretionary spending and reserve fund on the other, depending on your financial situation. Even if it is possible to invest 100%, it may not be a good strategy. Invest an amount that will not create any financial stress or forced Bitcoin sales in the long term.
