Using Bitcoin as Emergency Funds?

[Asuspawer09]

I learned a lot of things when it comes to investing in Bitcoin throughout my financial journey, from the very start I learn it the hardway losing a lot because of the wrong order of my investment, when I was just getting started in cryptocurrency all of my investment back in 2016-2017 was just all Bitcoin because for sure there are some investors that have that kind of mindset, I think a lot of investors believed on Bitcoin, but for sure if you do that you would probably get good profit, Im not saying that it was wrong. Still, it is better to have safety nets when it comes to your investments. Having emergency funds or savings would surely not be recommended back in the day, most of the people are just going to say that holding cash in the bank or savings is a bad idea because of inflation, and your money is not really earning anything, plus it's losing value because of inflation.

I was just a student back then, putting everything in, and it didn't really matter since I was earning. Because of the volatility through the years of cycles, I learned the hard way, losing a lot because when there was an emergency, or I needed money, I would easily sell my Bitcoin because I needed the money, and I didn't really have bank savings yet for any spending; all my money was just in my custodial wallet back in the day. I fixed my finances and put in a safety net. I realized the importance of having a safety net, investing in the right order, having emergency funds, having health funds, etc.

With that, inflation is just going out of hand; our local currency Dollars is already at 62pesos, increasing its value exchange through out the years, now im already thinking of putting everything on Bitcoin because it is just the same thing, I would lose money because of inflation, I mean in Bitcoin you would probably lose as well, but at the same time you might get profit long term, Emergency fund was not really something that you are going to use everytime, In my experience It wouldn't really going to get touch for months or year, similar to just saving long term, so maybe it is just better to be put on Bitcoin since it was a long term savings as well.

What do you think? If you are going to diversify, what's your strategy?
-100% Savings/Cash
-80.20 Savings/Cash or Bitcoin
-50.50 Savings/Cash or Bitcoin
-Larger part in Bitcoin

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[Big Dirams]

Going into bitcoin fully (100%) is a wrong idea especially when we are not stable financially, and those years you had no emergency funds that why you had to sell some of your bitcoins when emergency came up and with that you get to see the value of an emergency funds right?

You don’t just go into bitcoin investment fully without considering some factors, discretionary income is what we should push into bitcoin investment especially when we are DCAing and aiming for the long term. Then our emergency funds follows up because without it we will keep going for our investment and that not a good approach and it was really nice your experience didn’t just go for free during those years you learn from your mistakes and notice the importance of emergency funds.


However I wouldn’t go for bitcoin investment fully (100%), I would rather choose the (50/50) strategy on my bitcoin investment because profits isn’t guaranteed and that’s what I can really afford to loss or maybe I could go for (60/40) which isn’t part of your options.
And remember emergency funds isn’t the priority first, discretionary income is then emergency funds follow up. We can begin the journey without emergency funds but we can’t begin without discretionary funds, but beginning with discretionary funds and not having the availability of emergency funds is a bit risky so we need to meet up early to get the emergency funds.

[Charles-Tim]

If I do not want to use the money to buy things, but to be sitting in my bank account, I do not like that, but I still have 10% of my money in fiat.

The 10% includes fiat and fiat collateralized stable coins which are not fiat.

90% in bitcoin.

There are times I may have I reduce the bitcoin holdinf, but I increase it back.

Bitcoin is part of my emergency funds.

[Filicius]

If you are not going to need these funds, you will surely regret it in the future if you keep them in the bank and with the passage of time and inflation they lose value, as it has already done in recent years. But the future is uncertain and as you say, if you don't have enough funds for emergencies you will surely be forced to sell due to the circumstances, probably at a bad time when the price is low. That is, if nothing unforeseen happens that causes the price to fall below the levels we now consider normal.

I see Bitcoin as an investment, but by assuming such a great opportunity cost as it is to be all in and left with nothing for what may happen turns an ambitious decision into an unnecessarily risky gamble, unless you live with your parents or have a family network safe enough to not worry about for years to come.

As for the percentages on which you ask for an opinion, it is not possible to give it because it all depends on to what extent you would cover the most unforeseen + day-to-day needs with what you have. I mean, to invest in Bitcoin you should have spare money, and the percentage would be calculated precisely based on how much that spare money amounts to.

[SeriouslyGiveaway]

What do you think? If you are going to diversify, what's your strategy?
-100% Savings/Cash
-80.20 Savings/Cash or Bitcoin
-50.50 Savings/Cash or Bitcoin
-Larger part in Bitcoin

Emergency fund must be something stable in value because you don't need volatility with your emergency fund. Even Bitcoin is a strongest cryptocurrency, it still has volatility and you don't know what will happen with Bitcoin price next day, next weeks or months. There is chance for black swan event, even very small, but you can not exclude that future and an emergency fund is for taking care of you in accidents and you don't need a double of accidents with you and with your emergency fund.

Emergency fund can be in either cash, fiat currency in your bank account. Someone might suggest stable coins but I am against it because stable coins can depeg, and can be frozen by stable coin issuers.

PSA: Most Stablecoins Can Be Frozen, Even in Your Own Wallets.

[aoluain]

Me? 95% Bitcoin - thats the emergency and everything fund.

What I would do to diversify if I plan to in the future, it would probably be into a property.

The last thing I would consider is FIAT based savings, and I dont need to explain why not only
to say it just doesnt make sense with the interest rates being offered, l 30% ^{at best}
of what inflation is running at.

[Sim_card]

It's good you balance your bitcoin investment and fiat at hand if not, you will sell your bitcoin when your .weds arises. There's a certain level of emergency funds that I will build, it will enable me to continue buying bitcoin overtime without any fiat challenges. Build your emergency funds of three months of your income and continue building your bitcoin investment with DCA overtime. Your emergency fund should be in fiat but is usd has high value over your local fiat currency, you can save it in USD.

[ndutndut]

The strategy you’re using isn’t really wrong, especially since we experience inflation almost every year, which means if you keep your emergency funds in fiat, especially for months or even years without using them, their value will just keep decreasing. But using all of it to invest in Bitcoin is actually wrong too, even though Bitcoin can be sold anytime, the timing sometimes doesn’t match what we want because Bitcoin is very volatile.

So in my opinion, the right choice is that you shouldn’t invest all of your money in Bitcoin because emergency funds are still important, even if they aren’t used due to no emergencies happening. The goal is still to be prepared for something unexpected. To prevent your emergency funds from being eroded by inflation, it’s better to buy gold. Because gold is more stable for emergency funds and it’s also easy to sell.

[Bd officer]

Bitcoin is a long-term investment, so should you use Bitcoin as an emergency fund? Now if you use Bitcoin as an emergency fund and an unexpected emergency arises and your portfolio is in loss, what will you do? Here you may need to sell Bitcoin at a loss. You should keep an emergency fund along with investing in Bitcoin, so you should not invest all your money in Bitcoin. You should remember that Bitcoin is risky, there is no 100% guarantee. So many people advise investing in Bitcoin with money that you can afford to lose. So using Bitcoin as an emergency fund can be risky.

Now it is a personal decision of each person but personally I have invested in Bitcoin and kept the emergency fund in fiat currency.

[Upgrade00]

I have always been heavily into bitcoin more so due to high inflation in my country and the appreciation value of bitcoin over the years compared to other investment options.

I am recently moving towards a fluid hodling strategy where I hold more or less bitcoin depending on what point in the price cycle we are in at that point. This could be considered to be long them trading. This is by no means investment advice.

[ColdLava40]

I'm for 50/50 Because of how I am with my finances.

It is good to diversify your portfolio, leave some cash hanging around, put some into investment and then 50% into bitcoin. It is still good to put more % into bitcoin as it depends on your worth.

One thing that will make me not want Bitcoin as my emergency funds is because from my own perspective emergency funds is something you can lean on any time.

Let's say you had an actual emergency during the bear season and all your Bitcoin is kinda trapped in the market in a value !esser than what you bought at, you can't sell because doing that will be a huge loss for you. This reason is why I won't want to put Bitcoin in that category.

[Issa56]

Emergency fund was not really something that you are going to use everytime, In my experience It wouldn't really going to get touch for months or year, similar to just saving long term, so maybe it is just better to be put on Bitcoin since it was a long term savings as well.

Emergency funds is not something you won’t know when you will be making use of it. Emergency case can come up at any moment, if you invest your emergency funds in bitcoin, and something comes up, you will have to sell your bitcoin just to take care of the problem which you having at that moment, that’s why I don’t always encourage people to invest their emergency funds in bitcoin.

My emergency funds is always in fiat currency, i know it’s going to be affected by inflation but I don’t invest with it even if it’s in my account for months without me using it, because I don’t know when emergency will happen, and I will be using the money. Some people do leave their emergency funds in bitcoin, but I don’t do that, and I don’t encourage that.

[Jewan420]

It is better to lose some money due to inflation than to lose a lot. You never know when your emergency will come, emergencies are very unpredictable. So what if you put your emergency fund in Bitcoin and then there is a big dump in Bitcoin or a dip season starts and your emergency comes back, what will you do? It may be that you put Bitcoin in your emergency fund when it was worth $100k, after a few days the price of Bitcoin is $50k-$60k which happened a few days ago, so if you need emergency money then will you be able to recover that loss?

You may lose some money in the long run due to inflation. But I don't think that loss will be half of your total money. It may be wise to keep a stable currency in your emergency fund, because it will expose you to losses as well as profits. It may not be a good decision to do any business with your emergency fund. It's better for you if the emergency doesn't come for a long time, so a small amount of money loss in security may not have a big impact.

[Slow death]

What do you think? If you are going to diversify, what's your strategy?
-100% Savings/Cash
-80.20 Savings/Cash or Bitcoin
-50.50 Savings/Cash or Bitcoin
-Larger part in Bitcoin

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In my opinion, diversification would mean investing heavily in the real world, buying real estate like houses and renting them out, starting a business, buying gold, keeping money in the bank, and using another portion to buy Bitcoin. This is because, despite Bitcoin being an asset that appreciates significantly in price over the years, it has a negative aspect: the difficulty for someone who owns Bitcoin to leave it to others after their death.

For example, you could buy Bitcoin with all your money thinking it will be an emergency fund. But then one day you become very ill and can't use your computer or phone to access your Bitcoins, and the people around you can't access your Bitcoins either. At that moment, you could be in even more trouble because you wouldn't have the money to pay for hospital treatment.

[salad daging]

30% savings/emergency fund, 10% Gold, 60% Bitcoin.
It depends how your own needs are to adjust, basically not all will be the same but I am sure by asking opinions from others you will have many options.

But I do not like bitcoin in an emergency fund, afraid when the money is needed you have to sell at a loss, while selling at a profit is a plus, we know when an emergency occurs it? Now this is what is feared rather than selling assets at a loss, you better plan fiat for that need, at least 3x of your monthly income.

[Findingnemo]

A simple thumb rule for an emergency fund is to save 6 months of your monthly salary in a bank account if you are living a comfortable life and not more than that, and anything beyond should go into something like gold, stock market or bitcoin which can be anything but something that appreciates over the period of time.

50% of cash is still a big no, it has to be 10% or less than that.

[Cryptoprincess101]

With that, inflation is just going out of hand; our local currency Dollars is already at 62pesos, increasing its value exchange through out the years, now im already thinking of putting everything on Bitcoin because it is just the same thing, I would lose money because of inflation, I mean in Bitcoin you would probably lose as well, but at the same time you might get profit long term, Emergency fund was not really something that you are going to use everytime, In my experience It wouldn't really going to get touch for months or year, similar to just saving long term, so maybe it is just better to be put on Bitcoin since it was a long term savings as well.

Let me ask you; if you save keep your emergency funds in bitcoins and it happens that an emergency need came up when the market is at a DIP price, what will you do? Are you going to sell at a lost price just to cover up the emergency need? You see, this is why it is advisable to keep emergency funds in fiats since most of your real life dealings will be in fiats, like when you want to pay health bills.

I know that leaving money in fiat for a long time will make it to lose value as a result of inflation but it will be better to just leave emergency fund where you can easily access it when an emergency need announces itself. It will be so painful to sell your bitcoins to sort an emergency need except in a scenario where the market is skyrocketing but since an emergency need can come out unannounced, keeping emergency fund in fiat will be the right thing to do instead of keeping it in bitcoins.

[Zlantann]

I will prefer to diversify my investments into other assets outside the crypto industry. Since Bitcoin is a long-term investment,, I would have to put money into other short-term and meduim term investment. These short-term assets would be used as a financial backup I wait for other assets to mature.

However, if Bitcoin and fiat is my only options, 90% would be invested in Bitcoin while 10% would be kept in fiat banks. Fiat is handy in times of emergency and is generally acceptable.

Your emergency fund should be in fiat but is usd has high value over your local fiat currency, you can save it in USD.

Your advice is valid if you local currency losses value fast due to inflation. Some local currency are stable therefore there is no need to keep it in USD. Interms of emmercncy having access tp loca currency fast is essential.

[Maslate]

I am also one of those who believe that bitcoin can be an emergency fund as well. However,  I still think saving a small amount of fiat in the bank can still be helpful, so that if there are emergencies that require sudden expenses, you can withdraw it without touching your bitcoin investment. Its easier to invest when you don't think of selling any time, because bitcoin is really intended for long term, the longer it remain untouchable, the bigger financial returns it will reap in the future.

The only reason where I'll be selling suddenly is when my savings aren't enough to cater the emergency, or when I have no other option rather than selling a portion of my bitcoin. But no matter who you question is, its best to invest in bitcoin without any distractions. Selling not in the plan is already a distraction.

[Y3shot]

You don't need to invest all the money you have in bitcoin. One piece of common advice for investors is to invest an amount one can afford; this simply means one doesn't need to invest all their money in bitcoin because money will be needed for other basic things.

There is nothing wrong with keeping money in the bank, as long as it won't be there for a long time, because keeping money in the bank without spending it loses value. This is where bitcoin plays a better role for money that is not planned to be spent. Bitcoin investment requires good management of money to be invested, and when an amount that one can't afford is invested, it becomes a failed investment.