Using Bitcoin as Emergency Funds?

[Dareo]

It is true that the value of money is decreasing due to inflation, so the idea of ​​putting your emergency fund in Bitcoin is quite risky. Because, the job of an emergency fund is not to give you profit, but to protect you in times of danger. So when it comes to investing, I will never invest all my money in Bitcoin. My own strategy is to leave at least 6 8 months of expenses in the bank or in cash, and the rest of the money that you can't touch for now, just hold it in Bitcoin for the long term. So in this case, I will choose 70/30 option.

[ColdLava40]

If you are satisfied with the emergency funds, which you rely on for some time, you can increase your method of investing in bitcoin by changing it to 60/40 or 70/30, but as a new person or who want to live comfortably without selling bitcoin to solve your problems, 50/50 is the best solution.

It's absolutely the most considerable.

For a low income earner, you can't assume to put in more than 50% of your income into an investment which we know quite well has a long term target. It will not do you any justice when you turn back to your investment in a short time just so it could save you from demises.

The 50/50 I chose suits my financial budgets and I don't think I will be putting in more for the time being. Except I have an increase in let's say income then I am willing to add more. It's my risk tolerance and I will stick to that for now.

[Smack That Ace]

From the topic which is, using bitcoin as emergency funds, it is wrong for you to use bitcoin as emergency funds except you are not using bitcoin as your investment, if Bitcoin is your investment then using it as your emergency funds is wrong, your emergency funds should be on flat currency and not cryptocurrency,
The reason why I'm saying this is because Bitcoin is highly volatile in nature meaning that it can increase in price and it can also reduce in price so if you have an emergency funds on Bitcoin there's every probability that when you have emergency the high amount you kept or saved may reduce and become small amount because of the volatile of Bitcoin.
Always keep your emergency funds on your bank account.

Bitcoin is currently trading at $80k, down more than 36% from the $126k top. Just imagine if you used your emergency fund to buy Bitcoin above $120k and now suddenly needed that money. What would you do?

Its not just wrong to use Bitcoin as an emergency fund. Its a really bad idea, because it violates the purpose the emergency fund is meant to serve. Emergency money has to be stable, liquid and readily available, not something you put somewhere to chase profit.

[boyptc]

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?

That's the condition of why it becomes a bad idea even if we're so optimistic by holding Bitcoin 100%. We have to attend to the needs where we need to spend money and we will have no option but to sell it at price that we are forced and didn't like to.

But if someone is able to attend to that problem and they can invest wholly without having to think of any emergency funds and they have prepared for it, that's a better situation from that investor.

Think of those investors as fortunate ones because they are free to do whatever they can with their money, and at there is no burden for them to opt to sell what they hold if some events in their lives happen.

[Asuspawer09]

~

Did u consider inflation locally? the dollars increasing it's exchange?

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.

How's the experience? Thinking of doing something like this.

I mean, I want to go all Bitcoin again at some point if I have emergency anyway I could just sell Bitcoin, for sure Bitcoin value is not going to drop a lot because it's already have it's foundation, Bitcoin might just be the emergency funds, and If I get lucky I might withdraw or sell on the right timing if the market is doing good.

[Cgrexp]

If you are satisfied with the emergency funds, which you rely on for some time, you can increase your method of investing in bitcoin by changing it to 60/40 or 70/30, but as a new person or who want to live comfortably without selling bitcoin to solve your problems, 50/50 is the best solution.

It's absolutely the most considerable.

For a low income earner, you can't assume to put in more than 50% of your income into an investment which we know quite well has a long term target. It will not do you any justice when you turn back to your investment in a short time just so it could save you from demises.

The 50/50 I chose suits my financial budgets and I don't think I will be putting in more for the time being. Except I have an increase in let's say income then I am willing to add more. It's my risk tolerance and I will stick to that for now.

It is not wise to invest more than your financial capacity in long-term investments. It is not realistic for a person with a low income to keep  50% of  her income in long-term investments. The purpose of long-term investments is to build wealth over time. But if that investment money is needed in the short term for daily or other purposes  then there is a risk of being forced to sell investments during bad market times. Then long-term plans may be damaged. It may be more reasonable to view the 50/50 ratio as a personal limit consistent with your current financial situation rather than a universal rule. If the investor feels that it is possible to maintain cash flow and continue investing for the long term through this ratio, then staying within that limit may be enough for the time being. There is no guarantee that the results will always be good if the investment amount is high. It is important to invest in an amount that can be maintained for a long time without any additional financial stress. Investment decisions should not be made based on someone else's amount or decision. If your financial capacity increases in the future, the investment amount can be increased. And if the situation worsens, the investment amount can be reduced. True success in long-term investing is what the investor can maintain over the long term, balancing it with real-life needs.

[Charcol]

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.

Your experience seems important to me. At least you understand that not only wealth but also your financial planning is important.

However, your statement about emergency funds does not seem completely logical. Because the purpose of emergency funds is so that we can use them quickly when needed. Even so that we do not have to rely on market fluctuations. You know that even though the price of Bitcoin has the potential to increase in the long term, short-term volatility can bring its price down by almost half. If you pour your emergency fund into investments as unnecessary, you will probably not be able to use it quickly. Even if the price is low, if you have an urgent need, you may be forced to sell it at a loss to deal with the emergency situation.

If having an emergency fund was unnecessary, everyone would put all their money into investments, there would be no such thing as an emergency fund.

[Sim_card]

If there is an emergency fund, when the Bitcoin market goes into a decline, it can be purchased from there, if the investment can be continued using the DCA method, then the fraction of Bitcoin will also continue to increase.

Your emergency funds shouldn't be use to buy bitcoin but to take care of a real life emergency that popped up so that, you don't end up selling part of your bitcoin to take care of that emergency. If you go and use your emergency funds to buy bitcoin, you have killed the purpose of setting up an emergency funds which is to prevent you from selling your bitcoin prematurely.

 If you go and buy bitcoin with your emergency funds and the next day the price of bitcoin dips, if you are hit with a real life emergency at that time, you will sell your bitcoin at loss to take care of that emergency.

[Miles2006]

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.

The name Emergency funds and reserve funds is given for a reason, these are back up funds whenever facing challenges. Investors can only risk keeping their emergency funds in bitcoin when they have enough, having enough doesn’t necessary mean they no longer need the funds in fiat obviously this strategy has to do with risk reason why many avoid using their back up funds to invest, this strategy still involve replacing the funds back in fiat.
No one can tell when in need of an emergency funds, there’s no argument here definitely emergency funds remains an emergency funds, no need looking for profit because the common reason people decide to store their back up funds in bitcoin is because of greed. At the time when the emergency funds is needed and the market price is experiencing a dip how will such person cope? Personally 70.30 is okay, bitcoin gets the highest save while 30% in cash.

[Zaka1221]

Mistakes are always a way of better learning and also allow for doing better strategy for the future; diversification of funds is also important for every investor. Having emergency funds is always important; if anyone is doing investment without having any proper strategy or without keeping emergency funds, it means he is having a loss on his side from the start of his investment, which has never been a good sign.
Humans can't avoid emergencies; these are also part of lives, and they need to have preparation for them as well because many times they need funds while the market is not doing good. Many lost their good investments or profits just because of this; they did not do this, which hurt them badly, and they had to sell their investments at a loss.
Understanding of risk management is one of the key factors in investment because this always gives a better way of having a good strategy and also keeps things on a good level.

[Cookdata]

, 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.

Dollar might look interesting than your local currency considering the inflation but that does not make it inflation resistance. However, this is what you should do and I will implore you to do the same. I barely have zero NGN I hold more than a week. I have some few stable coins I do use for emergency, I don't have any savings in any form. When I need cash, I convert some few to local which take less than some secs and buy whatever I want, I'm 100% locked in Bitcoin.

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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I don't think we all have the same source of income, there are people with many source of income and they used that to determine their investment. If you have a passive income, that will be best to keep some for savings and emergency funds and put whatever you have left as investment, that's the best way to beat inflation. Any money you don't have plans for to be spend within two weeks should not sit on your savings, send all of it to Bitcoin.

[Franctoshi]

It's not a sin that you made a mistake in the initial time, but what matters here is the lesson which you learned from that mistake and what steps taken to prevent such mistake from reoccurring in the future.
When you mention emergency funds, They're are meant to cushion you against short-term shocks, that's when market dips about 30%-50% and not subject you to market volatility


Secondly, There's no percentage of investment you do (80-20, 50-50) that's bad all depends on what that suits your income, and without you having to be forced to selling on pressure to sort your needs. Any funds that you're putting in Bitcoin should be considered a long-term investment. Set up emergency funds in place and also have some fiat available to carter for your day-to-day expenses.
With this your experience I believe you will be able to invest wisely now.
 

[Z_MBFM]

Bitcoin is an investment asset. The longer you can invest and hold it, the higher your profit will be. One thing to note here is that when investing in Bitcoin, it is very important to have a separate emergency fund. It is best to keep your emergency fund in Fiat money, which you can use at any time, but if you do not keep a separate emergency fund, then at any time you will have to sell your Bitcoin for emergency purposes and when you start selling Bitcoin from your holdings, you will not be able to hold those Bitcoins. It is not necessary to invest a very large amount in Bitcoin, it is necessary to invest in Bitcoin as much as you can afford to keep it for a few years, and that is why maintaining an emergency fund is very important. At the rate of inflation worldwide, keeping money in the bank will constantly reduce the value of the money, and for this reason, investment is certainly important, but keeping an emergency fund is also important.

[Aanuoluwatofunmi]

Bitcoin can serve on different purposes as long as we are being able to apply using it where applicable, I have seen some investors that have always been holding their assets on bitcoin while some will definitely decided to have their emergency fund in it, which present us with the situation, where some will hold their investment assets on a non-custodial wallet while there emergency fund on a custodial storage as they can easily exchange it for their needs arising.

[Pandorak]

Using Bitcoin as an emergency fund is strongly discouraged, i’m convinced that if you have that mindset, the investment you build will inevitably end in a loss.

First and foremost, you must understand that Bitcoin is highly volatile, no one can control its price. It might be $80k today, but it could easily drop to an extreme low of $60k tomorrow, nothing is impossible. For this reason, it’s always recommended to use funds that you’ve set aside specifically for investing, in this case, the money left over from your income often referred to as discretionary funds. You should invest with these funds and you can also set aside a small portion of them to build an emergency fund. From now on, you won’t have to worry anymore when an emergency arises, because you’ve already set everything aside in advance and your investments will remain safe.

[PhilosopherKing]

Bitcoin can service on different purposes as long as we are being able to apply using it where applicable, I have seen some investors that have always been holding their assets on bitcoin while some will definitely decided to have their emergency fund in it, which presenters with some situation some will hold their investment assets on a non-custodial wallet while there emergency fund on a custodial storage as the easily exchange it for any need arising.

Mate, it is disastrous for any person to have their emergency funds in bitcoin. Para venture a person keeps emergency funds inside bitcoin and then an emergency happen in the time when bitcoin price have fall, and that emergency is so serious that it cannot wait. The person will have to sell that his bitcoin in loss so they can be able to treat that problem that cannot wait. And that is just a very shitty position for any person to find themselves inside

Even the person that created this topic already explained what he faced when he tried using bitcoin for keeping his emergency money and that is what can also happen to any body that tries the same thing.  An investor is supposed to always be prepared for emergency and this means that they should always make provision for emergency funds so that they will not be take by surprise

Yes currency value can go lower than it was, but it is better to accept that than to gamble and use put emergency funds inside something as bitcoin that can swing massively when you want to use that money.

[Loyang]

It is true that the value of money is decreasing due to inflation, so the idea of ​​putting your emergency fund in Bitcoin is quite risky. Because, the job of an emergency fund is not to give you profit, but to protect you in times of danger. So when it comes to investing, I will never invest all my money in Bitcoin. My own strategy is to leave at least 6 8 months of expenses in the bank or in cash, and the rest of the money that you can't touch for now, just hold it in Bitcoin for the long term. So in this case, I will choose 70/30 option.

If someone invests their emergency fund in Bitcoin, it is very risky. This decision of yours can force you to sell your holdings at a loss and before the expiry of the period. Because no one can tell when an emergency situation will arise. So when the Bitcoin market falls, if your emergency situation arises, you will have to sell your holdings at a loss and deal with the emergency situation, which will not be the right decision at all.

Keeping an emergency fund in cash is the smartest thing to do. But to protect ourselves from inflation, we can use several ways. For example, we can keep this amount of money in cash so that we can deal with our emergency situation for a short time and keep the rest of the money in USD.

[KingsDen]

Bitcoin can serve on different purposes as long as we are being able to apply using it where applicable, I have seen some investors that have always been holding their assets on bitcoin while some will definitely decided to have their emergency fund in it, which present us with the situation, where some will hold their investment assets on a non-custodial wallet while there emergency fund on a custodial storage as they can easily exchange it for their needs arising.

There's no doubt, we don't need to undermine the power of an emergency funds. I am also an advocate of having an emergency funds, but there could be an exemption. Yes!
Someone who has been in bitcoin for more than a decade and has seen upto 3 bull runs or more can have all their funds in bitcoin. Whether bull run or bear market, bitcoin cannot go as low as it was before the 3 bull runs. I don't know if anyone is understanding me.

For instance, let me use 2022 for instance, someone who started investing from $15k can confidently spend from their bitcoin investment in as much as they continue investing because bitcoin is not going back to $15k.

My logic might not be firm or I might not be able to express myself well. What I mean is that, people who have actively invested in bitcoin for over 3 cycles are safe.

[SmartCharpa]

If I invest all my money in Bitcoin, what will I do if I have any emergency that requires my money? I will definitely end up selling the bitcoin I have been holding for a long term. Sure, emergency funds is not something we use all the time, but life is unpredictable, we don’t know what will happen. So based on my country, I would prefer to keep my emergency funds in cash, even though the money will not add value, because I don’t know if I may have network issues in times of emergency.

You mentioned that people can lose in Bitcoin and also make a profit. There’s no way you can lose money in Bitcoin if you are not chasing quick profits. Many people have mistaken Bitcoin as one of these Ponzi schemes, and if they lose money, they will conclude that people can lose money in Bitcoin. Moreover, Bitcoin might have done well from where you invested years back, and we believe its future will also be greater than this, but profits are still not guaranteed in Bitcoin.

[SeriouslyGiveaway]

If I invest all my money in Bitcoin, what will I do if I have any emergency that requires my money? I will definitely end up selling the bitcoin I have been holding for a long term. Sure, emergency funds is not something we use all the time, but life is unpredictable, we don’t know what will happen. So based on my country, I would prefer to keep my emergency funds in cash, even though the money will not add value, because I don’t know if I may have network issues in times of emergency.

Emergency fund is a fund that needs to be built up and people must have it before using remaining money for their investments in Bitcoin or any other assets. Investment is only safe if investors can use their money for investment without pressure of getting profit daily, weekly or monthly as their regular income for spendings of regular utility bills.

They can build up their emergency fund with bitcoin, but split that part to the another part - that is investment portfolio - so that if they need money for emergency, they will only touch the first part. It's how they can take risk with Bitcoin emergency fund but it has risk of selling bitcoin with losses. So if they don't want to have situations of selling their Bitcoin emergency fund for loss, they can get rid of this idea which is not actually a good one.