It seems that I have already described some of this in earlier posts, so generally you want to hold 3-6 months of your expenses in some kind of way that would be mostly in the type of currency that you use to pay your bills, and sure some people even hold value in the dollar rather than their local currency because it tends to hold value better.. but none of that is guaranteed either... so when you invest into something that is as potentially volatile as bitcoin, you don't want to have to cash out at time that is not of your own choosing.. think of the March 2020 event.. if you had been forced to sell your bitcoin during that dip, you would have been screwed in terms of getting it back for even close to the sell price. There are a lot of ways that people can have emergency expenses, and yeah, you might not have as many if you are relying on your parents as your emergency fund... but maybe that would cause that you don't need as much of an emergency fund, and you might have to consider if something happens with your parents or your reliance on them as an emergency fund.. and I am not going to be the one to determine how adequate your emergency fund is.. or if your practices of thinking through your own situation is sound enough..
I think i need to also work on my mindset as I work on my capital and strategies cause if I'm not prepared in such a way that I've made my decision not to touch or sell my bitcoin because of any dip that happens and from your senerio from march 2020 some dips can happen and make it look like as tho I didn't plan well, so I think in my preparation I should keep a standard to never sell until I reach my goal, since a rush sell intended to cover up and buy at a cheaper price could in turn back fire at me. I think setting standards would also be of good help to me as a beginner.
I plan on building up my emergency funds from saving from my monthly income, since this is more reliable, and since you've been stressing on the importance of having a backup fund in case of market opportunities like major dips, this could also favour me if I buy at such opportunities. But if I can't meet up with this high strategies, cause I still think it might take a while for me to fully understand the way the market works, would you consider it wise, I buy majorly at dips and dca regularly for safety and to insure I buy at all times than to lump sum without giving a kind of spice to it. By spice I mean when lump sum are just done as they should when I'm just buying in large quantities than I normally through dca, this time I use my lump sum amounts to buy only at dips. Or should this emergency fund be for a totally different senerio where a major dip happens that nobody expects and I use that money to take advantage of it.
For a start I think I can use two strategies, lump sum and dca since I can manage that for now, is it also possible I lump sum on dips, since its buying with a huge percentage of your capital each month, can I use lump sum in a way that i set it to buy at any dip that occurs in the market while I use dca to be on a safe side since the market is unpredictable?
That sounds mostly reasonable to be combining your practices and then also monitoring how it goes which might allow you to learn from if you are balancing matters out well. None of us is going to feel comfortable if we run out of cash and the BTC price dips, and maybe we buy but then it keeps dipping, so then we might start to wonder if we structured our dip buys good enough or maybe we can just use DCA if the BTC price keeps dipping and we don't have any extra money at that time..
The longer that you are in bitcoin, then the more that you should be able to build up your reserves in various places, but even experienced investors might run out of cash or feel that they don't have enough cash to take advantage of dips and then they get concerned about if they might want to sell some and to buy back lower.. which I believe is one of the worst mistakes, even though quite a few people engage in that kind of behaviors, but if you have a regular cashflow coming in, then you can keep buying, but if you had been buying BTC for 4 years and then it dips a lot then you might feel that you are not getting as much advantage from the dip because you are buying lower, but your BTC holdings might have lost 50x or 100x or more than the amount that you ended up being able to buy.. because let's say you had been buying
$100 per week of BTC for the last 4 years, so you had invested around $21k and you have more than 1 BTC, and if you are still investing at the same rate, but the BTC price drops 20% from $49k to $39k, then at today's prices you lost around $10k, but you might have been able to buy $100 or maybe $200 worth of bitcoin at those prices, depending on how long the prices stay down at the 20% dip levels.
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From what your implying I believe that a having a reserve fund is good incase of dips, tho during long period of accumulation sudden dips that could go up to 20% could seem as a loss, but if my time frame and goal is still far I think, this could be to my advantage if I've had my reserve fund in Check and I'm still dcaing, cause surely bitcoin has surely shown price improvement and I'll end up buying more during those dips since price are low. But if this strategy is so important could I replace it with lump sum for a start, cause I'm still building up my portfolio, so those lump sum capital could go into my savings while I keep it for dips, but what I'm considering is would they always be dips and if I say lump sum is better, what's is the need of lump summing if its not going to give me a better advantage. If your okay with this I think I could go with dca and dip buys for a start.
You may well feel screwed if the BTC price goes down after you had already invested all $200 and then you don't have anything left, and then you may well feel screwed if BTC prices go up and you still are sitting on some cash. In the beginning it is almost a no win situation and you just try to balance it out as best as you can, and maybe after a few years investing you start to feel that you have everything in place. You have figured out your budget and you have some reserves for buying on dips and you have built and established an emergency fund.. and maybe you have figured out some ways in increase your cash flows and to decrease your expenses... but you still are likely going to always have some tensions in terms of trying to figure out how many BTC you need and how long it is going to take to accumulate as many BTC as you believe that you need.. especially if your goals might be to reach some variation of fuck you status...
and if you think about it, there are a lot of people who work 30-40 years or more and they do not reach fuck you status, so if you are able to actually reach it or maybe even reach it in 15-20 years, then you end up both reaching it and cutting the time in half.. and none of that is guaranteed.. You just need to do your best under your own particular circumstances.
I believe in other to avoid that tension I would set a big goal, then start with smaller targets or milestone, this emotion strategy would be good for me to avoid the tension around the time frame for accumulation and how many I would accumulation within that time frame.
If you are still living with your parents, then I will assume that you are on the younger side maybe lower 20s or less, and so sometimes it can take a while to both build up your investment portfolio but also to figure out your targets (or how easy or difficult it might be to reach them), so surely you can plan out targets of 1 year, 3 years, 5 year, 10 year and 20 year and maybe even further out and some other variations of timelines, and your actions are going to be much more concrete in the shorter term, but your ability to meet shorter term targets or to adjust them would likely be more measurable in the short-term in order to potentially keep you on track for the longer term... sometimes it will seem that you are not making very much progress, even if you might be ongoingly making efforts and even reasonably adjusting from time to time...and sometimes large dips can feel as if you might have had been set back 1-3 years or more, but then those perceptions might end up being false perceptions or they could become realized perceptions in which you might make some mistakes that ends up causing losses to your progress and sometimes difficulties to make up at later dates.. which in the BTC world, some BTC hodlers make mistakes of selling too much BTC too early and then they become disgruntled or maybe they end up holding too much on exchanges that get hacked or go into bankrupcy or rug pulling them, so there are various measures that each of us should try to take in order to lessen the impact of our various mistakes along the way.. It is almost inevitable that we are going to make various mistakes along the way.
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I think for now I'll just follow up a bit till I can grab what your saying fully, I'll try my best to keep following on this thread. I can see a I've got a lot to learn here. What kind of waller is best for holding, I just keep mine on Binance, do u think its okay?. If mistakes are inevitable, I'll make sure my back up funds are always in place.
Quote from: Troytech on January 16, 2024, 06:23:34 AM
For now I think I would start with dca with my little allowance and then use my monthly income to set up a system that can generate a substantial amount for investment. Cause if poor income and management could be a deficiency in accumulation where I might have to dip my hand back in my portfolio then I guess my first real move here should be to fix that and get my finance in order. What do you think about this.
You are describing the creation and building of an emergency fund, which surely could be life saving (and save your investment) .. and having an emergency fund will tend to give a lot of peace of mind when the BTC price starts to move against you.. which it will do from time to time.. especially the longer that you are involved in investing in it and building the size of your BTC stash.
By the way, you mentioned at least 2 bitcoin, but then you are also talking about investment numbers that would likely be quite lower than the amounts needed to reach 2 bitcoin, and I am not even necessarily suggesting that you need to get to 2 bitcoin, but if you consider that $100 per week would be $5,200 over 1 year and $52k over 10 years, you would almost need to be crazy to believe that there are very high chances that you would be able to accumulate BTC for less than $52k by averaging out your buys over the next 10 years, and that is why I had been saying that even $200 per week would be optimistic for reaching 1 BTC even with $104k invested over 10 years, so if you expect to reach 2 bitcoin or more in 10 years, then you would likely need to average around $400 per week over 10 years, and there is a bit of a presumption that you would be able to do that from the start since it is more likely that $400 per week now is going to get you more BTC than it is going to get you 10 years from now... and surely you are not even hinting at being able to have that kind of money to be able to invest now or to consistently be able to do it without putting yourself into a pickle in which you end up not having an emergency fund. ...
Surely, I am not going to tell you to NOT have high goals because sometimes goals can be reached and/or exceeded, and surely even with my getting involved in bitcoin in 2013, I had created goals for myself to be able to achieve in the next 6 months and then maybe to extend beyond the 6 months, and I was able to exceed my goals, but that was mainly because the cost per BTC was going down during that time, rather than up... so then my expectation of my average cost per BTC ended up going down because I was mostly anticipating how many bitcoins (or satoshis) I would be able to get for a certain amount of cashflow that I expected to spend over the first 6 months and then extending into the second 6 months, and each time adjusting some of my expectations based on expected dollar cashflows and also considering best case and worse case scenarios, and even though falling prices did cause worse case scenarios in terms of how the value of my BTC holdings was then going, but it created best case scenarios for being able to accumulate more BTC (as perverted as that kind of perspective seems).. because people can really call you names when you keep investing into something that is continuously loosing value (or at least its spot price continued to go down throughout 2014 and even into 2015, even though the very end of 2015 did end up being an UP year)..
I think I would keep my investment personal in other not to get your same experience and I would unwise not to take not of the fact that my goal is too high for now especially since I'm not having the capital in Check and if bad situation occurs on the long run I'd find my self in panic. I'll start small but I would still try my best to build my income to match the target. I know its possible but I still have to make sure I have a good plan.