Just like what @JJG said in his earlier post that, there are fours ways which an investor should prepare on when he wants to start his bitcoin accumulation, which are having plans to buy on the dip, lump summing and the superior of all the DCA method, and the fourth one is your emergency funds that will cover 3-6 months duration. The emergency funds is more important because if you don't have it ready, there is no way that you will succeed in your bitcoin accumulation journey. You will end up ruining it because you don't have what you will fall back on to use, when the unexpected and unforeseen challenges arises, which must be taken care of. This is why I make my emergency funds my priority as I am investing using the three methods to accumulate bitcoin depending on the rate of my cash inflow at that moment.
I think that everything you say is correct, except you do not need to establish your emergency fund in advance, but it may well be a great idea to establish it somewhat parrallel to your BTC investment until your emergency fund reaches a certain status, and of course, if you were to come in BIG to bitcoin (with a large lump sum or something like that), then it would be more important to make sure that you have an emergency fund that is in place that is at least accounting for the amount of your lump sum.
Let's go back to the example of the guy who has expenses around $1k per month and maybe an income of $1,500, so he has $500 extra that he could invest into BTC, and if he already has $1k emergency fund set up, then it is not really adequate, and maybe he needs to get to $3k in his emergency fund, so maybe he would be able to invest $250 into BTC and $250 into his emergency fund every month until he reaches his 3 months minimum.... and maybe it takes him 8-12 months before his emergency fund reaches $3k (3 months) and also maybe his BTC investment is over $2k by that time, too.. and then at that point he may start to feel that he has a bit more flexibility getting his emergency fund having 3 months expenses and into having 6 months, and maybe it takes him another 2 more years to get his emergency fund up to that level and then maybe he has more than $8k invested into bitcoin and something close to a 6 month emergency fund... which seems fair progress and surely as the guy builds wealth, he is going to likely have more more flexibility in the ways that he holds his value, and surely there is some urges to keep as much value in bitcoin, but once the emergency fund is well established then maybe he will be able to start to invest $125 or more per week into bitcoin, and maybe he had been able to increase his income and reduce his expenses, but if not at least he is on stronger grounds, but he did not wait to get started buying bitcoin, even though he ended up not being able to buy as much bitcoin until he had his emergency fund better established.. and sure maybe once the guy gets to 3 months, he might choose to be more risky and to invest a higher portion into bitcoin and maybe it takes him 4 years or more to get his emergency fund up to the 6 months level.
At the same time, I mentioned that if maybe he comes straight out with a desire to lump sum invest $5k into bitcoin, but he ONLY has 1 month's emergency fund, and maybe he would be better off to put ONLY around $3k into bitcoin and to use the other $2k for his emergency fund and then go into DCA investing at that point, since he is would then have used the lump sum to make sure that his emergency fund is in place, since he is starting out more aggressively into bitcoin... and so in that sense I am ONLY attempting to clarify rather than disagree with you Frankolala.
[edited out]
In fact, the four points you have mentioned have become the main calculations for someone when planning an investment in Bitcoin. let's say if someone has
passive income every month and they are able to set aside 10% regularly every month then their investment planning will of course not be disturbed because they get
passive income every month. But for those who work odd jobs, of course they have to manage the allocation of their funds as best as possible to keep the investment they plan running smoothly, such as setting aside a little for an emergency fund because if they don't have an income at that time of course they have an emergency fund to keep buying Bitcoin regularly.
I am not sure what distinction that you are trying to make ginsan in terms of bringing up passive income. I think that many people invest because they are trying to get to a status in which they can have passive income, but if someone might already have passive income, then that would not really be telling us very much about anything that the guy might do better, except that maybe he might have more time that he might be able to dedicate to studying bitcoin, since he does not have a regular job, but it also could be the case that either he expects his passive income might not be able to sustain him in the future, or he is investing with part of his passive income because he is wanting to create circumstances in which his investments might be able to increase his income in the future. Which money from investment tends to be passive income, even though there maybe be some work involved in managing it.. or learning about the ways that you are investing, whether in bitcoin or anything else..and of course, we are mostly focusing on bitcoin in this particular thread.
Apart from that, if they are beginners, they should not be too selfish to buy aggressively because they need to strengthen their mentality when the price of Bitcoin changes suddenly. Because beginners often panic when prices fall because they are not experienced enough to deal with situations when prices fall drastically. For that reason, I agree with all the points which deserve to be a priority for us in accumulating Bitcoin for long-term investment.
I doubt that the justification for being aggressive has to do with whether someone is a beginner or not, and maybe the beginner has to be more careful about his level of aggressiveness, and since presumptively he would be in the earlier stages of learning about his investment, but as the person gets more and more systems in place and learns about his investment (and his cashflow situation) he thereby would be in a better position to increase his aggressiveness level.
If you took profit once, or it is not a regular thing, then it is okay to take profit. Do not just make it a regular thing because that is where it will affect the profit you are supposed to make from DCaing which should be the increase of your portfolio. Also if you are to make a withdrawal from what you have been DCAing, try so that it is not a very big amount that affects or takes out amount of money equal to what you will DCA for like three weeks. What I mean is, if you must withdraw, there should be a limit to what you plan to withdraw from what you are DCAing.
We having been discussing about the DCAing accumulation process for some time now but haven't put into consideration on how to take profits.
I might be wrong and will gladly ascept any correction but I think their should be a time to invest and a time to begin taking profits, one step needs to be attained first before taking the other.
It is best to live the investment from your DCAing to mature after completing the budget reaching a significant price during the bull run it can also be from personal decision and the way we view the market.
We are not talking about those kinds of "taking profits" or figuring out when to take profits matters in this thread, and that is one of those concepts that traders try to impose upon you as if it were some kind of a prerequisite to figure out what your exit strategy is or is going to be.
Most likely if you have have an investment plan that is 4-10 years or more, then you may well can start to address those kind of taking profits matters or converting into other ways of managing your BTC holdings down the road.
And, sure there is nothing wrong with making sure that you are able to exit your investment if you were to need to exit, because no one should invest into anything if they have no way of exiting.. and surely one of the problems can be that there are ongoing attacks upon bitcoin, so that sometimes some of us might have gotten into bitcoin in certain kinds of ways that do not really allow us to get out in the same ways, including that exchanges lock up and close down and various other ways of getting out of BTC might end up drying up.. so it could be a bit concerning regarding knowing whihc kind of ways of liquidating bitcoin are going to be available by the time we enter into a stage where we are no longer accumulating, and we might want to trade and we might want to sell some or all. even though selling all does not seem like a great strategy either .. especially if someone might have spent 4-10 years or longer investing into bitcoin, so what would be the purpose of getting out? to buy a lambo? or maybe some other purpose(s)?
If you took profit once, or it is not a regular thing, then it is okay to take profit. Do not just make it a regular thing because that is where it will affect the profit you are supposed to make from DCaing which should be the increase of your portfolio. Also if you are to make a withdrawal from what you have been DCAing, try so that it is not a very big amount that affects or takes out amount of money equal to what you will DCA for like three weeks. What I mean is, if you must withdraw, there should be a limit to what you plan to withdraw from what you are DCAing.
Sometimes taking the profits ones could be the beginning of your investment downfall because I have seen were someone who invested on Bitcoin and when he realized that his investment has gotten some profits so he now decided to sell off all the accumulated Bitcoin in other to have a good profits but with the intention of buying it immediately the price drops a little but actually little did he realize that he had made the greatest mistake on his investment because after selling his Bitcoin the price has increased so much that if he decided to buy the same amount he had bought before the number of Bitcoin he will get will not be the same even joining with the profits he had gotten he will not be able to get that amount, so he became disoriented that if he had known he would have not taking this decision and now a little profits he was chasing has cost him not only his investment but also with the chance of getting back to the investment because of the price increament of Bitcoin. So actually my point is that in as much as you feel that taking profits ones from your investment is good but however you should also think about impossibility of getting back to the Bitcoin accumulation after selling your investment.
That is quite a common problem of bitcoin in terms of guys who sell way too much too soon and then they become bitter.. and they keep waiting for dips that do not end up coming, even though they might have thought that they were smarter than everyone else by selling and making good profits.