Quote from: Sim_card on April 25, 2024, 04:30:17 PM

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Quote from: teamsherry on April 25, 2024, 11:55:05 AM

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To me, I think the essence of all this which I think is best, is don't do more than yourself, invest with what you can do away with for a very long period of time, that's why the DCA accumulating strategy is the best because you will be accumulating Bitcoin through the DCA method either weekly or monthly according to your financial strength, and as long as you have a source of income to be funding the DCA accumulating strategy either weekly or monthly you wouldn't be compelled in tempering with your investment just because of some financial needs.

But if you are doing more than yourself, by investing more money, and part of the money that would have cover up for your well-being, at some point, when having a serious financial needs, and your emergency funds are not enough, you will be force to temper with your investment, before you know it, that will be the beginning of the end for that investment, because that will be how you will be eating it bit by bit till it runs out, so it's very important to invest according to your level or I say it like don't do more than yourself, just cut your coat according to your size when DCAing , then you are good to go.

Everyone needs to tailor his investment accordingly to his financial status and also the amount that would be comfort with, two persons might be earning equal amount and having equal financial stability but would be comfortable with different allocation, Mr A might be okay with an aggressive 25% weekly and Mr B might be okay with 10% weekly despite been at same level with Mr A and this might be due to each of them having different risk tolerance relating to investing in bitcoin or having all their value in only one asset.

You made a very good and interesting point but I want to point out one aspect of your statement that does not quite sit well with me. That is the aspect of using "risk tolerance" as a factor for investment. In the example you gave, it should not be ability to bear risk that should determine what percentage each of them will allocate to Bitcoin, rather it should be dependent on their individual needs. Using risk appetite as basis for determining the amount to allocate to Bitcoin might seem like Bitcoin is all about risk, a way of amplifying the risk of Bitcoin. So, needs is a better factor to consider and for this case, Mr A might have needs that requires up to 50% of his income while Mr B might have needs that requires just 30% of his income. Under these two scenarios, Mr B will have more leverage to allocate higher amount into Bitcoin than Mr A.

Meanwhile, when I said needs, I am referring to basic needs and any other thing of importance that cannot wait. These are the factors that can force an investor to sell his Bitcoin. Besides these needs, the other major consideration should be emergency funds which covers unforeseen circumstances.

Those are mere hypothetical to explain the mental situation of two different persons with equal needs and every other necessities in place. Mr A feels comfortable and okay with an aggressive 25% allocation to bitcoin and that doesn't seem to bother him or give him a sence of over allocation to bitcoin whereas Mr B feels okay with his 10% whimpy investment despite knowing he could allocate more to bitcoin.

Another thing might be that Mr A and Mr B responsibilities are not the same, and Mr B have a high responsibility than Mr A which will make Mr B not to be able to invest 25% because that is more than his discretionary income. Another reason that is that Mr A might have a strong faith in bitcoin a d chose to buy aggressively using DCA method because he feels that this is the best opportunity for him to invest aggressively and increase his bitcoin faster. On the other hand Mr B might not have not have strong believe in bitcoin just like Mr A, and decided to invest only 10% of his income using DCA until he builds his believe and knowledge on bitcoin, he might decide to increase his amount.

Lastly, Mr B might feel reluctant that he does not need to invest much in bitcoin and invest in a wimpy way, when he can buy aggressively like Mr A, because he is rich and feels that he have enough fiat to save him in future from getting broke, which is under probability. This is why when you are investing using DCA method, the amount of money that we use should be based on our discretionary income, and also DCA aggressively when you are opportune to do so.

Your right about all that but I think you seem to mis understand the hypothetical, in this case it is not about needs or disposable income available it's more about two different investors with equal financial situation and equal discretion income and disposable income that choses to allocate different percentage and that is due to the risk or proximity of the investment not doing well.

Let me explain as I've understood.

MR A Understands the fact that bitcoin has a probability of not giving him any returns or going to zero and still choses to give 25% to bitcoin without putting himself on any pressure and is totally comfortable with it and it does not bother him, but MR B despite being in the same situation like Mr A doesn't go well with having too much in bitcoin and rather decides that it would be better to have only 10% in bitcoin and have the rest in cash.

You see they both have everything equal on both sides but they don't chose the same allocation to bitcoin because they don't both agree that it would be good to be aggressive in bitcoin.