................ In conclusion I should say that in a long bitcoin cycle an investor should have at least 6 months to 2 years of cash flow so that he can keep buying and holding more than every bearish.
I think that everything that you say laijsica is correct, except you are very broad in terms of how much back up funds that I guy should maintain, and you are even quite non-specific about the purpose of your various back up funds.
Of course, if shit really hits the fan and income dries up and/or expenses go way up, then there is going to be a lot of good feelings and/or comfort to have more money available to hopefully make it through the difficult period without having to suffer too much... and so yeah, their would be heirarchies in regards to the various kinds of classifications of back up funds, and I think that 3 months of expenses is almost necessary for most everyone who is investing, yet a brand new investor could simultaneously build up his emergency fund while he is building up his bitcoin holdings... so for someone who might have had been living with only 2-4 weeks of back up funds, it could even take a year or more just to build up both his back up funds (his emergency fund) and his BTC holdings to amount to 3 months of expenses each.
Very well said, you have a good opinion there. Funds must be put aside to cater for emergencies or rather to prepare for a rainy day since it is a rainy day that tests one’s preparedness. It is advised that people should have at least 3-6 months worth of expenses saved up in cash, although this may be considered to be just an average and may differ from one person to another.
Holding an emergency fund and Bitcoin at the same time is a good way for new investors to start accumulating. Of course it may take time, but having a cash reserve and a solid investment portfolio will give one confidence and stability.
Besides, creating up these funds may take both time and commitment, yet it is necessary for creating financial security and coping with eventualities. It is very important always to plan for the future irrespective of how financially ready or prepared one is. It is perfectly alright that one begins with just a little cash and over time adds more to his or her emergency fund as well as investments.
Once an investor gets to a point in which he has both emergency funds and his BTC investment up to those kinds of 3 months each levels, then at that point, he may well need to take into account his own circumstances to figure out how to go about saving other kinds of reserve funds that may well depend upon how unreliable his income and/or how likely it could be that he is going to suffer from unexpected (or somewhat expected) expenses, and so the more unreliable his situation, the more reserve funds he should be building and maintaining to account for these kinds of possibilities.. because what good would it do to be saving, suffering and struggling to build up a BTC investment portfolio for a year or even for several years, and then all of a sudden suffer a cashflow disappearance issue or some kind of expenses that were somewhat expected and then end up being forced to sell some or all of your BTC holdings at a time that you did not want to and because of circumstances that were somewhat foreseeable.
After the emergency fund and the Bitcoin investment portfolio have been set out it will be appropriate to evaluate one’s circumstances from time to time and assess possible risks in order to decide whether it will be necessary to create additional reserve fund.
Unsteady income, the possibility of losing a job or expenses that are to be expected such as the cost of repairing a car or house taxes may cause financial instability. These risks can be alleviated with having more reserve funds, so that bitcoin holdings will not have to be sold in unfavorable market conditions.
In this regard, it is important to constantly review and evaluate one’s own financial position and rebalance reserve funds. This might include:
- Income stability: If there is unpredictability with the level of income, then that's a cue that one needs to have more funds in reserve.
- Expense predictability: If the expenses are unpredictable or likely to be steep, one should then save to cater for certain costs, and that means increasing one's reserve.
- Debt obligations: If paying off the debts is a challenge then it is recommended to have more money on your emergency fund to cater for the basic needs.
- Financial goals: Whether short or long term goals entail holding of bitcoins in a constant and stable rate, the focus should be in staking up the reserve funds for investment.
Therefore, by analyzing these factors, investors can have a more thorough financial security and protect their positions and their Bitcoin strategy in the long term