Along with DCA I give more importance to reserve fund for dip buying. Because reserve fund is divided into 2 always one part is kept for emergency fund (which acts as protection to prolong my investment) and the remaining part is used for buying dips. I have only been in the deep once since I started investing. I would like to ask some questions, should I be aggressive in DCA with the money reserved for the dip during the dip?
Or should I buy a lump sum with the whole amount?
I don’t think you still understand how to accumulate bitcoin. That is why you are not getting the point, because how can you mix your reserve fund for both emergencies and buying bitcoin at dip? Did you even know the difference of emergency fund and reserve fund in financial management? I think you don’t know that is why you are saying all this. Because if you do you would have known that the best way to accumulate bitcoin is by using DCA strategies not waiting for dip to buy. Because if you are waiting for a dip you will end up buying a small quantity of bitcoin. Moreover if you are using DCA strategy you will be able to purchase bitcoin bit by bit in different price and even in dip it will not affect you that much, because you didn’t buy them all at the same time. But I don’t know what is wrong with you that you failed to understand.
Why are you confusing yourself dude, if I may ask you what is the difference between emergency fund and reserve fund?
Emergency funds as the name implies, are funds that are kept aside which is to be use to attend to emergency needs or events that may arise in the future which we don't plan for, or have any knowledge that such will happen within the captured time frame. Let's say for example wind removing your roof during the storm. Situation like this is an emergency. And you will take funds from your emergency funds and fix it.
While reserved funds, are funds which are kept in a separate account, which you can turn to when your funds in the emergency funds account gets exhausted before the stipulated period which you intended for the emergency funds to last. Situation like this do occur when you experienced more emergencies than what you budgeted for. Let's say you made provision for 3 to 4 emergencies within a period of 6 months or less, but you ended up having up to 8 -10 emergencies. In this kind of situation it is natural that the money in your emergency funds account won't be enough to handle all. So it is at this point you now go to your reserve account and take money there and fund your emergency account.
Emergency funds and reserve funds might sound alike to many people but there is a small difference between them and this is how I understand what emergency funds and reserve funds are.
Within this responsive post, I fixed your quote Justbillywitt.
I like to think about emergency funds and reserve funds as two type of back up funds, and emergency funds are the last step prior to touching your BTC, so emergency funds should never be used for anything absent an actual emergency, and if you end up having to dip into your emergency funds for anything, you should be wanting to replace them as soon as possible so that you are prepared for any emergency that might end up happening.
If you are largely taking cashflow and keeping reasonable amounts of cash cushions and even investing into bitcoin in reasonable kinds of ways, even if you are aggressive in your bitcoin investment, you should still not be having emergencies, and if you have ever noticed folks who are not very good at managing their cashflows, they are frequently having emergencies, so you shouldn't want to live in that kind of a way, and part of the benefits of having organized finances is to have some calmness because you live within your means and you maintain various kinds of cash cushions that you respect, and if you violate them, you are purposefully doing so and maybe not very often, especially in regards to keeping at least 3 months of emergency funds available in case some or all of your income dries up or you suffer from some unexpected expenses that are beyond normal kinds of unexpected expenses that sometimes might happen from time to time.
Reserve funds have less priority than emergency funds, and they can be designated for a variety of things, yet it seems likely that almost any of the reserve funds would be tapped into prior to tapping into the emergency funds.. that is unless you have extra emergency funds and if you have extra emergency funds than the extra portion of your emergency funds might merely be serviing as some kind of a reserve fund, since the actual emergency funds should not be touched absent an actual emergency.
Sometimes we might be arguing about semantics, and maybe it does not matter so much what we call the various funds; however, sometimes the way that we call the various kinds of back up funds can help us better to understand how to use such categorizations to help us to achieve some of our objectives, and if we are trying to put ourselves into a better financial position and we would like to accomplish getting as rich as we can as fast as we can, without putting ourselves too much at risk, then sometimes we still should have patience in regards to how long it is going to take and to try to solidify our practices so that we don't end up rushing ourselves so much that we end up recking ourselves by engaging in gambling rather than investing.. So the reasons to have these protections in place is to help us to achieve our objectives in terms of doing as well as we can based on our own financial and psychological circumstances.
For example, let's say that we usually invest into bitcoin around $100 per week, yet we still have another $100 per week that we set aside for various kinds of extra expenses that we might have, and maybe we might sometimes allow the other $100 per week get to a certain size before we start to buy bitcoin with it, yet if we know that we have some extra expenses coming up such as we know that 1) we have to take our spouse on a trip in one month that is going to cost around $500 (this solidifies our spousal relationship), 2) we know that within the next month or two we need to update our computer & phone which is going to cost $1,100 (this improves our productivity and may even allow us to earn more income), and 3) within this same month, we also have pretty much promised to buy our kid a bicycle for $200 (this is an obligation that we have). We can see that our total extra obligations within the next month or two is around $1,800, and if so far we have saved up $1,200, then we pretty much are on track to have all of the money within the next 6 weeks - however, if suddenly our car breaks down, and we have to take $500 from our reserve fund to cover that car expense (especially if we might have to use our car for our work), then we are faced with a bit of a dilemma regarding how to prioritize our expenses, which also might mean that we might have to reduce our BTC investment during the period that we are meeting those obligations. So probably we would take from our various reserve funds prior to touching our emergency funds, and we might even have to cut back on buying BTC prior to completely depleting our reserves and/or having to be in a place that we would have to tap into our emergency fund. Sure the car breaking down could nearly rise to the level of an emergency, and surely the car could end up breaking after we had completely depleted our reserve funds, and sometimes, we might end up getting ourselves into a kind of tough situation if we don't have enough reserves to cover all of our expenses.. yet we still might have to figure out how to prioritize them within our own set of priorities.
Wow, you are really a tutor, just see the way you breakdown everything for everyone, this is what I call explanation in detail, in which you explain their difference of everyone. Because must people can’t differentiate between emergency funds and reserve funds, most of them think that it is all the same that is why they mix them together. Moreover emergency fund is only use when you have a critical emergency not for some mile emergency.
There is where you wrote that “ if you end up having to dip into your emergency funds for anything, you should be wanting to replace them as soon as possible so that you are prepared for any emergency that might end up happening.” Which is the best advice to give a person. Because some will not have the same idea and they will end up suffering of selling their bitcoin investment at lost to take care of their emergencies.