It’s true that most people, particularly those who are still struggling with their finances, at some point get pretty anxious about their investments and thereby would feel the need to cash out and take some profit from their investments. The idea could be that they may either lose everything if they don’t take their profits or maybe due the fact that they may have need for the money at that time.
But, just as you’ve rightly pointed out, cashing out pretty soon when it comes to Bitcoin investment is definitely a very bad choice, as it shows that the investor has absolutely no long term plans for their investment. Additionally, it could potentially lead to missing out on several significant long term benefits too. And even if they may think that it was the best idea to cash out at that point in time, they’ll probably look back to that decision years later, and they’ll definitely realize how big a mistake they made by selling or liquidating their holdings.
I believe there are investors who invested in Bitcoin way back in 2010 and decided to cash out the following year after making some profits, they cashed out thinking they’ve hit the jackpot, but if they had actually been patient enough to wait a few more years and maintained a long term approach, they would’ve made a lot more in the long run.
That’s the reason it’s extremely crucial for investors to develop a solid and strong long term strategy when investing in Bitcoin, and it doesn’t end there, they should also prioritize sticking to these plans, regardless of the challenges and temptations that hit them and may compel them to cashing out. It’s important to find a balance between being able to manage their finances and also managing their psychology too. Although this isn’t as easy as it sounds, but with the right approach and a good sense of discipline, it can be achieved.
Yes, of course, one should have a good idea about the right method and discipline, otherwise a person can never be a successful and long-term investor.
In your opinion, why did those who had investments in 2010 have to withdraw cash the next year? Did they only need profits?
I think they lacked planning compared to profits. Bitcoin investors do not always plan to start investing long-term. And most of them make mistakes after that. They forget the next step to start investing. They think that continuing to invest with current income will not be a problem. But they forget the emergency fund. They forget the reserve fund. People forget that they are social animals. In the case of living in society, it is difficult to say when and what kind of financial help is needed. They forget all that and just start investing for the long term. As a result, they build a beautiful portfolio in a short time. But when something goes wrong, they have nothing else to do. So they are forced to break the investment. And this is a very difficult time for us investors.
So I believe, if you really want to be a long-term investor, first you need a current income. Then you need a discretionary income. And that discretionary income needs to be invested and funded at the same time. Only then will an investor never have to interfere with his invested money unnecessarily.