Generally it is a good idea to figure out some kind of an investment pace into bitcoin that fits within your budget, so you should be taking ONLY from the extra money that you have, and not money that you need for expenses. Surely there are some kinds of expenses that you might not know that come up down the road, so many times it is preferable to keep both an emergency fund and various kinds of back up funds so that you never have to tap into your bitcoin investment at a time that is not completely of your own choosing.
You are absolutely correct! I have made this mistake before and I know what it cost me to sell part of my Bitcoin at huge losses because I needed to attend to my urgent bills. This is not funny at all and I hope other investors would scrutinize your opinion many times so they can digest it, avoid similar attempt in the future. It is not funny at all when you intend to hold your Bitcoin for as long as possible and suddenly you had an emergency to attend to. I just hope such unfortunate event would never happen to us. Also this was due to unplanned necessity that needed to be put in place before making any financial investment. We just have to keep some funds so that in case of any unforseen bills, one can take care of it asap.
It seems to me that most people should be considering bitcoin as an investment that is 4-10 years or longer, and the only reason to be thinking about less than 10 years is if you have age and/or health particulars that prevent you from being able to project your bitcoin investment in a longer timeline... .. so if we might presume that you are not fitting in the category of elderly or enfirmed, then we should presume your timeline to be 10 years or longer...
So you don't have to rush your investment. You can try to invest as aggressively as you are able to without overdoing it, yet if you do not have back up funds, you need to be trying to build them up at the same time that you are building up your bitcoin investment. Once you get your emergency funds up to 3 months (and then maybe you would have 3 months in bitcoin too), then you may be able to start to become even more aggressive in your bitcoin investment, yet you also have to consider that you don't even want to be tapping into your emergency funds, so you also might have to make sure that you build another month or two or more of various kinds of back up funds. I am not claiming to know your particulars, but each of us has to have these kinds of back up funds so that we are not forced to sell out of any of our BTC and we are not contributing to our own creation of emergencies in situations that no emergency should exist if we had engaged in better preparations. So it could be the case that you might need 5 months or more of back up funds (that includes your 3 months of emergency funds) before you are really able to become more aggressive in your approach to your bitcoin investment.
I know many of us would like to get rich quick (sooner rather than later), but investment takes time, and if we let our bitcoin build on itself (and even compound in value over time), we likely will still be able to enjoy greater feelings of wealth based on our having had built up our bitcoin investment, and it is also likely that our standard of living is able to go up after we have spent some time building our foundation levels of investment into bitcoin and also foundations to good cashflow management practices.
I understand that no one wants to have a bunch of cash hanging around that is not "working" and maybe poor people who get into investing are even more anxious to make sure that they are making their cash work, yet the problem is that poor people have fewer resources to fall back upon as compared with more wealthy folks, so it becomes even more important that they maintain emergency funds and back up funds so that they don't have to dip into their bitcoin investment.
This is a big challenge to those people that don't have sufficient money to take care of their bills because they don't have enough sources of income they can depend on. Once you know that you don't have a huge source of income, it is better for the person to invest little than to invest more money and later go back to the investment so as to take care of some bills. I know that all fingers are never equal which is a good reason when we need to think well before putting fund in any investment.
Yep. If you are using money that you know that you are going to need, even a few months down the road, then you are trading (gambling) rather than investing, and any of us can make mistakes to take chances with our expenses and then we end up making mistakes. I have made those kinds of mistakes on more than one occasion, yet we we see that the mistakes tend to have greater repercussions than if we had followed better practices, then we realize that we have to figure out ways to make sure that we are not engaging in behaviors that increase the chances that we are going to end up having to suffer through those kinds of repercussions.
In other words, we have to try to make sure that we are not gambling with our investment, and we are truly using money that we do not need to make our bitcoin investments. It can take a while to build up these kinds of better practices, and sure sometimes we are going to feel that we have too much cash sitting around and not doing anything, yet after we have experienced some of the difficulties we will also come to realize that even cash sitting around is serving a purpose, and we should be able to become more and more comfortable with our chosen balance, which means that we are getting better and better at managing our cashflow balances.
Another thing is that if someone is new to bitcoin and they might not have any emergency fund, then they could build their bitcoin investment and their emergency fund at the same pace, and likely they have to be less aggressive in their investment into bitcoin until they at least have three months of emergency funds in place.. and then they can also figure out how much of the other kinds of back up funds that they need. If their income and/or expenses are quite irregular and erratic, then there surely are justifications to keep more back up funds in place because if you already know that your income and expenses are irregular and erratic, then you already know that you have to keep greater level of back up funds so that you never have to touch your emergency funds for a situation that comes about that you know could come about, since an expected situation would not and should not be considered to be an emergency, unless you turn it into an emergency through lack of proper preparations.
Having enough emergency fund is very important to every investor that really want to have an effortless investment journey in the Bitcoin market. Surely the market is going to test us many times
to sell at a loss The fact of the matter with our bitcoin investment we should not be selling at profits or at a loss. We have to figure out ways to not tap into our bitcoin investment at all for more than 10 years, and perhaps even longer.
Many of us who might be building our bitcoin investment, we might spend 4-10 years or longer just building up our bitcoin investment, so maybe when we get to 10 years of investment, we might start to feel that we are getting closer to reaching our investment target, yet it may well be more than 15 years (from when we started) before we might start to feel that we have enough bitcoin and we can start to employ selling practices (whether price based or time based).
I am not trying to proclaim your timeline, yet it surely may not be uncommon for someone to be largely accumulating bitcoin (and without selling any) for more than 10 years... or maybe if they sell it would be sell and replace in order to support some venders or something like that.
but when you already have enough emergency funds in case of anything, you will not need to panic. This is why many short term investors do end up taking less profit from the market. Sometimes they think that taking profits at a certain point when the price of Bitcoin shoots up is the best decision which is not. They have the fear that the market price might falls and might take long time to continue which is not true.
Surely it tends to be a much better feeling when our bitcoin holdings are in profits as compared to when they are not in profits, so there can be degrees of bad management, and the worst would be selling at a loss, and surely it is not as bad to sell at a profit, yet it is still not good BTC portfolio management to be selling your investment merely because you are either engaging in poor cashflow management or you are tempted to tap into your bitcoin investment at a time that is way before your 10 years or more investment timeline.
Another value of holding onto your bitcoin investment for a long time is that its value continues to compound upon itself, so instead of getting profits that are less than one doubling, you may well end up getting several doublings, and the doublings really compound upon themselves.
In one of my earlier posts I outline 9-ish doubling from 2015 to present, which also shows that each doubling becomes more powerful resulting in 256x in profits or maybe even 512x in profits after the next doubling. If you continuously take money out, you end up missing out on the compounding events that are not guaranteed but still bitcoin has not really weakened in the strength in its investment thesis over the past 10-ish years, even if some of the upside potential is not as exponential.
So, let's look at the historical numbers and the timeline from 2015 to present again.
0) $250 (2015) 1X
1) $500 (2015-2016) 2X
2) $1,000 (2016-2017) 2X * 2 = 4X
3) $2,000 (2017) 4X * 2 = 8X
4) $4,000 (2017-2020) 8X * 2 = 16X
5) $8,000 (2017-2020) 16X * 2 = 32X
6) $16,000 (2017-2022) 32X * 2 = 64X
7) $32,000 (2021-2023?) 64X * 2 = 128X
8 ) $64,000 (2021-?) 128X * 2 = 256X
9) $128,000 (?) 256X * 2 = 512X