After I have finished pursuing through all the posts that is related to emergency fund, i have really learnt enough ideas on how emergency fund is important when it comes to Bitcoin investments in other to avoid touching your main income, i took personal because ever since i came across this thread, if i have not practice anything but this emergency fund i took very seriously and it have been helpful to me in such away that my accumulating without touching my investment.
The goal itself is like that, namely so as not to interfere with the funds that you want to use for the Bitcoin investment path itself so that you can invest continuously without any obstacles when you want to buy Bitcoin. In addition, it can also support you in collecting Bitcoin slowly until it becomes very much because you really don't touch it to sell in the near future under any conditions. So that emergency funds can be said to be an important option for long-term investment support because everyone also doesn't know what their life conditions will be in the future. So as much as possible you have to have really mature preparation if you want to invest in Bitcoin in the longer term.
Emergency fund is a major ingredient if you are planning to hodl for a very long term, with the fund you will not be tempted to touch your Bitcoin stash inorder to spend on emergency expenses that inevitably arises on the way. Without emergency funds to take care of unexpected expenses, hodling Bitcoin cannot be realistic, the temptation to sell will always arise almost everytime, investors can even sell when the situation on ground cannot be qualified as emergency. If you don't have emergency funds on ground, it is better to reduce the amount that you set aside for your DCA and keep the balance in the bankroll of emergencies, if an investor goes ahead to concentrate on DCA buying when they don't have enough left for emergency funds, there is likelihood that they will sell when emergencies arises.
Setting aside emergency funds might not be necessary for very rich people who have excess money to spend from when emergencies arises but for people that are not rich who are managing their income, it is imperative that they should set aside emergency funds so that they will not tamper with their Bitcoin stash.I will consider setting emergency funds as necessary and essential for everybody irrespective of how rich you are, there should be what can be considered as your emergency funds based on your finances status, we can't say that because we are so rich that we can should not have separate emergency funds.
Emergency funds are essential for people of all classes. The rich or the poor should create emergency funds. A day laborer needs to have an emergency fund. You may have a lot of money but you do not have an emergency fund, then you will not be able to deal with any problems economically. If you are rich, if you do not have emergency funds in an unexpected situation you will not be able to rescue yourself from that situation. There must be an urgent fund to deal with such natural disasters, health problems, danger, etc. Suppose a poor person has a certain amount of money for emergency funds. On the other hand, a rich person did not create any emergency fund. Now the poor will be able to cope with natural disasters because they have an emergency fund, and the rich will have difficult problems due to lack of emergency funds.
I think a certain part of our daily income should be kept for emergency funds that will play a very important role in meeting our unexpected financial needs.
Of course, you are correct to suggest that there are going to be circumstances in which any person who exercises poor cashflow management, he is going to end up getting himself into trouble based on his cashflow management practices.
Sure, it is true that rich people can become quite disadvantaged by both their poor cashflow management and also their choices of where to put their value, whether to consume and/or to invest. Yet, by definition rich people have a lot of advantages over poor people in terms of already having a variety of resources upon which he can fall back upon when making mistakes.
Yes, poor people can catch up and even pass up rich people in terms of their cashflow management and their organization skills getting them ahead, and surely historically investing in bitcoin might have also made some very big differences in terms of shifting wealth from rich folks to poor folks.
Poor people, on the other hand, need to exercise way more discipline to make sure that they are building and/or maintaining back up funds and resources, since by definition poor people do not have those various kinds of back up funds or resources to fall back upon, including potentially family/friends that can also bail them out... and so poor people have to consciously build and maintain their various back up systems.
People could really start without savings but make sure that they have passive flow of income so they can increase their long term investment plans to succeed.
Your use of the passive income flow expression is quite ambiguous.
People tend to build their investments from work income and to get their investment up to a high enough level that they are later able to live off of their investments (without having to do very much work, except maybe managing their investment). So getting income from your investment is passive income, and it is not very common to get to such a status of being able to completely live off your income and to potentially minimize the amount of work that you have to do for any of your income.
We tend to assume that in the earlier years of investment, guys are mostly getting income from various kinds of work, and perhaps even moving money around and trying to manage income from money.
Sure, it could also be the case that a person is already living off his investments, yet at the same time seeking better places to put money, and so then may well end up using some of his income from other investments in order to invest into bitcoin. which seems to be unusual, rather than common situations that we should discuss.
To me, it seems better to presume that in the earlier years of investing guys are getting income from their work and their labor and they are building up their investment portfolio in order to attempt to get it to a large enough status, rather than presuming that they are already able to live off of their investments and are merely trying to figure out ways to improve their income from the investments that they have.
I think that many guys would like to get to a status with their investment portfolio that they either no longer have to work and/or that they are able to earn quite a bit of money from their investments so that they might be able to minimize their work and/or to be more selective about which work they choose to do.
Of course, when we are in the earliest stages of building our bitcoin investment and perhaps also building up our emergency funds at the same time, it may well end up being the case that we end up tapping into our emergency funds for non-emergencies because we are still in the earliest of stages of building up such fund, and surely we are also running risks while we are building up our emergency funds, yet at the same time our bitcoin stash is likely not going to be much BIGGER than our emergency funds, at least going from the amount of value that we put into each of them.
Ideally, once we get the emergency fund up to at least three months of expenses, and perhaps our bitcoin investment is also getting to be at least that size too, then we may well strt to build up various other kinds of reserve funds, so by then we would tap into our other reserve funds prior to touching our emergency funds, and our emergency funds would be the last thing that we touch prior to having to dip into our bitcoin, so we already realize if our finances have gotten to such a stressed point that we are having to dip into our emergency funds, then we should realize that we are in a place that we don't want to be..
and that ideally, like you said Merit.s, we are not going to be touching our emergency funds at all absent an actual emergency and not merely our own inadequate cashflow management skills... but it can take a while to build our finances to such strength that we both have various kinds of back up funds beyond just our emergency fund, and we also are attempting to invest somewhat aggressively into bitcoin too, and perhaps our bitcoin investment is growing faster than our emergency funds and our back up funds, since once we get our various back up funds to certain levels, we may well not need to keep growing them and we likely are going to want to focus more on aggressively (perhaps?) building up our bitcoin investment.
I largely agree with you here, after reading how detailed your explanation is. That is why in the early stage of its either we have already build our emergency funds before starting the investment because there is risk on both side when the accumulation isnt big. When the emergency funds isnt strong, while still figuring out the monthly investment it will take time to have a solid emergency funds
perhaps 3 months before things will start to maintain equilibrium. Actually, it will be safer than we endure patience in building our emergency funds first then we can start focusing more aggressively or gradually through DCA on growing your Bitcoin position.
If a guy is starting out with absolutely no back up funds, and he wants to build emergency funds up to 3 months, it would take him more than a year to build up 3 months of an emergency fund, especially if he is ONLY putting around 10% of his income into an emergency fund... it might even take him 2 years at that rate. So there is value in being aggressive in both building an emergency fund and also simultaneously building bitcoin holdings, and frequently guys are not used to investing and so they might even have struggles to set aside even up to 10% of their income for investing and/or building up back up funds. Surely, if they can do more than 10% then they will likely be advantaged by their taking an even more aggressive approach.