Quote from: Tungbulu on Today at 02:51:38 AM

Quote from: JayJuanGee on Today at 12:21:00 AM

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Effectively managing one’s funds is indeed a multifaceted strategy which involves categorizing your funds into different safety nets, with each safety net serving different goals. The main idea of this strategy is often to ensure that one has an emergency funds that’s capable of covering at least (in my opinion) 3-6 months of living expenses to serve as an actual safety net and to provide some sort of financial stability whenever unexpected events like losing one’s job, urgent medical emergency or car repair comes up.

I know that a lot of people suggest a range of 3-6 months for some kind of a back up funds, but really each person may well need to decide levels of urgency within that 3-6 months of expenses since there is a pretty BIG difference between 3 and 6 months... which also gets me back to part of the reason why I consider it to be helpful to distinguish between emergency and reserve funds.. There can be a lot of flexibility with reserve funds, but not so much flexibility with emergency funds, and even reserve funds could end up being used for emergencies, yet emergency funds should not be used for anything other than emergencies, so if any guy gets to the point that he has exhausted all of his forms of backup funds and all that he has left is emergency funds, then he should be alerted that he is in a pretty desperate situation if an emergency were to occur at that time, and even non-emergencies could end up causing him to dip into his emergency funds because he does not have any other funds left beyond the emergency funds.

Each of us has to figure out how much depletions of our reserves are we willing to tolerate before we start to get a sense of urgency in regards to how depleted are our reserves and whether we are down to the bare minimum.. which bare minimum likely means that we might have to restrict some of our other behaviors....

So for example if we had depleted all of our reserve funds because we were buying on the dip, and we knew that we were not going to get paid for another three weeks, so all that we have left in our funds is emergency funds. Usually we would be buying bitcoin every week, yet since all we have remaining is emergency funds, then we cannot buy bitcoin for the next 3 weeks absent receiving some surprise income... yet let's say that the opposite ends up happening, and we have some extra expenses that come from 1) we lose our phone (so we have to replace it), 2) we miscalculate some of our expenses, so we need to pay for those extra expenses, 3) our boss gives us an assignment that is going to cost us extra for transportation and perhaps we might even have to pay for food and lodging out of our pocket (and maybe the custom is to reimburse us 3-4 weeks after submitting our expense reports - not in advance. We are sort of fucked, and maybe we even have to spend close to a month's of our emergency fund expenses for these various extra expenses, even though none of them are emergencies.

Not only do we have to dip into our emergency funds for 3-4 weeks of our expenses, but we also have to likely spend several months building our emergency expenses back up, and if the bitcoin price had gone down during the next several months, we were not able to buy bitcoin because we did not have any money - we were building back our emergency funds that we likely had gotten too close to not having enough reserve funds and we had ended up contributing to our own use of the emergency funds for non-emergencies because we had no other money to tap into, apart from our bitcoin, which was then in a dippening period, which we can see that we had used all of our extra reserve funds to buy the dip.. but the price kept dippening and we had no more money in our reserves after that point.

Quote from: Tungbulu on Today at 02:51:38 AM

It can really be challenging for some people to avoid the temptation of dipping into their backup funds for nonessential reasons or purposes that may not really turn out to be actual emergencies, and this is often one of the biggest challenges some people face when it comes to funds management.

Frequently, we have to exercise some self-restraints, because sometimes our own sloppy cashflow management could end up contributing our dipping into emergency funds for non-emergency situations.. and if we are getting our finances in such a bad situation, we also might not even be able to buy bitcoin during periods in which the BTC price is dippening and continuing to dip.

Quote from: Tungbulu on Today at 02:51:38 AM

It’s essential to have discipline and also a very clear financial plan in order to ensure that these funds remains intact and untouched except of course for the real reasons or an actual emergency occurs and it’s necessary to tap into these funds. And even if eventually the situation occurs where you’ll need to tap into these funds, there should always be a plan to replenish them as soon as possible.

It is indeed also very essential to also learn from any mistakes made during your funds management. When you learn to analyze the situation that led you to tapping or using the emergency or backup funds, it becomes a lot more easier to adjust your budget, investment strategies and even your spending habit so as to prevent such situations from occurring again in the future. You may even consider finding a few additional sources of income or even tightening your budget for some period of time in order to achieve this.

If we strive to learn from our mistakes, then hopefully none of our mistakes cause irreversible damage, even though surely mistakes can set us back from where we could have had been, but if we are learning from our mistakes, then we likely will figure out various ways to protect ourselves in the future in similar circumstances. It is way better when the mistakes are smaller and show us the direction of our needed preparations instead of being mistakes that end up causing a lot of unnecessary damage.

Quote from: Tungbulu on Today at 02:51:38 AM

The overall goal for an effective fund management is often to create or make sure to set up a system that works for you, one that simultaneously offers you the security of your assets as well as the opportunities for growth. It can be a lot more easier to build a solid foundation our long term goals if we learn to prioritize the emergency funds, being more strategic with the reserve funds and of course also having a disciplined mindset, which is of course very important.

Surely, there are some folks who may well get themselves into an emergency situation, and then maybe they end up selling some portion of their BTC, and they might end up shaving off several years of their BTC accumulation progress. Sometimes they might have some lucky events that end up saving them from suffering as extreme of damage, but sometimes they might never be able to completely recover from the damage that they had caused to their own situation due to their poor cashflow management practices.. and surely it can be difficult to avoid such mistakes, even we know that poor people can frequently be tempted to tap into their bitcoin in order to be able to consume, and sometimes there can be value in terms of paying oneself, even when recognizing that there are likely going to be large costs for the choice to pay oneself early.

Quote from: Pi-network314159 on Today at 03:27:06 AM

Quote from: Tungbulu on Today at 02:51:38 AM

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well it can really be challenging for people to dip dive into there bitcoin hodling for unnecessary things but yet people can work it out by self discipline. as i have discovered, the most common scenario that affect most bitcoin investors to dip dive into their bitcoin hodling, emergency fund, backup or reserve fund is addiction. addiction comes in many ways, which includes gambling on sport bet, drug addict, womanizing, clubbing and etc. most times we often neglect this things seeing them as a common thing, perhaps its one of the pioneer of most dip diving into our hodling. a real bitcoin investor should be dedicated and be serious and totally avoid these things to be on a safer side to meet up his target. i am not completely saying that having fund while investing is bad, but there should be jurisdictions to an extent to achieve success. success doesn't comes without determination. some urge will have to die to achieve our goal. there is more to investing in bitcoin than how people sees it. using discretion fund for fun is understandable, but going far as touching emergency fund or selling bitcoin for frivolities is something else.

another thing that makes people to dip into their hodling is because the lack the interest of setting aside emergency fund. a person who dont takes accumulating emergency fund seriously will have no choice than to touch his investment due to some mere incident

The longer that we invest into bitcoin, the more likely that we will be able to increase our standard of living, even with the same income, yet surely there can be a lot of trade offs between attempting to be frugal in order to maximize bitcoin investing or calculating some pleasures along the way, which also might be better enjoyed in moderation rather than our splurging in ways that you had suggested even while we also might be in our earliest of years of building our bitcoin portfolio too.

Frequently, I tend to suggest focusing on accumulating for a whole cycle prior to reassessing, but still some guys want to "enjoy life" while they are still investing, and their decision to "enjoy life" is not necessarily a wrong one or a bad one, even though it may well end up delaying their timeline to get to fuck you status, and surely some of those guys who continuously want to "enjoy life" might not end up getting to fuck you status. sine they are not disciplined enough in regards to deferring their gratification.

Quote from: tiCeR on Today at 11:26:47 AM

Quote from: JayJuanGee on Today at 12:21:00 AM

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Maybe this comes down to the ability to resist and postpone. For some people, who knows, maybe brain chemicals come into play and they can't stop spending, making the wrong decisions, undermining themselves in the process of building wealth over time, which, in all honesty, is not an easy thing to do depending on the circumstances.

It reminds me of losing weight or eating healthy. Almost everyone knows that eating less or less calorie dense foods leads to weight reduction, but it is not the knowledge, it is the ability to execute. This ability to execute could suffer from a couple of factors and for some people it is easier, for some it is harder. To resist short term pleasure is quite certainly connected to brain chemistry. Some people are not exactly wired to be able to handle temptation very well. Wrong brain chemistry interferes heavily with proper long term planning.

In finance this could play out in both ways and let's use bitcoin as an example. In a volatile environment, the temptation to sell when bitcoin turns red is bigger for some people than for others. The temptation to sell when it is up 5x or 10x is again bigger for some people than for others.

The extent to which deferring gratification is innate or if it can be learned may not be easy to decipher, since you are correct, some people have learned very bad habits from their youth, so they never really figure out how to defer gratification in meaningful ways, yet I still think that such skills can be learned - even though some folks are quite ingrained in their ways, so it would e quite difficult to teach people how to defer their gratification, and sure the other extreme can be to defer too much, so there is likely a balance in regards to still enjoying life while deferring gratification.

Quote from: tiCeR on Today at 11:26:47 AM

I believe, and your opinion would be interesting here, that the ability to resist selling in times of negative prices and the ability to resist in times of positive prices is lower for the same kind of people. This means there is a category of people that is limited in the magnitude of the ability to resist selling in both directions, narrowing down their scope tremendously to build a portfolio over time.

There may need to be some kind of a need to create a mental block about not looking at the price, and so each of us has to choose an amount to invest into bitcoin so that we are not overly concerned about price movements, and yeah, I know that it is easier said than done since even if we might come up with some reasonable weekly investment amount, and we might not even get tempted to tap into it for the first whole cycle, yet if the value ends up going up 5x from the amount that we had invested into it, then depending on what other resources we have, we might be tempted to tap into it.

Sometimes we might purposefully make sure that we have other investments so that we are not ONLY exposed to the bitcoin price.. especially since maybe within one cycle we had ended up investing around 6 months of our salary into bitcoin, and we also have established 3-6 months in an emergency fund and various reserve funds.. so the emergency fund portion is about 3 months, and the reserve fund portion is also 3 months, so if we have put 6 months into each (backup funds and bitcoin), yet if the bitcoin portion had grown up to 5x, which would then make it 2.5 years worth of expenses, then we might be suddenly be feeling rich on the bitcoin portion, even though we had invested similar amounts into the bitcoin portion as we had put into our various back up funds....

At that point, we may or may not feel some bit of imbalance, especially if we know that the bitcoin portion could end up correcting back down 75% or more, which would bring it back close to the same amount of our back up funds, and so we might not know for sure how to deal with the perceived imbalance.. and perhaps we could continue to ONLY invest into bitcoin or we could inject new money into some other assets that attempt to offset our bitcoin investment and to help us to feel more psychologically comfortable with whatever portion we have in bitcoin as compared to what we have in non-bitcoin assets.

I am not going to proclaim that I know the solution since there can be disadvantages in regards to feeling needs to diversify too early, since such diversification may well end up taking away from the bitcoin's performance, yet some form of diversification still might become a more prudent thing to employ in order to attempt to deal with concerns that we might have about our level of exposure to bitcoin and the vulnerability that we have when more and more of a portion of our networth is in bitcoin.

Personally, I do tend to feel better when I consider that a lot of my bitcoin value has come from bitcoin appreciating in value and not from my having had put more value into it, so maybe there is some kind of value, since I can look through my various records and consider how much value I have placed into various investments, and then that might make me feel comfortable if I can see that the bitcoin's disproportionate value as compared to other assets is in regards to its disproportionate appreciation rather than to my having had overly invested into it... yet if I feel that I want to take back some of what I had invested into it, then surely it is much more comfortable to do so when the holdings are in several times profits rather than when it is not.

Quote from: tiCeR on Today at 11:26:47 AM

They feel more fear when it goes down and rather sell, and they feel more urge to take profit when it goes up. Now I was only talking about selling, include buying into that equation and you see how complex it can become for some people, not for all of course.

In the abstract, it can be quite difficult to describe how any person should deal with feelings of being overallocated to bitcoin, since if we still feel that we don't have enough bitcoin, then it hardly makes any sense to sell, even though it may be possible that we take our new money and we invest into other asset classes (such as properties, stocks, bonds, commodities, cash/cash equivalents, rather than selling our bitcoin... .. and some folks might consider that if they just shave some off, then they won't feel so overallocated in bitcoin, so they might even consider that they are going to continue to invest into bitcoin, but at the same time they are going to sell some in case the price drops, which truly could result in selling from one hand and buying from the other, so it might not make a lot of sense to sell BTC prior to accumulating enough or more than enough, but guys are going to try to justify what they are doing, and even what they end up deciding to do might have a certain amount of internal contradictions contained therein.

Quote from: tiCeR on Today at 11:26:47 AM

There are of course other categories and you have those who never sell, but not because they are building their BTC stash confidently or rationally, but because they are greedy.

Yep.. if they think that they can sell and buy back cheaper, that sounds like a good idea, if it might end up working out in practice.... but sometimes (or perhaps frequently?) guys end up selling too much too soon and they do not end up achieving the objective of being able to buy back cheaper...and they would have had been better off to just stay focused on ongoing accumulation even if they might have had some periods of slowing down in their BTC accumulation rather than selling and then waiting to buy back cheaper.

Quote from: tiCeR on Today at 11:26:47 AM

In the case of bitcoin this would have paid off most of the time, but this is because of the unprecedented upside potential bitcoin brought about. In the shit coin era in 2017 some people did the same and they lost it all while they felt rich on paper. That is why building wealth over time for the "never sell because of greed" category could run into problems as well if they play the same game with other assets.

There are a lot of times, besides 2017, where guys sold way too much too soon, and the price did not end up coming back or at least when it came back, it ended up playing out much differently than expected, so their selling too much too soon ended up having a lot of negative ramifications to the bitcoin portfolio and their timing and/or ability to get to fuck you status.

Quote from: tiCeR on Today at 11:26:47 AM

To sum this up, I think it is not the rules or principles that people don't understand most of the time, but their own psyche that makes them deviate from the plan. I think we all have an area in life where we can empathize with that.

Part of the problem is that it is almost an impossible task to actually get the trades correct, so even if guys consider that their trading is conservative, they may well end up screwing up their whole approach because they may still be in the state of BTC accumulation, but they think that selling can help them to accumulate more and faster, which many times does not end up working out with any major advantages over just staying focused on a more sure path of ongoingly accumulating bitcoin without fucking around with trying to trade it.

Quote from: tiCeR on Today at 11:26:47 AM

Last but not least and this is bitterly true, there is also a lot of stupidity in laziness in finance. I didn't want to exclude this in any way. Cheesy

But I wanted to add to the spectrum that I believe for some people it is really hard because of the way they are wired for whatever reason.

The buying and the holding path is likely easier, yet so many guys will conclude that they are able to outsmart the easier path, and so they add a bit of complication in order to outsmart the basic move and to be able to outperform the basic move, and they might even have success on several occasions prior to their getting screwed (lured themselves) into a situation in which they had ended up selling way too much of their BTC holdings too soon.. even thinking about recent incidents in around October 2023 when the BTC price was around $27k, there were guys either waiting for BTC prices to drop to the lower $20ks, and/or there were guys who thought that they were geniuses when they sold most if not all of their bTC stash in the mid to upper $30ks figuring that they would be able to buy back, and surely they might not have had realized that they weren't going to be able to buy back until the BTC price had gone over $50k in February 2024..but sure they may well had continued to hope for BTC prices to return or they might have had bought back in at higher prices. There are a lot of these kinds of examples in bitcoin where the BTC price goes shooting up and maybe it comes back later, and maybe it does not but guys think that they are smart and sell too much too soon and end up with little to no bitcoin.. and at least way less bitcoin than they otherwise would have had if they had not tried to be so smart.