Investors create emergency funds so that they can maintain continuity in their investments. People can experience economic downturns at times and when a person experiences an economic downturn, they will naturally not be able to invest in Bitcoin continuously. But those who are very serious about their investments never want their investments to be irregular no matter how much economic hardship comes in their lives. That is why when they have a lot of money, they keep a part of that money aside and consider that part as an emergency fund. However, it may not be possible for everyone to create an emergency fund because not everyone's financial situation is the same or everyone's income is the same. Those who create an emergency fund and invest will undoubtedly be much ahead in reaching their goals, but those who cannot do so try to reach their goals.
It doesn't take a lot of money to build an emergency fund. If you want, you can build an emergency fund over a long period of time along with investing. For example, you can invest 80% of your discretionary income and create an emergency fund of 20%. You can build an emergency fund gradually and you need to keep 3 times your stable income in the emergency fund.
Emergency is not built differently dear, it is estimated from your income after you have removed funds for your basic needs and investment money. You are at liberty to estimate what you should use for emergency. Don't make it look complicated that one have to build emergency funds separately before even getting started with Bitcoin investment. As long as you have discretionary income, you don't have a problem. investing in Bitcoin, start with any convenient amount and then keep the rest as emergency fund to cover for cases of emergencies where you need to spend money not planned for when you are holding your investment. This is the whole idea of emergency funds.
If we go with the idea of building emergency funds separately, people may think that there must be a fixed amount you must have as emergency fund before buying Bitcoin. This can even make some people give up the idea of buying Bitcoin thinking that they may not be able to get the emergency funds. We must make it clear that emergency funds vary from individual to individual. For instance, someone married and with children may need bigger emergency funds than a single person who have little responsibilities. Just check your spending habits and your cashflow to get idea of what your emergency funds should be and you will be fine.
These explanation of building an emergency fund are not very clear. Generally, most people will start their investment into bitcoin and they are likely to have some sort of a cash cushion that they maintain, and it might be 2-6 weeks of their income or 2-6 weeks of their expenses.. so that could be considered as their emergency fund.
The emergency fund is continued to be built up by putting more value into it, and that value comes from discretionary income. So the discretionary income can be used to buy more bitcoin, buy other goods/services that are wanted and/or used to continue to build the emergency fund.
There are several of us who seem to recommend that the bitcoin investor might be o.k. to build the emergency fund up at the same time that he is investing into bitcoin, so perhaps a person would minimally want the emergency fund to get built up to 3 months of his expenses, and it could take a year or more to get the emergency fund and the bitcoin investment to a point that they are each 3 months of expenses.. and even though the bitcoin investment may well continue to be built up after 3 months of expenses have been invested into it, there can also be various other more flexible back up funds that also continue to get built up and perhaps used from time to time, yet the other back up funds that are additional to the emergency funds will tend to be more flexible as to when or how they might be used.
Of course, there is discretion in regards to how anyone might build up their various back up funds and even their bitcoin investment, and surely it would be a good practice to make sure that emergency funds are not easily used absent an actual emergency of unexpected loss of income and/or increases in expenses, and if other back up funds are kept, it well could be the case that a person invests into bitcoin 15-20 years or more and never has to tap into his emergency funds, since his various other finances tend to be enough to take care of any fluctuations in the unexpected lessening of income and/or the increasing of expenses.
Keeping your Bitcoin in an exchange is really an unwise thing to do because if anything happens to that exchange in question, like hacking or internal theft, or like in the case of FTX, just know that you asset is gone, that's why it's advice to store your Bitcoin in a self custodian wallet like electrum where only you have access to, and one funny thing is that, most investors have heard of this statement before which is not your key, Not your coin, but they really don't understand what that statement mean, but in essence of all am trying to say is that keeping our Bitcoin in an exchange is a terrible mistake we should avoid by all means because once that exchange goes down, at that moment, your asset are gone.
So if Bitcoin.com97 was saying that every week he was going to be buying $10 worth of bitcoin, then how frequently are you suggesting that he withdraws his bitcoin from the exchange? Every week? month? quarter? twice a year? yearly? or something else?
If Bitcoin.com97 sticks to $10 per week, then monthly withdrawals would be $40 to $50 each time. Quarterly would be around $130. Twice a year would be $260. Yearly would be $520. What levels of withdrawal are you recommending Futurexxx?
Keeping your Bitcoin in an exchange is really an unwise thing to do because if anything happens to that exchange in question, like hacking or internal theft, or like in the case of FTX, just know that you asset is gone, that's why it's advice to store your Bitcoin in a self custodian wallet like electrum where only you have access to
FTX is very big black swan event from a centralized exchange but you can lose all your money without a big case like FTX. Fortunately, FTX users started to get compensations from the exchange but in most cases of hacked exchanges, scam exit ones, bankrupted ones, you have to assume you will lose most or all your money.
It's very unrealistic to think that after a blackswan event, you will get full amount of your fund or most of it back.
and one funny thing is that, most investors have heard of this statement before which is not your key, Not your coin, but they really don't understand what that statement mean
They can understand it but they did not mind to practice properly according to security advice. They naively thougth that they will be well, and practiced carelessly until they lost money but at the accidental time, it's too late as Bitcoin transactions are irreversible. What lost is lost forever and can not be reversed.
So if Bitcoin.com97 was saying that every week he was going to be buying $10 worth of bitcoin, then how frequently are you suggesting that he withdraws his bitcoin from the exchange? Every week? month? quarter? twice a year? yearly? or something else?
If Bitcoin.com97 sticks to $10 per week, then monthly withdrawals would be $40 to $50 each time. Quarterly would be around $130. Twice a year would be $260. Yearly would be $520. What levels of withdrawal are you recommending BlackBoss_?
Ever since Centralized exchanges have become the primary targets for hackers,it unwise to save your Bitcoin assets in an exchange. Most Centralized exchanges that have been hacked in the past has been finding it difficult and are unable to refunds Users assets lost under their watch and as such the User asset is lost.Centralize Exchanges should be used to buy Bitcoin and after the purchase,the user should immediately move his BTC to his private wallet where his asset is safe and secured from future hacked. Sometimes people choose to stored their assets in CEX because of avoiding little fees charged from moving their assets into their private wallet of which I find it too risky because that period of keeping your assets in CEX, what if the exchange was hacked.So it's better to pay for the transaction fees than putting your valuable assets at risks.
You believe that the ONLY cost of moving coins off of exchanges is the transaction fees? What about the cost of having a bunch of small UTXOs? Do you put any importance in regards to managing UTXO sizes? and/or questions of future transaction fees?
So if Bitcoin.com97 was saying that every week he was going to be buying $10 worth of bitcoin, then how frequently are you suggesting that he withdraws his bitcoin from the exchange? Every week? month? quarter? twice a year? yearly? or something else?
If Bitcoin.com97 sticks to $10 per week, then monthly withdrawals would be $40 to $50 each time. Quarterly would be around $130. Twice a year would be $260. Yearly would be $520. What levels of withdrawal are you recommending Cossyblack?