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You are right, the guys consistent $50 per week habit already gives him a strong DCA foundation, so the main decision lies with how to structure that $5k....
I agree that the main focus is the $5k funds, but the $50 per week is not an automatic decision that he should divert all of it to BTC in contrast to keeping some of it or all of it still going to his historical investments. Nonetheless, I do consider that the most compelling answer would be to transition the $50 per week towards bitcoin - yet there could be some unknown facts that might cause him to weigh the considerations differently, such as if he were to have tax advantages with the account or if his employer were matching the funds, and surely I had not mentioned those kinds of possibilities that could exist with the other investments that he had been doing.
Absolutely, that is a thoughtful take because while Bitcoin may seem like the more compelling option right now, it is wise not to overlook the potential benefits tied to his existing investments. Things like tax advantages or employer matching could make a strong case for keeping some of that $50 allocation where it is....
A transition doesn’t have to be all or nothing, even redirecting part of it toward Bitcoin while maintaining the advantages of his current setup could strike a smart balance until he has all the facts laid out.....
Of course, there are odds that the BTC price will not dip that far, and if the BTC price keeps going up are you going to adjust the prior amounts? Since you are presetting the amounts, you likely would be setting from our current price or perhaps from the price in which you bought BTC last.. but if the BTC price keeps going up without any of your orders filling, are you just going to keep your buy orders in place. Right now a 30% dip from here at $118 would take your lowest automatic buy order to somewhere in the $82k price range, which surely seems low from here, but not outside of the realm of what could end up happening.. but yeah there is also a risk that none of your buy orders would get filled, ever.. even the one going down 10% (which is around $106k), and so then you don't have shit for bitcoin, yet at the same time, you have $1,500 i cash that you had not used... By the way, I am maybe using stronger language than I need, and holding back 30% for buying on dips is not totally unreasonable... .
You bring up a valid point, If BTC doesn’t dip and just keeps climbing, those preset order, especially the deeper ones like at $82K (which would be a 30% drop from the current $118K range) may never get filled. And yeah, that would leave you sitting on $1,500 in cash while the market runs away from you.
That’s why I think it is risky to go all in on just waiting for dips. A better approach might be to split the $1,500 maybe deploy some immediately, say 40 to 50%, then ladder the rest down for potential dips for example, 10% at $106K, 20% at $96K, 20% at $88K...... That way, you are not completely out if Bitcoin keeps climbing, but you are also covered if it retraces.....
In this kind of market, flexibility and balance are everything it is not just about timing the bottom but staying in the game......
Exactly. If you are specifically that person, you likely have to commit to something, since even non-committing has consequences, so it is likely better to commit, even if like you mentioned previously, some of the money, could be put into some kind of a reserve fund that would then allow considering what to do with that part later, even if it is put into a reserve fund it is held in cash or cash equivalents, unless you actually decide to put it in to some kind of a fund that locks it up for a period of time.
You are right. Whether you invest now or wait, both are decisions with impact. It is smart to commit part of it and keep the rest in a flexible reserve like cash.....That way, you are not stuck, and you still have options when the time is right......
Surely people who have lump sum amounts have more options than people who are completely reliant on their discretionary income. Of course, some young people, and even some people who have never gotten into any practice of investing, they might not hardly have any lump sum amounts available, and surely I am presuming that even folks without any investments, they still may well have 2- 6 weeks in cash, since there are likely not very many folks who completely operate on $0 in extra money and 100% wait for their paycheck.. and even though surely there are people who live like that, it seems to me that we should at least aspire that we are trying to make sure that we are not that kind of a person in the future, even if we might have had lived that way in the past... just as a basic safe living style, we likely need to try to keep a couple of weeks of cash as our back up and extra funds, even if we might spend 100% of our paychecks within the period that we get them.
Absolutely, having a lump sum definitely offers more flexibility, but those relying only on discretionary income aren’t without options either..... Even if someone doesn’t have investments yet, having at least 2 to 6 weeks worth of cash saved is a good starting point. It is about building that habit of setting something aside, no matter how small to avoid living paycheck to paycheck long term.....The goal is progress, not perfection.