Emergency funds is very much important for the survival of your bitcoin investment, so in a situation where you are just starting from the scratch, it is best to build your Bitcoin portfolio and your emergency funds together, but once you notice that your emergency funds is big enough to sustain all your financial needs for the next three months, you can stop adding to it and start investing aggressively in Bitcoin because by then, you now have the full financial backings of your emergency funds to go all the way in your investment, so what am trying to say is that a proper money management skills is greatly needed if you want to be successful in your Bitcoin investment.
Emergency funds are certainly necessary to insure against financial issues you may NOT KNOW ABOUT, but unless you spend the major part of your money there and invest very little your bank account will look very little bigger in terms of Bitcoins. A good balance would be to start out aggressively with your investment, and yet saving concurrently a little in case of emergency. As soon as your emergency fund is sufficient to sustain you a couple of months, you will be back to placing more emphasis on aggressive investing. It simply comes to proper management of money and prioritizing when to change priorities. Lacking the balance, one can either take excessive risks or lose on possible growth.
When it comes to aggressive investing, it is important to first understand your risk tolerance. Some people can tolerate losing 50% of their money, while others lose 10% of their money and get emotionally destroyed. ‘Aggressive investing’ means taking more risks for higher returns. I think it does not apply to everyone in all situations. It is also wrong to think that investing means being aggressive. If a new investor enters a volatile asset like Bitcoin without any plan, it becomes a kind of gambling for him. Smart investing is not just about looking at the profit side but maintaining the right balance of risk-return. Therefore, one should take time and understand the risk-taking capacity and build a portfolio step by step. So that both peace of mind and profit are maintained.