Hi JJG. I wanted to ask a question according the acummulation of Bitcoin and this thread is I think the best for that. I wanted to ask tha We should invest Big amounts of Money at A big for example $5000-10000 or we should break down this amount and DCA it over the course of a few years. I believe investing it at once is a riskier choice but can give you more profit than DCA. But DCA is Not Very Risky and requires Time and Discipline. What would you say a person should choose if they want to Increase The value of their money The Most. Thanks
No one can really answer the question for you.
Let's say that you are pretty new to bitcoin and you had been getting started by investing from your income for the past two months at a rate of $100 per week, and so as you are getting used to investing $100 per week, you start to look at other funds that you could put into bitcoin, and yeah, if you have $5k or $10k available then you have quite a bit of money that you could invest at once or you could defer it by time (DCA) or defer it by price (buy on dips that might not happen).
Surely you should consider all three categories of 1) buy right away, 2) defer by time DCA and 3) defer by price, buy on dips.
you could divide the amount into three and use all three parts, or maybe you consider that you are already investing $100 per week from your income, so you will only divide your lump sum into two parts.. 1/2 to buy right away and the other half for buying dips.. Dips that might not happen.
So for sure you run a risk that the price might go up if you do not buy right away, but then if the price drops then if you have no money to buy then you might feel stress from that, so you might feel better to hold some money back for buying dips.
I cannot answer for you.
There can be some people who come to bitcoin and they purposefully might plan their next 6 months with a budget for investing and sure their budget may depend on if they have lump sum funds and/or if they just have income from their periodic pay.. so they might combine the two in order to figure out their 6 month budget, and they might not want to overly defer if they are worried about the BTC price going up and if they don't have very much bitcoin. On the other hand, if they think that the price might be coming down then they might hold back either for buying on dips and/or to DCA their buys.
Some guys might know that through the year, they may have 2-3 times per year that they receive extra pay, so that money can be treated as a lump sum when it comes in and considered in the three categories.. however you like.
Many times people think of DCA as a way of deferring by time, but really if all that you have available is the income as it is coming in, then you are not deferring by time, you are investing as much as you are able to invest whenever you get paid... Of course, sometimes you have to make sure that your expenses are sorted out before you can determine how much you have in your discretionary funds and when that money is freed up and/or available for buying bitcoin.
I personally think that guys should be building their back up funds as they are investing, so it can take some time to make sure that your bitcoin investment and your back up funds are at least 3 months of your expenses.. so if a guy invests everything into bitcoin without an emergency fund, then the bitcoin serve as an emergency fund, which is really risky in terms of potentially entering into a situation where the guy has to sell some or all of his bitcoin at a time that is not of his own choosing and mostly due to his own errors in not establishing and/or maintaining a sufficiently size quantity of back up funds that may well need to be in local cash..some form that is generally available and liquid and not too volatile.