If you have discretionary income, then you should never wait for an emergency fund. As you said, the emergency fund is set aside before the discretionary income. If you have created an emergency fund without really investing, then this is the wrong approach. Because if you do not already have an emergency fund, then you can create an emergency fund along with investments. If you create an emergency fund along with investments, then you are not missing out on the opportunity to buy, you are not falling behind the goal of building your portfolio. If you wait to create an emergency fund without investing, then this will be a very wrong decision for your investment.
You may be confused, discretionary income is the amount of money that we do not need very much. For example, even if this amount of money is lost, we will not suffer much loss. The amount of money that is left after deducting all your expenses is the discretionary income. If you invest with discretionary income, you do not need this amount of money very much. Discretionary income is very good for long-term investment.
If a guy is building up his emergency fund, then he is taking that money from the discretionary fund. It is money that is after the expenses have already been determined and/or removed... so yeah, all back up funds, whether emergency funds or reserve funds are built from discretionary funds.
you are correct JJG and this your explanation is very simple and very clear, for easier understanding, because alot of guys have argued this particular matter where some said emergency fund and backup fund are built from someone main source of income and not from discretionary income which is not correct. If an investor is building up his or her emergency fund and backup fund the investor is taking the money from his or her discretionary and not from his or her main source of income, discretionary income is a leftover money after you must have settled your basic needs either for the week or for month, that's to say from your discretionary income invest in bitcoin, from discretionary income you build up your emergency fund and backup fund and not otherwise.
Discretionary funds can also come from anywhere, and because they can be used for a variety of purposes, you can choose what to do with them. This makes investing more flexible for people to explore, and all of these factors will give everyone enough financial security. Therefore, everyone needs to know where their investment sources and funds for sustenance come from, as both are crucial when following the investment plan in its entirety, because people need to realize that discretionary income is also a brilliant idea. Discretionary income not only helps you build emergency funds but also investing funds.
I think you're correct here discretionary income can come from any where it must not only come from your main source of income, that's why it's refer to as a leftover money after you must have settled your basic needs and expenses either for the week or for the month or money you won't be needing anything soon. So Any other money that didn't come from your main source of income can also be refer to as discretionary income If you're not making use of them anytime soon, let's say your friend dashed you some money or you won money in gambling and you decide to invest in bitcoin that's fine since you won't be needing the money anytime soon
or you can also decide to allocate the money to your emergency fund or back up fund, so at that state that money can be refer to as discretionary income. I believe JJG will throw more light on this matter for more clarification, but I also believe that we both are on the right track.