I think we’re over exaggerating and over emphasizing on this Scenario, it’s just as simple of knowing when to stop if we’re choosing to be aggressive and knowing when to be aggressive financially, I think there is nothing absolutely wrong if we want to be aggressive and there are times we can be aggressive and there are also times we might not be aggressive, it depends on when we have more discretionary income to be more aggressive, because there is no way we can be aggressive when we don’t have a discretionary income, and we should be also smart and intelligent enough to know when is the right time to be aggressive and when it’s not the right time to be aggressive.
The truth is that buying Bitcoin aggressively is not a bad idea if you are doing it from your discretionary income, it is very good, especially if you are still far away in your accumulation journey, where the problem usually lies is doing it outside your discretionary income, because by doing that it smells troubles in your ability to hold for a very long time.
Another thing is over doing it without sorting out your basic needs first.
To buy aggressively, we have to depend on our financial situation. If we buy without depending on our financial situation, then we may put our holdings in danger later. For example, if we invest with our emergency money, then if we need that amount of money, then we may have to sell our holdings. So it is better to be aggressive depending on our financial situation.
Let me tell you in a little simpler language. As you said, invest aggressively with discretionary income. If you invest with the entire amount of your discretionary income, then you will not be able to create an emergency fund. If your emergency fund is already created, then if you invest with your entire amount of discretionary income and then you have any kind of financial crisis, then you will have to take money from your emergency fund. But it is never right to take money from your emergency fund for these small financial crises. So
it is always better to invest 5 to 25% of your discretionary incomeIf a person is investing into bitcoin, they can invest up to 100% of their discretionary income, but if they make a mistake then they are being too aggressive. Therefore it is good to hold back.
If a person decides to invest somewhere between 5% and 25% of their income into bitcoin, then they still cannot go over 100% of their discretionary income, so presumptively anyone investing 5% to 25% of his income into bitcoin is working within his discretionary income.
It seems pretty whimpy to only invests 5% to 25% of your discretionary income. .but guys can do what they like, even whimpy things.
Many folks struggle to be able to save/invest 10% of their income. so presumptively they are saving/investing from their discretionary income, and someone who saves/invests 10% of his income might be saving/investing 60% to 80% of his discretionary income... perhaps.
Sometimes we might need to talk about an example. Maybe a guy makes $2,000 a month, and he has around $1,000 a month in basic expenses, and then he might have another $300 a month in discretionary expenses, so then he might have $700 a month that is left, and he might put half of that into his bitcoin investment around $350 and the other half of $350 into his back up funds. In that case he is investing only 17.5% of his income into bitcoin, but he is investing 35% of his discretionary income, and perhaps once his emergency funds are up to a high enough amount, then he might invest $700 per month into bitcoin, which is 70% of his discretionary income, but only 35% of his regular income (which might be a real hard goal to reach since many folks struggle to invest/save 10% of their income).
Yeah, I totally get where you're coming from and honestly think you're right about your perspective. The key isn't just about saying invest a certain percentage of your income, the real question should be, just as you rightly noted, what is really left with you after covering all the basics. The real decision making happens with the discretionary income. Some could decide to put 100% of that into accumulating Bitcoin, but he does this, there'll certainly be no room left for Emergency fund or unexpected things, and yeah, that could be considered to be leaning too far into risky, and in such a case, it'll be smarter to just hold back a little and readjust your approach.
I also believe that the example you gave about the guy earning $2000 income a month really helps to further make it more concrete. If $1k goes to essential expenses, $300 goes to some other things that are actually discretionary, which of course leaves him with around $700, now the wise thing to do in this scenario would be to split it into two equal halves, one going to Buying Bitcoin and the other half goes into backup funds. This way, the approach is well balanced because this shows that he's simultaneously building his future as well as a safety net to fall back on, should incase an emergency occurs unexpectedly. And when his emergency funds is strong enough to carry at least 3 months worth of his living expenses, he can then make the necessary adjustments and even if he invests all $700 into Bitcoin, it wouldn't be seen as reckless any longer because he already have a safety net, should incase something unexpected comes up, rather, it could be seen as taking advantage of his financial stability.
Yeah, you're absolutely correct that a lot of people finds it hard to be able to save even up to 10% of their income. So if an individual decides to put in 17.5% into Bitcoin, when you look at it at first, it might seem like a really small amount, but when you also consider the fact that it is around 35% of his discretionary income, then the whole picture changes. That's far from being whimpy, on the contrary, it's a very disciplined approach.
Then maybe it makes more sense to look at it from the angle of “how much of your free money is safe to commit” rather than just saying 10% or 20% of income. Someone might only be putting 15% of their salary into Bitcoin, but when you check, that is actually 40% of what they have got left after bills, rent and food. That is a big difference compared to the way most people think about it.
The problem comes when people throw in 100% of their free money with nothing kept aside for emergencies. Sure, it sounds brave, but when life hits with hospital bills, rent hikes, or job issues, they will have no choice but to sell at the wrong time. On the flip side, being too careful and only stacking a tiny amount when you could afford more ends up slowing progress unnecessarily. That is why having that split some into Bitcoin, some into backup funds actually makes the whole plan workable. You are still growing your stack but also protecting yourself from being forced out of the game.