In simple words, if someone wants to invest for a long term or buy in dip and hold, then the total income must be divided into 3 parts. 50% daily expenses + bills and 20% Emergency & Reserve fund, that is, first complete the emergency, then create a reserve and the remaining 30% can be invested and this is the safest long-term investment plan. Now if you want, set up a DCA strategy with your profile for dip buying or long-term holding. If you keep it like this, it will be clear which money is for survival, which is as a buffer and which is for real investment. There are also many other strategies for investment, but this is the one I like the most and I consider it the safest.
You are not in the position to determine how much is your discretionary income but your basic needs and weekly expenses will determine it. If you calculate how much is your basic need and monthly expenses it might be problematic for you to know the right amount of money that is your discretionary income and take not that your discretionary income is what you use to invest in bitcoin and build your emergency funds and other backup funds.
It's not the amount that we love to invest with that we must use to invest in order to avoid using beyond your discretionary income to invest in bitcoin because it will be a waste of time and gambling if after investing with the amount you feel is cool and you end up selling part of your bitcoin because you couldn't meet up with your basic needs and monthly expenses. This is why proper planning and right discretionary income should be figured out before using the money to buy bitcoin.
abaeze needs to figure out his discretionary income first - that is how much money is left after taking care of us basic expenses.
Sure it is possible to just pick random amounts and then it all works out, but many folks are not going to be served by such a gambling kind of an approach.
It is true that some expenses are more basic than others, so sometimes discretionary income could change based on our categorizing of our expenses whether our expenses are basic or discretionary.. If our expenses are basic, then we account for those first.
Once we know our discretionary income then we can potentially allocate some of that discretionary income or even all of it to bitcoin investing, since if we have determined that it is discretionary income, then that means that we can do whatever we want with it including consume, invest and/or hold it as back up funds, yet if we make mistakes, then we might end up having to unduly suffer because of our mistakes, which is part of the reason for investing in the future and also another reason to create and maintain back up funds.
There is no exact formula, yet if we make mistakes and we do not have enough of a cash back up or if we invest too much or too little into bitcoin, then there would likely be consequences for our mistakes.
I think the way you've outlined your points are just spot on. Randomly throwing money into investment without a particular structure may not always have a specific outcome, sometimes it might actually work out for you, but most people who actually rely on chance rather than a solid plan mostly end up struggling with their investment.
Your point about distinguishing between basic and discretionary expenses was also very much noted. In a situation where a person mistakes or considers a necessary expense to be discretionary, they could potentially end up overinvesting and then later on, struggle to meet up with Essentia expenses, which can be a very tough situation any investor would find himself. And this here is the reason why building clarity around spending categories is just as crucial as deciding how much is okay for you to invest with.
In addition to this. While it's true that discretionary income gives folks some flexibility, it's worth noting that discipline is what makes the difference. The fact that one can actually have the freedom to allocate 100% of their discretionary income to accumulating Bitcoin (which is aggressive enough) doesn't mean that they should always do so. Some folks might actually consider setting aside some part of their discretionary income as a cushion to cover some upcoming short-term expenses and needs, while investing the rest regularly and the investment would still be growing.
Another valid point that should also be noted is adaptation. Life isn't static, change is constant and people can experience constant changes in their income, their expenses, opportunities and even emergencies. When folks prioritize having a structure for backup funds and investments, it means that it's possible for them to potentially adjust without actually feeling that urge to panic-sell or to acquire loans.
It's true that there's no formula or strategy that's flawless, but discipline, adaptability and of course a well thought out plan can go quite a long way in ensuring that Bitcoin investing fits in an individual's overall financial situation/health.