People form emergency funds when they see that a bad situation will arise. Because in the present time, people do not want to expose their investments to any danger, so they give the most importance to prudent income and emergency funds and follow the DCA method every week. As a result of regular Bitcoin purchases, they are ready to earn more financially so that they can make more money with Bitcoin investments. An investor never neglects his investment, because Bitcoin investment is long-term, so it is most important to form an emergency fund to manage it.
Speaking of emergency funds, what's the best way to make sure I don't spend my Bitcoin prematurely?
My idea is to diversify my savings. I shouldn't invest all my money into Bitcoin. I can put some funds into other profitable investments that aren't as strictly a "hold" as BTC. If I use this strategy, I might not need a dedicated emergency fund because I'll have other readily available assets. This means I can use these other funds instead of touching my Bitcoin.
This is not a good idea. I don't know how you intend to replace Emergency funds with diversified investment of which I still don't know
youyour area of interest when it comes to diversification. A real bitcoin investor makes a proper arrangement for a "cash" availability known as emergency funds. This money has to be made handy and accessible at all time if
yearyour hope to successfully hold your bitcoin for a long period of time. A diversified investment into shitcoins or altcoins is not a secured money since you may even loose the entire money which you diversified into shitcoins even before an emergency arises. Again, if you mean to diversify your investments into other areas outside crypto currency, let's say you diversify into real estates (which is one of the safest alternative), you may not have a quick sale in the event of emergency thereby defeating the goal for an emergency funds.
As a newbie who plan to succeed in bitcoin investment, you must not play too smart with your funds. Your bitcoin needs cushion and that is why we advocate for an emergency funds. Emergency situations don't announce it's occurrence, so there's no way you would possibly get a buyer (i.e if you invest into real estates) as at when necessary to take care of the unforeseen circumstances.
When setting up your investments strategy, your cashflow management is very important, with your discretionary income, make provision for emergency funds and back up funds and then invest by DCA in a less stressful manner. This will help you to successfully HODL without panicking when volatility sets in or selling prematurely due to emergency situations.