Even though an investor doesn't have a good income source to keep a reserve and float funds, it is okay, but the investor should always make provisions for emergency funds, even if he has to reduce the money he will be using to accumulate bitcoin weekly or monthly just to build up emergency funds. It is important to have emergency funds when investing in bitcoin so that if any emergency happens, you will have what to use to settle the emergency and not depend on your bitcoin portfolio to solve it.
Exactly one of the reason I strongly preach against lump-summing as a formidable technique when accumulating bitcoin. Lump-summing could lead to aggressive accumulation that may affect other areas of your finance. People should always know that, inasmuch as your investment is necessarily important because it takes care of your long-term goals, there are also short-term goals one needs to meet, it could be from getting groceries to paying some bills at home.
When one adopts an aggressive pattern of investment, or should I say an over aggressive pattern of Bitcoin accumulation, through lump-summing, DCAing or any other accumulation strategy, one can easily forget the need for these short-term goals which are also important and immediately necessary for you to take care of them. Somee invest all their money without seeing the need to focus on these short-term needs, without even considering them as they prioritise their investment over every other thing.
Asides investment, Daily needs will arise, weekly needs will arise and there'll always be monthly bills to pay and most certainly, Emergencies will arise sometime in the future and all these needs to be well prepared for, and being too aggressive will never give you time to consider these facts and when eventually these needs comes up, they run to their investment, maybe take out the profits, (which isn't always the best thing to do in an investment
See JJG's Power of Compounding Theory and it might perhaps give more insight to why it's a bad idea to always take out profits) or they ahead to sell a portion of their investment to sort out these things and sometimes at an unfavorable and unreasonable prices, due to lack of adequate preparation for these events.
The second part that you kept that you will use to invest later, what's the logic behind it? Since you are not doing monthly or weekly DCA purchase, why didn't you invest it with the first investment, because I the best time to invest was yesterday. If you are doing a DCA on weekly or monthly basis it would have been a different case. The one you kept to invest later, what if procastination sets it and your attention is diverted and the money is used for something else. Or are you waiting for more dip before you can use the second part to invest? Waiting is dangerous, invest when the money is available and don't wait for a later date. You already had your emergency funds secured and that's good enough, the one that's left for investment, should go into investment immediately without delay. If we wait for tomorrow we might regret, wishing we entered all in when we got our first buy.
Have you also thought about the possibility that the reason he is feeling reluctant to invest that second part is because he could maybe feel he's being too aggressive in his accumulation and decided to maybe slow down a bit by also considering other necessities.
Or would you rather prefer he invested everything and when the need for that something else comes up and then he's forced to sell few days after buying?
If an investor is using the DCA accumulation strategy, and he chooses to DCA on a monthly basis, and this person lives off of $500 monthly, It sure wouldn't be a great idea to put the whole thing in your investment portfolio and neglecting other needs.
Rather than putting everything, I believe a more suitable approach could be to divide the monthly earning into 3 halves, one goes to your investment, the other goes to your Emergency funds and the last half you can save for the bills and needs that may arise, at least this way, even though some may think that you're not accumulating enough BTC on a monthly basis, but at least your sure that your investment is safe and you've made provision to cover other expenses, so something going all in isn't really the best approach.
I understand your point regarding on that situation but actually the emergency fund should be the less option to be chosen by some individuals since they might doing the wrong thing on their investment since once they touch that funds for sure every time you think you want to buy something you will always resort to take that money and use it for unwanted things. That's why its better to forget about the emergency funds and always use your extra funds on investment. If there's a delay of salary will occur then delay your investment because there's no race on accumulating of bitcoin since any time you can buy this whenever you have funds to use. We always have a choice and for sure salary will not be delayed for months since usually the delay only take for few days so with that there's no really point to use our emergency fund just to buy bitcoin.
You make a very valid point by also emphasizing a little on the benefits of not being too aggressive in one's Bitcoin accumulation, there's absolutely no needed to rush or substitute funds in your Emergency funds or reserve just to accumulate because your Emergency Funds and reserves are just as important as your investments, and like the name implies, any funds accumulated in the Emergency funds is meant for nothing more but an emergency, not for accumulating bitcoin because that's not infact an emergency as it can wait for a couple of days or weeks and you can buy anytime you have the money to buy.
Let's assume one's salary is delayed for a couple of days and you're on a monthly DCA, it's possible to wait that few days or even weeks until your salary is paid and you can go ahead to buy, rather than substituting money meant for emergency to BUY BTC.
The example I gave in my post above is clear for you to know that a delay in someone's weekly or monthly salary payment is a good emergency that will make that person use his emergency fund to cover up until the person receives his salary. For instance, you used to receive your monthly payment at the end of each month, but something happened at the place of your work, and you got paid on the 10th of the new month. You will have no choice but to use your emergency fund to sort out your bills because you never expected that your salary payment would be delayed.
I understand your point regarding on that situation but actually the emergency fund should be the less option to be chosen by some individuals since they might doing the wrong thing on their investment since once they touch that funds for sure every time you think you want to buy something you will always resort to take that money and use it for unwanted things. That's why its better to forget about the emergency funds and always use your extra funds on investment. If there's a delay of salary will occur then delay your investment because there's no race on accumulating of bitcoin since any time you can buy this whenever you have funds to use. We always have a choice and for sure salary will not be delayed for months since usually the delay only take for few days so with that there's no really point to use our emergency fund just to buy bitcoin.
At first, we should be able to differentiate between emergency funds and reserve funds, there should be a clear disparity between both. Emergency funds are funds kept for rear circumstances that may happen, like health problems, fire outbreak and incidents that requires very quick attention but when we say reserve funds, it's more of a funds kept to cover up expenses, those reasons might be slightly known or not. Talking about salary, what should be used in that case is reserve funds and not emergency funds, we all know how the economic situation is, sometimes people get paid earlier or later but the fact is that they must surely be paid, so delay of payment it's not an emergency case.
Emergency funds are important, do not talk of it as less important, we should know when the urgency of resolving an emergency happens, what pops to the mind is to sell off ones investment and your attention may not go for watching the price if it's lower or higher than what was used to enter the market and this will cost losing ones accumulated portfolio that should have been avoided by simply keeping aside both emergency funds and that of the reserve funds.
You've said it all.
A good investor must acknowledge his financial situation as well as sense possible occurrences that are liable to come up in the future and prepare for them. Knowing fully well that your salaries are often delayed or mostly delayed and not prepare for it by having a reserve or floating fund somewhere is just simply careless if you ask me, there are people who work in places where salaries are never delayed, and if peradventure he experiences a delay in salary payment for the first time and didn't prepare for it, then it's understandable at some point because he's never experienced a salary delay before, but a person who's experienced a delay in salary oftentimes, it's only reasonable and logical to always prepare for it.
And yeah, the importance of an Emergency Fund could never be be overemphasized because it's just as important as your Holding itself, because without the availability of the emergency fund, the safety of your investment isn't guaranteed as you'll tend to always look towards that direction whenever you have an emergency (which will surely occur in the long run). So investors should prioritize building their Emergency funds and reserves as much as they prioritize building up their portfolio, because the emergency fund offers your investment more security and safety.
And so with my own situation, I came into bitcoin thinking that I was going to hold whatever I bought for at least a year, but most likely at least 2 years, yet these days I think that many of us know more about bitcoin, and any new investor should be able to commit to investing 4 years or longer.. of course, people are going to be scared and even some of them want to try to play the wave that is likely less than 4 years, and so I consider those folks to be traders and/or gamblers rather than investing, even if some of them might end up changing their minds and decide to stay longer.. just like I continued to stay longer rather than ever making any radical moves to sell large portions of my holdings.. which also could be considered a bit of controversial stance - since we know that in 2018, the correction was in the ballpark of 85%, so that can cause regrets from a lot of folks in terms of not having had sold much or even any BTC during the earlier price rise.
It's always very important for investors to have a long-term perspective when considering Bitcoin investment because that's when one can really reap the actual benefits of Bitcoin.
With how impatient most investors who join the market today are, it's very easy for them to get caught up in the short-term market fluctuations and FOMO, but oneuat commit to a longer investment horizon when investing in Bitcoin because thatt way, you can be able to ride out the market volatility while focusing on the long-term trajectory and potential of Bitcoin.
The experience you've shared about yourself of initially hoping to HODLing for just a year or too but decided to consider a longer term of 4 years or longer investment horizon is a road map to how investors should perceive and embrace Bitcoin investment.