It seems that I have already described some of this in earlier posts, so generally you want to hold 3-6 months of your expenses in some kind of way that would be mostly in the type of currency that you use to pay your bills, and sure some people even hold value in the dollar rather than their local currency because it tends to hold value better.. but none of that is guaranteed either... so when you invest into something that is as potentially volatile as bitcoin, you don't want to have to cash out at time that is not of your own choosing.. think of the March 2020 event.. if you had been forced to sell your bitcoin during that dip, you would have been screwed in terms of getting it back for even close to the sell price. There are a lot of ways that people can have emergency expenses, and yeah, you might not have as many if you are relying on your parents as your emergency fund... but maybe that would cause that you don't need as much of an emergency fund, and you might have to consider if something happens with your parents or your reliance on them as an emergency fund.. and I am not going to be the one to determine how adequate your emergency fund is.. or if your practices of thinking through your own situation is sound enough..
I think i need to also work on my mindset as I work on my capital and strategies cause if I'm not prepared in such a way that I've made my decision not to touch or sell my bitcoin because of any dip that happens and from your senerio from march 2020 some dips can happen and make it look like as tho I didn't plan well, so I think in my preparation I should keep a standard to never sell until I reach my goal, since a rush sell intended to cover up and buy at a cheaper price could in turn back fire at me. I think setting standards would also be of good help to me as a beginner.
ONLY you are in a position to figure out your exact balances, and usually you want to put enough into bitcoin so that you won't feel bad if the BTC price goes up since you would have already put enough in that you feel that you have a bit of a stake, yet the balance goes in the other direction too, so as I already mentioned your first full cycle, and maybe even longer could be difficult in terms of getting a kind of balance that is comfortable for you, and you can ONLY do so much about your income and your expenses.. so you have to work with what you have, and even if you believe that you do not have a lot of income, you have to still realize that you are ahead of a lot of people in the world who still do not either appreciate bitcoin and they have not taken actions to invest into it... so sometimes a fairly modest investment approach can pay off quite well while you are still figuring things out.
Remember just a few days ago, you said that you ONLY just made your first $10 purchase, so that already put you ahead of those who had not taken any actions, so maybe if you just consider whatever you are doing is making progress so long as you don't overdo it and cause yourself to get reckt because you over did it.. and at the same time, you seem to be still studying about the plusses and minuses of bitcoin, so there should be nothing wrong with starting out with a relatively modest investment approach until you get your bearings.
I plan on building up my emergency funds from saving from my monthly income, since this is more reliable, and since you've been stressing on the importance of having a backup fund in case of market opportunities like major dips, this could also favour me if I buy at such opportunities. But if I can't meet up with this high strategies, cause I still think it might take a while for me to fully understand the way the market works, would you consider it wise, I buy majorly at dips and dca regularly for safety and to insure I buy at all times than to lump sum without giving a kind of spice to it.
Ultimately the choices is yours, and you are completely responsible for whatever you do, and we are largely just brainstorming in these kinds of threads because no one is going to help you if you screw up and we are not going to take blame if you follow what we suggest and then it does not end up working out for you.
Many of us will take from our own experiences, and for me, when I first got into bitcoin, I set up a 6 month budget. I added up all the cash that I had available that I was authorizing to go into bitcoin, and I also added up my expected cashflow for those upcoming next six months. One of my advantages is that I had already been investing for more than 20 years when I got into bitcoin, so I pretty much already had my emergency fund in place.
So what i am suggesting is that if you establish your budget, and let's say that you have figured out that you have around $400 to $800 in income every month, and you have around $300 in expenses every month, you have about $600 saved up, and so you could try to figure out what to do from there, once you have all the numbers. So if you already know that your income exceeds your expenses by between $100 and $500 per month depending on your income, and then you know that you have about 2 months of an emergency fund, so you should probably build it up between 3-6, but you can invest in bitcoin and beef up your emergency fund at the same time.
You can kind of figure out if you are buying BTC every week or if you are going to wait for certain times in the month, and if you figure out your 6 months budget for bitcoin the you could divide it by 26 or maybe you divide it by 13 so then you have a budget every week or every two weeks. If you do not end up lump summing to get started, then you could divide part of your weekly/biweekly allowance into DCA and buying on dips... maybe you decide that no matter what you will buy $10 per week DCA, and then you will build up your buying on dip fund until it gets to $100 or $200 and then once it reaches certain sizes, then you might increase your weekly DCA because you have more in reserve for buying on dips and you could also use your emergency fund as such a measure. Once your emergency fund reaches a certain size, then maybe you decide to increase your DCA by a certain size and/or your buying on dip fund.
You could have situations in which some months you have some extra money come in or some expenses that get greatly reduced, and you can decide which bucket to put that extra money into, and the more you practice, the more it will start to become naturally to you which category to put it into, and maybe after you get up to a certain amount of BTC, whether $500 or $1k, then you figure out some private wallet to move it into... hardware wallets (such as the Trezor) are good, but maybe you want to make sure you get up to a certain amount of BTC before you buy a hardware wallet.
So maybe after 3-4 months you end up figuring out or even receiving an extra $600, and maybe the default would be to divide it into 3 and invest 1/3 into DCA, lump sum and buy on dips, but if your emergency fund is not quite bolstered, then maybe you would decide to divide it into 4 parts... there are a lot of possibilities and no real right answers, even though some ways of going about it are probably preferred to others, and you likely will make some mistakes along the way, but if they are just small mistakes it is easier to learn and recover, but if you end up making some BIG mistakes, like you decide to just throw everything into bitcoin, and then you end up having an emergency and/or the BTC price moves against you, then you could end up losing all or most of your investment, and sometimes guys will lose several years worth of investing and putting systems into place because they make big mistakes and they cannot figure out how to get out of the mistake and then they end up doubling down or some other kind of gambling behavior rather than just accepting that losses along the way will sometimes happen.
By spice I mean when lump sum are just done as they should when I'm just buying in large quantities than I normally through dca, this time I use my lump sum amounts to buy only at dips. Or should this emergency fund be for a totally different senerio where a major dip happens that nobody expects and I use that money to take advantage of it.
You should be able to more or less pre-describe the reason that you are holding any extra money in certain funds and in certain ways, but one of the problems when you try to be too smart about it, then sometimes you could end up panicking if you are holding too much cash and waiting for dips that do not end up happening, and then if the BTC price ends up going up 15% or more, then you start to speculate that you should have just been buying all along with it instead of holding it, so these are not easy balances, either way.. As a beginner, you probably should be allocating more towards either buying right away or DCA rather than holding for dips, but I cannot really tell you for sure what is going to pay off the most in the end, because I don't really know either, especially short-term price moves -
...yet if the you spend a certain amount investing and even overinvesting at certain price points, then you might feel that you need to protect yourself by keeping some extra cash on the side to have ready for dips because you had concluded that you already over did it.. and you want to have some extra cash in case there is a dip.. but if you are just starting in bitcoin, it is not very likely that you have bought too much, since you have ONLY so far proclaimed to have had bought $10.. so it would be difficult to perceive to have too much BTC, at least at this point in your BTC investment journey, you don't have any problem of having too much all at once... unless maybe you go and buy $500 and then start to feel stressed about it. then at that point it might be good to have some extra cash available to buy on dips, in case there is a dip from whatever point you bought the $500 worth..
For a start I think I can use two strategies, lump sum and dca since I can manage that for now, is it also possible I lump sum on dips, since its buying with a huge percentage of your capital each month, can I use lump sum in a way that i set it to buy at any dip that occurs in the market while I use dca to be on a safe side since the market is unpredictable?
That sounds mostly reasonable to be combining your practices and then also monitoring how it goes which might allow you to learn from if you are balancing matters out well. None of us is going to feel comfortable if we run out of cash and the BTC price dips, and maybe we buy but then it keeps dipping, so then we might start to wonder if we structured our dip buys good enough or maybe we can just use DCA if the BTC price keeps dipping and we don't have any extra money at that time..
The longer that you are in bitcoin, then the more that you should be able to build up your reserves in various places, but even experienced investors might run out of cash or feel that they don't have enough cash to take advantage of dips and then they get concerned about if they might want to sell some and to buy back lower.. which I believe is one of the worst mistakes, even though quite a few people engage in that kind of behaviors, but if you have a regular cashflow coming in, then you can keep buying, but if you had been buying BTC for 4 years and then it dips a lot then you might feel that you are not getting as much advantage from the dip because you are buying lower, but your BTC holdings might have lost 50x or 100x or more than the amount that you ended up being able to buy.. because let's say you had been buying
$100 per week of BTC for the last 4 years, so you had invested around $21k and you have more than 1 BTC, and if you are still investing at the same rate, but the BTC price drops 20% from $49k to $39k, then at today's prices you lost around $10k, but you might have been able to buy $100 or maybe $200 worth of bitcoin at those prices, depending on how long the prices stay down at the 20% dip levels.
From what your implying I believe that a having a reserve fund is good incase of dips, tho during long period of accumulation sudden dips that could go up to 20% could seem as a loss, but if my time frame and goal is still far I think, this could be to my advantage if I've had my reserve fund in Check and I'm still dcaing, cause surely bitcoin has surely shown price improvement and I'll end up buying more during those dips since price are low.
You can really never know - especially now there are so many people who believe that we are more likely in the earlier stages of a bull market rather than a bear market or flat, which would justify lump sum and aggressive DCA.. but that could also end up being wrong. When I got in, there ended up being 2-3 years in which my holdings were mostly not in profits, although since I continued to DCA especially in 2014 (a down year) and 2015 a mostly a flat year, my average cost per BTC came down from $1k to below $500, but then I ended up having some mistakes in 2017 that likely brought my costs back up to $750, and these days I just like to say that my costs per BTC are around $1k, since it is a nice round number. and so i am not sure how much it matters if I say that my holdings are 42x in profits or if I try to use a lower number to say that my holdings are 52x or 62x or more in profits. At a certain point the profit levels might not matter as much as just figuring out how to plan your maintenance after you have reached the stages in which you feel that you have enough or more than enough BTC, versus if you are in the earlier accumulation stages, you just should probably be focussing on accumulating and not so worried about the price, but instead worried about your keeping yourself from making mistakes in which you lose your accumulation and your building of the your stack..
so lets say if you first set your goal that you want to get 1 million sats, and then you want 2 million, and then you want 5 million and then 10 million and then 21 million and then 50 million, and etc etc.. and maybe it won't really matter how much you pay for them, as long as you are using extra money that you have and you are not putting yourself into any bad money situation while you continue to build your stack size... after you are doing these things for a while, then you can readjust your goals and rethink about where you are at, where you came from and where you want to go.
But if this strategy is so important could I replace it with lump sum for a start, cause I'm still building up my portfolio, so those lump sum capital could go into my savings while I keep it for dips, but what I'm considering is would they always be dips and if I say lump sum is better, what's is the need of lump summing if its not going to give me a better advantage. If your okay with this I think I could go with dca and dip buys for a start.
Another way of thinking about lump sum investing is that it is way of front loading your investment and you do it either towards the beginning or you do it once you have established conviction about the investment and you feel that you need more BTC in order to be better prepared for up. Buying on the dip is a different thing, but it still can be done in a lump sum kind of way. I am not that excited about ideas that involve waiting to buy, unless you really feel that you have enough BTC to be prepared for up... but yeah, if you are a scaredy cat about BTC then you might wait or you take a whimpy position, and that is up to you.. because you may well be preparing for dips that do not end up happening and in the meantime you are insufficiently/inadequately prepared for up.. but in the end it is up to you regarding how to balance out making sure that you are prepared for up, while at the same time making sure that you are prepared for down too, just in case it happens..
You may well feel screwed if the BTC price goes down after you had already invested all $200 and then you don't have anything left, and then you may well feel screwed if BTC prices go up and you still are sitting on some cash. In the beginning it is almost a no win situation and you just try to balance it out as best as you can, and maybe after a few years investing you start to feel that you have everything in place. You have figured out your budget and you have some reserves for buying on dips and you have built and established an emergency fund.. and maybe you have figured out some ways in increase your cash flows and to decrease your expenses... but you still are likely going to always have some tensions in terms of trying to figure out how many BTC you need and how long it is going to take to accumulate as many BTC as you believe that you need.. especially if your goals might be to reach some variation of fuck you status...
and if you think about it, there are a lot of people who work 30-40 years or more and they do not reach fuck you status, so if you are able to actually reach it or maybe even reach it in 15-20 years, then you end up both reaching it and cutting the time in half.. and none of that is guaranteed.. You just need to do your best under your own particular circumstances.
I believe in other to avoid that tension I would set a big goal, then start with smaller targets or milestone, this emotion strategy would be good for me to avoid the tension around the time frame for accumulation and how many I would accumulation within that time frame.
For sure, you can set goals and then adjust them along the way... you want to have reachable and aspirational goals, and you likely could even set up some worse case, best case and medium case scenario kinds of projections, and the medium case scenarios should be the most likely to play out, but you still could end up having scenarios where either worse case or best case end up playing out... or sometimes it might appear that a worse or a best case start to play out and then BTC could surpise and bring it back to the middle, and surely once some past events play out, then your future scenarios might end up changing, so you might have an excel spreadsheet that has various scenarios and plans and then you save them and update them and then 1-5 years down the road you might revisit some of your earlier projections to compare with what you were projecting as compared to what ended up playing out.
If you are still living with your parents, then I will assume that you are on the younger side maybe lower 20s or less, and so sometimes it can take a while to both build up your investment portfolio but also to figure out your targets (or how easy or difficult it might be to reach them), so surely you can plan out targets of 1 year, 3 years, 5 year, 10 year and 20 year and maybe even further out and some other variations of timelines, and your actions are going to be much more concrete in the shorter term, but your ability to meet shorter term targets or to adjust them would likely be more measurable in the short-term in order to potentially keep you on track for the longer term... sometimes it will seem that you are not making very much progress, even if you might be ongoingly making efforts and even reasonably adjusting from time to time...and sometimes large dips can feel as if you might have had been set back 1-3 years or more, but then those perceptions might end up being false perceptions or they could become realized perceptions in which you might make some mistakes that ends up causing losses to your progress and sometimes difficulties to make up at later dates.. which in the BTC world, some BTC hodlers make mistakes of selling too much BTC too early and then they become disgruntled or maybe they end up holding too much on exchanges that get hacked or go into bankrupcy or rug pulling them, so there are various measures that each of us should try to take in order to lessen the impact of our various mistakes along the way.. It is almost inevitable that we are going to make various mistakes along the way.
I think for now I'll just follow up a bit till I can grab what your saying fully, I'll try my best to keep following on this thread. I can see a I've got a lot to learn here. What kind of waller is best for holding, I just keep mine on Binance, do u think its okay?. If mistakes are inevitable, I'll make sure my back up funds are always in place.
You probably need to research, including other threads.
I think that up to $500 to $1k it can be o.k. to keep your funds on exchanges, and a lot of people recommend Electrum as a private wallet.... but I am not used to that one. Bluewallet is good, but still that is a hot wallet and so you might be careful in terms of keeping too many funds on your phone, or maybe something like Trezor.. once you get up in the area of a couple thousand dollars it would be good to have a hardware device as your wallet, but you still have to learn about what you want and what are the trade offs and the need to be careful about how much of your BTC you hold with 3rd parties rather than keeping your own.. In the long run, you probably would want to have 90% or so of your BTC in your own various forms of self-custody rather than being held on or through 3rd party services.
For now I think I would start with dca with my little allowance and then use my monthly income to set up a system that can generate a substantial amount for investment. Cause if poor income and management could be a deficiency in accumulation where I might have to dip my hand back in my portfolio then I guess my first real move here should be to fix that and get my finance in order. What do you think about this.
You are describing the creation and building of an emergency fund, which surely could be life saving (and save your investment) .. and having an emergency fund will tend to give a lot of peace of mind when the BTC price starts to move against you.. which it will do from time to time.. especially the longer that you are involved in investing in it and building the size of your BTC stash.
By the way, you mentioned at least 2 bitcoin, but then you are also talking about investment numbers that would likely be quite lower than the amounts needed to reach 2 bitcoin, and I am not even necessarily suggesting that you need to get to 2 bitcoin, but if you consider that $100 per week would be $5,200 over 1 year and $52k over 10 years, you would almost need to be crazy to believe that there are very high chances that you would be able to accumulate BTC for less than $52k by averaging out your buys over the next 10 years, and that is why I had been saying that even $200 per week would be optimistic for reaching 1 BTC even with $104k invested over 10 years, so if you expect to reach 2 bitcoin or more in 10 years, then you would likely need to average around $400 per week over 10 years, and there is a bit of a presumption that you would be able to do that from the start since it is more likely that $400 per week now is going to get you more BTC than it is going to get you 10 years from now... and surely you are not even hinting at being able to have that kind of money to be able to invest now or to consistently be able to do it without putting yourself into a pickle in which you end up not having an emergency fund. ...
Surely, I am not going to tell you to NOT have high goals because sometimes goals can be reached and/or exceeded, and surely even with my getting involved in bitcoin in 2013, I had created goals for myself to be able to achieve in the next 6 months and then maybe to extend beyond the 6 months, and I was able to exceed my goals, but that was mainly because the cost per BTC was going down during that time, rather than up... so then my expectation of my average cost per BTC ended up going down because I was mostly anticipating how many bitcoins (or satoshis) I would be able to get for a certain amount of cashflow that I expected to spend over the first 6 months and then extending into the second 6 months, and each time adjusting some of my expectations based on expected dollar cashflows and also considering best case and worse case scenarios, and even though falling prices did cause worse case scenarios in terms of how the value of my BTC holdings was then going, but it created best case scenarios for being able to accumulate more BTC (as perverted as that kind of perspective seems).. because people can really call you names when you keep investing into something that is continuously loosing value (or at least its spot price continued to go down throughout 2014 and even into 2015, even though the very end of 2015 did end up being an UP year)..
I think I would keep my investment personal in other not to get your same experience and I would unwise not to take not of the fact that my goal is too high for now especially since I'm not having the capital in Check and if bad situation occurs on the long run I'd find my self in panic. I'll start small but I would still try my best to build my income to match the target. I know its possible but I still have to make sure I have a good plan.
I only mention how much commitment it would take to get to 2 BTC, which is a lot of money compared to investing $10, so there is no problem in terms of keeping your specifics personal, but if we start to talk about how many BTC that you might want to get in a certain amount of time, then we should attempt to be realistic about what kind of numbers (investing amounts) that you would need to meet in order to reach those kinds of numbers. There is also nothing wrong with having lofty expectations (aspirational goals), but even folks with aspirational goals might also need to have more realistic goals that line up with what they are actually doing..and maybe it is not that BIG of a deal if you have some that are more easily reachable and others that are more difficult and some others that are not as likely but there could be some scenarios in which the further out ones could end up being reached or close to being reached and when they get closer, then the path towards reaching them might become more clear too.. so it likely does not hurt to make those kinds of plans and then revisit them from time to time.
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You're still thinking short term and in such cases you should just take your profit like every normal trader but when you talk of accumulation of btc and using dca as a risk proof investment strategy then you start seeing the market in a different light and even when you've made some profit you'll tend to view it as an opportunity to invest more
Think of it as a business strategy,how many big cooperations or firms do you ever see their investors or shareholders sell their shares simply because the stock value is increasing and they've made considerable profit?? Of course none or rather very few instead they double down on it and invest more because the profit only signals that they're on the right trend and the business is likely to grow and amass even more profit
Why take profit when you can hold out for a couple more years,I think unless you have a critical life challenge that inevitably requires you to sell out all you ow,I seriously think this a wrong and hurtful approach to investment
It is also referred to as letting your winners ride... or allowing compounding to take place rather than getting in and out and then sometimes maybe hardly having any compounding effect, including fees and taxes that might result from such in and out behaviors.
