This is how I manage my money and I see this even working efficiently.
- investment (40%)
- holdings (20%)
- necessities(30%)
- others(10%)
I was focused more on investing and putting huge shares on there knowing that this is the only way to have financial freedom. I couldn't say this was beyond the limit, we could afford to risk more especially since we know that this could give us a passive return. I don't think this is like gambling that it needs luck, we endure this because we know ourselves that we can do it.
Topic: Is investing more than you can afford to lose inevitable? (Read 499 times)
Although it is quit advisable to invest less than you can afford to loose. Which means that you must not borrow to invest. It is also improper to use money that is mapped out or budgeted for you or your family's basic needs such as feeding, medical bills, housing and others for investment. But sometimes when you are sure of making profit from an investment, you might be tempted to go beyond your limit. Although there is no investment that totally guarantees profit but there are some speculations, predictions or forecast that looks to solid to fail or too clear to be fake.
Yes, it could be if you are risking money that you require to sustain. Nobody becomes rich in financial markets overnight. Risk money that is surplus. The market is infamous for volatility, and it is great at breaking people’s expectations.
Invest only what you can afford to lose is a very popular phrase for bitcoiners, but how do you manage to do it, many bitcoiners have lost fate in fiat currencies because of inflation, so they do not consider banks to be an option for holding. Some people say they only keep what they feel will be sufficient for them per month, and invest the rest of their income, will that not be investing more than you can afford to lose?
If i earn $400 for example, and i keep a $100 and invest $300 in bitcoin, with time my bitcoin will grow and i will have so much money in my wallet, but no money in my bank, and this is exactly how people claim they go about things because of inflation, isn't this investing more than you can afford to lose? And if you are in for diversification, and in addition to bitcoin investment you put some of your money into real estate, gold, and the rest, and only keep what can sustain you per month, isn't it investing more than you can afford to lose?
How do you go about this personally? I am asking because many people especially bitcoiners do not trust the banking system, with inflation and censorship problem, in that case does it mean that investing more than you can afford to lose is inevitable in this current system? Because your money is somewhere else, either bitcoin or other investment.
If i earn $400 for example, and i keep a $100 and invest $300 in bitcoin, with time my bitcoin will grow and i will have so much money in my wallet, but no money in my bank, and this is exactly how people claim they go about things because of inflation, isn't this investing more than you can afford to lose? And if you are in for diversification, and in addition to bitcoin investment you put some of your money into real estate, gold, and the rest, and only keep what can sustain you per month, isn't it investing more than you can afford to lose?
How do you go about this personally? I am asking because many people especially bitcoiners do not trust the banking system, with inflation and censorship problem, in that case does it mean that investing more than you can afford to lose is inevitable in this current system? Because your money is somewhere else, either bitcoin or other investment.
What you can afford to lose today might be what you can afford to lose tomorrow because possibly the value might have appreciated.
As a thumb rule, besides investing in BTC and other coins, learn to convert your savings to stable coins like Usdt, especially for those of us who do not trust the conventional banking system. whenever you take your profit and you don't feel like converting into Fiat, convert it into Usdt and save for rainy days.
...you can avoid investing more than you can lose by keeping part of your fund in stable coins (especially decentralized) and move the rest to bitcoin.
A stablecoin such as UST?
Originally, it was not clear that Bitcoin had no fatal flaws, or that it would even work. It was an experiment. It was not wise to buy bitcoins with money that you could not afford to lose because the whole system could have failed at any time and for some unexpected reason.
The statement of investing what you are willing to lose is beyond the scope of bitcoin. That statement has been in existence years before the creation of bitcoin. So, it is totally wrong to constrain its meaning to bitcoin and its early adoption.
The fact is whether bitcoin is failing today or is lasting forever, you shouldn't invest what you can't afford to lose.
This statement originated from the stock trading, where trading volitile assets can be considered as gambling because you wouldn't predict accurately the next market move.
As long as you are sending fiat to something that isn't stable, that statement is for you. Bitcoin can only grow above that statement if it remains decentralized and secured but not volitile.
Technically, you can avoid investing more than you can lose by keeping part of your fund in stable coins (especially decentralized) and move the rest to bitcoin.
Moreover, no one is willing to lose any money even if it's a cent.
Edit:
...you can avoid investing more than you can lose by keeping part of your fund in stable coins (especially decentralized) and move the rest to bitcoin.
A stablecoin such as UST?
I emphasised on decentralized stable coin. Maybe like DIA.
Yes. It could be very risky, especially if you are on a tight budget. So before investing make a plan. Beware of the risk. You should have something in your pocket for emergencies.
You can spend and invest more than you can afford to lose, perhaps it was your choice but never you'd think it was a smart decision as you are dealing with a high-risk investment. Rich people have a lot of money and a lot of resources that is why they are not afraid of spending more but for poor people, that is something different. Putting to the instance that if we have to spend everything we have, what had left us in case our investment fails? It is very important to think wisely and to think not just by today but also in the following days. This is not about thinking the negative but we also have to make ourselves prepared for it.
That is why its not wise to invest all your hard earned money as everything may end up not as what you expected, so its better to prepare for it than to feel sorry in the end. For me, we can always choose to invest what we can afford to lose because that's always the right thing to do. Save and invest. You have to prepare for your investment funds first separate from your savings funds to avoid financial struggles if you fail in your investment plan.
In my opinion, the idiom "don't invest more than you can afford to lose" is still valid, but the reasons have changed.
Originally, it was not clear that Bitcoin had no fatal flaws, or that it would even work. It was an experiment. It was not wise to buy bitcoins with money that you could not afford to lose because the whole system could have failed at any time and for some unexpected reason.
Now, after a few near-fatal incidents and 12 years of improvements, the failure of Bitcoin itself looks very unlikely. However, much of the infrastructure and systems built around Bitcoin are still new and are still failing. So, the main risks now are the price of a bitcoin and the failures of the services around it.
As for other coins, they could fail at any time without warning. They should be considered to be experimental.
Originally, it was not clear that Bitcoin had no fatal flaws, or that it would even work. It was an experiment. It was not wise to buy bitcoins with money that you could not afford to lose because the whole system could have failed at any time and for some unexpected reason.
Now, after a few near-fatal incidents and 12 years of improvements, the failure of Bitcoin itself looks very unlikely. However, much of the infrastructure and systems built around Bitcoin are still new and are still failing. So, the main risks now are the price of a bitcoin and the failures of the services around it.
- Hypothetically, if you buy bitcoins at $60k and hold them in your own wallet and a fall of the price to $17k will cause you hardship, then you should not invest. It could happen again, even at the current price.
- You should still consider that any bitcoin-related companies that hold your bitcoins or that you might invest with could lose, confiscate, or freeze your bitcoins at any time. It happens all the time.
As for other coins, they could fail at any time without warning. They should be considered to be experimental.
Imagine you just started out investing when Bitcoin was $50-60k and because you didn't plan for future needs, you now need to liquidate a chunk from your portfolio to pay for something that has to be paid short-term. You would be making a huge loss selling your coins at $20k when you bought them at $50k.
Some people may not consider this situation because they forget that they still have other plans for them to make besides just investing. That's why the advice is to invest the money you can afford to lose because we never know if we don't need the money we have invested here in the future.It would be great if we have bitcoin earned from services or signature campaign that are not for sale, it is an investment for the future while other income from real work is to make ends meet and savings.
I tag Bitcoin a safe risk. Yes investing such amount in Bitcoin is similar to investing more than you can afford to lose but in real sense it is a worthy risk because no matter how the price of bitcoin falls it will always rise again. As long as the fund is not needed in a near future it is worth risking. Where i can't afford careless risks is in shitcoin and it's counterparts
Bitcoin price is currently falling to a low of $17,708, this is proof that the 2022 crash is still not over. Either the crash will stop where, or it's the current low. but if you target $11k and $12k the crash will certainly continue.
I didn't expect the price of bitcoin to be below $11K-$12K it seems like it's really bad. It's certainly nothing new because I've been through two periods of halving. But if BTC's price is below that then it will ruin the halving cycle against BTC's price that once happened. Although I know at the moment I think many users are optimistic that BTC will again reach its highest price all the time. A slight difference also occurred in the previous halving period the state of the global economy was good. But this time interest rates are rising, macroeconomics is in trouble. That's at least what makes the difference, but my hope BTC is strong above the price you mentioned.
To beginners it is important they invest in amount that they can't afford to lose because bitcoin is risky and if the market go dip they won't be able to control their emotions. But as for people who are already use to bitcoin they can decide to take the risk to invest in bitcoin more because they already have understanding of the market of bitcoin.
How do you go about this personally? I am asking because many people especially bitcoiners do not trust the banking system, with inflation and censorship problem, in that case does it mean that investing more than you can afford to lose is inevitable in this current system? Because your money is somewhere else, either bitcoin or other investment.
If you want to invest wisely, there are a few questions you should ask yourself.
1. Do I have extra money that I don't need for day-to-day living? It doesn't matter if it's $100 per month or $1,000 per month, whatever you are able to afford. Start with a small amount of money, and increase that amount gradually if you can.
2. Do I have a good plan on how to allocate the money I have?
It's important to decide how much of the available money to invest in which types of assets. For example, can you handle high-risk investments or will that be too much? What can you afford to lose? You don't have to expose yourself to high risks unnecessarily, it's just important to understand that lower risk also means lower potential return.
3. What time period will I invest, how long can I wait?
The best time for investing in crypto is today and for the next five years or so. But the shorter the time period, the greater the risk. As a rule of thumb, if you cannot wait a few years to receive the return, it is probably a bad idea to invest.
I invest little to no money into Bitcoin. I work for it occasionally and provide services in exchange for Bitcoin quite regularly. So my income from fiat remains a stash of its own and my Bitcoin is a different pool.
It's hard to manage fiat in the way that you can comfortably say I only need these $100, while the rest will be invested into Bitcoin. I am using those numbers because that's what was mentioned in OP. Things happen short-term where you need more money than you originally thought. Financial needs for you and your family change. You need to fix your house, you need to repair your car, buy a new TV because your kid broke the old one, get your daughter some bracelets, buy a new suit for work because there is a tear in the old one, etc., etc. How are you going to do that if there is no money in your bank?
Imagine you just started out investing when Bitcoin was $50-60k and because you didn't plan for future needs, you now need to liquidate a chunk from your portfolio to pay for something that has to be paid short-term. You would be making a huge loss selling your coins at $20k when you bought them at $50k.
It's hard to manage fiat in the way that you can comfortably say I only need these $100, while the rest will be invested into Bitcoin. I am using those numbers because that's what was mentioned in OP. Things happen short-term where you need more money than you originally thought. Financial needs for you and your family change. You need to fix your house, you need to repair your car, buy a new TV because your kid broke the old one, get your daughter some bracelets, buy a new suit for work because there is a tear in the old one, etc., etc. How are you going to do that if there is no money in your bank?
Imagine you just started out investing when Bitcoin was $50-60k and because you didn't plan for future needs, you now need to liquidate a chunk from your portfolio to pay for something that has to be paid short-term. You would be making a huge loss selling your coins at $20k when you bought them at $50k.
Investing the $300 out of $400 income is too much. How can you live for $100. If you have a family to feed $100 is not enough for foods and monthly bills.
Before you become paranoid of inflation of local currencies including usd, think that the prices of your daily needs will increase too.
If theres a growing inflation it's obviously and common sense that $100 is not enough for a month or half a month for daily needs.
Always follow the spend, save, invest rule. Most of your wage will be on your spends, inflation affects everything that you need to buy, that's why you need to make large portion of your earned money for spend and that would be 50% of it. Saving is 30% and invest only 20% of it. This 20% and 30% will depends on what risk control you are using in investment if invest > savings or the other way around.,
Before you become paranoid of inflation of local currencies including usd, think that the prices of your daily needs will increase too.
If theres a growing inflation it's obviously and common sense that $100 is not enough for a month or half a month for daily needs.
Always follow the spend, save, invest rule. Most of your wage will be on your spends, inflation affects everything that you need to buy, that's why you need to make large portion of your earned money for spend and that would be 50% of it. Saving is 30% and invest only 20% of it. This 20% and 30% will depends on what risk control you are using in investment if invest > savings or the other way around.,
How do you go about this personally? I am asking because many people especially bitcoiners do not trust the banking system, with inflation and censorship problem, in that case does it mean that investing more than you can afford to lose is inevitable in this current system? Because your money is somewhere else, either bitcoin or other investment.
Someone put it this way- Don't invest what you can't afford to HODL. So if you are newbie please follow this line of thought. You know, one of the craziest reasons I heard for investing more than one can afford to lose is this, "if I don't invest the kind of money I cant afford to lose then I will never hit it big and strike it rich. if this is my one and only chance to make it in my life (which it is) I have to go all in" . Like they say different strokes for different folks isn't it? For this person, the banking system, with inflation and censorship isn't their problem. They just want to hit it big.
-snip-
I hope I'm betting on the right thing, though. But to those who've been through 2018 and survived, what's happening right now is nothing worrying.
It's really nothing to worry about. I went through several Phases of bitcoin crash since I hope I'm betting on the right thing, though. But to those who've been through 2018 and survived, what's happening right now is nothing worrying.
2017 bitcoin crash up to 43% hit a low of $11,100
2018 was bitcoin's craziest crash, dropping 83% to a low of $3,140
2019 Down 53% to $6,430
2020, no less crazy, down 72% to a low of $3,860
2021 down 55% to price $28,600
2022 it drops to a low of $20,178.
Now just need to calm down and add bitcoin assets for the long term until a new ATH is reached.
Yes, if you look at the historical patterns, it means the periods of the last biggest rises and falls in the price of btc, 2017-2018. and 2021-2022, then we could even expect the btc to fall a little more now, maybe even to 11k or 12k, and then reach a new ATH of 245k in 2025.
However, I am not sure it will repeat everything like 2017-2018 because today is one of the biggest world crises in history and stocks are falling on all stock exchanges, while cryptocurrencies are falling even more, even big investors are liquidating crypto assets.
Obviously, many small investors will give up the crypto and come out with big losses, while profiting will be investors who can control their emotions, stay calm and thoughtful and hold their cryptocurrency in the long run and wait for the trend reversal and new ATH.
Nothing is inevitable but one should always be prepared for big market changes, big market ups and downs and know well when to enter and when to exit. Who knows how to recognize the right moments to buy and sell, for him only profit is inevitable.
Bitcoin price is currently falling to a low of $17,708, this is proof that the 2022 crash is still not over. Either the crash will stop where, or it's the current low. but if you target $11k and $12k the crash will certainly continue.
-snip-
I hope I'm betting on the right thing, though. But to those who've been through 2018 and survived, what's happening right now is nothing worrying.
It's really nothing to worry about. I went through several Phases of bitcoin crash since I hope I'm betting on the right thing, though. But to those who've been through 2018 and survived, what's happening right now is nothing worrying.
2017 bitcoin crash up to 43% hit a low of $11,100
2018 was bitcoin's craziest crash, dropping 83% to a low of $3,140
2019 Down 53% to $6,430
2020, no less crazy, down 72% to a low of $3,860
2021 down 55% to price $28,600
2022 it drops to a low of $20,178.
Now just need to calm down and add bitcoin assets for the long term until a new ATH is reached.
Yes, if you look at the historical patterns, it means the periods of the last biggest rises and falls in the price of btc, 2017-2018. and 2021-2022, then we could even expect the btc to fall a little more now, maybe even to 11k or 12k, and then reach a new ATH of 245k in 2025.
However, I am not sure it will repeat everything like 2017-2018 because today is one of the biggest world crises in history and stocks are falling on all stock exchanges, while cryptocurrencies are falling even more, even big investors are liquidating crypto assets.
Obviously, many small investors will give up the crypto and come out with big losses, while profiting will be investors who can control their emotions, stay calm and thoughtful and hold their cryptocurrency in the long run and wait for the trend reversal and new ATH.
Nothing is inevitable but one should always be prepared for big market changes, big market ups and downs and know well when to enter and when to exit. Who knows how to recognize the right moments to buy and sell, for him only profit is inevitable.
And if you are in for diversification, and in addition to bitcoin investment you put some of your money into real estate, gold, and the rest, and only keep what can sustain you per month, isn't it investing more than you can afford to lose?
How do you go about this personally? I am asking because many people especially bitcoiners do not trust the banking system, with inflation and censorship problem, in that case does it mean that investing more than you can afford to lose is inevitable in this current system? Because your money is somewhere else, either bitcoin or other investment.
How do you go about this personally? I am asking because many people especially bitcoiners do not trust the banking system, with inflation and censorship problem, in that case does it mean that investing more than you can afford to lose is inevitable in this current system? Because your money is somewhere else, either bitcoin or other investment.
It is better to have many investments like gold, real estate, crypto, stocks, etc. rather than keeping your spare money somewhere safe. My mindset is like your money should also generate more money. I don't say that saving is bad but if you have $1m as savings, I would invest some of it on the things I mentioned. Your $1m by the time you will retire if you don't invest on anything would not be much because of inflation unlike if you have a real estate in a crowded place, you can sell it at a high price and get double or even more of your investment.
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