Topic: (SSS) - A Sane and Simple bitcoin Savings plan - page 10. (Read 84968 times)

I'm finding this really useful for quickly running through scenarios. Awesome work, thanks!

Somebody should make a javascript calculator with all the knobs so you can compare various strategies and outcomes.

Rpietila,
I am thinking about your model and if and how I'm going to implement it. I'm not a total newbie when it comes to investing and i was thinking about a slightly more advanced model.I don't think I can ignore the exponential trend and so I think one alternative model should be one where you can buy back if the trend goes under the curve after a recent rake hits. What's your take on this idea? Thanks again.

P.s. Thanks for your time on this forum and your positive energy. May you find a nice castle.

What is the smallest conceivable investment, $50?

That means, 35% of it is now $35,000.

I don't think you should buy in at this time. You are doubling your exposure, while increasing your holdings by only 3%. Your best option is to hold, however if Bitcoin's exceed 50% of your portfolio, then you should consider raking.

Exactly. Good post indeed, Risto

Or small and not rich

I would rather do this way (as a guide to newbies):

1. Buy with a small amount as soon as possible (upon first hearing about this, it is unlikely that anyone will invest more than 10% of net worth, more likely 1%).

2. Every time you gain confidence in Bitcoin, buy more. Do not consciously DCA, because your inability to appreciate Bitcoin fully in your first day automatically serves as DCA

3. When the combined effect of your purchases and bitcoin's value appreciation results in you having more than half of your net worth in Bitcoin, select a "percentage of other assets" you want to have as a hedge in your portfolio. The "rake" % is always half of "other assets" %, if the rake is taken after each doubling in price.

If you are already in, you can start following the plan from (2.) or (3.).


A further word about the optimal rake%:

I suggest you use 10-20% rake. This lets you keep 35% (in case of 10% rake) or 11% (in case of 20% rake) of your bitcoins when their value goes to $1,000/mBTC.

- If you use only 5%, it takes quite long before you cash out any meaningful amount, which is risky. Also your portfolio tends towards 90% bitcoins/10% everythingelsecombined, which makes most of us too emotional.

- If you use 0%, you go crazy. Many can live with this as long as bitcoins are a small % of their portfolio, but start making mistakes (such as selling 90% of the holdings, at the instant they appreciate so that he can buy a new house) when the percentage grows bigger. Better be disciplined, set a schedule to sell, and follow it. (You may skip the first several doublings if your capital is small and you want to quickly grow it.)

- If you use 30%, you only retain 3% of your bitcoins, which I think is suboptimal. If you are so concerned about getting your fiat value back, I suggest you let it go up to the second double, and then repatriate the original investment.

Better get used to the idea that it is very improbable that you will have the same number of bitcoins when their purchasing power is 1000x higher than now. In astute cases, I think you have shed 2/3 of them, whereas most have only 1-10% of the amount that they now have.

The same happened when Bitcoin was $0.5 until now. If someone has 35% of the bitcoins he had that time, he is very smart (and very rich).

Well of course Dollar cost averaging isn't going to do much good in the general case. That's not the point (also for stocks).

The point of Dollar cost averaging is to sacrifice a bit of upside for a lower volatility. If you start accumulating right before a market crash there will be a huge difference in the favor of Dollar cost averaging.

If you don't care about volatility AT ALL, and just want to maximize EV, by all means don't Dollar cost average. Of course this isn't a yes or no question and you can divide you purchase in as many discrete purchases over as long a time as you like to make your own decision with respect to minimizing volatility and maximizing EV. It's completely natural and understandable to want to minimize volatility during the buy in period, especially with respect to something as volatile as Bitcoin.

Disclosure: My initial Bitcoin purchase has not been a Dollar cost average purchase but rather one buy and all my subsequent purchases have been really erratic both in size and in timing.

And yes i reconn that dollar cost averaging won't do much good, simple because bitcoin has been increasing more times than decreasing. So,in turn you'll end up paying more bit coins then you could pay initially.

sounds fine for me. Just stick to the plan so before long you will also have regained your initial investment.

(Or lost it all, but that is the risk we'll have to take.)

In the long run, there will only be about 1,000,000 people with a whole bitcoin. If you manage to keep 1/10 of your stash permanently, you are among this group. Not bad really.

OP... I bought 10 BTCs for about $6900 and I don't want to look back until 2015




$6.9k is not something I can "afford to lose" since it's pretty much most of my savings at this point... but I am single, have no debts and have a job so incase bitcoins really pick up I want to take that risk of losing ~$7k when I can potentially become a millionaire. Do you think this is stupid of me? And how confident are you on the success and mainstream adoption of Bitcoin? I just want your opinion since you sound pretty smart.

I must say great plan, best of all its simple and if you invest only what you can lose. You can even stop looking at prices every time and get some sleep...
Thx for sharing

Just to clarify, I signed up for Coinbase and they limit purchases to 10 until you are completely verified. The first couple of months they had shortage issues. Only so many coins available and they went first come, first serve. So they didn't have inventory. What I should have done is use localbitcoins to get my initial purchase but I had in mind only trusting coinbase. If I had it to do all over again I would have the quantity of coins I wanted. As it stands, I have half my original quantity at more than double the price I would have paid if I had just gone and found the supply instead waiting for Coinbase to get up to speed.

I don't have that problem with Coinbase now, so if you are happy with a ten coin limit per day and a fifty cap on coins per week, they are fine. All in all, I like Coinbase, they just din't allow me to purchase as many as I wanted as quick as I wanted. This is why I took the accumulation route.

This is brilliant

Will be referencing this, that's for sure

Selling now would physically hurt me

And what the hell would I do with the fiat anyway? If you have no direct expenses to use it on therefore no reason to sell. I use my liquid fiat for all current expenses and manage to do so quite easily.

When my Bitcoin holdings become valuable enough to completely discontinue earning money through work, I will probably continue to hold the majority of my worth in Bitcoin. I might diversify a little (to reduce the chances of having to discontinue my retirement) but definitely not into fiat (I would expand my stock portfolio if the price is right).

Indeed!

This is a just for fun implementation in Pyhton, probably a bit over-engineered 

You can change the parameters in main() or write an argument parser.

$ python -m sssplan
 Price  mB left  mB sold  k$ out  mB val.  k$ sum  total val.
    2   9000     1000       2       18       2       20
    4   8100      900       4       32       6       38
    8   7290      810       6       58      12       70
   16   6561      729      12      105      24      129
   32   5905      656      21      189      45      234
   64   5314      590      38      340      83      423
  128   4783      531      68      612     151      763
  256   4305      478     122     1102     273     1375
  512   3874      430     220     1984     493     2477
 1024   3487      387     397     3570     890     4461

Great. That will be a safer plan for those who invested most of their savings.
I personally have only spent less than 15% of total investment. Maybe too conservative, but too much risk may ruin my sleep time:)

Stop loss is a tool for suckers. This plan assumes that you invest what you can afford to lose. One of the most important features is that you never sell when prices are trending down. That will soon reverse the trend and keep your coin stash intact.

If you are the type that thinks in dollars and wants to cash out the original investment, I suggest the following:
at $2, do no sell
at $4, sell the original amount (which is 25% of your bitcoins now) Now you are clear.
afterwards, sell according to your rake.

If this is too risky for you, you are investing too much. Think again with a smaller initial sum.

Many forum frequents actually have too much % of portfolio in bitcoin now, after the recent runup. If you are 10% rake type of guy, it means you should have $20,000 worth other financial wealth per every BTC100. If your rake is 20%, you should have $50k per every BTC100. If not, then sell! Congratulations! You have already completed the initial doublings of your plan