A very comprehensive and useful post about Bitcoin and Cryptos.
Making Money With Bitcoin: 33 Super Helpful Q&As
Crypto world will be great.
Making Money With Bitcoin: 33 Super Helpful Q&As
Crypto world will be great.
Making Money With Bitcoin: 33 Super Helpful Q&As
- Thread starter Bitcrypto
- Start date
CryptoTC
Crypto Fat Cat
I like your asset allocation advice for smaller investors. 1-2% keeps risks down but can boost overall portfolio if bitcoin soars. Not many people in the crypto world will throw out advice this specific. “Don’t invest more than you can afford to lose” isn’t really that helpful.
21. What share of my assets should I put in bitcoin?
If you’re OK with losing all of your bitcoin money, then you should set a limit on the share of your investment portfolio to put into it. The higher your net worth, the larger percentage allocation you maybe be able to afford.
If the value of your investment portfolio is $100K or less, we don’t recommend putting more than 1%. If your investment portfolio value is over $10M, you might be OK with 10%.
I also liked this: Forget about getting rich quickly. Most likely it won’t happen to you.
OTOH I disagree with your views on DCA. If you think bitcoin will be adopted or that other coins will find uses, then making regular buys to smooth out the wild swings is an acceptable strategy since market timing isn’t really a good idea for most buyers. FWIW and IMHO.
26. Should I use Dollar Cost Averaging (DCA) when buying bitcoin?
First, let’s explain how DCA works. It is an investment methodology where you invest a fixed dollar amount on a schedule regardless of the current market price, averaging out your buy-in price over the lifetime of an investment.
The advantages of DCA are 1. automating an investment strategy; 2. ‘protecting’ against one-time losses; 3. taking emotions out of decisions.
DCA makes sense when you expect the value of an asset to go up over a longer period of time. It protects you against short-term losses that might be incurred by lump sum investing during downtimes.
When it comes to bitcoin, you have no idea how the asset will perform over time. You don’t know whether it will grow or decline.
With highly speculative assets like bitcoin, what we recommend you do instead is, set and write down your ‘investment’ strategy upfront. Articulate how much money you will invest over what period of time, in what chunks of money and under what conditions.
Don’t do blind DCA because buying bitcoin is not an investment. It’s more akin to playing poker in Vegas, for which you’d need to have a really good strategy (and a lot of luck) if want to win.
Old Man Crypto
Expert chainblocker
1% is certainly a good conservative number. If you don’t have ANY other risky assets at all in your portfolios, you could even move to 2-3%. Remember these allocations expect you to rebalance. If you have 2% in bitcoin and it gets back to $20k, you now have over 6% in bitcoin. You need to take some profits and move them into your other investments to avoid being over exposed to bitcoin.
When and how often to do that is an unanswered question for crypto. I do it annually with mutual funds. Some people do it quarterly. When you own specific stocks, you might set price targets. With crypto, no one knows what might work. And it moves much faster than any other asset class.
New world order, Wild West, and even maybe the Emporer’s new clothes and all that.
#20 is my favorite. Good stuff there.
There are a few things you should know:
When and how often to do that is an unanswered question for crypto. I do it annually with mutual funds. Some people do it quarterly. When you own specific stocks, you might set price targets. With crypto, no one knows what might work. And it moves much faster than any other asset class.
New world order, Wild West, and even maybe the Emporer’s new clothes and all that.
#20 is my favorite. Good stuff there.
There are a few things you should know:
- Bitcoin is one of the most speculative assets out there. Prices are likely to swing widely. If you decide to ‘invest’, make sure you have the stomach for it.
- Forget about getting rich quickly. Most likely it won’t happen to you.
- Beware of groupthink and self-proclaimed experts. Youtube videos, Reddit comments, and Stocktwits can all be very entertaining and sometimes educational, but the last appropriate source of investment advice.
- Don’t think you’re late to the game and you have to buy bitcoin now. Acting based on panic thinking the price will climb to $100K is foolish. What would you do if you knew the price would move the opposite direction to $100 instead?
- Don’t spend more than you can afford to lose. Invest only your ‘play’ money: the money you spend on stuff you don’t need. This is not meant to be a replacement for your retirement / 401K.
All of this is good stuff. My read on the typical bitcoin buyer in late 2017 is that they took money from monthly budget and went all in on bitcoin to get rich quick. They had no real strategy, although some have 401k and other work retirement plans.
Now the whole market is suffering.
If Wall Street does indeed move in, will we see the price swings get muted or damped? They will be smarter than crypto buyers of Dec 2017 throwing money into bitcoin as fast as possible. There are claim that futures have taken the oooomph out the market already.
Now the whole market is suffering.
If Wall Street does indeed move in, will we see the price swings get muted or damped? They will be smarter than crypto buyers of Dec 2017 throwing money into bitcoin as fast as possible. There are claim that futures have taken the oooomph out the market already.
BitFit
Contributor
More likely to get poor quickly with bitcoin rather than getting rich quickly. At least in 2018.
I guess a lot of people got rich quickly in 2016 and 2017 though. Now everyone wants to duplicate that and thought it would be easy. This just increases the pain of current market year.
I guess a lot of people got rich quickly in 2016 and 2017 though. Now everyone wants to duplicate that and thought it would be easy. This just increases the pain of current market year.
If the stock market can make you rich, why are so many Americans poor?
CryptoTC
Crypto Fat Cat
Because they don’t save and invest their money. It isn’t the stock market’s fault or a result of evil corporations. Truly poor Americans still have 55” TVs and iPhones. Spending everything you have isn’t a way to get wealthy in 5, 10 or 20 years.
Crypto won’t be replacing the stock market. Companies aren’t going away. Bitcoin and Ethereum can’t make cars, trucks, TV’s, phones or serve food and provide housing. Companies do. We may end up paying for all of that with a crypto, but the companies and their stocks aren’t going away.