Bitcoin - How Much Should You Buy?

By johnwege | johnwege | 14 Jun 2021

There are usually two types of people that invest into bitcoin.  The first type is the person that is interested in the technology side of things; the potential freedom that it could bring to the world.  The second type of bitcoin investor is in it solely for financial gains.  Which group do you fall into?

The great thing about bitcoin's creation is the whole "game theory" concept that was built into it.  Meaning that no matter which of the above investor categories you fall into, they both motivate each other.  When the bitcoin price increases, that leads more people to want to begin investing into bitcoin and this is how adoption spreads rapidly.  But, bitcoin is a coin that no government controls, and as the adoption occurs, (even if for financial reasons) the freedom benefits will follow as well.  As adoption increases even further, more development power will be invested into bitcoin and the tech will increase even further; thus leading the price to increase further; and this will lead to even more adoption.  This is the never ending cycle.

But today, we will be focusing on the second type of bitcoin investor; the one who is in it for the financial gains.  Which is probably most of us. I think most people probably first get into bitcoin hoping to achieve financial gains, and then they fall down the rabbit hole and fall in love with it. For me, that is exactly what happened.  Years ago, when I first got into bitcoin; I had no interest in the tech side of things, I was merely looking for something to change my life financially. (It did) But as experts often say, when you have skin in the game, that is when you will begin to research the subject.  I became obsessed with researching bitcoin, and haven't looked back since.  Today I am definitely both of the investors; interested in both the tech-side and also the financial side.

Many people who do put in the research into bitcoin to fully understand it, quickly come away knowing that they need to accumulate as much of it as they possibly can.  They also know that the time to do this is short.  It is only a matter of time before the rest of the world catches on to just how valuable bitcoin will become in the future.  That was the conclusion that I came to.  Bitcoin really is one of those one in a life-time investing opportunities that we may never see again.  It very well could be the opportunity that many people have been looking for to escape the daily rat-race, to have financial freedom, or to just have enough money to not have to worry quite as much.

People have seen this opportunity, and they don't want to let it pass them by. But there is an extremely important question that you need to be able to answer. 

Just how much should you be investing into bitcoin?


While by reading that question, it might sound like a very basic question, but there are many things that you need to consider.  Many of us believe that bitcoin will eventually be going to over $1 million per bitcoin, and so every extra dollar that you are able to invest, will go much much further in the future. 

While everyone's situation will be different, these will be general things to consider before deciding how much to invest into bitcoin.

The first thing you need to make sure to do is to pay off your monthly expenses.  This means rent, food, credit cards, bills, loans,  all of the necessities.  These are more important to pay than investing into bitcoin.  You don't want to fall deep into debt; which can sometimes be near impossible to dig yourself out of.  

Next, never invest more than you are willing to lose.  This kind goes hand-in-hand with the previous tip.  But you never want to invest so much that you can not pay or bills, or cannot enjoy your life.  Many people will argue that you should live a very conservative life, saving money that hopefully make it big.  This would let you live lavishly ten years later.  But always remember that life is short, and we want to try to enjoy each moment.

Another thing to consider when deciding how much to invest into bitcoin is your level of stress management.  If investing a large amount of money into bitcoin stresses you out.  Or perhaps if the huge volatility stresses you out; then that is a sign that you are investing far too much.  As a bitcoin investor, losing several, several thousands of dollars in an hour's time will happen to you and you have to be ready for it.  Just as ready as you are for the amazing price increase days.

And finally you need to consider your own portfolio balance.  For some people, they are very happy to go 100% into bitcoin and cryptocurrency.  While for others that is not a good idea at all.  If you are investing heavily into a risky asset like bitcoin, it would be a good idea to invest into a "boring" yet steady asset such as an index fund to help balance it out.  While the price is increasing heavily, it may sound like a crazy thought to want to diversify out of such a highly-increasing value asset.  But you will understand more when the price does eventually come down.  Something else to consider is a person's age.  The younger you are, the more risk-appetite you can have.  The reason for this is that if everything goes under, you have a longer time to recover from it.

As for me, I invest far too heavily into bitcoin and cryptocurrency.  It takes up an enormous amount of my portfolio.  The reason I do this is because I am convinced that this truly is a once in a life-time investing opportunity.  But I do find other ways to balance this out.  Because I am the high-risk investor; we have decided to have my wife's investments focused more on those incredibly "safe" type.  This helps to balance things out quite nicely. As for you. There is no correct number for how much you should invest, but I would recommend a number that you feel comfortable with.  The most important thing is to get off zero, and I think you will be very happy in a few years time.

So how about you? Are you investing not enough/too much into bitcoin? How do you maintain a healthy bitcoin investing ratio? Do you have any other tips that would be good to consider as well?


As always, thank you for reading!

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Living day by day, stacking sats and trying to retire early. Follow me on Twitter

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