How much of your net worth should you be investing into crypto? That is a question that many of us ask ourselves. And it is an important thing to consider as well, taking into account just how volatile the cryptocurrency market can be. The problem is that many of us have gone down the rabbit hole of bitcoin, Ethereum and other crypto coins. We feel that we have essentially seen where the future is heading with great conviction. We feel that we are early, and can't believe that everyone else hasn't woken up to this fact yet. And so, we often feel that we are in a race against time. Meaning that we want to accumulate as much as we possibly can before the world wakes up to the real value of bitcoin, Ethereum and other coins. While that is the future that I believe we are heading towards, when you have that opinion, it can become very easy to go overboard and invest in crypto too heavily. After all, many of us feel that this is our once-in-a-lifetime opportunity to change our lives financially. I'll be honest, this is something that I do myself as well. I sacrifice buying things currently, just so that I have more to invest. I tell myself that these sacrifices today will turn into something much greater in the future. The problem is that none of us truly knows the future. The key thing that you need to always remember, is to never invest more than you are willing to lose. If you have that mindset and consider the money you invested into crypto already lost, that will make your experience much less stressful.
But back to my point about sacrificing today and instead using that extra money to invest in crypto, in hopes of having great returns in the future. This has been my lifestyle for the last several years, and it has been the best thing that I have ever done. During my earlier years, I was pretty reckless with my money. As soon the money would hit my bank account, it would find its exit as well. It pains me to think that during those times I actually was familiar with bitcoin, but had not gone down the rabbit hole yet, and ignored the market. While I did spend money I things that I'm thankful I did; such as traveling and living in different countries around the world, the life experiences. But I did waste a lot of money on purchasing things to add to "my collections." Things such as video games, Blu-ray movies, Air Jordan shoes, tech gadgets, clothes, and so on. Many of them that I would sparingly use, and not get the value out of them that I paid. And then there is the constant eating out at restaurants or fast food restaurants. These are the things that I regret.
Eventually, I reached a point where I realized I was getting older and I had not begun to do any sort of investing. And I had several debts as well. I was already far behind others financially, and it looked like retiring was an impossible dream. And so I decided that I needed to change my lifestyle, change my purchasing habits, pay off those debts and begin investing. At the time in my life, my salary was quite low, and so I decided the first step to take was to minimize my spending habits, keep it to a minimum and invest everything. I didn't know what I would invest in at the time, as I had little to no experience. Initially, I began investing in the stock market. While I was doing this I also began researching investing markets in general as well. That is when I remembered bitcoin, and decided to just look at how it was doing. To my surprise, it had gone up quite a ways since I had first heard of it. And so I began looking into it even more, and eventually fell down the rabbit hole, and became convinced that bitcoin was the future.
I started with a very small portfolio, literally investing the extra $10 that I had in my account, but the key point is that I never stopped. Each week, each month, I would continue to invest as much money as possible. Many times I would invest the moment that my salary was deposited into my account, and would often over-invest. Making it difficult to budget until my next payday. A cycle that would repeat constantly. Years down the line crypto lending services would become popular, and presented me with an opportunity to put the crypto that I had already purchased to work and earn a passive income. All the while, making accumulating much easier. As time passed, staking crypto would become popular as well. Which also presented another opportunity to compound my earnings. Even as my financial situation changed; I no longer have debt, my crypto portfolio grew to a size that I'm proud of, and that dream of retiring early not being only a dream but a real possibility. Even with all of those things, to this day I still live an extremely frugal lifestyle. I continue investing first, sacrificing other purchases, and then clamping down on my budget until my next payday arrives. It can be a difficult lifestyle and would be much more difficult if I had children that I needed to support. But I don't, and I'm taking advantage of this time to build up as many assets as possible. But it isn't something that is for everyone.
I hope that by living frugally today, I will be able to enjoy tomorrow even more. But, there is risk in this type of philosophy as well. The first risk is what I mentioned above. Crypto is extremely volatile and there is no guarantee for prices to continue going up. You could lose everything. The other risk is that life is short. By sacrificing today, you are potentially missing out on enjoying the present day, and also missing out on some great experiences. It is important to not let life pass you by. After all, time is the most valuable asset that we have, and we have to treasure it.
And so we need to find a balance. I find that as I was younger, I was able and willing to sacrifice much more than as I'm getting older. Living in that small and older apartment was no problem. Eating ramen noodles constantly to save money was no problem. Because I was on a mission, and as I mentioned, I had put myself in a bad spot financially. Fast forward to today, and I'm daydreaming about what my dream house would be like, and where I would like to travel with my wife.
So how much should you be investing into crypto? That is a question that every person will have a different answer to. At one point, I was putting 100% of my disposable income into crypto and investments. Now it isn't quite that high, but it is still an amount that would make many people squirm and possibly have anxiety. Especially when the price of bitcoin drops heavily. While the short-term future will be very unpredictable and prices could go up or down. Especially if the world heads into a deep recession. But looking at the last two years, I think most of us would agree that bitcoin has a much better chance of being the future than many of us would have predicted, and much sooner as well. And so that leads me back to the race against time. Bitcoin is currently $41k, and many people think that is expensive, and it is. But in terms of where the price is most likely heading years down the line, it is most likely very cheap still. And so that is why I continue to sacrifice today. By sacrificing today, it will allow me to live out my dreams in the future. Hopefully getting rid of that tiresome 9-5 job, and retire on some tropical island.
How about you? What is your crypto investing philosophy? Do you sacrifice today, so that you can invest more?
As always, thank you for reading!