How much Bitcoin should you buy?
💡 Daily Reminder: Stay humble, stack sats
Bitcoiners,
If you are new to bitcoin or have been buying for the past few years, you may be wondering how much Bitcoin is appropriate to own in your overall portfolio.
Here are (3) considerations you should apply to your personal life in order to determine how much bitcoin you should buy.
Time Horizon
Risk Tolerance
Understanding the Technology
Time Horizon
An investment time horizon is the period when one expects to hold an investment for a specific goal.
As a rule of thumb, you should not buy bitcoin with any spare cash you will need over the next 5 years. If you have spare cash and are willing to not touch it for 5+ years, then bitcoin should be in your portfolio. The reason behind this is that bitcoin is a volatile asset and typically appreciates over 4-year cycles.
Risk Tolerance
Your risk tolerance is personal to you.
The ability to take risks depends on how much extra positive cash flow you have coming in each month. If you don't have positive cash flow nor do you have an emergency savings fund, you are probably not able to take much risk. Along with ability comes the willingness to take a risk, which also depends on the individual.
Understanding the Technology
The more you learn about Bitcoin, the more you buy.
I have been buying bitcoin for 5+ years and can say that the more I understand the revolutionary technology, the more I buy. A deeper understanding leads to more conviction. If you put no time into learning about Bitcoin, there is a good chance you will end up selling when the price drops significantly and end up with a loss.
Nowadays, people tend to allocate 1-10% of their investment portfolio to Bitcoin. Take these (3) points into consideration when deciding how much bitcoin you should buy.
Happy Wednesday,
-Pod
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Eric Podwojski
Founder, Bitcoin EDU
Twitter:Â @epodrulz
Disclaimer: This should go without saying: This is not financial advice. This is not investment advice. I write this newsletter for education and entertainment. Act accordingly.
