Building Wealth: Using old strategies in new markets. (Part 1)

in #bitcoin7 years ago

First we need to decide what our goals are. Are we looking for long term wealth or to just make some quick cash? The former will eventually lead to a steady stream of the latter, rarely does the quick route lead to the former. With that in mind lets hash out some of the rules I use to build for the future. I am not a financial adviser or professional, so please remember these are my opinions and may or may not apply to your situation.

Rule 1: I try not to invest or buy anything that I don't want to own in 5 years. If the coin, stock, bond, or other investment isn't something I can see myself owning in 5 years, I don't touch it. 5 years seems to be a good milestone, as it will outpace, outgrow and just plain withstand any of the crazy fluctuations of crashes, inflation, or panic pressure. As far as cryptocoins go, BTC is the one that looks like it will be around in 5, 10, and 15 years from now.

Rule 2: Diversify. "Don't have all of your eggs in one basket." Look at other investments, traditional investments are still a good hedge against downswings.

Rule 3: Cost averaging is a great tool for increasing your position, while protecting against major losses. By investing a constant amount at regular intervals, you take out the guess work and it averages the amount you have paid for that investment. I sleep much better not having to second guess whether I got into the market at the right price... Remember rule 1, we're in this for the long term.

Rule 4: NEVER, ever, buy on margin or via a loan. Getting that call, informing you that a brokerage is demanding cash to bring your account up to cover the margin, really sucks. It also puts all of your investment at risk, and to see your hard work and time go out the window, because the market took a turn and you don't have the capital to cover it, is something to avoid at all costs. The same goes for a loan, what did you have to put up for collateral? Is that risk worth losing the collateral? For me the answer will always be no. One small caveat, if you are buying equipment or something with physical value that can be liquidated if the worst happens, might be the exception. Do your research.

Rule 5: Probably the most important of all. Never buy, sell, trade or do anything financially based on emotion. While you may get lucky from time to time, it only feeds an eventual downward spiral, as you start to chase losses, trying to make that money back.

This is just a quick overview of what I hope to cover in this series of articles, I will try to get a little more in depth and share some of the tricks and concepts that apply to even these new markets based on old strategies and analysis. Whether you are a miner, a trader, or a hybrid, there are many things we can learn looking at how wealth has always been built. Patience is probably the biggest strength to have, it can also be one of the hardest to obtain.

I wish you well,

Mike


Posted from my blog with SteemPress : https://www.private-locker.com/cryptocurrency/theories/building-wealth-using-old-strategies-in-new-markets-part-1/