Are the stimulus checks and Bitcoin boom a weird coincidence?
Stimulus checks + our country collapsing = ...a lot of people talking about Bitcoin?!
There is a LOT going on right now (but don't let that kill your New Year, New You vibe). In the mix of crazy, I've been seeing a lot of not great advice out there. Specifically about Bitcoin. So let's talk about this extra $600, and if any of it should be going into a new crypto account...
Just so you know, this post contains affiliate links!
But first- if you haven't seen my latest videos on YouTube, check them out! I'm still in the baby phase of my YouTube career, and any views, likes and, subscribes really helps me out!
How much do you need to invest to retire with $1,000,000 Starting at Age 30?
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Why Roth IRA's are NOT Tax-Deductible!
Thanks for the views, friends!
Now, back to Bitcoin.
I, personally, have been investing in Bitcoin since 2017 (thanks, George!). This isn't to give you FOMO. This isn't me bragging. But I hope you can see, the main ingredients in this next example are TIME and PATIENCE.
My first Bitcoin buy was $40.14, and the price of Bitcoin at the time was $2,460.45 per coin. That $40 purchase got me 0.01631595 Bitcoin and is now worth $590 dollars.
And I kind of want to cry reading that. Whenever you see prices like that, whether you profited or didn't, the gut reaction was "I wish I bought then/more." But this price increase didn't happen overnight. That is 42 months of letting that virtual currency sit there.
Was I accumulating a lot of Bitcoin at that time? I FREAKING WISH. In 2017 I was making 30k a year, aggressively paying off student loans, and had just started investing for retirement. I was merely dabbling in crypto, and mostly trading bitcoin for other altcoins (facepalm, facepalm, facepalm) and NOT putting a lot of money in.
But, over the years, I semi-regularly added to my crypto portfolio, and as of right now, my small investments here and there are certainly paying off.
Am I super excited about investing in Bitcoin right now, when it's at an ALL-TIME HIGH OF $37,000?! (As of writing).
It's CRAZY high! And Bitcoin is CRAZY volatile!
Will it plummet back down soon?!
I sure as heck don't know, and neither do your price-charting Facebook friends!
How quickly and drastically a price changes. When you see big % changes, like Bitcoin being up 6.73% today, up almost 94% in the last month, and 223% in the last 3 months... that's pretty darn volatile.
Is volatility bad??
Only if you can't handle it. Because it certainly works in both directions. What can move quickly up, can move just as quickly down.
How do you know if you can't handle it?
Pretend you put $600 in Bitcoin, and when you check your account balance in 2 weeks, you see it's now worth $317.
How do you feel?
Or do you feel like buying more?
If you feel sad and sick, you likely can't handle a lot of volatility, and that's fine. Not only is it fine, it's normal. But being able to better manage this fear, and make sure it doesn't lead to emotionally selling at a loss, is going to be key. Train yourself to look at price drops as buying opportunities, and NEVER invest more than you can afford to lose.
If you feel like buying more, congrats, you can handle a little (or a lot) of market volatility! Now just make sure you don't teeter too close to the edge of a gambling problem, and try not to lose the house!
So, how do you know if you should be investing in the stuff?
First, make sure you are financially comfortable TO invest.
If you are carrying debt on high-interest credit cards or are struggling to pay your bills, that's where your stimulus check should be going!
If your debt is alright but you don't have any emergency savings put aside, that's where I would park stimulus money next!
Next, if you are brand new to investing and haven't given a thought about retirement yet... you might want to start your investment journey there. Investing in the stock market still has its risks, but it also has a lot more historical data backing up its returns, and there are too many tax advantages in retirement accounts to ignore.
Try thinking of where your money should go like a hierarchy of needs.
Don't worry about getting on the Bitcoin train if you need to pay your bills, or would rather put that money aside in a savings or retirement account!
And for most money decisions... I'm rarely an all or nothing girl. Assuming your bottom needs are met, you might want to break up this stimulus money. $200 in a high-yield savings account, $200 in your Roth IRA, $200 in Bitcoin?
Works for me.
Just make sure to do your own research before investing in ANYTHING! Past results do NOT guarantee future results, I am NOT a Financial or Investment Advisor, this is NOT meant to replace any professional advice from someone who knows your unique situation. This is purely based on my thoughts and experience! In other words, I am not responsible if you put it all on black (or Bitcoin) and loose yo' money!
And if you are wondering where to buy Bitcoin and other cryptocurrencies, I personally use Coinbase. ? That IS an affiliate link, and if you use it to open an account and buy $100 worth of Bitcoin, we each get $10 free of Bitcoin!
Just make sure you aren't investing money that you will need in the short-term, and mentally prepare for the price to drop, go back up, drop again...
And make sure your current financial needs are being met FIRST!
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Friend of Finance LLC is NOT an Investment Advisor. This information is based on the personal experience and opinions of Friend of Finance and is not meant to replace advice from a tax or investment professional who knows your situation. You should ALWAYS do your own research before investing in ANYTHING!
Hi, I'm Alicia, welcome to Friend of Finance! This site is a way for me to share helpful things I've learned from working in the financial industry, important money things that I probably wouldn't have learned otherwise, and things everyone should know about.