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| HEALTH, WEALTH, AND HAPPINESS |
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To build long-term wealth, we use a concept called steady-drip investing.
Each month, we tuck away a little bit of money, and invest it into a blend of traditional and digital investments (the stock market and the block market).
Also called dollar-cost averaging, the advantage to this method of investing is that you can set it and forget it. Every month, like clockwork, it’s an automatic withdrawal from your bank account, where your money will go to work for you, building wealth.
Steady-drip investing comes with another advantage: it protects you from yourself. In the world of investing (especially blockchain investing), it is easy to get caught up in the hype cycle.
Too many blockchain investors put in a ton of money because “bitcoin’s going through the roof,” only to see the price of bitcoin plummet the next week. Instead of “buy low, sell high,” they “buy high, sell low.” |
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Image courtesy of dcabtc.com Whether you invested in bitcoin (orange line) or the stock market (red line), you would have much more money than you put in: your wealth would have worked for you.
But note how that orange line is all over the place. In a word, bitcoin is more volatile.
This is why we recommend a mix of bitcoin and traditional stocks – the stock market and the block market – and steady-drip investing into both. |
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Our Blockchain Believers Portfolio has a mix of both.
We're not aware of any investment apps that will let you set up both a balanced investment portfolio and a blockchain portfolio, so you’ll have to build the app stack yourself. Fortunately, you can set it up in about an hour. Here's how.
How to Dollar-Cost Average Bitcoin and Stocks
Time: about an hour
Apps needed: We’ll use Betterment and Coinbase.
Step 1:Install Betterment. Betterment is a financial services app that allows you to save and invest using automatic steady-drip withdrawals from your checking account. (Alternately, you can set up a checking account directly within Betterment.)
Betterment will also let you set up savings and retirement plans if you haven’t done that yet – but here we’ll focus on setting up our blockchain investing.
After setting up your account and connecting (or opening) your checking account, you’ll set up a new investment account, which will look something like this: |
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(Note this screenshot shows an ambitious goal – you can lower this to whatever you can afford to put away each month.)
Then set up automatic withdrawals from your linked checking account (or directly from your Betterment checking account) to establish your monthly steady-drip investing.
That’s the stock market. Now on to the block market.
Step 2:Install Coinbase. This is probably the easiest app for blockchain investing, as well as one of the most trusted: Coinbase has been in business since 2012, with an annual revenue of over $1 billion. Most important, they support steady-drip investing into digital assets. |
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Image courtesy Coinbase
You’ll set up Coinbase to make automatic withdraws from your Betterment account, at no more than 10% of your total monthly investment. Let’s say that you’re investing $1,000 per month into your Betterment "stock portfolio": no more than $100 will go into your Coinbase "block portfolio." (Detailed instructions here.)
Your Coinbase investment can simply be held in bitcoin, or you can do a mix of top digital assets. (See our Blockchain Believers Portfolio for examples.) If you’re investing $100 per month into your Coinbase account, for example, you might put $50 into BTC, $25 into ETH, and $25 into XRP. This will go into your account monthly, like clockwork.
Your final setup will look something like this: a “snowball” of gradually increasing wealth: |
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Because it’s blockchain, it’s a square snowball.
Creating Wealth with the Blockchain Snowball
In summary, this method allows you to do dollar-cost averaging across both the stock market and the block market; this combination has performed better than the stock market alone.
At the same time, this limits our risk to the volatile blockchain markets, which can otherwise wipe out a lifetime of wealth for people who make badly timed bets on bitcoin.
By combining traditional stock investing with a little bit of blockchain exposure, we enjoy the benefits of blockchain without betting the farm.
Drip by drip, the water feeds the soil. Drip by drip, the plants grow. Drip by drip, may your investments do the same. |
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| Health, wealth, and happiness, |
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| John Hargrave Publisher Bitcoin Market Journal |
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Hi Everyone,
As humans, we love to debate. Not sure what it is about a good argument, but even if it changes nothing, it can really be satisfying at times. The best kind of debate by far, however, is one that's productive.
Yesterday, a great debate did not happen in the United States. Instead, both presidential candidates held completely separate town hall style events. It seems to make sense, given that almost all voters have already decided.
So if they're not competing for votes, the only job left for them is to motivate the action of voting, and they don't really need to share a stage to accomplish this.
Still, this massive division between the left and right just seems like a new low for the country that invented democracy. Well, perhaps it's not as bad as the Civil War. ...
The work of professor Steven Pinker always warms my heart, as he enjoys pointing out just how much progress the human race has made over the last decades and centuries.
Despite the fact that people often see the world as descending into chaos, we're actually improving ourselves at a rapid pace.
Even still, I'm quite sure that even professor Pinker would have to agree that what we're experiencing now is at the very least a speed bump on the path of progress.
The initial response from global leaders to the COVID-19 global pandemic was way overboard, and now that we're deep into the second wave, the continued response is remarkably underhanded.
Central bankers know well that there's little they can do at the present time. They're really good at manipulating markets and making sure stocks don't crumble, but getting money to the lower ends of the economy is really beyond their ability.
It's for this reason that just about every central bank speech of the last few years has included a growingly desperate call for governments to deploy fiscal stimulus, the kind that gives money directly to the people and not to companies.
It seems the International Monetary Fund agrees. ... |
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| If there's one obvious impact of the virus on the economy, it's the acceleration of the growing divide between the rich and poor, as has been made abundantly clear by the big bank earnings reports that came out this week. |
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Again, it seems to me that the fault here lies not with central bankers, who are doing everything they can to be effective, but political squabbles in the United States and Europe that are preventing governments from writing those checks.
Due to the inefficiencies of the democratic system, stimulus checks that a broad consensus of global leaders feel are necessary to allow people the freedom to combat the virus are not getting written.
Today marks yet another final Brexit deadline. It seems that the sticking points affect so few, but the squabbles impact many. Is it really worth fighting over specific fishing rights and risking the sacrifice of significant portions of both economies over not reaching an actual deal??
Politicians on the left and right, on both sides of the Atlantic ocean, are locked in a debate not on the correct course of action to take, but who should be the one to get the credit for taking it.
Is this a productive debate? Probably not. If there weren't so much at stake here, we might actually enjoy it, as we usually do.
Have a wonderful weekend. |
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| Mati Greenspan Analysis, Advisory, Money Management |
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