INVEST WHAT YOU CAN'T AFFORD TO LOSE
During one of my many conversations yesterday with jfang, he mentioned something I and many crypto investors/enthusiasts have said and taken to be the norm when it comes to investing in cryptocurrency. It is the second most popular phrase after, "do your research." I have said it; you have said it and we all believe this to a certain degree.
"Do not invest what you cannot afford to lose"
At first, it sounds logical and I understand the rationale behind it. Crypto can be said to be in its infancy. The market is still very volatile and one must tread with caution. You cannot afford to lose money making silly investment decisions. This is standard for any type of investment, even in the traditional financial world.
Now, telling people to invest what they can afford to lose sends a wrong message. What this implies is that crypto investment is nothing but a gamble, and investing in this space can be likened to throwing money away. I do not believe this and I am certain a large number of people in the crypto sphere do not believe this as well.
There are a lot of solid projects in the crypto space. For instance hive and its ecosystem have a number of projects that provide utility rather than feeding on the hype of the crypto space. The truth is, a lot of people do not value such projects because they do not bring the type of returns they expect. Most people want to get rich quickly in this space and are willing to gamble with their money to achieve their aim. This attitude towards crypto investment has led to the narrative that the crypto space is a fluke.
Fortunately, I see the crypto industry differently from the average Joe. I, to some degree, understand the ethos of decentralisation thanks to communities like leofinance where I learn about cryptocurrency. 60% of all I own in terms of money is on cryptocurrency. So I am certainly investing what I cannot afford to lose. I am intentional about what I do in this space and I think anyone who truly wants to make it in this space should do the same. Aside from money, I am spending a lot of my time in this space learning and building relationships. It is not something I intend on throwing away.
Most of the closest people I know are from the crypto space. I interact with them daily; we work together on different projects. So crypto isn't a gamble to me and I can say the same for those who have poured their heart, time and resources into this space for years.
Also, I do not believe a 2 trillion dollars (it is a little below that now) market is going anywhere anytime soon. Yes, there are risks attached to investing in crypto. The same can be said about other investments. The point is: crypto has moved from a playful experiment into a thriving industry.
I believe language is important and how we phrase things can determine not just its outcome but also our collective consciousness about that said thing. We need to start taking crypto seriously and change our narrative about this space. This is the one way we can truly grow. Cheers.
If you found this post insightful, a reblog would be appreciated. Thank you.
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I don't think "Do not invest what you cannot afford to lose" is that bad of a thing. Crypto is still a high risk, high reward investment at the end of the day and people really shouldn't be throwing their dinner money into the pool. 😂
But at the same time, I can also see your points. I guess things just aren't that simple.
Crypto is still high risk in a way but it is the best thing that has happened to the financial system
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Same here. Fortunately for us, we went all in and our lives changed for the better. Certainly, not everyone can have such an experience but I know a lot of people who have succeeded.
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That's true, all bases on believe
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I think a better narrative would be: 'invest responsibly or wisely'
Crypto investment is high risk, not a gamble. I think the narrative of investing only what you can afford to lose often falls in line with gambling. So this is the perception I will like to correct.
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Same here bro. Same here
My life is here and it’s intentional as guck
I think we are on the same page
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Na so brotherly. We dey here chock! Unlike most people in the west, there aren't so many options here. So I guess I understand why the mindset is different
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Investing what you can afford to lose always but crypto space as evolve from that sense because most people in crypto now have their life saving in cryptocurrency. Crypto is getting more stable and the risk is minimal
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The same can be said about people investing in the stock market. However, the narrative isn't to invest what you can lose but to invest wisely. Investing what you can lose, in my opinion, is synonymous to gambling, are you gambling or investing? I think many have mixed both.
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Investing in hive is just my best way of saying invest wisely.
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Well, it's just not black and white but I do have my own buffer because I don't have 100% of my investments in just crypto. Even if things went bad, I would have a buffer to get back on my feet and I think it's something that gives me ease of mind.
Would it hurt if I lost my investments? Yes, it would and I understand that some people don't mind going all in. The roadmap is important but sometimes it requires more than just the right idea and roadmap. It also requires timing sometimes and there are just too many factors for me to think of doing so.
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I agree. I do have something I can fall back to if this goes south. However, it doesn't mean I don't take it seriously. I think it is possible to do both--have a buffer and a plan B. Every smart investor should have both.
True that. We are in the business of capital allocation and certainly there will be times a seemingly great investment doesn't pay off. Things like this are expected. Thus, we need to diversify to hedge against risk.
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Risks are everywhere, it is not only on the crypto space that we incurred this risks, to me, the life we live is full of risks, so taking risk in Crypto investment is just like doing the same thing we know how to do the best.
It was full of insight.
We all need to take calculated risks sometimes to achieve feats of greatness. It is a necessary part of life.
Thanks for stopping by.
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It may no longer be prudent advice on the macro scale, but on the micro scale it still is I think. I am diversified across a bunch of assets for instance, and most of them I have amounts that I can "afford to lose". I know that some of my bets will be huge wins, while some will be total losses. Most are in the middle.
Overall I try not to advise anybody, especially friends and family lol.
"Not financial experience. Just sharing my experience."
Well, as regards the statement, I am more worried about it connotes covertly which is what I tried to address in this post. As I told another commenter, there is nothing wrong with diversifying your portfolio, it is expected. However, there is a level of attention that goes into it. I want to assume you are not paying tokens based on hype alone. You do your research and find out about the project's utility. This way you are certain about your position to a said degree that warrants investing. Investing this way eliminates the mindset of losing. I don't think people invest intending to lose although that is a possibility. This is why one can hold a position even when a token isn't doing well in the short run
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The financial investment space sometimes can be a game. A game of risks and learning.
But I think the most important thing is learning to take responsibility for your decisions.
That helps to develop a firm stance especially when taking risks.
Things can always go well or go bad.
But one should make wise decisions and be mentally ready for the worst.
Valid point. Part of taking responsibility isn't throwing your money away on projects without doing your due diligence. It is one thing for a good project to fail and another gambling like a degen on NFTs with little or no utility.
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Very well said > Invest what you can't afford to lose. Your words literally hit the right target. I was thinking about savings and investing, it always raised a question in my head and now it seems to clear up. Thank you.