Not every day as an investor is supposed to be amazing. There are going to be times when it is hard to look at your account. However, as investors, these are the times that we need to buckle down and review our reasons for entering the market.
Cryptocurrencies have been having a hard time recently, and there isn’t an end in sight. But, unfortunately, it seems that most companies, big businesses, and governments are taking this time to thrash cryptocurrencies thoroughly.
Sorry, I have been rude. Welcome back to the CryptoCurrency 101 Series (101, 102, 103, 104, 105, 106). If you haven’t, go back a check out the prior articles. Okay, back to the show.
Whether it is cryptos lack of intrinsic value or their views on the environment (mining), governments and businesses want to pull out all the punches. As an investor, you have two options; cry about it, or get rich.
I Live Paycheck to Paycheck
That’s right; even if we can’t control the markets, we can control our investing. Building the mindset of an investor has never been more critical than today. So let’s review our investor’s code to ensure we remember the guidelines.
Investing and trading are different. It seems like yesterday (a couple of months ago) that everyone was high on the horse with cryptos. I couldn’t read an article without someone talking about how much they made on a particular coin. It seems everyone was profiting large amounts.
But with the fall of Dogecoin, most coins also fell. And not just a few percentage points, but 40-50%. And crypto has stayed down for over a month now. I do not hear any more bragging or showboating in the media right now. Why is that?
Because people thought they were just going to pick a winner and ride it to the moon. Investing rarely, if ever, works like this. This is the difference between being an investor and a trader. An investor is looking for a long-term move and ensures they have a proper investing thesis on each security they buy. Traders are looking to obtain capital gains.
Don’t get me wrong; traders can make a lot of money. However, over time it is more complex and harder to replicate one’s successes. For example, I know many people who got into Dogecoin at $0.15 and watched it climb to $0.70. They should have sold, but they never really vetted what they were going to do with their coins.
Dividends vs. Royalties II
Then Dogecoin dropped to $0.43 after Elon Musk appeared on Saturday Night Live, quickly wiping out tons of unrealized capital gains people had. However, traders kept holding Dogecoin because they didn’t know how to move out of it and into something new.
I see it all the time across many different asset classes; people hit the jackpot but are stuck on the next move. They are stuck because they do not know how they hit the jackpot. I know people who have large sums of money in Tesla stock and others who bought homes in Southern California at the perfect time.
When it comes to their next investment, they are waiting for the media to tell them what to do. However, nobody is coming to save them. No one is going to knock on their door and give them their following significant investment thesis. So they have to find it.
How Do You Define “Being Rich?”
I invest for income. I rarely have this problem because I invest from cold hard cash, even in the crypto space. I buy or create things that make my passive income increase—specifically, rents from real estate, dividends from stocks, royalties from books, and interest from cryptos.
That’s right; I invest for income within crypto. Over 70% of my crypto portfolio is earning interest, even in a down market. I am not overly concerned about the price action within my cryptos because I am still being paid cold hard cash to hold my money there.
Prices will eventually recover, and all will be right with the world. But, in the meantime, I will continue to invest in cryptos. Why? Because everything is still on sale.
Downturns make millionaires. The best time to invest is when the markets are down. Look at the housing market in 2008-2009. If you had bought a few houses during this time, you would be set for life. Many fortunes were built during the 2008 and the 2020 pandemic.
The Road to Wealth
Crypto is going through a similar phase right now. The big players (governments and politicians) are using this time to scare the crap out of traders. But, unfortunately, people who are looking for easy money are still sitting on the sidelines.
Investors are having a field day. They have already formed their playbook of what coins will be long-term successes; now, they can buy these at a discount. That is why it pays to be an investor.
Retail buyers (mainstream buyers) are waiting for the talking heads on TV and the internet to tell them when and what to invest in next. Robert Kiyosaki says it best. “When the mainstream gives you investing tips, all the profits have already been extracted by insider investors.”
I am happily still investing while this plays out. It may be a year or two before cryptos recover, or it could be a day or two—no one knows. I know that I believe in specific cryptos like Chainlink and will collect my interest while I wait.
It has never been a better time to be an investor. Recent events show that this is the best time to be an investor. There are enough asset classes to find a downturn or slow period at one specific point in time. Currently, real estate and stocks are hot, and crypto is down. So, where should you direct some of your money? That’s right.
Hopefully, this has been a good refresher for you. I love to read about investing vs. trading and income vs. capital gains. It always seems to reinforce the principles I hold dear. If you don’t know your investing thesis, it is never too late to form one. Read books and learn about the markets. I didn’t know much about anything until two years ago. Good Luck!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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