Borrowing Additional Money on Home Loan to Purchase Bitcoin. Need Advice

LNyclix on 27/02/2021 - 09:50
Last edited 02/03/2021 - 15:43 by 1 other user

Hi everyone.

Last July I purchased a property off the plan for 530k in Canberra. It's a 3 bedroom 2 bathroom 2 garage seperate title townhouse. I negotiated a few good additions for free ( ducted to entire house as opposed to one aircon unit, caeser stone bench top) which should help add to the value. The house is due for completion in April and house prices seem to have gone up a fair bit in Canberra since then so I'm thinking it could come back evaluated 570-580k.

Now I've been wanting to purchase Bitcoin again for a while. I've been in it previously but I sold at a loss as my mortgage broker said I needed 20% to get pre-approved ( I had around 13%) I didn't want to sell but I did in order to get it. Needless to say it's gone up dramatically since then and I'm kicking myself about it. It's my own fault as I didn't reach out to other banks for their advice which it turns out I'd have been fine on 10-12% and pay LMI.

My question is would it be ridiculous of me to use the equity I have in the home and borrow more from my bank in order to purchase 30-45k of Bitcoin since the bank will loan me 20% of the evaluated value. Interests are incredibly low at the moment and I could see myself getting ahead more by utilising this low loan rate and banking on Bitcoin.

Once I move in I'll receive 25k from the government from their building stimulus scheme which will go towards purchasing some appliances and furniture. I should have around 10k spare.

I'm currently on just under 60k a year, clearing $950 a week after tax. If I proceed as planned borrowing 80% which is 424k my repayments will be around $365 a week on a 3 year fixed term leaving me $585 a week to live on.

If I was to borrow an additional 40k to throw into Bitcoin( 80% of 580k) my repayments would go up to $400 a week, leaving me $550 a week to live on. The house is 7.8 energy stars with 2.2kw solar so I don't imagine my utilities will be too much.

I'm a big believer in Bitcoin and could see it hitting 200k by the end of year. I understand it could also be worth a lot less than it currently is. I'm looking to hold long term.

Is it mad that I even consider borrowing an additional 40k to throw into Bitcoin ? The other two bedrooms would be empty so if I struggled financially I could rent a room out for around $250 to help.

Another option I considered was not borrowing anymore than I needed, renting a room out and paying as much into the mortgage as I could in order to purchase a second property in a year or so. This seems the more sensible route?

I don't see myself getting ahead from working in retail alone so I'm looking at other means to get ahead in life.

I apologize for the long post and appreciate all your replies.

Cheers,

Edit: Thank you to everyone that has replied. I've decided against borrowing any additional money from the bank. I really hadn't thought the idea through and how badly it could turn out. I still believe in Bitcoin and will invest but only a small amount each month that I wouldn't lose sleep over if it went to zero.

Financial Cryptocurrency Home Loan

Comments

  • WreckTangle on 27/02/2021 - 09:54
    +90

    Tl:dr

    But why not borrow the money and go to the casino?

      • SBOB on 27/02/2021 - 12:30
        +89

        past performance is no indication of future performance ;)

        • Kangal on 28/02/2021 - 18:41
          -2

          I used to think this, but it is not (entirely) true.
          Past-Present performance represents Confidence, which is indicative of Future Performance. It is not 1:1 and there are known-unknowns, as well as supply-demand, which accounts for the fluctuations in performance in goods, services, and value-stores.

          edit: to clarify, I'm not telling people to buy/sell crypto. Nor is this financial advice. This is just a correction of a common catch-phrase. Just like how people say economics is not a zero-sum game, when in reality it is (planet/universe has finite resources).

          • 80kinvestment on 28/02/2021 - 23:29
            +10

            @Kangal: Past performance has been priced in.

          • deme on 02/03/2021 - 11:43

            @Kangal:

            Just like how people say economics is not a zero-sum game, when in reality it is (planet/universe has finite resources).

            \delta U = Q -W

            Even if energy could could be destroyed, at the scale of the Earth šŸŒŽ vs. the Universe this is moot.

            Also finite resources doesn't mean economics is a zero sum game.

            Past Performance is not an indicator or Future Performance, there is value and speculation, over till it will revert to the value.

            So is past performance an inverse indicator of future performance, no. Speculation is human emotions if you can predict this congrats you are now a trillionaire.

            If past performance was an indicator of future performance then the market would never go down.

      • Valjew on 27/02/2021 - 12:53
        +3

        Itā€™s an absolutely, 100% fair comparison. If you donā€™t understand this you obviously donā€™t understand how the stock market works. The stock market is little more than the worldā€™s most accurate pricing system - the odds of the price going up are just as high as the odds that it will sell. How well Bitcoin has performed in the past means nothing.

        • Kangal on 28/02/2021 - 18:54
          +5

          Investing in Bonds/Stocks/Crypto has SOME risks SIMILAR to gambling.
          However, in a Casino there is an entity controlling things (the House), whereas in a free-market capitalist environment there isn't one. And you can do some estimates to calculate your returns in a Casino (usually less over time, with some having better odds than others). Making estimates for Stocks is also possible (usually more over time) but not as accurate.

          With that said, people usually focus on long-term performance (ie the last 150 years of data) to come up with estimates for long-term performance (ie the next 15 years). This trend is usually an upward tick, with inflation being a downward tick, hence one of the major reasons for investing over pure saving. Unless you're a short or day-trader, in which case, gtf off OzBargain : )

        • bman20 on 02/03/2021 - 15:52

          I am sorry, I have to bite. Your comment is moronic.

          you donā€™t understand this you obviously donā€™t understand how the stock market works. The stock market is little more than the worldā€™s most accurate pricing system - the odds of the price going up are just as high as the odds that it will sell.

          WTF. Did you hear this somewhere or did you come up with it yourself? I agree re the pricing mechanism which is simply regurgitating Economics 101.

          The remainder is baseless drivel. If the stock market has equal 'odds' of going up or down, why have the All Ords consistently gone up over the last 100 years? Inflation aside, it has gone up consistently (over relative increments) for as long as the market has existed. Just a lucky streak of 100 odd years? Lol.

          A casino is a place where a counterparty ALWAYS has the upper hand, by definition. The only time this isnt the case is for games like traditional poker where the casino has no stake in the game aside from a small clip of each hand. In a casino, at the start of a game, your odds of winning are ALWAYS less than 50%. Even if your bizarre and inaccurate theory were true, your comparison is flawed - using your own logic. What did you say? "It is an absolutely, 100% fair comparison". Lols.

          How an asset has performed in the past is still the most effective predictor of future performance. Despite what you heard on Channel 7 news (i am assuming this is your source of finance knowledge).

          I love that you have the balls to accuse someone of not understanding the stock market when you are very clearly a neophyte to financial markets.

          Stay in your lane, valjew.

      • AABBs on 27/02/2021 - 21:53
        -2

        LOL. The odds of making/losing money for both would be similar

        • whooah1979 on 28/02/2021 - 06:05
          +6

          Could you please link the paper that shows casinos and digital assets have similar gains? I'm interested in reading the data the researchers used for their conclusion.
          Thanks.

          • AABBs on 28/02/2021 - 09:36

            @whooah1979: Very smart with your words … digital asset … papers. How dare one compare with the Casino

            Very easy have a look at the historical price

            • resisting the urge on 01/03/2021 - 23:05

              @AABBs: The day OzBargainers recommend crypto assets as a good investment will be the day to get out.

              After all, it is well established for years now that over a decade, any investment in bitcoin would have returned >200% per annum, adjusted to the CPI.

              So if you buy and hold, and even better avoid selling in a dip- anyone on the planet would be hard pressed to beat the return you get from a single, one time, minimal cost transaction.

              https://www.tradingview.com/chart/BTCUSD/XAZGh86z-Bitcoin-Goā€¦

              I am no expert and this is only a fact, not advice. Any investmtent decision you make is your own, and should only be done as part of a strategy involving a range of different kinds of assets to reduce exposure to massive, extraordinary impacts. Which is why in Crypto, the smart investors all hold a bit of BTC even if they are spending all their time researching/valuing altcoins, DeFi, and NFTs.

              • AABBs on 02/03/2021 - 21:16
                -3

                @resisting the urge: You can do as you like, I am doing just fine and am not seeking financial advise. Bitcoin will go back to 2k

                • resisting the urge on 09/03/2021 - 09:59
                  -1

                  @AABBs: Did you even look at the chart?

                  Have you any idea why conservative financial institutions worldwide are investing in crypto? What Distributed Finance brings? Why the market capitalisation of all types of crypto has increased, so massively in the last year, across the board? How much further each can go? Why corporations and companies everywhere are moving liquidity from cash to crypto in the Billions, in order to reduce exposure to risk and increase capital returns?

                  Bitcoin may do anything, but few assets retain value forever, without a dip or three. And again, the charts support any number of historical comparisons, which (with the utmost respect) do nothing other than contrast against your bold prediction of BTC<2k

                  • AABBs on 09/03/2021 - 18:57

                    @resisting the urge: Fair point. I retract my comment about Bitcoin going to 2K

                  • AABBs on 09/03/2021 - 19:19

                    @resisting the urge: Regarding these global conservative financial institutions investing in bitcoin who are they. I know Tesla put in USD 1.5 billion but their share price / market cap has tanked approximately 300 billion since that day

                      • resisting the urge on 11/03/2021 - 10:37

                        @whooah1979: By the time the institutions AABBs wants to see published on lists like that actually make it there, it'll all be over. No room left for the little guys, in the banana republics, with their worthless fiat assets.

                        AABB: That represents only 6.5% of the bitcoin market cap, but I'm not your analyst, so won't research for you. All I get is pokes and negs.

                      • AABBs on 12/03/2021 - 20:39

                        @whooah1979: Ta

          • deme on 02/03/2021 - 11:46

            @whooah1979: I think looking at the house (exchanges, casino) and the Muppets coinbois.

            The house is making similar gains.

      • gromit on 28/02/2021 - 12:45
        +2

        It is actually very fair comparison. Just because you had a winning streak in a casino doesn't mean it is a smart idea to leverage your future against another gambling spree

        • swagneto on 01/03/2021 - 22:36

          If it were gambling it wouldn't be on my income tax

      • mohan76 on 28/02/2021 - 14:13
        +2

        how about last 2 days or fast week performance

      • AABBs on 02/03/2021 - 22:24

        I like the conclusion you have come to, very sensible! keep Saving, keep Investing and leave it to Time. I call it the SIT Principle, secret to financial success!

    • [Deactivated] on 28/02/2021 - 18:10
      +1

      So many financial instituions are actually holding BTC in their portfolio now.

      I mean you don't see Tesla spending 1.5B into a casino.

    • CalmLemons on 01/03/2021 - 14:16
      +1

      Don't do it.

      Active trader and investor.

  • Rizzler on 27/02/2021 - 10:04
    +13

    mate BTC is a bubble. Like other key life decisions, just gotta pull out and enjoy the fruits before it's too late. Or you could stick it somewhere safer.

    • EightImmortals on 27/02/2021 - 12:07
      +7

      So what isn't in a bubble ATM?

      • Rizzler on 27/02/2021 - 15:14

        I think you missed my point….

      • AABBs on 27/02/2021 - 21:54

        Cash

        • bman20 on 03/03/2021 - 08:47
          -2

          You are right that cash is not a bubble. Given your other comments, i suspect you are correct unintentionally.

          Cash is not a bubble because it has not gone up in value, for a very long time. The very opposite is happening with money being printed like never before. Bu

          • AABBs on 03/03/2021 - 19:56
            -2

            @bman20: You donā€™t know who I am. Keep making assumptions. Talk is cheap, tell me how you are investing today and with how much conviction

            • bman20 on 04/03/2021 - 10:22
              -2

              @AABBs: huh? i dont care who you are and never suggested i knew who you are? I just know you are clueless on the matter based on your comments in this thread, enough evidence for me to have conviction in that.

              Financial market neophytes feeling entitled to air the opinion is something that the new world has brought about, a bubble you might say.

              Comparing any tradeable investment to a casino shows a rudimentary misunderstanding of either investments or a casino.

              Gambling is a zero sum game, investing is not. Whether it is crypto, commodities or equities - the same applies.

              • AABBs on 05/03/2021 - 18:51
                -2

                @bman20: Do you go around insulting people you meet in person? Be nice, it is harder to do but the rewards are better. I am not buying Bitcoin today because I think I can buy it for less tomorrow. This thread is about a guy looking to borrow against their house to buy Bitcoin. Do you own Bitcoin, are you buying today? The casino comment is this : you buy Bitcoin today the risks are similar to the casino. You might win big but there is a significant chance for it to go the other way. Iā€™m entitled to have an opinion on this the same way you are . Have a great day!

                • bman20 on 08/03/2021 - 09:46
                  -2

                  @AABBs: If i met someone who espoused utter drivel that could influence peoples financial decisions, i would take a similar tone in person as i am now. It is completely reckless for someone like you to chime in here.

                  I am not sure if you have ever been to a casino but it certainly doesnt work as you described. When you make a bet at the casino, there are two outcomes. You win or you lose. Your money goes up or it goes to 0. It is virtually impossible for bitcoin to go zero. If someone wins in gambling, someone else has lost an equal amount. There is just no comparison.

                  "you think you can buy it for less tomorrow" - ironically you are the one gambling here.

                  • AABBs on 09/03/2021 - 09:39

                    @bman20: quick to dismiss otherā€™s views … growth opportunity

                    • bman20 on 11/03/2021 - 14:40
                      -2

                      @AABBs: What is your view? It's ill-considered drivel. "you think you can buy it for less tomorrow" - top analysis. I don't gamble, i don't try and time the market - i invest.
                      Thank you for the character assessment, no doubt there is a cheap mirror you can find on Ozb

                      • AABBs on 12/03/2021 - 20:44
                        -1

                        @bman20: Be nice my friend …. no more

                        I can hammer just as good as the next guy

                        Good luck with your investments

                      • AABBs on 10/11/2022 - 07:36

                        @bman20: You still long Bitcoin?

                        • cloudy on 11/11/2022 - 22:02

                          @AABBs: lets be nice, he has probably lost a lot of money now. No need to give him the i told you so, his mother has already done that.

                        • bman20 on 14/11/2022 - 20:53

                          @AABBs: been in your head all this time!
                          ive had no crypto for for over 12 months as i sold it to buy my first place.
                          when i have more disposable cash i will buy again.
                          still long bitcoing however short-medium term is looking shockers

                          • AABBs on 14/11/2022 - 21:39
                            +1

                            @bman20: Good to hear mate, all the best with the new place!

        • whooah1979 on 03/03/2021 - 09:13

          The RBA pump the fiat cap by 5% every year.

          https://banknotes.rba.gov.au/production-and-distribution/disā€¦

          At the end of June 2020, there were 1.8 billion banknotes worth $90.1 billion on issue in Australia. The value of banknotes in circulation increased by 12.6 per cent over 2019/20, compared with annual growth of around 5 per cent in recent years.

      • Whomastadon on 28/02/2021 - 15:25
        -2

        Your mum

        Whomastadon on 28/02/2021 - 15:25 (Collapsed - Offtopic. Show)
    • whooah1979 on 27/02/2021 - 12:56
      +2

      Where is a safer place to stick it? šŸ¤”

      • EightImmortals on 27/02/2021 - 13:50

        I'd say under your mattress but inflation stuffs that idea up.

        • SBOB on 27/02/2021 - 17:04
          +23

          What if it was an air mattress?

          • EightImmortals on 27/02/2021 - 17:48

            @SBOB: I guess if you preinflated it it would serve as a good store of value!

    • dufflover on 28/02/2021 - 14:05

      mate BTC is a bubble

      So is CBR :P

      boom-tish

  • triviums on 27/02/2021 - 10:05
    +6

    My question to you is if you are very wrong are you going to be financially fine? i.e can you wait something like 5 years or more for a return on investment?

    • Nyclix on 27/02/2021 - 10:23
      +2

      Yeah if it went to zero I'd be fine. Just means I have an extra 40k on my mortgage.

      • bargain huntress on 27/02/2021 - 15:35
        +2

        are you sure that would be fine? even if the housing market goes down or bursts or there is another recession?

        • Arigato on 02/03/2021 - 18:10

          Are you saying he should sell his house all together?

          • bargain huntress on 03/03/2021 - 15:26

            @Arigato: not unless he is in over his head - ie can only just barely pay mortgage when times are good; then there's no room for bad times and he would need to downsize to stay safe from foreclosure in the future?

      • frbargain on 28/02/2021 - 13:51
        +1

        In that case do it. Ignore the people saying stuff about casinos etc. If you've done your due diligence and can afford it to go to zero then why not do it?

    • buffalo bill on 28/02/2021 - 17:53

      Legislation aside, research quantum computing and the effect it will have on Bitcoin and you will see Bitcoin is not a long term investment.

      • whooah1979 on 28/02/2021 - 18:58
        +2

        quantum computing

        What can quantum computing do? They can't be used to hash a new chain. Even if they could get one block they would still have to fight for 5 more.

  • Ocker on 27/02/2021 - 10:11
    +6

    Just be prepared to lose everything - including your property. If house prices come off dramatically you could get into a negative gearing situation.
    Are you really that desperate to make a quick buck?

    • Nyclix on 27/02/2021 - 10:24
      +1

      I'm not prepared to lose my property no. But I don't see how that could happen. Canberra is so safe house wise and if it got rough couldn't I just rent a room or two out to help ?

      • TilacVIP on 28/02/2021 - 08:07
        +3

        You do realise bitcoin could fall back to $10K quite easily [I wouldn't touch it at that price also]

        People need to remember, Bitcoin is nothing more than a gamble.

      • snooksy on 28/02/2021 - 11:57
        +7

        I think you havenā€™t been around long enough in either stocks, housing, working career to experience a recession, housing pullback, market crash etc. Your house can easily pull back $100k worth. BTC could go to less than $100. You could lose your job as well and have to sell your house at a loss which means declaring bankruptcy to get the bank off your back. BTC is not investing, itā€™s speculating. You arenā€™t putting your money to work to grow an asset and generate a return on investment. You are hoping someone pays more for your coin than you paid for it. How do you value BTC? What is itā€™s underlying book value? What is the return on investment - 0% until you sell it and you hope some poor shmuck pays more for it than you paid.

        • whooah1979 on 28/02/2021 - 12:43
          +2

          I think you havenā€™t been around long enough in either stocks, housing, working career to experience a recession, housing pullback, market crash etc.

          Some people have short memories.

          2020 COVID

          XJO crash.
          https://nimb.ws/gjAVlS

          https://www.bbc.com/news/business-53994318

          Australia in first recession for nearly 30 years

          https://www.news.com.au/finance/economy/australian-economy/cā€¦

          Coronavirus in Australia: One million people lost their jobs in a month due to COVID-19 crisis

          https://www.abc.net.au/news/2020-05-05/almost-one-million-auā€¦

          Almost a million Australians out of work due to coronavirus; RBA tips economy to take 10pc hit

          https://www.bloomberg.com/news/articles/2020-10-01/australiaā€¦

          Australia Home Prices Fall, Dragged Down by Sydney, Melbourne
          By Sybilla Gross
          October 1, 2020, 10:00 AM GMT+10
          Melbourne house prices down 5.5% since start of pandemic
          Values rise in rest of country where virus cases are limited

          Australian house prices fell for a fifth month, as declines in Sydney and Melbourne outweighed a nascent recovery in the rest of the country.

          House values in major cities dropped 0.2% last month, CoreLogic Inc. data released Thursday showed. Prices in Melbourne, which is in its third month of lockdown after a resurgence in coronavirus cases, declined 0.9% last month, to be down 5.5% since the pandemic started.

          In Sydney, prices fell 0.3% in September. Home values rose in the rest of the country, where virus restrictions are not as stringent, led by a 0.8% gain in Adelaide and a 0.5% increase in Brisbane.

          https://www.abc.net.au/news/2020-09-01/melbourne-leads-houseā€¦

          Melbourne's property market has taken another big hit during August, with price declines more than twice those seen in any other capital city around the country.
          The Victorian capital's prices are now down 4.6 per cent since the coronavirus pandemic hit in March.

          In contrast, CoreLogic said the rate of decline reduced in Sydney (-0.5 per cent) and Brisbane (-0.1 per cent) last month.

          Adelaide and Perth had flat prices, while Hobart (+0.1 per cent), Canberra (+0.5 per cent) and Darwin (+1 per cent) posted gains.

        • El-Rhi on 28/02/2021 - 13:18
          +1

          Sounds like a Ponzi

        • oziebee on 11/04/2021 - 16:21

          I still don't understand why the toilet rolls being purchased by people during COVID. Is it FOMO or rumour or something else. It makes me think that the same people are after the housing and bitcoin

      • trongy on 02/03/2021 - 08:53

        If owning bitcoin is so important to you, why not just get boarders in now and use their rent money to buy bitcoin?

  • treekangagaroo on 27/02/2021 - 10:15
    +13

    This is how I would look at it.

    If you could afford to lose all of your investment in bitcoin (if everything goes south) and still be happy and carry on your life as normal, then take the risk and invest. There is a fair chance that it could go up due to firm believers like you worried about FOMO and rushing to invest . Also you should decide ( now ) at what point you will take your profits, and get out of this if the value gains. Don't wait thinking you will maximize your profits by doing so and end up loosing more after investments dry up. You should also watch out for regulatory changes for cryptos.

    If you do not understand it, better stay away !!

    • Nyclix on 27/02/2021 - 10:25

      Thank you. This is good advice.

  • Fozdog on 27/02/2021 - 10:17
    +8

    Your calculations are based of all time low interest rates, run the calculations at a modest 4-5% rate and see how you feel about the repayments.

    House sharing for cash is a good play regardless

    • Nyclix on 27/02/2021 - 10:28

      Good point ! I'd definitely be struggling at 5%.

      If I was to get 250 cash a week is the tax man likely to ever find out if I use the cash for food etc ?

      • EightImmortals on 27/02/2021 - 12:09
        +4

        He will if you keep talking about it in public. :)

      • bargain huntress on 27/02/2021 - 15:39
        +4

        would your boarders ever be claiming centrelink? - you would be the person the would be paying rent to. maybe even claiming rent assistance to pay rent too.

        i think all the departments share info now?

      • snooksy on 28/02/2021 - 11:59
        +1

        You might ha r to calculate your ability to then pay the tax back

      • gromit on 28/02/2021 - 12:50
        +1

        Only takes one mistake for tax man to find out and that mistake can come from many sources including the borders themselves.

  • whooah1979 on 27/02/2021 - 10:29

    OP, when did you sell your digital assets?

    • Nyclix on 27/02/2021 - 10:30
      +1

      It was around March last year. It was pretty much at the bottom.

      • whooah1979 on 27/02/2021 - 10:39

        Ok. That was a shame. That šŸ¤•.

        People don't have sell their digital assets to take advantage of its value. People can now lend their digital assets and earn interest. They can then use that as collateral to borrow other assets at a low interest rate (and even 0% interest).

        Keep that in mind the next time you need capital and don't want to liquidate your assets.

        • Nyclix on 27/02/2021 - 10:41

          I had 3,200,000 vechain coins which went to around 7btc a few months later. That hurt lol.

          It's my own fault for not doing more research before selling.

          • whooah1979 on 27/02/2021 - 11:07

            @Nyclix: A VET šŸ‹.

            VET is doing good things with MNC that doesn't make the news. It has the potential to 10x in this bull market. It could also just stay stagnant.

            DYOR before investing in digital assets.

        • bargain huntress on 03/03/2021 - 15:28

          @whooah

          People can now lend their digital assets and earn interest.

          how do you do that?

      • graysen on 27/02/2021 - 10:40

        ooff,,

  • mskeggs on 27/02/2021 - 10:30
    +25

    You should definitely do this. With the BTC likely to go to $200k or more, you should probably buy now by maxing out your credit cards, or get a short term cash advance from a payday lender so you donā€™t miss out on the gains while you are waiting for the bank finance.
    The above is sarcasm.
    You have already lost money on Bitcoin. Learn the lesson.

    • Nyclix on 27/02/2021 - 10:32

      Thanks for your reply.

  • avoidfullprice on 27/02/2021 - 10:31
    +3

    Are you looking for confirmation or actual advice?

    You're exposing to idiosyncratic risk, whether you are putting extra 40k into one stock on the market or Bitcoin. Is it mad if you do that?

    Your experience has confirmed to you that selling to get 20% deposit is a mistake and want to buy back more to make up. Is your purchase decision then a strategic one or emotional one?

    Your last few paragraphs about not borrowing but let out a room but that's slow but don't want to work in retail etc. read like justifying your decision and not really exploring alternative. Have you explored other FIRE strategies?

    • Nyclix on 27/02/2021 - 10:33

      On paper putting 40k in does sound a little mad. I'll be honest I haven't looked at alternatives. What's fire strategies?

      • modiika on 01/03/2021 - 11:53
        +2

        Financial Independence Retire Early. Some places you should check out:

        Retire early part is somewhat optional as not everyone wants to retire young, or starts young. But basically its an ideology almost, that focuses on minimizing your expenses and maximising your investments. I cant recall the exact figure, but if you are able to invest 50-60% of your income per year (usually in Index ETFS, or a mix with some other investments like property) then you'll be able to retire in like 12-15 years. That assumes you retirement expense remain the same or lower. So there are blogs out there of people living frugally in their 20s (usually with a fairly high paying post uni job) and retiring in their early-mid 30s.

        Basically, it is a (boring to some) investment strategy focused on the mid to long term. You build a balanced investment portfolio that will slowly (relative to bitcoin movements) grow. A key principal is most people really cant beat the stock market, they cant pick winning stocks reliably, they aren't going to become rich day trading ( or in Forex/Bitcoin or whatever other get rich investment gets popular from time to time).

        Fire isnt for everyone, but i do think it does focus people on things they should be thinking about but dont:

        • what do i want to be doing with my life
        • how much money do i need to retire
        • when do i want to retire
        • what do i need to fund the retirement i want
        • what purchases / decisions am i making today that arent really benefiting me (that stan subscription you forgot about) that is delaying my ability to retire/ be financially independent.

        As I said above its not necessarily about retirement. Some people, just want to know they dont have to work any more to take some of the stress out of a job they love, or so they can drop their hours back. Some variations of FIRE reflect this such as:

        • FATFire - Basically people who want to be well off in retirement, lots of international travel, eating out, etc
        • LeanFire - Basically people who want to retire as soon as possible and dont mind having a very small safetynet/ very low amount to live off each year. They may plan to make money another way, such as in a different but not lucrative job or they may just value the freedom that much.
        • BaristaFire - Similar to Lean, the idea really is that they work 2-3 days in low stress easily available jobs working at minimum wage, and that supplments their investments enough that they can be comfortable. Another variation on this is where the person has a hobby or a skill they want to develop, which may never fully support them, but combined with their retirement investments will give them a comfortable life and give them more enjoyment than sitting at home in their 30s doing nothing.

        I think you should explore this area before investing in bitcoin. Not because I think you'll want to follow FIRE, but because the resources in that community will show you that there are likely a better investment for your 40k than Crypto

      • modiika on 01/03/2021 - 11:57

        I also ask what you think the end value of bitcoin is likely to be, 200k per coin? How long will it take to get there. If it does great, that's a 2.9ishx growth on your investment. Ok so your 40k investment is now 112k, and you pay capital gains on half of that (assuming you sell after more than a year) so maybe you end up with 90k. Does that change your life? Was the risk of losing the 40k worth that return? What if it drops to 10k next year, and you suddenly need the money? Would a more stable investment that got you to 90k in 10 years have been a better fit? Given the low interest rates, it is perhaps not unreasonable to withdraw from your mortgage, but by taking it out you may be delaying paying off your mortgage by 1-3 years. These arent even worst case scenarios.

        You could invest 40k in an alt coin and get some crazy 100x return in a few months (assuming you sell). But there are 1000s of alts, how do you know which this will happen to. Why would it happen to any one? Would it just be meme nonsense like Doge? That to me is pure gambling. People will yell DYOR, but that doesnt help you aren't an expert by spending 3 hours googling various alt coins. You'll end up reading either biased comments on a forum, or articles written by people with agendas (either to pump/dump certain coins or just click bait that tells you nothing). These coins are pure speculation. I think bitcoin will likely dip and go higher, i dont think its reached peak bubble yet, but its probably only a couple years off that. But that is just an educated guess.

        • whooah1979 on 01/03/2021 - 12:03

          10% of the gold market cap in 2021 and another 10% for every year after that.

  • Brucet on 27/02/2021 - 10:36
    +2

    You play with fire (stop being greedy)

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