The Cipher

Wow.

 

On 5/26/2021 at 12:29 PM, GrandPapillon said:

keep the 50K in cash, that's your best investment at this stage, at least you are not losing money

 

There is

 

On 5/27/2021 at 10:01 AM, AndyAndyAndy said:

...where you are guaranteed...

 

But with 50k Baht I would just go into a Bitcoin.

 

so much

 

18 hours ago, Logosone said:

50K is actually the perfect amount to trade in Forex. You could open a nice account and make a fortune trading foreign currencies, Bitcoin, Gold or even Indices.

 

almost unbelievably bad

 

5 hours ago, GrandPapillon said:

right, because losing money in crappy investment will definitely beat the inflation erosion of your capital

 

investment advice in this thread.

 

People should have to post their qualifications and performance track record along with any financial advice they give, honestly.

 

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If ฿50k is the sum of your net worth, then you don't want to take any investment risk at the moment. A serious downturn in your investments at the same time as a job loss sends you to zero immediately with no safety net.
 

The first thing you want to do is save until you have basic cash savings of ~฿300k. You can keep that in any checking account, or you can put it in a liquid savings account if you want, but the interest here isn't important. This is your buffer in case your cash flow ever unexpectedly goes to zero.

 

Hopefully that will never happen, but if does, now you have some emergency cash to tide you over while you find a new job or to book a ticket home to SA etc.

 

Once you have your ~฿300k saved, you can start looking at taking a bit of investment risk. Stress on 'a bit' here. ฿300k isn't hard to blow through, so at this point you're still at the stage where you are building your financial foundation.

 

Start looking around for tax advantaged brokerage accounts (for stock trading) that you might qualify for. What you want is something that shields you from taxes on your investment gains. Examples are a Roth IRA (USA) or a TFSA (Canada). Not sure if Thailand or South Africa have anything like this, but at least look.

 

If you can't find a tax advantaged account, just open any brokerage account that lets you trade stocks. Ideally you want to find a broker with low or no commissions and an easy interface so that you can learn the ropes. Ideally your brokerage platform will give you access to trade on US exchanges (they contain most products).

 

At this point, find 2-3 broad market ETFs that you believe in. An ETF is basically a basket of assets that share some underlying theme. You buy a share of the ETF and it gives you exposure to everything in that basket. Examples are: an ETF that tracks the S&P 500, an ETF that tracks the performance of Indian stocks, an ETF that tracks Chinese stocks, etc. ETFs are traded on exchanges and can be accessed through your brokerage.

 

What you pick is up to you - just make sure that (i) it tracks a broad enough market that you get diversification; and (ii) that you believe the direction of the markets that you choose to track will be up over time.

 

These ETFs constitute the second part of your emergency money. But unlike the ฿300k cash in the first part, they give your money a chance to appreciate over time. These are intended to be relatively safe long horizon plays.

 

You want to buy into these ETFs by dollar cost averaging (DCA). That basically means that you don't try to time the market - you just make a contribution (ideally of the same amount) at the same time each month. For example: On the first Monday of every month you buy $XX worth of the S&P500. DCAing helps you buy more units when prices are cheaper and less when they're more expensive.

 

You want to do this second part until you have at least ฿700,000 allocated to your core ETF positions. Ideally you will never have to sell these, and they will compound over the course of your life. These ETFs will not make you rich. They exist to give you a stable baseline that should increase in value a bit each year (maybe on average 5-10% if chosen properly).

 

Along with the previously saved ฿300,000, this means that you will have a total of ฿1,000,000 that you will ideally never touch (one exception is that the ETF position can be used as a down payment for a property). If you run into financial trouble, use the ฿300k cash buffer first before selling your securities.

 

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Ok. So after you've saved that ฿1M you can start to think about riskier investments. Like individual stocks or options or crypto or whatever. Come back at that point and ask for next steps (too hard predict what markets will be like at that time)????.

 

Yes. You are going to hear other people with better investment performance than you. But they are taking more risk for that performance. Don't chase big gains until you're stable, and then only chase with money that you don't need.

 

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Now - I'm gonna be real a little bit. It sounds like your biggest issue is actually income. If you're stressing about where to put ฿50k, you're stressing about the wrong thing. The best use of your time would be to figure out how you can save materially more cash at the end of the month .

 

If you're in your 20s, so your biggest asset is time. Spend your weekend evenings learning a new skill for a higher income career, or starting a side hustle that you can potentially scale into a full time business. You are worth more than your current salary.

25 minutes ago, 1FinickyOne said:

This is what puzzles me.. I struggle to see the value of bitcoin [as opposed to a credit card or cash even] and sort of view it as a couple of guys saying, lets make our own money, it is not visible or tangible, we'll just say it exists [lets make it rare!! limited quantities ] - - and the 'mining' being a big energy suck - and for what? 

 

I'm just lukewarm on Bitcoin as opposed to something like Ethereum which I am quite bullish on. The first thing you'll want to understand is that each crypto asset is different and each has a different claims as to why they are valuable - propositions which may or may not be true.

 

I am not an expert. But my understanding is that what gives Bitcoin value is that it is a quantity-capped asset that has a big enough first-mover advantage that proponents believe it will mature into basically digital gold. Ie, an asset that has more demand than supply and is thus valuable because of its relative scarcity. I see Bitcoin fans throw out the example pretty frequently that there are ~50 million millionaires in the world, but can only ever be 21 million Bitcoin (assuming no code change), so every millionaire couldn't even own one entire Bitcoin if they theoretically wanted to.

 

41 minutes ago, 1FinickyOne said:

But, my larger question is who started this and why can't it easily be copied? 

 

Well, at the most basic level it can be extremely easily copied. You can go online, see the exact code of Bitcoin, and copy and paste it into a replica whenever you want.

 

But. How would you get anyone to want to buy your replica? Mass demand isn't easy to manufacture, and that's one big thing Bitcoin has going for it.

 

Besides that, there's a dedicated community of folks updating Bitcoin's code to make it faster and more efficient, so if you copy-pasted it, Bitcoin's code would evolve beyond your copy (assuming you weren't updating it).

 

50 minutes ago, 1FinickyOne said:

If one morning there was no more bitcoin, who would you call to get your $$ back from or complain? Is there even an office or a mint? 

 

Short answer: nobody. For better or worse that's part of what 'decentralized' means.

 

Longer answer, you could try and call your exchange to complain, but if Bitcoin itself just vanished then there isn't really anything your exchange could do.

 

Crypto is a largely unregulated space. This means that there's a ton of risk out there with stuff like scams and legal market manipulation. There is no regulator stopping somebody like Elon Musk from Tweeting down the price of an asset when he wants to buy more and Tweeting it up when if wants to sell.

 

Or, more significantly but less obviously, there's nothing stopping big-money players from causing a major price crash via a cascade of leverage liquidations when they want to buy into the market. ????????

 

And there's a ton of other sources of risk too. So. It's a pretty wild ride.

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And that's why it's important to understand (i) what you're buying; (ii) why you're buying it; (iii) what your time horizon is. Answering those three questions for myself was part of why I prefer Ethereum and DeFi products over Bitcoin personally. You can read a bit about the bull case for Ether here.

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Ok disclaimer time. Not investment advice. I have a small amount of BTC exposure via an ETF and a larger Ethereum position. Please do your own DD.

18 minutes ago, Walker88 said:

Everyone playing the game has just marked to market, pretending they could all realize that amount. When even a small number of folks decided to liquidate, it fell 50%.

 

Yes. This is correct. The crypto market has a liquidity issue because everyone tends to be on the same side of the trade at all times (and frequently levered too) so the velocity of price movement is very fast in both directions. Coins coming off exchanges and into cold storage doesn't help the liquidity issue either.

 

The crypto market is also immature, highly manipulated, and has a lot of amateur participants, so I think it will continue to be boom and bust until (and if) it matures.

 

23 minutes ago, Walker88 said:

Where is the actual value?  Any office buildings constructed, factories built, people hired, products produced?

 

Zip.

 

Not exactly right here though. There's a lot of garbage in the space, but there is legitimate innovation that is occurring as well and products and networks being produced that could one day be materially impactful on the world.

 

Unless you've taken some time to learn a bit more about the space, it's easy to see anything 'crypto' as just competing scams - I used to see it like that. But there are differences between something like Poocoin (which is a ponzi) and AAVE (which is actually trying to innovate in decentralized finance).

 

If you are actually a former Wall Streeter, then I'm assuming you're familiar with how Venture Capital funds work and the 'home run' model. One way to think about the crypto market is to imagine coins as VC portfolio companies except available to the public and traded in real time (instead of held in an infrequently valued private LP).

 

Once you eliminate the scams you're left with a bunch of competing projects intending to actually disruptively innovate in some way. Many of them will probably fail or go nowhere, but a few might actually achieve something meaningful and justify valuations.

Wow. Never would've guessed it by hanging out here.