Investing in a ‘Fire & Forget’ fund that spits out 5-10% per year is NOT how an average person can become wealthy in a time efficient manner. In fact, it's impossible within a time efficient manner (5-10 years).
Whaaaaat? Surely not. Why does everyone pile into funds like Sheep then?
Without going into a long rant, it’s simply because it used to be an effective way to save for the masses about 60 years ago when rates were in completely different territory. But that paradigm of trusting a Fund Manager just seems to have continued and the whole FCA regulated industry/basket continues to propagate it.
For example, if you put £10k into a fund like this, and it miraculously makes 10% per year. After 10 years you will only have £26k! Which is pathetic for 10 years of work/investing. Parking your capital like that massively loses you out on Opportunity Cost. Opportunity Cost in making your money work harder and faster and the cost of you not learning new wealth building skills. You're better off spending £1000 every 6 months in trying to set up a business. After 5 years of constant learning and pivoting you will have found at least 1 biz out of 10 that becomes successful. And we should all know by now that the single fastest way to 10X your wealth is by setting up, running and growing a business. Yes, it comes with a cruise-liner of risk in the beginning but the more experienced you get, the risk dissipates.
You have to understand that Funds like this sit within the Capital Preservation phase of your life. But until you have made your fortune you are in the Capital Accumulation phase of your life whether you like it or not.
So you need to focus on building wealth via high yielding assets like Business or Trading or Property and Investing in general until you make your B Number (the lump sum that passively spits out your ideal monthly income at 5% ROI), THEN you can park it somewhere to PRESERVE and slowly grow without risk.
Also, funds like this are a dime a dozen and their marketing is sometimes very good, especially as most IFAs would recommend them. BUT you have to be chronically aware that these funds only make you meaningful amounts of money after 30+ years because that's when Compounding Interest properly kicks in. If you pull your money out early, you're screwed.
And the amount of global uncertainty around these days is huge so it's dubious whether your cherished fund will even be around in 30 years as it's going to be an alien world compared to the last 30 years due to exponential tech progression. Prime example is when people lost 16 years’ worth of savings when their funds went bust during the 2008 crash.
So please don't think I'm the 'Crypto guy'. I'm not. I'm the Wealth Generation guy and Cryptos is only about 10% of my wealth. Biz is 90%. The faster you can get into the Wealth Preservation phase (5-10 years) the better because then you can have 7 figures compounding over 30 years, instead of 5 figures compounding. You'll then have more money to help do good in the world instead of barely looking after yourself. Which I think is a bit selfish. Don't aim to just barely live by the time you're 70 and be a burden to society/family. Aim to earn excesses so you can do good stuff and help others.
Here's another example. Let’s say Person A has £10k and starts saving and contributing £250/m into a magical fund that always chucks out 10% per year for the next 30 years. At the end of 30 years, that person will have a pot of £99 000! Which is dreadful in my opinion after 30 years of active saving and pot contributing. Assuming Person A has to live off that for another 30 years, that’s £3300 per year if it was a capital drawdown type pension. Or if Person A aimed to live off the 10% yield from that £99k, that would only spit out £9900. Not good enough is it. In my opinion, I really don’t want to be forced to work to survive by the time I’m 70! On the other side of the coin, let’s say Person B did ‘the riskier path’ and took her £10k and spent say £1000 every 6 months trying to set up a business. Let’s say she failed miserably for 7 years and in the last 3, she managed to sell a business for £500k. Which isn’t that hard. Especially after 10 years in biz! She then puts that £500k into this magical 10% yielding fund and does zero contributions. Well after 30 years, Person B will have £3.36m! If she wanted to live on that 10% yield it would spin out £336k per year!
So in summary, I'll repeat this because it's important:
Focus on building wealth via high yielding assets like Business or Trading or Property and Investing in general until you make your B Number, THEN you can park it somewhere to PRESERVE and slowly grow without risk. For more Wealth Building nuggets, check out the free videos at www.TheWap.org
So what on earth has all of this got to do with Cryptos Siam!?
Well part of my wealth accumulating strategy is to have 10% in extremely high yielding/high appreciating assets. That’s how anyone who ever made 8 figures got there. They concentrated a part of their life or funds into something high risk and high yielding. Whether it’s a business or an asset.
So for me, 90% of my time and money is in various businesses and 10% is in trading and Cryptos. That’s because the potential Risk to Reward ratio is so blindingly high that I would be negligent to not have exposure. Cryptos gives the average Joe the easy opportunity to put Risk Capital into it (1-10% of your wealth) to potentially make such a high reward over the next 10 years that this reward equates to 70+ years of saving. But the journey will be tumultuous and the only way to feasibly ride it out for the average person is to have pure risk capital in it so it doesn’t affect one emotionally.
Because in the near future, there will be a frenzy where every morning when you wake up, the market cap will be jumping up tens of Billions per day for a sustained period. During this time, most won't know what to do with their portfolios, their paper profits will be dwarfing their annual income & they'll sell early due to the fear & negative anchoring currently being engraved into their psyche right now...
There will then be some horrendous pullbacks to the tune of hundreds of billions in an even shorter period of time. Again, most people will lose their shit again and the cycle will continue ready to attract and mentally destroy more unprepared investors investing in a sector they don't really understand and with no real yardstick to aim for.
I'm a broken record but this is why you need to be in this market for the realistic profit-making reason and that's to capitalise on the medium term bubble. Anything less than Peak Bubble indicators you should ignore and get on with your life...
So, anticipate this next stage of the rollercoaster ride as it will be even more stressful than a falling market. I was once £650k IN PROFIT in just one day back in 2015 from trading and I experienced the most amount of stress in my life that day. Even more than losing £400k over a period of 4 months.
Until then, be strong and maintain the bigger picture Cryptonians!