There are many quotes that get used to death on the internet, particularly in personal development circles. One of my favourites is the following:
“The best time to plant a tree was 20 years ago. The second best time, is now”
Its meaning is obvious, but I take it as a reminder of the danger of procrastination. There’s nothing that can be done to change ones past actions. There’s no point in wishing you’d done or said something earlier in life, even if you know you’d feel better if you had.
If you’re regretting that you didn’t do something, the best corrective action is to do it now. Right now.
That’s how I’m viewing my journey to investing in cryptocurrency, and more specifically, Bitcoin.
I Was Late to the Party
I can’t pretend that there was any science behind my decision to explore investing in crypto when I did — on Saturday, January 2nd, 2021. It was a decision taken on a whim.
I decided that I’d take a little money I’d been given for Christmas and explore the process for investing it in some Bitcoin.
I’d long been following the story of crypto from afar. I know of people who invested early and made a lot of profit from it. I’ve heard of others who’ve overextended themselves as they chased riches and lost the lot.
While I never had a great deal of disposable income to invest in it, I’d always had in the back of my mind that it’d be smart to try and at least get involved in some small way. A big barrier existed in unravelling the technicalities of actually making an investment. This was probably the single biggest factor in stopping me from starting.
It was this barrier that I set out to break down on that Saturday.
If I could figure out how to invest, my strategy was (and remains) that I’d buy and hold Bitcoin and gradually drip a little money in each month to increase my holding.
Cutting to the punchline, I figured it out — with ease, as it turns out.
5-days later, I own a trivially-small amount of Bitcoin, have it downloaded and stored offline in a hardware wallet, and my journey has begun.
On the day I was delighted to make a small profit of about 3%. One week later, my £100 of Bitcoin is worth £143 (at this second).
I’m no financial genius — the increase is thanks to unprecedented rises in the price of Bitcoin of over 400% since the start of the new year. But the experience to-date has certainly prompted me to reflect on the things I’ve learned so far.
1 — I wish I’d started sooner
You won’t be surprised to learn that I’m kicking myself for not having made my first exploratory investment a lot sooner when the price was a LOT lower.
In the time I’ve been following Bitcoin, the price had been up to $20,000 and as low as $3,000 (in 2017). At either of these prices, assuming I’d made a small investment each month (as I intend to do going forwards), I’d have built up a tidy sum by now based on today’s price (nearing $40,000).
I have no appetite to work out how much as it would be a distraction from writing this piece and would only make me feel worse.
Of course, it’s important to note that 3+years ago, it may have been a lot more difficult to get into Bitcoin investing for a newbie like myself. I really don’t know.
Either way, it’s pointless to regret what might have been, but it emphasises the wisdom behind that quote. I could have planted my tree sooner — but at least I’ve done so now.
2 — I wish I’d invested more
As well as starting earlier, I could have invested more.
I didn’t have loads more money to make my first investment on that day, so it’s largely a moot point. I would also feel differently, no doubt, if I’d lost money on my initial investment.
As it stands, I wish I’d staked even double what I have so far — it’d give me a bigger (notional) profit from what amounted to an hour of time and attention.
Much of my reading since the new year has been revisiting various podcasts that touched upon Bitcoin and cryptocurrency that I’d previously given half an ear to. I’m now listening intently.
I’ve also been reading up on the psychology of investing since I realise I have much to learn.
This excellent piece on investing psychology from Tim Denning will tell you all you really need to know on the subject. This is the primary feeling I’ve had about Bitcoin since investing on 2nd Jan. It’s number 1 in his article on the subject for a reason. I strongly suggest you read the rest of the piece.
3 — I accept that the price will probably dive
I’m a pragmatist at heart and a slightly cynical Brit. I’m prone to looking for the catch in things and tend to see the glass as half-empty.
I’m open to the likelihood that Bitcoin isn’t going to carry on with its bullish run.
The price has reached historical highs day-in, day-out since the new year, and it’d seem unlikely that it’s not going to fall substantially in the near future. Even if predictions like this one from JP Morgan turn out to be true and Bitcoin is destined to reach $146,000, financial markets move in waves and cycles, not straight lines. It will come down even if it keeps going up.
I’m receptive to the idea that it’ll drop well beneath the price at which I bought, effectively losing money. If and when it does, I’ll be buying the dip.
Bitcoin and cryptocurrencies generally are considered volatile investment vehicles, but it’s clear that as years pass, they’re becoming more widely accepted as the real deal. Those who are cynical of it will be quick to point out that I’ve bought near the top, and I’m okay with that. My goal was to start building my holding and to learn. I’m doing just that.
As big a part of learning as the mechanics of making an investment will be to learn how the price fluctuates, and I’m primed to do so.
4 — The psychology of investing is a huge factor
As Tim Denning points out, the psychology of investing is a topic in its own right. I need to learn a lot more about it if I’m going to maintain my status as an investor for the long term.
Even on the day when I made my first tentative investment, I found it hard to contain my nerves. I watched the price fluctuate radically, and as it climbed upwards on the day, I could hear a voice in my head telling me I had to get in and make my purchase now, now, now.
I could have waited even a few minutes and caught a better price as it fluctuated lower again before rising further. Instead, I got caught up in the moment and became gripped by FOMO.
I’ve also learned that confirmation bias is a thing too. The average consumer buys a new car and then looks for reviews from others who have bought the same and loved it. They reject reviews from those who’ve hated it, deeming the authors to be weirdos and cranks.
In the same way, I’ve looked for research that suggests crypto is here to stay (not that you have to look for at the moment). I’ve rejected the stories from those who are cynical. I realise that I need to make my research more balanced and gain a more rounded education on the subject.
There’s much left to learn and a long way to go in my life as a crypto investor. I’m still treating it as an experiment, and it’ll certainly remain a supplement to my other modest investments — I’m not cashing in my pension or selling units of managed funds to put it all on Bitcoin.
But I’m glad that I’ve overcome the inertia and ceased the procrastination, and have finally got involved.
If you wish you’d planted your crypto tree 20-years ago, I will urge you not to procrastinate further. Plant it today!
Note: This article is for informational purposes only. It should not be considered Financial or Legal Advice. Consult a financial professional before making any major financial decisions.