6 year plan, traditional investments too slow?

Thrugelmir

whatstheplan said:

ratechaser said:

However many calm and reasoned posts go into this thread, it's still a get rich quick scheme. It might work, it might not, no one here can tell you which way it will go. If they could (to a good level of accuracy), they would be sipping cocktails on their mega yacht rather than posting here at close to midnight...

I have some frankly insufferable acquaintances that 'got in early' on crypto and are crowing about how smart they were. I'll grant that they were lucky, but smart, really? Amazing how hindsight can make people rationalise themselves as financial geniuses. They are still sitting on what is only a paper profit, because BTC will obviously go to a $million, right? Let's see shall we.

So good luck to you if this is the punt you want to take, but aside from a handful of crypto fanboys on here, you're unlikely to hear a lot of strong validation for your plan.

Tbh I wasn't seeking validation and I appreciate crypto fans on this forum are probably in a very small minority.  

In the longer term the money is the commercialisation of the technology i.e. blockchain. 

underground99

whatstheplan saidHowever, me investing/gambling say £6k in crypto over the next 24 months has the potential to return more, maybe even much more, in 5ish years time than investing £6k in traditional markets.  Say I doubled my investment in the same timeframe via traditional investments, so I've made £6k.  Great.  However it does little in terms of bringing my retirement date forward.  So in that sense yes, I'd be taking a punt as oppose to a more considered investment approach.

It's fine if you recognise it as a punt that needs to come off in a very fortunate way for you to 'win' your bet. The important thing is you don't look at what happened to the price of bitcoin or ethereum over the last X years and assume that 'if all goes to plan as expected' it will have the same crazy exponential gain over the next X years, bringing forward your retirement date much more than a failure would delay the date. I mean yes, that can be a plan, but it shouldn't be assumed that it'll work: it's a punt.

Likewise, a naive person could look at the share price of Tesla or something and see, "ooh, nice, if only I'd bought that, 10x my money in a year. So if it goes bust I lose 100% of my money and if it goes to the moon I turn it into 1000% of my money, and if it doesn't move I am breakeven. So if I 'average' those outcomes I get the average of -100, 0, +1000, which is 300%, so I should definitely go for it over the next year, it's a no brainer".

People would invest in all sorts of nonsense if that was how risk and probability really worked. If it's a coin toss fifty-fifty that something loses 1x or makes 10x, of course you should take the bet. But if the payoff for success is 10x the potential loss, in a short space of time, it's definitely not a fifty fifty chance - a rational person would expect to lose the 1x many more times than they win the 10x. So that is how your 'get retirement funds quickly by using crypto' will likely go.

You want those nice gains that you saw everyone else make recently, and missed out on, so you want to play, for fear of missing out again, but you wouldn't - or at least, shouldn't - expect to make a lot more than conventional investments. It's just a skewed distribution towards a really high payoff (low chance) or a lower or negative payoff (higher chance).

Some crypto will do 10x and some will do -1x. You're hoping Ethereum or another picked out of a hat out of hundreds will be the one that does 10x, and it might or it might not be, but it can't be rational to 'expect' it to be. All you can do is 'hope' that the coin you picked will be the next big thing rather than the last big thing. 

I get what you're trying to do and it sounds nice. You know that £6k one way or another doesn't improve or delay your retirement by much. But £30k or £60k would. So you think: why not gamble the £6k (which doesn't change my life) to get the £30k or 60k (which gets me a year off work). Sounds great if it works. There are all sorts of get rich quick schemes or bets at the bookies that could offer those outcomes. Of course they, just like a punt on crypto, are not bets with a 50:50 odds of success. They mostly won't pay.

The issue is that your daydream for early retirement is probably something that you won't be thinking of as a 'get rich quick' scheme. You know get rich quick schemes rarely work, but you think that something that you diligently put money into every month for a few years is not 'quick', and retiring only one year early is not 'rich', so you think you're not indulging in a get rich quick scheme. Rationally, you are - you rely on a huge inflation-busting gain from one specific niche asset type, to make you wealthy  enough (rich) to leave work earlier than you could hope to do by conventional means (quick). That's all fine if you're up for a gamble, but there are loads of other alternatives.

If you're willing to potentially lose £6k and the returns from conventional investment on that £6k (which doesn't unreasonably delay retirement if lost) for a chance of getting an extra £20-100k (which does materially being forward retirement if it works), you don't need to do a slow and steady drip feed into crypto. Just save or invest more conventionally to build a stash.

Then, when you get closer to retirement, take your £6k or £10k or whatever you reached, from stash, go to the bookies or the casino. You'll find a sporting event or casino game that offers that chance to walk away with a large gain or nothing. Bet big on longish odds and go home happy (hand in your notice the next day, just like you would have done if the crypto paid off) or sad (keep working until you have enough to retire normally, just like you would have done if the crypto tanked).

However it's of more use to me to receive considered feedback and advice as oppose to joining a crypto forum where the reverse would likely be true i.e. many people simply saying to me 'yeah do it, great plan, you'll make millions!'  An echo chamber isn't what I need or seek 

We can agree that it's best to stay away from places that tell you what you want to hear.

Those bullish on crypto or the specific type of crypto that you intend to buy, would tell you to do it, and you know that before you even go there, so there is no point going there until you have definitely decided to do it and want pointers on what sort of wallet to get or whatever. 

The obvious options are

- bet on a cryptocurrency or mixed basket of different currencies, and have an early or late retirement depending how it goes;

- invest conventionally and have a normal retirement;

- invest conventionally and tax efficiently until you get a year from retirement, and then use as much of the proceeds of those invested funds as you like, to bet large on an interesting event or exciting casino game, and have an early or late retirement depending how it goes.

The people on a crypto forum with vested interests will tell you that option 1 is a much more sensible thing to do than option 3 because option 3 involves 'gambling', while with hindsight the more famous cryptocurrencies are all substantially up from where they were a few years ago and they should continue to outpace all conventional forms of investment. That's the sort of advice you don't need.

Albermarle

Thanks and I see what you're saying, however bear in mind my (original) retirement plan won't be affected as I'll have a workplace pension,

Despite the fact that this workplace pension is a significant part of your retirement plans , you do not seem to be giving it any attention . Depending on how it is invested and how well it performs over the next 15 years , it could make a much bigger difference than your crypto adventure .

whatstheplan

underground99 said:

whatstheplan saidHowever, me investing/gambling say £6k in crypto over the next 24 months has the potential to return more, maybe even much more, in 5ish years time than investing £6k in traditional markets.  Say I doubled my investment in the same timeframe via traditional investments, so I've made £6k.  Great.  However it does little in terms of bringing my retirement date forward.  So in that sense yes, I'd be taking a punt as oppose to a more considered investment approach.

It's fine if you recognise it as a punt that needs to come off in a very fortunate way for you to 'win' your bet. The important thing is you don't look at what happened to the price of bitcoin or ethereum over the last X years and assume that 'if all goes to plan as expected' it will have the same crazy exponential gain over the next X years, bringing forward your retirement date much more than a failure would delay the date. I mean yes, that can be a plan, but it shouldn't be assumed that it'll work: it's a punt.

Likewise, a naive person could look at the share price of Tesla or something and see, "ooh, nice, if only I'd bought that, 10x my money in a year. So if it goes bust I lose 100% of my money and if it goes to the moon I turn it into 1000% of my money, and if it doesn't move I am breakeven. So if I 'average' those outcomes I get the average of -100, 0, +1000, which is 300%, so I should definitely go for it over the next year, it's a no brainer".

People would invest in all sorts of nonsense if that was how risk and probability really worked. If it's a coin toss fifty-fifty that something loses 1x or makes 10x, of course you should take the bet. But if the payoff for success is 10x the potential loss, in a short space of time, it's definitely not a fifty fifty chance - a rational person would expect to lose the 1x many more times than they win the 10x. So that is how your 'get retirement funds quickly by using crypto' will likely go.

You want those nice gains that you saw everyone else make recently, and missed out on, so you want to play, for fear of missing out again, but you wouldn't - or at least, shouldn't - expect to make a lot more than conventional investments. It's just a skewed distribution towards a really high payoff (low chance) or a lower or negative payoff (higher chance).

Some crypto will do 10x and some will do -1x. You're hoping Ethereum or another picked out of a hat out of hundreds will be the one that does 10x, and it might or it might not be, but it can't be rational to 'expect' it to be. All you can do is 'hope' that the coin you picked will be the next big thing rather than the last big thing. 

I get what you're trying to do and it sounds nice. You know that £6k one way or another doesn't improve or delay your retirement by much. But £30k or £60k would. So you think: why not gamble the £6k (which doesn't change my life) to get the £30k or 60k (which gets me a year off work). Sounds great if it works. There are all sorts of get rich quick schemes or bets at the bookies that could offer those outcomes. Of course they, just like a punt on crypto, are not bets with a 50:50 odds of success. They mostly won't pay.

The issue is that your daydream for early retirement is probably something that you won't be thinking of as a 'get rich quick' scheme. You know get rich quick schemes rarely work, but you think that something that you diligently put money into every month for a few years is not 'quick', and retiring only one year early is not 'rich', so you think you're not indulging in a get rich quick scheme. Rationally, you are - you rely on a huge inflation-busting gain from one specific niche asset type, to make you wealthy  enough (rich) to leave work earlier than you could hope to do by conventional means (quick). That's all fine if you're up for a gamble, but there are loads of other alternatives.

If you're willing to potentially lose £6k and the returns from conventional investment on that £6k (which doesn't unreasonably delay retirement if lost) for a chance of getting an extra £20-100k (which does materially being forward retirement if it works), you don't need to do a slow and steady drip feed into crypto. Just save or invest more conventionally to build a stash.

Then, when you get closer to retirement, take your £6k or £10k or whatever you reached, from stash, go to the bookies or the casino. You'll find a sporting event or casino game that offers that chance to walk away with a large gain or nothing. Bet big on longish odds and go home happy (hand in your notice the next day, just like you would have done if the crypto paid off) or sad (keep working until you have enough to retire normally, just like you would have done if the crypto tanked).

However it's of more use to me to receive considered feedback and advice as oppose to joining a crypto forum where the reverse would likely be true i.e. many people simply saying to me 'yeah do it, great plan, you'll make millions!'  An echo chamber isn't what I need or seek 

We can agree that it's best to stay away from places that tell you what you want to hear.

Those bullish on crypto or the specific type of crypto that you intend to buy, would tell you to do it, and you know that before you even go there, so there is no point going there until you have definitely decided to do it and want pointers on what sort of wallet to get or whatever. 

The obvious options are

- bet on a cryptocurrency or mixed basket of different currencies, and have an early or late retirement depending how it goes;

- invest conventionally and have a normal retirement;

- invest conventionally and tax efficiently until you get a year from retirement, and then use as much of the proceeds of those invested funds as you like, to bet large on an interesting event or exciting casino game, and have an early or late retirement depending how it goes.

The people on a crypto forum with vested interests will tell you that option 1 is a much more sensible thing to do than option 3 because option 3 involves 'gambling', while with hindsight the more famous cryptocurrencies are all substantially up from where they were a few years ago and they should continue to outpace all conventional forms of investment. That's the sort of advice you don't need.

Detailed, balanced and considered reply, thanks for taking the time.

whatstheplan

Albermarle said:

Thanks and I see what you're saying, however bear in mind my (original) retirement plan won't be affected as I'll have a workplace pension,

Despite the fact that this workplace pension is a significant part of your retirement plans , you do not seem to be giving it any attention . Depending on how it is invested and how well it performs over the next 15 years , it could make a much bigger difference than your crypto adventure .

It's true there is scope for me to put additional resource into my pension.  Tbh it's not really something I've ever considered however you've got me thinking and I'm going to investigate the numbers (additional pension investment and how this would look in terms of lump sum and monthly payments.)

thickasabrick

I bought a bitcoin a few years ago (2017) when I had some money sitting around waiting to pay a bill due in 6 months. Thought it would be interesting to learn about blockchain and how the technology behaves. I learned a lot, mostly about volatility and my attitude towards the risk of losing all my money. Especially when one of the transactions got stuck for 48 hours due to a shortage of miners (processing). Very grateful to see the price climb so I could get my money back without loss and to pay that bill 6 months later. 
Things have moved on since then, more miners, faster processing, more acceptance in the main stream.
Still, not for me, I will be sticking to the "slow" path. 
Simple things, like I haven't maxed out my pension contributions and as a higher rate tax payer that is a guaranteed 40% back in my pocket. Probably a big debate about that statement but as far as I'm concerned that 40% was gone and now it's back in my pockets as a refund to my pension and a tax refund at the end of the year.
JLcollins summarised it very well in this article ""How to Invest in Bitcoin like Benjamin Graham"
to quote

Who should consider speculating on Bitcoin?

My ideal hypothetical investor for cryptocurrencies has already maxed out their tax protected retirement accounts for the year, already saves over 50% of their income, already has a 6 month life-emergency fund, is already well on their way down the Simple Path to Wealth or is firmly FI with lots of cushion to play with. Furthermore, this ideal speculator is comfortable being an early adopter of technologies and is willing put up with quite a bit of inconvenience and headache to make it happen.

Finally, and most importantly, our ideal crypto-speculator has to have all of the above in order to also have a 100% emotionally detached, iron stomach, this-is-monopoly-money attitude towards the bet.

thegentleway

whatstheplan said:

Albermarle said:

Thanks and I see what you're saying, however bear in mind my (original) retirement plan won't be affected as I'll have a workplace pension,

Despite the fact that this workplace pension is a significant part of your retirement plans , you do not seem to be giving it any attention . Depending on how it is invested and how well it performs over the next 15 years , it could make a much bigger difference than your crypto adventure .

It's true there is scope for me to put additional resource into my pension.  Tbh it's not really something I've ever considered however you've got me thinking and I'm going to investigate the numbers (additional pension investment and how this would look in terms of lump sum and monthly payments.)

exactly, the opportunity cost of gambling £6k on crypto is that you miss out on £6k + growth extra in your pension...

csgohan4

I would rather put spare money in investments which I know on the whole will mean i will end up more than I originally put in, such as index tracker. Depending on your Risk appetite, more risky equities, or if your feeling brave, individual stocks.  

whatstheplan

csgohan4 said:

I would rather put spare money in investments which I know on the whole will mean i will end up more than I originally put in, such as index tracker. Depending on your Risk appetite, more risky equities, or if your feeling brave, individual stocks.  

In a way, joining this forum maybe wasn't a good idea from my perspective.  I joined to ask about a crypto plan however I find myself today browsing stuff online about various (more traditional) investment routes and I feel myself getting more and more interested! 

grumiofoundation

whatstheplan said:

csgohan4 said:

I would rather put spare money in investments which I know on the whole will mean i will end up more than I originally put in, such as index tracker. Depending on your Risk appetite, more risky equities, or if your feeling brave, individual stocks.  

In a way, joining this forum maybe wasn't a good idea from my perspective.  I joined to ask about a crypto plan however I find myself today browsing stuff online about various (more traditional) investment routes and I feel myself getting more and more interested! 

Most people would say it was a good idea then...