The Winning Strategy in BOTH Bull and Bear Markets
Cash Flow
Cash flow is one of the most important metrics whether you are an individual or a company. Having a strong and diversified cash flow not only keeps you comfortable, also opens up doors to all kind of possibilities in both bull and bear markets
Cash-in/Cash-Out
For many of us, we work a day job earning a steady wages and salaries (cash-in), and then we have bills to pay (cash-out): taxes, mortgage, rent, utilities, food, phone bill, internet bill, Netflix, HBO, Disney+, YouTube, Apple TV+, Apple Music, Spotify, it is getting out of control!
The formula is very simple, make more money from more than one source, and spend less.
Why multiple sources of income is important
Imagine these scenarios
- Crypto Maximalist: You work for a crypto startup, you get paid in BTC, all your investments are in crypto: how do you feel if you had to cash out BTC after it is down by 80% to pay for your day to day expense valued in fiat? Now you have a choice, find a job to make fiat to pay for your day-to-day, cash out crypto to pay for your day-to-day at a huge discount, move back to the basement so you don't have to deal with physical world for now
- You have a day job paying you a steady income that covers your day-to-day expenses, with left overs to DCA into crypto: now you have fiat-in matching fiat-out, there is no "currency exchange rate -or- market risk", having a source of income that is not crypto allows you to take advantage of crypto bear market
- You have investments in stocks or bonds or savings: Many stocks pay you dividends in fiat, bonds and savings accounts pay you interest in fiat, you don't have to sell your stocks or bonds to buy crypto, stocks or bonds generate additional cash flow and you can buy crypto with these additional cash flow
Why diversification is important (examples only, not a financial advice)
Let's all be honest here, let's take the March 2020 low as a starting point, to today.
- BTC went from about $3400 to $17000 right now, that is still a solid 5x
- There are energy stocks (remember crude oil future went to negative briefly?) that appreciated more than 10x during the same time period, with improved fundamentals and cash flow
- There are dividend paying stocks that appreciated over 9x during the same time period, with improved fundamentals and increased capital returns
- Even AAPL went from $63 to $142 (2.24x) during the same time period
Crypto tend to go up and down at the same time, but stocks do not always follow the same pattern and volatility.
By having a wide variety of investments and different asset classes, you have the flexibility to adjust your asset mix when one is over-priced while the other is over-sold.
BTC needs 4x to go back to the previous ATH. But 4x is very possible outside of cryptocurrency.
3 quickest way to improve cash flow immediately - cut spending
- Debt repayment or refinance, especially if you are carrying credit card debts (which you shouldn't)
- Review all the out of control subscriptions, reduce it down to 1 or 2
- Keep a budget, to review where you spend money. Eliminate restaurants, daily coffee (brew your own), World Cup in a bar (if you really want to channel more money to investments...), you get the idea
Mortgage debt vs. Investments
With interest rates going up and up, it is time to think about paying down the mortgage versus keeping your investments - especially if your investment's expected return after tax, is less than the mortgage interest rate. Have a target price where you would be happy with the the investment return, to rebalance your finances. With less mortgage balance left, you may choose to pay off the mortgage sooner, or ask your bank to potentially reduce your mortgage repayment amount to increase your cash flow.
Final Take Away
Have crypto, but have more than crypto.
Diversified income streams allow you to capitalize and prosper in different market conditions.
Continue to build the HIVE community, and stack HP :)
Posted Using LeoFinance Beta
I am fortunate not to be indebted to anyone, the challenge for me at present is to get another source of income aside crypto.
There is no doubt we need multiple sources of income.
Posted Using LeoFinance Beta
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STOPCheck out the last post from @hivebuzz:
Yeah you are absolutely right. Never invest everything in one project. Last bull market i have invest my all money in one gamified project and his both tokens slp and axs down almost 90 persont. Now i am waiting for bull market and recover my investments.
Oh anyone and everyone really need another or many sources of income to provide our needs and so we can have savings.
Yes. Especially passive. To get out of this rat race.
Apparently, the market is gradually taking a bull. Yesterday Cumulative Price Index (CPI) triggered a bull in all USD and USDT pairs.
Consumer Price Index leads to Feds decision.
Crypto market rebound happened before the data.
There is expectation, what’s important is what’s happening next. Market is always forward looking.
I sort of agree but not really. I mean let say your investment is around a year paycheck. You can diversify withing crypto by simply invest back in crypto.
Lesser ways to invest in crypto is by learning Blockchain skills. You can always increase the crypto economy by becoming the crypto expert in your town and make money that will turn into crypto.
Another way is to hire crypto people, or people that charges in crypto. This will increase the appeal of people to deal with crypto.
Finally there are other ways you can make money in crypto, like building a Dapp or a business that relies on crypto community using it.
Sites like Hive for example, pays you in hbd. So making a community of let say hydrogen engineers will allow you to make money out of the shared knowledge and make more opportunities for the community.
I suppose it also depends on the economy you live in.
For example in North America, for the same hour writing a HIVE blog, I can make more working a minimum wage job and get more HIVE for the hour spent.
The second point is income diversification. While crypto market is in deep red, physical world sources of income that’s not crypto or blockchain are going up. (While crypto related are laying off employees)
One can choose to go all in and ride the cycle both ways, or take a more balanced approach with less worries.
One more thing, from a risk management perspective, it is best to match the cash-in in the currency you need for the regular expenses. Unless you can buy food and pay rents or mortgages in crypto at crypto value and not fiat value.
My point is the crypto price is not the end all be all of crypto. There are services both needed and offered in this crypto economy that will make you real money.
Building a Dapp could make you 20k hbd (I refuse to call it usd) in a few weeks of being out.
Freelancing for companies on Web3 strategies will also give you a nice contact, whenever they need am expert to launch their NFT campaign or Metaverse building.
Or start a podcast on 3speak on a topic that is specialized but demanded enough to earn you a good amount of followers.
And finally if you don't want to do, you can always invest in others that are. Helping crypto entrepreneurs will earn you fortunes if they do well and the bull market comes back.
Yes. For those that got the skills, not a bad gig.
Well if you are here you already have a big head start over the rest of the normies.
It's up to you too capitalize on your knowledge of the platform and resell it.
If you are a writer, write an ebook. If you can draw, create an NFT collection. If you can talk, make a podcast. If you too tired to do, lend the money to people that can do. There are tools to insure you can get a ROI on them.
😉
Been here before DOGE was born. Very wow. Old days of random block rewards and Reddit.
And when you could mine BTC with a laptop. $40 era. Must have been 2012 if I recall. When BTC was too hard, GPU moved to LTC and DOGE.
Well that's great, you should monetize that experience from all the n00bs that will pay to learn and even better, pay to benefit their companies.
Thanks.
That’s why I am saying what I said, and take advantage in any market.
99% of crypto projects will not survive.
I don't think that's necessarily true. I think there are more projects being created and launched than projects dying. Whoever said that knows nothing about economics. It's like saying 99% of companies will die. Or 99% of Linux distributions die. In reality we have more and more and more projects and progress and money.
I am optimistic with HIVE. If that means anything. 😉
For clarity, I group zombie coins that are abandoned as dead projects. Blockchains live on forever until the very last computer unplug and purge.
Oh I don't deny projects die. But i take the overall size of the crypto market and enterprises people make or pivot. Just hive has a whole slew of crypto projects on their tokens, dApps, L2 networks, like Leo finance or 3speak or Games like WWO.
My point is that there are many more opportunities in crypto and in Hive like create a new collection of NFTs or create a new game or even a new Token or network. There are more things to do than buy tokens and publish posts to the network.
There is a demand for Web3 assets from legacy business. You can go to any business and tell stories of the birth of the internet, the birth of social media and how the birth of the Blockchain could put the business on a whole new level of cash flow and how you can take them there.
Even Trump make NFTs, I bet someone got payed dearly in the middle of the bear market.
I am not able to do anymore because of my day job.
We will leave it at that.
Points well taken.
Your actually right, about having multiple source of income, I just have some questions on you concerning what I think needs addressing.
As a teenager in a country in africa called Nigeria, we don't actually have per time jobs for teens to represent a source of income, the only active we participate in are cryptos, like me on hive, that's my only source of income aside my parents helping, I do desire to be independent, presently I only have hive as a source and other ideas to invest in with little to no capital.
We all got to start somewhere.
The best investment is to invest in yourself. Health first, and knowledge and skills, while accumulating relevant experience.
Make yourself marketable so other people want to pay you for what you can do. Then go from there.
Thanks