My Ambitious Financing Plan to Buy Bitcoin before Institutional Investments Crowd Arrival
By: Jon Frowski
Tags: Money Management, Personal Finance, Investing, Wealth, Investment

Back to my point.

Option 2

Without further delays, I’m cutting right to the chase;

This is my decided option.

Leverage. Why? I figured the 3.5% APR on the Loan, over 5 years just about gets counteracted with Inflation — which is a Lot higher in real terms once we’re done with Stimulus Package Money Printing. It’s a global pandemic And recession, and each and every country is printing themselves out of this.

This becomes a long term risk adjusted take, with opportunity cost met upfront. At sub-£300 per month with a steady income this makes up a small sub 20% stake of my monthly disposable income. Risk is acceptable.

I do have debt, which i’m paying off, and a mortgage. Both are being paid. My pension holds a Bitcoin amongst other diversified ETFs — managed portfolio.

But I do have little to no savings. As far as Net Worth is concerned, Im not doing all that too well. Most of it would be locked in equity I suppose, and we know how much that valuation can fluctuate by. Across the board I have invested about 230% of my actual Net Worth into Bitcoin — non-leveraged Pension and ISA portfolios. All that is long term haul investments.

This particular decision making process, with Option 2 can achieve to grow that “Net worth” exponentially, albeit with employed leverage.

This may not to taste for everyone, and that’s fine with me.

“Do not invest more than you can afford” comes to mind, time again and again. This is where I politely hold a same-but-different take on this view.

This is to say — that does not mean your savings, but exactly that, the mere affordability of risk. If you can afford the risk, then the risk-reward assessment is acceptable.

Affordable leverage is a smart choice and how the larger Investment is realised. Think about your house, your car, your holiday. When was the last time you invested your “cash savings” to buy any of these. Borrow is the norm. Institutions issue debt(borrow), corporations do the same. It’s the name of the game.

Ironically, the irresponsible target-chasing results of leveraging and over-leveraging is what GOT US into this debt spiral. There is a need for a great financial reset, but thats another post.

Where am I now?

Source: my loan app

All this talk and discussions were great but where is my OWN position on this bitcoin investment with leverage?

Well, I borrowed, I bought.

Foolish or not, time will tell now.

I can sit back, keep paying the loan with interest, which adjusted to inflation and annual salary increases — is NET £0 cost at present.

This is 0% lend effectively in real terms

Also I am locking in the multiplier factor ahead of further rises. I can certainly miss ebbs and flows to perhaps buy-in at a cheaper price. That risk is acceptable to me and I believe opportunity cost versus the inflation realisation imminent will be a riskier game to adjust to in the long run.

What about you

How do you hedge against imminent double digit cost-to-capital inflation in real terms? CPI is a narrow defined metric and far from certain or applicable to all your individual circumstances. A student living at home with parents will have a different inflation impact versus a dental professional in the suburbs or a retiree in their 60s-70s.

How do you plan to hedge that? What instruments do you use?

Keen to learn your opinion and learn

Meanwhile, hope you enjoyed reading in on my own mission statement.

See you on the other side.