Tag: diversified portfolio

Lets start by comparing two examples: the bare mathematics of how fast you could become a crypto millionaire. And we can consider some practical ways to make huge gains and keep ourselves on the track to wealth and abundance.

The Mathematics of Getting Wealthy

Using a simple online investment calculator, I was able to calculate how long it would take to become a millionaire by investing money two different ways.

1. In the first example you invest $20 per week. We explain the range of time it would take if you were to receive compounding over time on various annualized rates of return.
2. In the second example you invest $1000 and only gain from the annual returns, compounded.

Example 1: Investing $20 per week

Investing $20 per week may not seem like much, but it can add up! I first learned about this simple plan to become a millionaire from Bob Proctor. He explained that compound interest is the most powerful ally for quickly becoming a millionaire. Investing weekly should not be confused with Dollar Cost Averaging. Dollar Cost Averaging is a bankers way to pull the wool over your eyes. I’ll explain why you should avoid Dollar Cost Averaging below.

The amount of time it would take to reach our million dollar goal would depend on annualized rate of return. Different rates of return have a dramatic difference in how fast we can become a millionaire.

To illustrate this, let’s consider a range of annualized rates of return:

At a 10% annualized rate of return, it would take approximately 46 years to become a millionaire by investing $20 per week.

At a 20% annualized rate of return, it would take approximately 27 years to become a millionaire by investing $20 per week.

At a 50% annualized rate of return, it would take approximately 12 years to become a millionaire by investing $20 per week.

At a 100% annualized rate of return, it would take just over 7 years to become a millionaire by investing $20 per week.

Example 2: Investing $1000 one time

Here is the step-by-step calculation for starting with $1000 and earning a 100% annualized return, compounded annually:

Year 1:

1. Calculate the annual return by dividing the annualized rate of return by the number of times it is compounded per year. In this case, we are assuming a 100% annualized rate of return compounded annually, so the annual return is 100%/1 = 100%.
2. Calculate the final balance after one year by adding the initial investment to the annual return and multiplying by the initial investment. Using the formula:

Final balance = (1 + annual return) * initial investment

In this case, the final balance would be (1 + 100%) * $1000 = $2000.

Year 2:

1. Calculate the annual return by dividing the annualized rate of return by the number of times it is compounded per year. In this case, we are assuming a 100% annualized rate of return compounded annually, so the annual return is 100%/1 = 100%.
2. Calculate the final balance after two years by adding the balance from the previous year to the annual return and multiplying by the balance from the previous year. Using the formula:

Final balance = (1 + annual return) * previous year’s balance

• after year two, the final balance would be (1 + 100%) * $2000 = $4000.
• after year three, the final balance would be (1 + 100%) * $4000 = $8000.
• after year four, the final balance would be (1 + 100%) * $8000 = $16000.
• after year five, the final balance would be (1 + 100%) * $16000 = $32000.
• after year six, the final balance would be (1 + 100%) * $32000 = $64000.
• after year seven, the final balance would be (1 + 100%) * $64000 = $128000.
• after year eight, the final balance would be (1 + 100%) * $128000 = $256000.
• after year nine, the final balance would be (1 + 100%) * $256000 = $512000.
• after year ten, final balance would be (1 + 100%) * $512000 = $1024000

It’s important to note that these calculations are based on the assumption of a consistent annualized rate of return, which is certainly not the case in the real world.

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Know Your Local Tax Laws

It is also crucial to consult with your local tax specialist – because the way you achieve these returns can have huge impact on the taxes you will be liable for.

One of the first tools every crypto trader needs is cointracking.co

This service provides low cost insight for tracking your ongoing crypto profits and losses as well as a powerful asset for generating sample tax reports from your past trading activity.

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Stop Dollar Cost Averaging

Dollar cost averaging involves investing a fixed amount of money at regular intervals regardless of the asset’s price trend.

Investing with the trend refers to the strategy of buying financial assets that are showing an upward price trend and selling assets that are showing a downward trend.

One benefit of investing with the trend is that it can lead to higher returns. By only buying assets that are showing an upward price trend is about to begin, an investor is more likely to experience price appreciation, which can translate into higher returns. On the other hand, dollar cost averaging into an investment without regard to the price trend means that an investor may continue to add to losing investments, leading to lower returns.

Another benefit of investing with the trend is that it can reduce risk. By adding to your cash stack weekly, but only holding assets that are showing an upward price trend, an investor is less exposed to downward price movements. This can potentially lead to growing a stable cash portfolio in bear markets and lower risk of loss.

Why Banks Recommend DCA

Because they make regular commissions. And because it fits in with the ‘payment lifestyle’ they have already roped you into.

Consider this: Banks have more than a century of tested sales propaganda to snowball you into signing the form to start ‘investing in your future’ by investing a fixed amount at regular intervals.

Rather than providing the simple education and tools required to manage and grow your own money, banks have used the same tired double-speak for generations of people…

“Dollar Cost Averaging can potentially be less time-consuming and less stressful for regular investors who may not have the expertise or resources to constantly monitor and manage their investments.”

Typical Bank Service Representative Statement

“One reason our bank recommends dollar cost averaging for regular investors is that it can potentially help you avoid making emotional decisions based on short-term market movements.”

Bank Service Rep Who Assumes You Are Incapable

PRO Traders Know DCA Is Hogwash!

The internet has stripped away the curtain between the bank representative and the privileged portfolio investment manager – and poof – once you look over their shoulder you begin to see… this is so simple that YOU CAN DO IT TOO!

1. Moving Averages

One common approach to identifying trend changes is to use moving averages. A moving average is a technical indicator that calculates the average price of a security over a specific time period, such as 20 or 50 days. By plotting multiple moving averages on a chart, an analyst or trader can identify when price is trending upwards or downwards past an action point in our trading plan.

For example, many analysts use this common standard: when the 50-day moving average is above its 200-day moving average, it could indicate an upward trend. On the other hand, if the 50-day moving average is below the 200-day moving average, it could indicate a downward trend.

2. Trend Lines

Trend lines are another tool that analysts and traders use to identify trend changes. A trend line is a straight line drawn on a chart that connects two or more price points. By drawing trend lines on a chart, an analyst or trader can potentially identify key support and resistance levels, which can be used to help determine the direction of the trend. For example, if a stock’s price is trending upwards and breaks through a key resistance level, it could potentially indicate a trend change from bearish to bullish.

3. Chart Patterns

Chart patterns, such as head and shoulders or cup and handle, can also be used to identify trend changes. These patterns are formed by plotting price action against time and can indicate a change in the direction of the trend. For example, a head and shoulders pattern after a significant up trend may indicate a trend change from bullish to bearish.

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Before and After Example

Diversifying into Altcoins

The Crypto SmartWatch Control Panel provides us with a daily action matrix that anyone can actually follow. With this objective approach to holding a variety of different crypto assets, an investor is less reliant on the performance of any one particular asset. This can increase the overall opportunity for portfolio growth with access to a wider range of assets that pass our trading signal.

The goal of diversification is to spread investment opportunity across a range of crypto assets when Bitcoin Dominance Trends are suggesting the next altcoin season is about to begin. By investing small into all the projects that pass our trend change markers we are positioned so that if one crypto dramatically overperforms we catch a bit of it to improve the overall portfolio returns.

When to Diversify

As we can see from the example charts above, we only needed to be in a position for a few months during the year – and the rest of the time we would be holding cash and adding our $20 per week to the investment pool.

Year after year we have been
pinpointing the start and the end of altcoin season!

Here is a recent example of diversifying into an altcoin season in early June 2022 and below we see how we identified the time to start exiting positions in September of 2022.

In the chart below from early June 2022, we can see how the average of all the crypto projects were transitioning through the bottom formation much like our example chart for CHZ above.

When To Sell Out

By September, many of coins in our portfolio were starting to reaching top formations and flashing our exit signal. We were getting a similar exit patterns in dozens of altcoins over a period of a couple weeks – as we can see in the pie chart and the daily action matrix graph below.

Crypto Millionaire in 2023?

Here are four factors to master on your way to becoming a crypto millionaire.

1. Financial Emotions: In order to become a millionaire, it’s important to have a positive emotional relationship with financial concepts such as saving, budgeting, investing in the best crypto projects with the Crypto SmartWatch, and managing debt. Without this positive regard for money, it may be difficult to make informed financial decisions that are necessary to achieve long-term financial success.
   
2. Financial plan: Developing a financial plan is crucial to becoming a millionaire. Feel the success of your end goals today as you work on small growth steps, and you won’t get off track and make financial decisions that may not align with long-term goals.
   
3. Money Management skills: In order to become a millionaire, it’s important to feel good about managing money effectively. This includes feeling good setting financial goals, creating a budget, controlling spending, and saving and anticipating the benefits of investing for the future. Poor money management skills always lead back to negative feelings about money.
   
4. Discipline: Building wealth requires discipline and commitment. It’s important to stay focused on long-term financial goals and make choices that align with those goals, even if they are not always easy or convenient in the short term. Without discipline, it can be difficult to stick to a financial plan and make the necessary sacrifices to achieve financial success.

Discipline refers to the practice of training oneself to do something in a consistent and controlled manner. It involves developing habits and routines that help to achieve specific goals or objectives.

However discipline should never be seen as a form of self-control or self-regulation.

In a broader sense, discipline refers to a belief system or ideology: that you are a disciple of a belief system. It is easy and natural, in fact logical to act in accordance with your belief. It takes no teeth gritting or willpower.

Turn your knowledge about money into a belief

introtocryptos.ca

If you logically understand your trading approach but find that you are not following the trading rules – dig into your emotional beliefs about money. Change those beliefs and successful trading begins to happen naturally – and you certainly can continue the cycles of growing your portfolio year after year.

How Fast Can You Become A Millionaire?

How Fast Can You Become A Crypto Millionaire?
Even starting with a very modest strategy – it’s easy to see that becoming a millionaire should be one of our short term goals in life!https://t.co/JAJJ1Q3hsn#CryptoInvestor #altcoins

— introtocryptos.ca (@introtocryptos) January 15, 2023

Even starting with a very modest strategy – it’s easy to see that becoming a millionaire should be one of our short term goals in life!