I was being interviewed on Jordan Goodman’s Money Answers podcast the other day, and he asked me what makes Sane Crypto sane?
The answer is that Sane Crypto is about stripping away the emotions, ignoring our prehistoric Lizard Brains, and making decisions based on probability and logic rather than fear, greed and ego.
To understand why I think Bitcoin is not only a good investment but an essential investment, you have to understand how I think about investing.
My starting premise is that I HAVE to invest. Everyone does.
I just saw an article, “Postcrisis, wary investors miss out on huge returns”, that says …
“Only 10 percent of total respondents invest more today than they did 10 years ago, compared with 66 percent who said they invest less.”
That is CRAZY! It makes me want to cry! Or shake people! Or both!
It is completely irrational… the opposite of Sane!
Your job as an investor is to take money you create from your intellectual and physical capital, meaning your work, and transform it into enough financial capital to live 30 or 40 years in retirement.
Mathematically, to replace a $150K/year income and have a reasonable probability of living comfortably for 30 years in retirement will require a nest egg of at least $1.6M, just as an example.
If you would like to know how much it will take to replace your income, you can download our free retirement calculator at https://sanecrypto.com/retirement-calculator/
To do that is going to require, in addition to saving a meaningful portion of your earnings over time, a low double digit return…
Not all the time. Some years the returns are negative. Some years they are positive. But over time.
Over your lifetime… You need to average at least a low double digit return.
And the later you start, the less compounding you will get, so the higher that average return will have to be to make up for it.
This is your job, as Family CFO of you Inc. And I would argue that it is the most important job you will ever hold. Far more important from your W-2 jobs.
And it is also a VERY hard job. Here is why:
- Unless you have a crystal ball, which, to my knowledge, hasn’t been invented yet, the future is a probability distribution rather than some fixed outcome that is knowable or predictable in advance. So, you are playing a probability game.
- You are playing that game with a lizard brain, which happens to be hard wired, over millions of years of evolution, to be very bad at probability games.
- Investing is a zero sum game, which means, if you win $500, someone else has to lose $500. And you are playing that game, against some of the brightest minds in the world, literally, with unlimited resources, for the ultimate prize… money!
- Finally, as if that wasn’t hard enough, the playing field is designed to disorient, distract and deceive you. The financial press, and nowadays social media, is filled with propaganda and mis-information that act like the lights, bells and buzzers on the casino floor. It is all a great system designed to part you from your money.
But lest you think it is an impossible game… IT’S NOT.
Because the good news about this game is, like the old story, you don’t have to run faster than the bear to get away. You just have to run faster than the guy next to you.
Some people may think that sounds harsh. It is harsh. But that is the game.
You better understand it. You better find someone to teach you. Because, the consequences of playing poorly suck.
And your only other alternative is just to hope. Really? That’s your strategy.
Seriously, if you are not investing or born into money, you better hope you die early.
Because being 90 years old living under a bridge eating cat food is a whole lot worse than learning to tolerate the ups and downs of a portfolio, I promise you!
You HAVE to invest!
As always, I hope that helps.