Is It Better to Save or Invest?

Is It Better to Save or Invest?

Sean: From Pam. Is it better to save or invest? I’ll let you answer this one.

Toni: Well, normally we all start by saving first because that’s how you develop the habit. That’s how you develop the mindset of simply doing delayed gratification. And then once you’ve established the habit, then you can start investing. But again, like what they say, if you just put, if you save most of your money in the bank, it loses to inflation, so might as well invest anything excess of your emergency fund. It’s like that. What’s your take on that?

Sean:  It goes hand in hand. It’s not an either-or. It’s not an either-or. They don’t compete. I would say, you have to save and invest. So you save first, build up your emergency fund, and then you save some more and use it to pay for your insurance, and then you save some more and that’s what you invest.

So, yeah, it’s not an either-or. I can’t say one is better than the other. It’s a process that you have to have both.

From Erika. Should I invest in cryptocurrency?

Toni: This is a trending topic and it’s most likely because we’re in a bull market. I would say cryptocurrency is a high risk type of security or investment, and there’s definitely a lot of opportunity for you to make money because it’s volatile.

Okay. For those who don’t know, there are basically two ways for you to earn from crypto. Number one, what we call hurdlers, huddling. So these are people who strongly believe that cryptocurrency is the future of money and that’s why they hold onto it for the long term. I think Jason Lo mentioned before that he bought BTC, I think 2014, correct me if I’m wrong, like 2013, 2014.

And then the second group, majority of those who hold crypto, they’re the traders. A large bulk of them trade crypto. And the main reason why they trade crypto is because they’re just looking to diversify their trading portfolio. This means, they’re already trading stocks or even currencies in Forex.

And then I would say the third way, which is not popular now, is mining. So it used to be profitable back then in early 2014 to 2015, but now it’s just impractical and highly risky because you need a powerful server to be able to mine. So those who understand cryptocurrency will know what I’m talking about.

So you have to determine what your objective is first before you enter into cryptocurrency if you’re planning to invest long term. If you strongly believe in the potential of cryptocurrency in the future, then yes, go invest in cryptocurrency, assuming that you’ve done your research. If not, then another way to make money, as I’ve mentioned earlier, is to trade, but of course you would have to understand the basics of technical analysis and do lots and lots of research.

So one tip is to never invest into those Bitcoin mining pools that’s very popular on Facebook, FB groups, because what they do is they crowdsource money to fund cryptocurrency mining operations. So most likely they’re investment scams. So that’s what I would say, should you decide to invest in cryptocurrency. So Sean here has a lot of friends probably who also trades or are into crypto. So what’s your take on that?

Sean: I know a couple of people who have made crazy amounts in crypto. That’s what I can say. Personally, I haven’t made crazy amounts in crypto. I haven’t experienced that. Hopefully I don’t know, but I’m invested in a couple of cryptos. Most of them are from people I’m copying, using eTero, that’s it. And that’s because I’m sticking to my strategy in investing.

And that’s low stress to no stress. Crypto is very stressful because the market’s always open and the volatility is, I can’t keep up with the volatility. You have to be awake at certain times in the night. When it starts dropping, your heart starts stopping. And I said, I’m just going to open a small position in it, that if it will drop, it’s fine. I’ll just hold it there and let it be. That’s how I treat my crypto investments.

Otherwise it’s through the people I copy trade and they’re the ones trading, which is good because when they close a position positively, then I make money and it’s for keeps. So I can’t really tell you and endorse that go with it and go with the hype. Personally, that’s how I’m doing. It’s still risky. It’s still volatile. A lot of it has no fundamental basis. Yeah, a lot of it. You’d be surprised many of them have no fundamental basis except for it’s an investment vehicle. It’s a blank index vehicle. That’s it. So it’s risky.

Toni: Right. And it’s highly speculative. I mean, no matter how many times you’ve heard that people make a lot of money from crypto, again, if it doesn’t make you sleep at night, then it might not even be worth risking. Right? So you have to assess your risk profile, that’s very important. Because like Sean here, he can’t stomach the volatility. Right? You have to stay awake and you’ll get stressed. So do a cost-benefit analysis. Is it worth stressing over if you get into crypto? Just stick with what works for you and don’t ride the hype.

Sean: Yup. That’s right. So how you could look at it is, how much do you make and set aside for yourself, for your family, and for your investments? And how much are you planning to make when you invest in crypto? Because there’s a huge chance that you’re going to lose money. There’s a huge chance that you’re going to make money. But the line is very gray. You can’t calculate it. It’s super risky.

So when I think about how much money I can make and save versus that kind of volatility, I’d rather set aside that money I’m making and save for a more stable investment that would grow steadily over time. And then I’ll just keep on adding to that rather than adding to a crypto and then it drops, and then I add a huge position, that one is not a good run for me. So it depends on your risk appetite. How about you, Toni? What’s your risk appetite?

Toni: I’m highly aggressive because I have a longer timeframe. And in my case, well, like if you go to TikTok, you’ll just see the crypto guru’s left and right. And it happened also back in 2017, a lot of people were also hyping and getting into Bitcoin and a lot of people are not understanding its risks.

Now, even though Sean said that that’s not to discourage you from getting into cryptocurrency. We’re just saying that if you were to get in, expect that there’s a lot of potential upside and also a lot of potential downside. So if you make a lot of money this week, you might lose a lot of money next week too. So make sure that when it comes to higher risk investments, it should just be the smallest part of your portfolio, not your entire portfolio. Because I’m seeing first-time investors getting into crypto, because that’s the first thing that people are talking about.

So start small. And I would say, I’m also part of the crypto community and it’s dynamic. I mean, everyone helps each other and everything is fun, but make sure that you’re also setting aside money for investments that are boring, the stuff that grows slowly over time. Then that’s how, you know, when to balance your portfolio.

Sean: I don’t know about you, but my crypto position is only in the single digit of my entire portfolio in terms of percent. So it’s really small for me.

Toni: And in my case, like the money that I put in crypto actually is the money that I get from brand deals. For me, the brand deal is like a side hustle for me. So even if I lose all my money holding the coins, it’s fine because I just used my money from my side hustle and not from my main source of income, so it won’t hurt me. So I just invest what I can actually afford to lose. Even if it drops to zero, it’s not going to affect my quality of life.

Sean: Right. It’s play money. That’s what I use to buy my stuff.

Toni: You said it into words. I said so many things, but that’s the term.