I wrote this piece on the same day that I wrote the first piece….and decided to make you wait for some extra time to test your patience, that is all.
Ask Yourself the following questions:
- Can I afford to lose this money? Are you putting an amount of money that you can afford to lose? Does your wife know what you are doing? Are you sure it is not money in bucket 1 or bucket 2. This has to be clearly free money and you should be reaching your goals easily.
- Do you understand this thing? I can stand in a podium and talk about many other subjects but this does not interest me. Are you sure that you have understood this? Do you understand the thing you’re planning to allocate your money into. Warren Buffett reminds us never to invest in things we don’t understand. Don’t play Bridge with experts. They need a ‘bakra’ and it would be you if you are not as good as they are. So, when it comes to something like Bitcoin you have to really immerse yourself in understanding it since it’s pretty new. Of course, you’ll never understand it as well as some experts do but understanding it will at least set the table for understanding how not to be too much of an idiot with your money. You shouldn’t own Bitcoin if you’re unwilling to invest some time in understanding it. I am too dumb to understand Bitcoin, and I will happily stay away.
- Is it FOMO? Yesterday Ekta Batra said it was FOMO for her with Bitcoin. It’s true for most of us. We have seen a train leave Mumbai and headed south…at Pune you do not know whether it will go to Chennai or derail at Pune itself. That is the worry. One of the main reasons why millions of people jump on investment manias and get crushed by them is because of a simple Fear Of Missing Out. Your brother-in-law made Rs. 100,000 investing in Hdfc Standard Life IPO, and now he also has some Bitcoins! Your wife feels you are a coward and hence you are getting Index returns on your equity. If FOMO is the main driving force behind your decision then wait 2 months, sober up and find a new hobby. Do not chase your relative’s return!
- You KNOW it is really different this time? Well it could be but…A mania like Bitcoin isn’t like the Tulip Mania? The Bitcoin mania is a technology mania sold on the premise that this is a world changing technology that will become self fulfilling to some degree. It is hoped that like FB and Google as the number of users increase, its value will increase.As with any mania the ONLY question you have to ask yourself is whether it’s really different this time. Try answering this before you put in your money.
If you cannot answer that your money is better off in a mutual fund.
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