How To Be A Successful Investor and Be The Top 1% — Part 2
This is how you become a successful investor.
HOW TO START
In order to align your mind, body and action and become a successful investor, you need to follow these steps —
- Decide how much time you want to set aside for crypto on a daily basis.
- Doing deliberate practice on a daily basis, it’ll help in getting the mind, body & action in sync.
- Every single action you do everyday, should help you move closer to your goals one step at a time.
- Sticking to the plan and the macro view.
- Have an enormous amount of patience and discipline.
- Understand the difference between smart money and dumb money
SMART MONEY VS DUMB MONEY
There are 2 types of money, smart money and dumb money.
Majority of the people constitute the dumb money because they don’t educate themselves around crypto.
Therefore they end up investing in scams and are then unable to understand when/where/why their emotions were coming in.
Here are some of the properties of Dumb Money -
- Gets you REKT.
- Invests less time getting educated about something before investing in it.
- Chases wealth.
Now here are some of the properties of Smart Money-
- Takes lesser decisions, doesn’t decide everyday about where to invest.
- Knows failure is a part of the journey.
- Calculated risk management has more upside than random arbitrary decisions.
- Never follows herd movements like FOMO, fear, scarcity, greed.
- Knows wealth can be created, so never chase it.
- Understand that the market is out of control and we can’t time the market.
- Is very pessimistic about crypto in the short run and understands anything around 5–6x is more than enough for short term gains.
Smart money knows how to engineer wealth.
Here’s an example of how to Engineer 150X with Baby Steps
Engineering means taking control and getting what you want. Below are some things you need to take care of -
- Understand that it’s better to do a 5x in 1 year & 100x in the second year, rather than expecting 150x in one go and getting REKT.
- The market will do what it wants to do, not what you, i or any other retail investor wants.
For eg- if you invested at the end of bull run, you can’t expect it to make you 100–150x, you joined the party late.
- Profit is made when you invest, not when you exit.
Smart investor knows the right time to invest/buy i.e when others are selling, therefore the profit is made only if one buys at the right time and sells when others are buying.
- Checking historic prices, historical data, movements is the key, understand where we are in the market cycle and have achievable expectations.
- Control your frequency of exposure, the more you look at the charts, the more likely we are to make bad decisions.
Frequency of exposure- Total number of times you expose yourself to a thing with/without the desire to do so.
To give you an example- if you’d have invested in any of these coins in october 2020, currently you’d be at an easy 25X-30X, it doesn’t require you to be a genius to make 25–30X.
In crypto there is a market cycle of 4–5 years. Generally, in every asset class, most of the people buy around
- Thrill Phase
- Euphoria Phase
And sell around-
- Denial Phase
- Panic Phase
- Anger Phase
Smart investors buy heavy-
- Before the “hope” phase
- From “anger” to “depression” phase (this is where people make life changing money )
And sell in-
- Thrill Phase
- Euphoria Phase
Below is the BTC chart of pre covid 2020 to 2021, do you see the hope, euphoria, thrill & depression phase?
If you could compound (annual or monthly) your money here 3–4 times, you could have easily engineered 50x-100x in the above market cycle.
If you want to engineer massive gains, you need to have your Freedom Number.
Write down a number which could provide you freedom of time, freedom to not work for money or freedom to never work again.
Avoid re-engineering your plan, instead stick to the engineered plan.
Understand that crypto is there to give you freedom, not take away your freedom.
For Example -
Let’s say I want $10,000,000 ( freedom number) in assets by 2030.
Here’s the breakdown -
50% in crypto — $5,000,000
40% in real estate — $4,000,000
10% in precious metals — $1,000,000
Right now, I have $1,000/mo to invest in crypto which makes it $12,000/year.
I have already invested $10,000 so far in crypto.
And in the next 9 years, I can invest at least $108,000 more. My total invested amount becomes $118,000 or $120,000 for the sake of calculation.
Today, these are the prices of top 5 cryptos (excluding USDT)
BTC is at $50,000
ETH is at $4,000
BNB is at $600
SOL is at $200
In the next 9 years, I want to have a return of 83x on my crypto portfolio in order to grow it from $120,000 to $10,000,000.
I want to grow it to $10,000,000 so I can roll over some capital to real estate ($4,000,000) and precious metals ($1,000,000).
Now, in the next 9 years, I’ll have to engineer an 83x net return on my crypto portfolio.
- 200% CAGR, 1800%/2 = 1000%
BTC is at $500,000
ETH is at $40,000
BNB is at $6,000
SOL is at $2,000
With these returns, I’ll be $120,000 in the market which will be $1,200,000 in 9 years.
Now, I need to engineer an 8x from here, which could be done in 2 ways -
- I can add more capital — fresh fiat
- I can allocate more capital — move around from my PF
I buy at say $50,000, I sell at $100,000 and then buy the dip.
Do this 4x with a 2x return each time and I’ll be at 8x.
And that is how one can engineer 150x in small baby steps and achieve their goal of becoming financially free !
If you’ve read this post until here, I challenge you to figure out the answers to these 3 questions —
Q-1 Find out your Macro View + Goals + Freedom Number
Q-2 Create a plan to Engineer Wealth
Q-3 Find the Expected returns and Time Frame
If you want to learn how to generate trustfree ROI then you may like what we’re doing at Fidaro.
Here are some useful links to save and reference. Let’s go and help you achieve your goals.