So I wanted to give a bit of background on where I come from from an investment background and how it informs my philosophy in crypto today. I first started investing in the stock market 12 years ago when I opened a brokerage account with $250. I started depositing the same amount every month and started building up funds each month.
Looking back at my trade history during those early years I'm struck at how many of the companies I invested in are no longer around. I don't know if they were bought out or bankrupted, but I went through different phases of speculative buying: pharmaceutical longshots, Chinese car companies, Indian infotech firms. It's hard to tell with a cursory look at those that are still around how they hold up today. There have no doubt been splits that have affected the stock price, (AAPL, for instance,) but most of the ones that I dealt with back then are way below my exit price.
Of course there are the diamonds from those early days around 2007-09: Netflix at $28, Google at $400. Amazon at $53, Apple at $120. But perhaps my biggest regret was liquidating some of that to buy a car. At the time, I had been driving a beater for several years, and had been looking at a sport import make. After weeks of searching, I had found a really clean, well-maintained model, but it was slightly outside my budget. To raise the extra grand that I needed, I sold 19 shares of Netflix at $57. Over the ensuing 5 years, I've enjoyed the car while dropping about 1/3 of the $8500 purchase price in repairs and maintenance, while the price of Netflix's stock has split 7-1 and climbed to $180. That thousand dollars of Netflix would be worth almost $24,000 today.
At an early stage in my investment career I began getting into the teaching on the Motley Fool. The basic gist of the Fool philosophy was that of long-term value investing, basically picking a stock and holding it for 3-5 years through all its ups and downs. By the end of 2013, I was subscribing to their Stock Advisor subscription service and had moved all of my various 401K funds into a managed IRA account with my broker. Since then I've been able to gain a modest 30% gain, mostly by following stocks on their recommendation list, but also by picking ones on my own and holding them. I've sold maybe one or two stocks that were in buyouts, but other than that I've made maybe one trade every three months as I max out my IRA.
By count, the number of stocks up or down is about even, however, the winners outnumber the winners. A thousand dollar investment can only go down a thousand dollars, but it can also go up many times that. A couple of 100-300% gainers will make up for a dozen losers. And that right there is the best part of investing.
But my best trade didn't come from the stock market -- this is a crypto column, after all.
I don't remember when I first heard about bitcoin, or why I decided to start mining altcoins instead of just buying in to BTC, but a few years ago I decided to start mining. I'm a gamer, so I already had a nice GPU, and I figured I may as well start putting it to use while I wasn't gaming. I started mining a few different shitcoins before finding a mining pool that paid out in LTC.
Then, in August 2015, I bought 21 Ethereum. At the time it cost me about 8 LTC, worth about .1BTC at the time. I'll let you figure out how much BTC was worth back then. Today, 8 LTC is worth about $416, .1 BTC is $430, and 21 ETH is worth over $6000. Over the next two years, as I added a total of a hundred dollars in mining proceeds to ETH, the price of the coin maxed out at $400, turning my initial investment into over $14,000.
That's the end of this diary. Next time I'll talk about what I've done to diversify this windfall, and the steps I've taken to move my fiat savings into crypto.
Thanks for the story I just got into crypto if you have any wisdom to pass on I would appreciate it. thanks again
Sure will. That's why I started this blog. Be sure to follow, I try to post weekly. See you on Tradingview cryptocurrency chat, @madgod
How did you move your 401K into an IRA. Did retire or was that an old 401K?
BTW I love both my 401K and crypto.
I do not max out my contribution to 401K but i do make sure i get the full company match.
Will you say what % of your networth is in crypto. Mine is less than 2% but rising faster than anything else.
Don't regret the car. You did it the right way. You bought the car with the proceeds of you secondary passive income and not the sweat of your own hands. Most use debt paid for by their primary income.
I had left the company that offered the IRA, so I just did a rollover. Not sure if you can do that if you're still with them. Talk to an Ameritrade rep.
I probably have 20-30% of my liquid net worth in crypto right now, but I have student loans and mortgage that dwarfs that. My spouse has safer investments, so I'm hedged in that way.
My 5 year plan is to build that crypto capital and either be trading or working in blockchain tech full time. I think there is still plenty of opportunity to build generational-wealth as we saw in the growth of the internet.
I like the way you think. I am shooting to 5% in crypto of total Net worth. I may even tolerate 10% but I think you are right there is generational wealth that will be made here. I start up chemical plants for a living so i doubt i will be working in blockchain for a living but i will certainly be an investor. Perhaps not a full time one until I dont like my job anymore or they dont like me!
My 401K like many others wont let you roll while you are still employed. But then it makes a good hedge.
I found a good alternative which is a checkbook Roth IRA. I had not thought to use it for crypto but it makes absolute sense given the tax nightmare that trading crypto creates. Also I like the concept of tax free capital gains. You just cant get your hands on it until later. Perhaps thats a good thing in this space where HODL is about the best strategy.
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