If you’re thinking about getting on board an exciting and hot opportunity like bitcoin, then keep reading.
The following story will make you recognize the difference between a life of incredible wealth… or crushing debt.
Mr. Smith “not his real name” told his story to Forbes few years ago.
He had about $2.6 million worth of bitcoin. And on the ride up, he had cashed out $25 million.
On the other hand, from South Korea, resident Kim Hyon-jeong did give her name to the New York Times.
Her story was different and much more unlucky.
Mr. Smith was a software engineer with an interest in the technology behind bitcoin.
In 2010, he witnessed bitcoin’s price soar from $0.008 to $0.08 in less than a week.
Something that attract his attention, he bought $3,000 worth of bitcoin at a price of $0.15.
As you know, the price skyrocket to more than $19,000 in December 2017.
But Mr. Smith didn’t make that full return. He had been selling all the way up. He cashed out some at $350, more at $800, and so on.
Unfortunately, on the other side of our story, Ms. Kim took a different approach to her investment in bitcoin.
She is 45-year-old teacher with a child,
she put about $90,000 into cryptocurrencies.
It wasn’t just her savings either. She cashed in an insurance policy and took out a loan for $25,000. As she described it…
As she said:
I thought cryptocurrencies would be the one and only breakthrough for ordinary hardworking people like us.
I thought my family and I could escape hardship and live more comfortably, but it turned out to be the other way around.
The value of her investment was down 90% as of August 2018.
One of these investors is a success, and one a failure.
Actually, it is not about the timing,
When Mr. Smith got in at $0.15, he had already seen bitcoin soar 1,775% in the previous six months or so…
and it would drop nearly 50% just a few weeks after he purchased.
Bitcoin was a new and untested asset. It would have been crazy to predict that bitcoin would go on to shot to the moon higher from Mr. Smith’s purchase price.
Ms. Kim invested later, in the fall of 2017, during a time when bitcoin was front-page financial news around the world.
Yet with such a wild and unpredictable asset, both speculations could have made money.
The difference here is that Mr. Smith bet a lot smarter.
He invested a small amount for a successful professional.
The technology got him excited, but he only invested a small bet.
He also locked in gains along the way, taking some money and risk off the table as the rest of his investment continued to grow.
You can do this in a lot of ways.
For instance, you might sell half of an investment once it reaches a 100%.
Meanwhile, Ms. Kim did the bet completely wrong.
She put 30 times more into her bitcoin bet than Mr. Smith did.
Worse, she borrowed money she didn’t have.
So, here is what I suggest.
Bet, but bet small. And don’t jump blindly. Don’t take high risk. Don’t borrow money to invest.