Making it & Keeping it
I first wrote this article months ago when CT was convinced $10M was not enough to retire. I bet that number has now dropped by 99% for many since the illusion of free money has disappeared from the trenches. This article was relevant back then but now that I think about it, this is much more relevant today. There's been growing debate about how much money is enough for an individual and I am willing to bet it's a much smaller number for many than they'd like to believe. I haven’t been around for that long but I’ve spent the last decade of my life obsessing about building my financial health with the primary goal of providing for my family and loved ones.
I’d hope my experience would help shed some light on some common misconceptions, helpful practices, and mental models you can use to achieve your goals. While this is probably more skewed towards financial education, I would urge you to also think of this as something that also applies to life in general.
Some relevant context about my journey (Can skip)
I come with none and have always had zero safety nets. So if I fail, there's nothing to protect me and I'd probably hurt more than just myself. This has been the case since I was 16. Analysing your position is important in understanding and managing your risk and planning your goals.
I spent a fair portion of my teens acquiring skills that gave me enough leverage to get my foot into any door I needed to. I am an introvert and still prefer my own space and that meant sales was hard. Cold, in-person outreach was unimaginable to me but it had to be done.
I learned digital marketing back in 2016, started writing blogs, building websites and offered my services to every small business I could find back home. This was while I was still an undergrad. Slowly the word of mouth got me some real sweet gigs and I decided it was my time to run my own company.
A social media agency. I always wanted to run a business and this was my shot. I spent countless hours in university, and then outside working with a wide range of clients. This is also when I started to take my finances more seriously and be independent.
After 3 years of running the business and being fairly good at it, I knew I had done everything I could. The adtech business in my opinion was dying (it’s dead, don’t bother starting an ad agency) but I needed my next big move, I needed my next major trend that I could ride, so I waited it out until I knew I was ready.
Around 2019 two things happened, I got deeper into managing my finances (primarily investments) and I was introduced to crypto simply because I needed an asset with a higher upside to be a part of my “well-balanced” portfolio and Bitcoin was it. I did come across crypto back in 2016 in a competition but never paid much attention post that.
I firmly believed writing was my gateway to learning new things. I would write about Spacex and Elon back in 2016 because I was obsessed with deep space travels and all things that could make human life multiplanetary so the fascination with tech had always been there.
2019-2021: I spent a lot of my time continuing to work with tech companies in Bangalore, getting a hang of the landscape.
Money wasn’t easy. I had to manage my expenses while living in a whole new city. Stayed as a paying guest with 2 other roommates. It wasn’t much but I had a place to crash at 1AM when I was done with my work and woke up at 6AM so I could head to class for my MBA. It was good and more than enough for me to power through my days.
Like I mentioned, this was also when my investment journey had just begun so after all my expenses I started to chip away some of it into a mutual fund, and started building my own stock portfolio. I believe I learned from the best and consumed copious amounts of content from finance youtubers and fund managers across the globe. Some good follows: Mohnish Pabrai, Saurabh Mukherjea, Andrei Jikh, Graham Stephan, Meet Kevin, and countless more youtubers
Money management: Maximizing earning, minimize your expenses
Introduced to the FIRE Movement I knew I had to work backwards from a networth number I wanted to achieve. This is widely known so I’ll keep it short. You essentially take your yearly expenses and multiple it by 25 to get to your fire number.
This is the amount of money you’d need to be financially independent and retire. Now there’s a lot of things to consider as far as expenses are concerned, mainly inflation.
I’ll get to that in a bit but for now let’s focus on next steps. Once you have a fire number, the best thing you can do for yourself is to setup a google sheet that primarily tracks 3 things.
Income: Any and all income for the financial year
Expenses: Mostly fixed expenses that are above a certain limit. Don’t bother with recording minor expenses and transactions. It isn’t worth it.
Investments: A sheet dedicated to tracking your investments across all asset classes and allocation with a live tracker (Google Finance is your best friend)
Now when I first started, I tried it all. Mutual funds, individual stocks, gold and crypto. This was necessary because I had to learn the in’s and out’s of markets, businesses and the investment instruments at my disposal
I focused on building an optimal portfolio, starting with tax-saving and large-cap mutual funds, chosen for their low expense ratios and other favorable factors. To get better at this I decided to buy into individual stocks to see if I could outperform my mutual fund returns. I dived into balance sheets, P&Ls, and industry sectors, building a diverse portfolio that included chemicals, consumer goods, financial products, automotive, and more. I would consider this a pivotal moment in my learning.
Slowly started adding digital gold to my portfolio but unfortunately I first bought digital gold through fintech apps, incurring high fees. Sovereign gold bonds would have been a much better choice. Despite this, I built strong positions in quality stocks and mutual funds, with massive gains.
Then, I got into crypto, beginning with Bitcoin but quickly moving to Ethereum. Crypto’s values resonated with me, so I sold my gold and many stock positions to go all-in on crypto.
Of course, while this was the worst time to join crypto because it was during a raging bull, it was also the best time for me personally. I made it all and was up 30x on my net worth if i remember correctly and then lost a lot of it. Decided to rebuild it all by slowly buying every last ounce of ETH i could afford Taking on multiple jobs, working with some of the best people. This was around the time I had found superteam or a year into it so I had already earned a fair amount of access to people. Continued grinding it out and stacking as much ETH as I possibly could and eventually SOL My bets were simple. I understood that the macro liquidity and business cycles exist and in that case with ever inflating fiat supply, the riskiest assets were the ones to benefit the most. The odds of the cycle failing are extremely low, an at best delayed, so my r/r in deep bear 2022 was extremely high I watched a lot of my industry friends leave and never come back to the industry. This was my golden moment. Many teams couldn’t afford to hire, if you knew how to leverage your skill you could find skin in the game with some of the best teams in the game. Staying deep in the trenches + contributing to the ecosystem was my infinite leverage edge and I used it. The goal was to find consistent growth in my net worth and manage a zero inflow/outflow policy from my crypto holdings. That means no fiat goes through an exchange into crypto and I liquidate nothing. That of course meant I had to find a way to stack both while following this rule.
Managing your portfolio
Many assume that the path to making it is by actually just buying as many low cap coins as you possibly can and expecting a 100-1000x but you couldn’t be further from the truth. You will most likely never get out of the supposed trenches if you don’t fix this and find something you are good at.
First of all, a vast amount of your early wealth will come from earning it. So when I see questions like “I have a really small port of $500, how do i invest it” -- YOU DON’T! You go find a job and learn how to make money and keep it. But now imagine if you’ve got the money, how do you invest it. You have to think of everything in terms of risk/reward ratios.
Declutter & Delete
Clean up your portfolio and get rid of all the tickers. You should not be holding anything above 5 tickers at any given point in time. Ideal case is 3 (this is what i practice)
Concentrated bets with conviction
Every bet you make has to be high conviction and no overtrading
Don’t be last & Don’t marry your bags
Don’t be the last to join, don’t be the last to leave. You want to also ensure that while you are capable of holding, sometimes the dynamics may change, and you might need to exit.
Positioning & r/r
a. What’s the upside on your position? Are you risking 50% of your portfolio for a 50% gain and a 90% downside?
b. Or are you risking 10% of your portfolio for 1000% upside but a 50% downside?
c. Ask these questions to yourself and find out what’s the number on every trade you are comfortable losing, what’s the expected downside and if that’s lower than your comfort stop loss, and then measure the upside and its impact on your overall port
d. I also wouldn’t enter into positions with really small sizes (Relative to total port) simply because i’d end up wasting way too much time thinking about it for very little gain while sacrificing time i could spend working
All of the above are just some of the many mental models I use to evaluate bets. I am not a professional trader, I don't claim to be the best at it but I frequently help friends with the same advice (Whether it’s been helpful you’ll have to ask them). I am also not a perps trader and these are all spot positions so if you enjoy leverage my advice probably isn’t for you.
This is for the small guy trying to make it and the big guy that is trying to manage risk and grow their port.
How much money do you actually need?
More than you’d hope for and less than you’d imagine but entirely achievable. If you go online, especially on Crypto Twitter you’ll find some of the most delusional responses to this question. Everything from how you need at least $100M to nothing below $5M (for a decent lifestyle) and most of this is bullshit from people that haven’t done it themselves. They haven’t even done the actual math to justify these numbers.
Let’s start from the beginning and make some assumptions.
Assume you are in your 20s either early 20s or late. Either way you are younger than most especially outside of crypto. You are someone that understands about this nascent and emerging technology more than 99% of the plant, and with any amount of curiosity probably are in the top percentile of even your own friends and peers in crypto just by how much you know about the space.
You probably also spend a fair amount of time scanning the trenches so even if you don’t actively have a job, you probably still have extremely relevant and valued skills that are probably transferable (and can be used in various ways, whether for a research or product position or for your own startup). All I mean to say is that you’ve got a skill that can be leveraged.
I am also going to assume you are not the kind of person that enjoys sitting around and doing absolutely nothing (if that’s you and you love doing nothing, that’s fine, good for you) and probably always learning, adapting.
And here comes the most critical flaw in many that fit in this category. When you speak of retirement, you assume you are never going to work again, never going to create something of value, never going to find a way to do something you love unless you have the money to do it
Well in all honestly if you need a giant safety net before you go out to pursue your dreams, you probably won’t do it either way.
I digress. But the point I am trying to make here is that you probably don’t need all that much to actually go out there and do things you love.
Build a crypto portfolio that’s largely in majors so you dampen volatility, trade if you want to in low caps to get rid of that itch, and continue stacking majors (probably not now considering the stage of the cycle we are in right now) but nonetheless that should be the plan. Have a multi-year time horizon, don’t try and play games without an edge, and don’t betray your nature.
If you even assume a $100k portfolio, as someone that could probably make 30-40% of that every year in income, you can easily live in an emerging country for low expenses, connect with other crypto contributors and work on things you are passionate about
What next? Get your house in order
As someone that works and largely has crypto assets you want to make sure you have records clean.
Here’s some hygiene you should absolutely practice
Clean records & accounting
Unless you live in a tax free country for crypto you want to make sure you have everything tracked and accounted for. Every last $
2. Pay your damn taxes
(“Huh, what’s that? ca?”)
This is a simple one but may confuse many of you. There’s absolutely zero reason to not pay your taxes and not report your assets/income even if it’s in crypto, even it’s in an “anon” wallet (trust me it probably isn’t anon)
You are better off paying your taxes as a cost of doing business and being able to actually use that capital in the future. Imagine making all the money, not paying taxes and then 10 years later making 100x the amount but now you are answerable to this money you made 10 years ago cause you thought you were a shadowy super coder that could get away
You’ll have to pay the dues, plus penalties and well maybe you’ll even healthmaxx in jail
All I am trying to say is that paying taxes is worth the mental peace
3. Optimize for better onramp/offramp and banking solutions (Trad banking as well as crypto-friendly solutions)
You need to find the best partners for every need
Whether that’s incorporating an entity, getting a new banking partner, OTC solutions, and more
Test each of these pipelines with size so that you know for sure it works and always have multiple options
You want to be sure if shit hits the fan tomorrow you know exactly how to liquidate your entire NW (If needed)
4. Permanent Residencies & Citizenships
Last piece of the puzzle. If you live in a country that’s fairly tax disadvantageous to you, you should start making plans of exploring alternate residencies and citizenships
Irrespective of that having a second residency/passport only has upsides. You want to diversify your exposure and not be beholden to one state and its policies. This is true freedom
All in all you want to push yourself to think about diversifying your risk exposure to systems. Banking diversity, jurisdictional & legal diversity and safeguards. The more proactive you are the more at peace your mind will be.
The takeaway I’d want people to have from this post has largely to do with how much of your life is actually under your control. More than you’d imagine. You can literally fix anything, and just do things to improve your quality of life as long as you are curious and determined.
At some point, if there’s enough interest I’ll probably expand on certain parts of this essay and write more