What’s your Crypto Exit/Investment strategy?

I would not re mortgage my home to purchase cryptos.
I would not re mortgage my home to purchase shares.
I would not re mortgage my home to bet on the horses.

Is the point your making that crypto investing is riskier than for example equity investing.

I have a strategy in place to pay off my mortgage debt. I have allocated a very small percentage of my income for higher risk investments. If it were not Bitcoin, it might be another high risk investment, but either way I have no intention of ever diverting these initial funds into my mortgage. Sure if I eventually make a killing then maybe.
 
Hi Landlord

This is a really important point. Don't just reject it out of hand. Read it. Think about it. And then maybe reply.

While you have €200k of borrowings and €200k of Bitcoin, you are borrowing to invest in Bitcoin. It's sometimes hard for people to see this and to accept it.

Look again at the figures

First situation
Family home: €500k
Mortgage: (€200k)
Investment properties: €400k
Mortgages: (€200k)
Gold: €100k
Bitcoin: €200k

Total assets: €1.2m
Total borrowings: 0.4k
Net assets: €800k

Then my question:

Family home: €500k
Mortgage: nil
Investment properties: €400k
Mortgages: (€200k)
Gold: €100k

Total assets: €1.0m
Total borrowings: €0.2k
Net assets: €800k

Your net assets are the same.

Would you remortgage your home to buy €200k worth of Bitcoin?

You said you would not, but why not? This would be the result:


Family home: €500k
Mortgage: (€200k)
Investment properties: €400k
Mortgages: (€200k)
Gold: €100k
Bitcoin: €200k

Total assets: €1.2m
Total borrowings: 0.4k
Net assets: €800k
 
landlord said:
Is the point your making that crypto investing is riskier than for example equity investing.
Click to expand...
No, the point is really very simple - investing while carrying debt is leveraged investing.

Leverage always increases risk - it amplifies gains and losses.

Your strategy for paying off your mortgage debt may well falter if your high risk investments don't work out as you expect.

If you are happy with your risk profile then that's obviously fine but don't fool yourself into thinking that investing while carrying mortgage debt is somehow different to remortgaging a property to make those investments.
 
I understand that my net assets do not change.
A more realistic example for an average crypto investor would be
Family home: €500k
Mortgage: (€200k)
Investment properties: €400k
Mortgages: (€200k)
Gold: €5k
Bitcoin: €5k

If I pay for a 5k holiday I am then in your eyes effectively borrowing to pay for this holiday.
If I pay for a 5k yacht I am then in your eyes effectively borrowing to pay for this luxury item.
Neither of these would be considered to have any appreciation prospects.
 
Sarenco said:
Sorry BS but financially it's the same thing.
Click to expand...

Sorry Sarenco, but it is not. If I have €10,000 in my bank account, I could buy bitcoin with it. Or, I could take the kids to Disney in florida for a two week holiday.

Either or, it does not constitute re-mortgaging the family home.
 
landlord said:
Family home: €500k
Mortgage: (€200k)
Investment properties: €400k
Mortgages: (€200k)
Gold: €5k
Bitcoin: €5k
Click to expand...

That would surprise me - I thought you were all Bitcoin millionaires. Sure €5k is hardly covering the time you have spent studying it.

The key point is that while you have a mortgage, you are effectively borrowing money to invest in shares, buy Bitcoin or to go on holidays.

If the amount spent is not material - then it does not matter.

But if it's a material amount, as it must be for many Bitcoin fanatics, then they should sell and pay down their mortgage.

Brendan
 
Sarenco said:
No, the point is really very simple - investing while carrying debt is leveraged investing.
Click to expand...

I have not borrowed any EXTRA to invest in this asset, so I still don’t see how it’s leveraged.
Surely the average stock market investor also carries mortgage debt.
 
landlord said:
I have not borrowed any EXTRA to invest in this asset, so I still don’t see how it’s leveraged.
Click to expand...

Can you not see that the end result is exactly the same?

If someone has mortgage debt while they have stock market investments, then they are borrowing to invest in the stockmarket, which is not clever, if the figures are material.

Brendan
 
Brendan Burgess said:
That would surprise me - I thought you were all Bitcoin millionaires. Sure €5k is hardly covering the time you have spent studying it.
Click to expand...

The 5k relates more to what the average investor may have initially invested recently, not its current worth.
 
Talk of remortgaging your home is being overly dramatic, you could say that about any investment.

Would you remortgage your home to buy a €25 prize bond? Because that's what youre doing when you buy one while maintaining a mortgage. etc.
 
landlord said:
The 5k relates more to what the average investor may have initially invested recently, not its current worth.
Click to expand...

I am close to giving up.

It does not matter what the initial value was. If you invested €5k and it's now worth €500,000, then you use the €500,000 figure.

History is not important.

That is like saying "Well I inherited my €100k of Bitcoin from my aunt, so I am taking no risk by holding onto it."

Brendan
 
Brendan Burgess said:
If someone has mortgage debt while they have stock market investments, then they are borrowing to invest in the stockmarket, which is not clever, if the figures are material.
Click to expand...

Once again I feel you are taking an a one sided view black or white without looking for any grey.

I have ECB trackers at 0.75% above ECB base rate. Would you not normally recommend to someone like me to invest at least a chunk of my excess funds in equities considering a 10-15 year goal?
Or is this NEVER “CLEVER”?
 
BreadKettle said:
Would you remortgage your home to buy a €25 prize bond? Because that's what youre doing when you buy one while maintaining a mortgage. etc.
Click to expand...
Absolutely correct.

It's hardly an earth shattering revelation but it's amazing how many people don't seem to understand this simple reality.
 
Sarenco said:
Absolutely correct.

It's hardly an earth shattering revelation but it's amazing how many people don't seem to understand this simple reality.
Click to expand...

It's because wording it in that way tries to imply that the person is risking the home by making the investment, which isn't the case.
 
landlord said:
Once again I feel you are taking an a one sided view black or white without looking for any grey.
Click to expand...
But landlord there is no grey!

Investing while carrying a mortgage is leveraged investing. That's all we're saying.

I regularly advise people to max out their tax advantaged pension contributions before paying down mortgage debt ahead of schedule. I think that's appropriate financial planning but I don't fool myself into thinking that I'm not therefore advising people to make leveraged investments.
 
You must log in or register to reply here.
Back
Top