A Description of my Investments, by Jake Snow
This post is part of a larger collaboration of Satoshi FI admins and moderators where each of us discuss our own choices for investment. We have private discussions and the drastically different paths we have taken are regularly a highlight. Because of this each of us will publish an article about our own choices, and particularly focus on how those pertain to crypto. I don't typically describe myself as a Bitcoin maximalist, but that's the role I play by comparison.
A (not so) Brief Background
I am now in my 30s, I have two children under 10 and my wife is, and always has been a stay at home mom. We started dating when we were barely adults. I had a short run at a community college where I paid for classes out of my own pocket, but when I couldn't fund more I opted to leave rather than take on debt.
I had hoped to acquire the knowledge necessary to push me into the IT field, specifically system administration. I already had years under my belt as a Linux user and amateur hacker. Around 2010 I was spending the vast majority of my time compiling customized Linux operating systems and releasing installable live boot images publicly. After a couple years I stopped this, partly because I never earned a penny doing it, partly because I started playing call of duty online. I was living paycheck to paycheck and I had great priorities /s.
When I stopped taking collage courses I began working full time in the gaming industry, first as a poker dealer, then table games, and eventually made a move to another state to be a supervisor, then manager in that department. This afforded me a decent lifestyle for the first time in my life. I was putting money into a 401k with company match and buying stock from the company I worked for at discount. My daughter was born and I bought my first house. I wasn't on my way to retiring early or anything, but I was doing well.
I learned about Bitcoin right around the same time. It was December 2013 and a coworker nagged me about it, saying it was money that was “like the Linux stuff”. I looked it up more to appease him than anything else, found bitcoin.org and read the whitepaper. This moment was monumental for me and I first purchased bitcoin shortly after using coinbase. Bitcoin was monumental to me partially because my coworker was right, it was open source money, partially because I understood this had the potential to free people from government control – at this time I wouldn't have viewed myself as libertarian or anarchist. I had resigned myself to the position that there was no hope, and no way to be free. Reading the white paper changed my perspective, I saw in it that freedom could be won through peaceful transition. I'll leave my political (or rather, anti political) views at that. It focused my enthusiasm in Bitcoin, and has only continued to over time.
By the end of 2015 I solidified my desire to hold as much bitcoin as I could, but lacked the income to make a significant investment. In fact this was a period of relative struggle. I was still putting money in my 401k and receiving the maximum match offered by the company I worked for, but it was paycheck to paycheck on my take home pay. I began searching for side hustles that might be able to earn me bitcoin. I'm going to skip the how and the what here to retain some level of privacy, but the side hustle I found was in the crypto space. In the spring of 2016 it grew enough to register a company name and have lawyers involved in the setup. I began making nearly as much as I was at my regular job and my wife helped convince me that leaving my job was the right thing to do. This was hard for me, I'm extremely risk adverse and my desire to hold bitcoin was based on the technology potential, and never about getting rich. I took the leap, which included selling all my stocks, closing out my 401k, taking a loan, and putting it all towards this business, then struggling like never before for the following two years.
My Current Investments
The company I created, and struggled to grow has become extremely valuable. I can't write about my investments without making this the focus, and I couldn't make this mention without the more in depth background. It's by far the largest investment I have, and I earned it through years of struggle. While I may have started a business in the right industry at the right time, many others did as well and failed. Growing a business as an investment isn't luck as much as determination and personal skill and respectability over competition.
My other major monetary investments are property and my personal bitcoin holdings. These are not large holdings compared to my business, but they are respectable and I am doing my best to grow these positions equally as I take business profits.
I've had to take pause on property investments because of covid-19 changing the value proposition. I'm waiting for foreclosures to start being processed again before continuing to buy property.
Crypto Investment Strategy
My crypto investment strategy is that the only “crypto” that's an investment is Bitcoin, anything else is a short term bet. I (almost) never attempt short term bets on other coins. I'm still risk adverse by nature and have to will myself to take any new risks.
I view my bitcoin as my general savings. If I find an investment worth buying I don't mind selling some bitcoin to take that investment. I do not sell bitcoin to “take profits”, I take profits in other investments to buy bitcoin. In this way I take the first steps to denominate my life in bitcoin, rather than dollars.
Not all Investments are Made for Financial Gain
I found the FI community in 2017. A friend invited me to FI related facebook groups. At this stage I was still struggling financially, but I gained insight into the FI mindset and very easily fit in – except when discussing exact investment choices of course.
Throughout my life I would take inventory every couple years. I evaluate what I've done, what I want, and how to get it. For the first time in my life, in 2018, I took this inventory and found that I didn't want to focus on making more money.
The goal is to be happy, so my investments have shifted to general happiness and of course, safety. I'm still extremely risk adverse!
I have focused on spending time with my family, keeping emergency food, water, and other supplies, and I'm actively working to homestead. I spent much of my childhood living and working a farm and the lessons I learned farming helped shape much of my adult life for the better. I see this pursuit as an investment in my children and a way to focus on activities we can spend doing together.
This may sound like prepping. I've almost always lived in rural areas, storms and long term power outages are assumed. Situations arise where these precautions are used often enough to have them. Taking it farther, producing as much of what is necessary for life ourselves is the best preparedness one could have, but also enables teaching my children lessons I learned growing up that shaped my work ethic and problem solving capabilities.
I think being prepared for multiple possible futures is the essence of diversification. It can be applied generally to life as well as financial decisions. Many traditional investors are beginning to see that an investment in bitcoin is a financial prep – diversification away from nearly every other investment option today.
My Ideal Investment Strategy
If I were new to bitcoin today, but held much of the knowledge I have now, I would buy bitcoin with the intent that each purchase would be held for no less than 4 years. I think this would limit the purchase amounts to what I could handle emotionally at that time and provide a horizon to look to.
I hope that I can one day live on investments in a way that reduces or eliminates tax. This isn't a position of greed. I personally feel partly responsible for atrocities funded by tax dollars, that partly came from my pocket. This deserves mention because eliminating this would give me peace of mind. The goal is to be happy, to be fulfilled in life. I think many people achieve greater income and forget the true goal. They continue to pursue more money at the cost of years of potential happiness.
I regularly define Bitcoin as financial independence. I mean this in that one is free to use bitcoin exactly as they wish. No entity can prevent or force you to spend. No country can debase the bitcoin supply. These are only true for the bitcoin held in a private wallet, and sometimes only for the bitcoin no one knows you hold. Political refugees, particularly from Venezuela, flee their country, but have everything of value stripped on the way out. Holders of bitcoin have been able to escape with their bitcoin, and no other possessions of value. Even if the likelihood that this might happen in your country is extremely low, it's still possible, and to have financial independence should mean having a respectable portion of ones value held in bitcoin, in a private wallet, and hopefully some that was obtained without any knowledge – without kyc like a name or ID.
I know this isn't exactly what is meant by the FIRE community, but I see wealth preservation as a vital part of financial independence. Bitcoin has been the only route to wealth preservation for some people, and it continues to be for others. It may not be likely for most people, but it remains a possibility.
I can only hope I can consider my future as being financially independent. I hope to achieve my goals and continue my pursuit of happiness. Continuing to support Bitcoin and helping others will likely be a part of this, regardless of any financial incentive. If Bitcoin can usher in a renewed age of hard money, enabling an honest economy and eliminate incentive for most war and similar conflicts then I could only be that much happier. USD has been used to drive value from those who create it to those do not.
This wasn't meant to be a how-to. If I were to highlight the best financial decisions I've made it would be avoiding debt and taking risks, particularly betting on myself to start and grow a business. I have surrounded myself with business owners since, many of whom are in traditional markets, owning restaurants, bars, stores, both physical and online only. Most have had a similar experience of a couple years of struggle followed by success after they refused to give up. If I gave the most honest advice, it would be to focus on happiness first, financial gain second, and when you have some wealth to protect, to do so in the best ways you know how.
In my constant study of economics I continue to learn why Bitcoin has potential to succeed. If bitcoin can be used as money it will become less expensive to simply use BTC, instead of exchanging with currencies. A free market gravitates towards the most efficient solution and because of these facts, as well as some history about nations using material other than gold as money in a global gold economy, I don't believe there will be a wide market of cryptos as monetary devices. There will likely be many crypos, but they will have little to no hope in competing with the market of money, which is the largest market there is in the world.
I am not an investment advisor and this is not intended to be investment advice. The article is an incomplete account of my own experiences and personal thoughts that should not be considered perfectly accurate. I have not included investment amounts by percent or dollars, and only eluded to some values vaguely. If you find any topics interesting I highly suggest doing your own research!