When talking to anyone who has some type of Crypto or online income, you will often find that many are relying on one or two significant income streams. Although it makes a lot of sense from a practical point of view, it’s definitely not the safest option. With the collapse of Celsius and other lenders, many were left destitute, as they were relying on their weekly interest as a form of income. It’s always great to have a big lump sum coming in from one or two significant sources, but what happens if something goes wrong? Prior to recent events, this was merely a potential scenario that many considered possible, but highly unlikely. The only thing that can protect you in a scenario like this is diversification. This is something that I have endeavored to do for years now by choosing to build multiple income streams. These streams can obviously grow in time but the most important objective is to get them established.
Once I had numerous mechanisms in place I began building upon this foundation. Further allocation of “smaller” earnings is now possible to increase the “network” and subsequently increase the amount of income being generated over time. This is where the power of compounding is unleashed and the results begin to follow almost automatically. Another important factor to consider is that even if 100% of your “economy” remains unscathed during a bear market, it still has a very significant impact. Earnings generally drop quite severely during a bear market. There is little that you can do to avoid this dynamic, apart from one strategic approach.
There are a number of reasons why I like to have dollar-based models. Firstly, these income sources are sometimes not necessarily Crypto-based and therefore have a built-in hedge. Secondly, the income that is generated is protected from the effects of any severe crashes in the Crypto market. Some of these sources may indeed reflect a BTC balance but the value is “ruled” by the dollar valuation. In other words, if the BTC price drops significantly, then the satoshi value increases dramatically. We can now see that not only are the income sources diversified but also the “type” of income. Regular readers will identify my “back-up plan of a back-up plan” approach coming through here. This is an imperative approach when operating within the realm of finances, in my opinion.
This is the type of thinking that has preserved me during this bear market. Building multiple streams with multiple “currencies”, as well as shifting to stables in 2021. Never take it for granted that your plan will work. Look for holes in your strategy. Throw worse-case scenarios at your idea and see if it can still stand, theoretically. Being in love with your idea is dangerous because you can become susceptible to similar delusions that young couples often experience. The other can do no wrong… until a true test comes along. Don’t be offended by those who challenge your approach, but rather use it as an opportunity to test the strength of your strategy. Thanks for stopping by! See you in the next one, as we journey on!