We take our responsibility to educate readers on how to build wealth very seriously.
💎 To that end, we are excited to continue publishing step-by-step tutorials, strategies, ideas, theories, and practical breakdowns of how to build wealth, even throughout difficult market conditions.
In this letter, we’ll review 5 tips to invest profitably in your 20s.
🔥 As always, we’ll also share the hottest crypto market news, events and happenings.
Read, enjoy and share with your network.
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🔮 Prices Dumping; Funds Pumping
Current price action displays a remarkable recovery after we fell to 6 month lows of $28.6k. That being said, resistance still pressures a fuller recovery and market sentiment remains cautious. Struggling prices and cautious market sentiment... And yet, we see a sustained set of high-profile eight and nine figure financing rounds across multiple dimensions of the crypto market. Examples:
Andreessen Horowitz launches a new $2.2 billion crypto fund called Crypto Fund III.
Ledger raises $380 million for its crypto hardware wallet.
💎 What does this mean for crypto traders and investors?
Capital flows tell us which projects are comparatively better able to weather downturns. They also show us what investors are interested in. Back in 2017-2018, we mainly saw retail cash. This time around, we have deep-pocketed actors invested in the future of the space across multiple dimensions.
⚠️ Remember: capital flows can be lagging indicators
Venture rounds come together over the process of months, or sometimes weeks. As such, it’s highly possible that some of the rounds that get announced now, were beginning to be formulated in better times at higher price levels. This doesn’t mean they are not still relevant data points. It just means that as responsible readers and investors, we need to dive deeper into the headlines and understand when fundraising began.
💸 How to Invest in Your 20s
For the majority of people, the early 20s is the first time period during which we get access to a reasonable amount of disposable income. Up until then, it’s common to have relied either on lower paying jobs or parents. We know, however, that as quickly as the money comes in, so too does it go out on things like new video games, expensive food, cinema tickets, or more broadly some sort of purchase... oops!
In this article, we’ll show you how to think differently about how you can use money. We’ll show that money doesn’t have to be spent, but rather it can be invested to make you more money. Let’s dive into the first tip.
1️⃣ Spend Money to Create More Income
You can generate income through a variety of strategies, each of which take different levels of work. For example, you can invest your time and money into starting a business.
If you’re not sure how to get started, you can begin by asking yourself what skills you have and how you could potentially turn these skills into a product or service you can sell. You might love to cook and in your free time decide to post 10-60 second TikTok videos or even write and sell a recipe eBook.
You may even team up with someone who has skills that complement yours. In our ebook scenario, for example, you might take responsibility over the curation of recipes whilst your friend who understands marketing can help spread awareness.
You can consider doing these projects for free at the start to gain experience before you begin charging.
2️⃣ Save Money and Invest Today
This is where the concept of living below your means comes into play. This doesn’t mean to be stingy, but rather spend money in a way whereby your net worth is continually increasing. When you bring compound interest into play, the amount of money you’re giving up by making a big purchase in your 20s is enormous.
3️⃣ Take Calculated Positive EV Risk
One of the benefits of being in your 20s is that you likely don’t have a lot of responsibilities like a house or family and you have a long time horizon, meaning you can afford to take on larger, calculated risks. Investing is a large topic and everyone has to start somewhere. We highly recommend considering Nassim Taleb’s Barbell Strategy.
This strategy suggests that the best way to strike a balance between risk and reward is to invest in the two extremes of high risk and no risk assets while avoiding middle-of-the-road choices.
A real life barbell has weights on each end and a bar in the middle to connect them.
With an investing barbell, on one side you have a small proportion of investments that are high risk but have high reward potential. The reason for these is to be exposed to the occasional unlimited upside. In fact, the younger you are, the more heavily weighted you can be to this side of the barbell.
On the other side, you have a larger proportion of investments that are low risk and low reward potential. The reason for these is to protect yourself from the risk of ruin.
No investments are held in the middle, or in other words, nothing medium risk is held in the portfolio.
👉 For more detail on the barbell strategy, check out our FREE article, Taleb's Barbell Strategy.
What many don’t consider in their early 20s, however, is their ability to take non-financial risk. For example, one of the most controversial topics is that of university. There are other options if you’re unsure as to whether you want to attend university. You can always take a year to two years off to figure out what you want out of life. This is a much better plan than building up a mountain of debt… Just like compound interest on your savings stacks up in your 20s, so too does it stack down in terms of debt!
4️⃣ Thoroughly Research Your Investments
Let’s say you’re invested in Bitcoin. You should be able to argue against Bitcoin better than Peter Schiff or any of the other biggest Bitcoin bears out there. If you’re an investor with a long time horizon and you truly believe in the asset, then you need to spend the time to strengthen your conviction. What would it take for you to lose faith in this investment? Ask yourself this question before you invest, not during the emotional turmoil of the highs and lows of this asset. If you find yourself getting emotional during the ups and downs, it’s likely because you’re either overexposed to the asset and you need the money short term, or you don’t have confidence in your investment.
5️⃣ Dollar Cost Average
Dollar cost averaging is an easy, no-brainer strategy to continually invest in assets you believe in whilst diversifying your time risk. It’s a set and forget way where you can focus on other things with the added benefit of easing emotional and psychological pressure. This is because with the dollar cost average strategy, you buy the lows and highs passively and thus average into an upward trending asset. 👉 For more on Dollar Cost Averaging, check out our free video guide.
Your 20s can be a fantastic time to begin investing. We hope this article introduced you to a variety of specific and actionable advice you can implement today to build wealth. By taking time to plan today and creating a strategy that aligns with your financial and personal goals, you can put yourself in a position to take control of your money and profit.
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🧩 Newsletter Fun With Crypto Funds
Blockchain Capital have just announced that two major companies will be joining their fifth venture fund.
❌ Which of the following is NOT one of the companies that have joined the new fund?
🧑🎨 NFTs: A New Wave of Renaissance
The Binance NFT Marketplace is now live. The first “Premium Event” auction, titled ‘Genesis’ will feature newly digitized NFT artwork from Salvador Dali and a tribute to Andy Warhol’s original works. To view the Genesis gallery, use this link. Why set up this Premium Event?
The idea is that NFTs bring a revolution to the world of crypto and as such, tribute should be paid to other artists who were revolutionary.
Dali’s Divine Comedy project (101 watercolor drawings to commemorate the birth of Dante Alighieri) was one of the most representative works at the early stage of the Renaissance.
As for Warhol, he has been recognised as the leading figure in the visual art movement, also known as pop art.
As well as Genesis, the Binance NFT Marketplace will feature:
The ‘100 Creators’ Program. 100 artists, handpicked by the exchange, will spearhead the launch of the NFT marketplace. Only these selected creators will be able to sell their artworks in the first week following the marketplace launch.
Mystery Box Offerings. Each box is guaranteed to contain one NFT, and its contents can vary in rarity. The first Mystery Box collection will feature 16 “tokidoki” (Japanese word for ‘sometimes’) characters, toys from the Japanese-inspired lifestyle brand created in 2006 by Italian artist Simone Legno.
NFTs have been an exciting and indeed revolutionising prospect for some time now, with the Binance NFT Marketplace being a new development... In fact, we made our readership aware of NFTs and their potential back in September 2020 in our article: Are NFTs the next big thing?
💡 If you are new to NFTs, or would like some more information on the different types of NFTs, what to look for and how to purchase NFTs, we have two further guides for you:
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Mastercard was not one of the companies to join the new VC fund. Visa and Paypal however, are joining the fund which so far has raised $300 million.
Blockchain Capital is one of the most highly regarded VC firms in the crypto world. Founded in 2013, it has invested in hundreds of companies across different sectors of the crypto industry such as Aave, Coinbase, Ripple and Kraken.
Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here.
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