A Casual Talk on the Timing of Cryptocurrency Investments: The Power of Time

Investors should rationally view the objectivity of time,

rather than being influenced by their own subjective delusions.

The wishful thinking of getting rich overnight is the reason why most investors lose money.

As Buffett said,

Wealth growth is like a rolling snowball,

referring to compound growth here.

The compound interest formula is C(1+R)^N, where C represents the initial capital,

R is the annual return rate,

N is the number of years of growth.

These three parameters together determine your final wealth.

The importance of these three parameters varies.

Time is the most important,

it can bring exponential growth,

the further you go, the faster the wealth grows.

The growth in the last year,

may be equivalent to the total of the previous ten years.

That’s why 90% of Buffett’s wealth was earned in the last ten years,

the money he made in the first 50 years is only one-tenth of what he earned in the last 10 years.

Understanding the power of compound interest,

is understanding this nonlinear wealth growth.

Let’s take another example,

Suppose a company’s profit grows by 20% annually,

for 40 years,

profits will increase by 1500 times.

Invest 1000 yuan,

after 40 years, it will become 1.5 million.

Most of this 1.5 million is earned in the later years,

about 1 million of it is earned in the last three years.

To achieve compound growth,

you need long-term investment,

patience,

otherwise,

the power of time cannot be fully realized.

Compared to the holding period,

buying and selling stocks is just a moment.

Investors need to hold stocks patiently for the long term.

How can this be achieved? It’s related to age.

Starting to invest at 70 is obviously too late,

investment must start early.

Time is the greatest wealth for young people,

time is more important than money,

it is the condition for compound interest.

Young people are now poor,

but over time,

they can also become wealthy.

This mainly depends on how we think,

and what we do.

The first few years are tougher,

save and scrimp to accumulate some money (for example, 1000 yuan),

then use this money to invest.

This is crucial,

it’s seed money,

according to the previous calculation,

40 years of compound growth can turn 1000 yuan into 1.5 million.

Many people spend their 1000 yuan on consumption,

which will leave them poor even in old age.

Having the valuable resource of “time,”

but not utilizing it well,

when wages are low,

only focus on immediate enjoyment,

and do not accumulate wealth.

This mindset and behavior pattern are often passed from parents to children,

leading a family to be poor for generations.

Young people can save seed money through a few years of hard work,

then buy stocks of good companies,

hold patiently for the long term,

allowing their wealth snowball to grow slowly over time,

achieving a life turnaround.

The media always likes to promote getting rich overnight,

but this is a low-probability event.

If you are poor,

and still want to overtake others on a bend,

get rich overnight,

the result will only be disastrous.

Overtaking on a bend often leads to disaster,

people should not do low-probability, high-risk things.

Therefore,

I do not recommend young people start businesses.

Although entrepreneurship benefits the country,

the success rate of startups is less than one percent,

it’s a low-probability event.

Even if you start a business,

do not borrow a lot of money,

especially from relatives and friends.

If the startup fails,

you will need a long time to work and pay off debts,

which will limit your life development,

equivalent to betting your future life on today’s entrepreneurial success,

and entrepreneurship is a high-failure probability endeavor.

Even if you gain skills and experience through entrepreneurship,

you may also be dragged down by debt,

losing a lifetime of development.

On the other hand,

making money through investment is a high-probability event,

what you need is time.

You don’t need to be very smart,

just some focus and patience,

which is completely different from starting a business.

Of course,

you need patience,

having the idea of getting rich overnight will lose money.

Just like playing mahjong,

besides poor skills,

many people lose money because they are impatient.

I hope young people learn to invest early,

the greatest resource for young people is time,

don’t waste this precious resource.

Be a friend of time,

let time fully exert its power,

and make your wealth snowball bigger and bigger.

Start by saving and scrimping to accumulate seed money,

and after some years, it will grow into a large crop.