Plans fail for lack of counsel, but with many advisers, they succeed.
Proverbs 15:22
Recently, I noticed a lot of noise about Bitcoin as a great asset class for investors.
The property market, my preferred asset class, was rising and viable new investments were getting harder to come by. Like many investors, I began considering alternative investment opportunities. In short, I was looking for a place to park my money until the property market corrects and prices drop once more.
Bitcoin appeared to be the hot new topic on the lips of many. Not one to dive in and bet everything on red based a few hot tips, I did a bit of research of my own…
… and then I applied Proverbs 15:22 Plans fail for lack of counsel, but with many advisers, they succeed.
Plans Fail for Lack of Counsel
When God’s word asserts that plans fail for lack of counsel, I take heed.
I reached out to an online group of fellow-investors and asked them why they believed Bitcoin was a good place to put my money — or why not, as the case may be. In the next twenty-four hours, I gained a deeper understanding of Bitcoin, and Crypto-Currency investment in general, than I had amassed in the previous seven years.
Do I know everything? No. However, I got access to valuable online tools and resources for future research. My fellow-investors explained what was driving the current phenomenal price-rise — and what might cause future crashes. I learned about aspects of this asset class I had never really understood, like mining for Bitcoin and other currencies (not something that interests me, FYI).
I learned why many investors believe it will continue to rise and I learned why other investors believe it will fail.
I walked away with a more solid understanding of what it means to invest in this asset class and, if I chose to invest, how I might approach that.
Off the back of that counsel, I have the following take-aways:
- Bitcoin is high-risk, high reward — so I should invest only small amounts of capital that I am willing to lose
- This asset class is too volatile to park money earmarked for alternative use, like property investment
- With a 1 in 16 Trillion chance of mining a Bitcoin, mining is not a viable strategy for me (FYI Lottery offers a 1 in 45 Million chance of winning)
- There are many alterative crypto-currencies other than Bitcoin. All have a similar risk profile
- I should focus the bulk of my capital on more stable asset classes
- Viable property investment opportunities are still out there so I should not blindly write off my existing investment strategy
NOTE: This article should NOT be construed as investment advice. It is a personal testimony to illustrate the wisdom of seeking counsel, as shown in scripture (Proverbs 15:22). Please seek professional advice when considering any investment opportunity.
Most of all, I received some valuable clarity about my own position, what I was really asking and what it meant for my overall investment strategy.
But with Many Advisers, They Succeed
Here is some wise counsel that one particular adviser offered.
Let’s ignore Bitcoin for a minute.
- Investor is assuming property prices are a little ‘hot’. As if that can be determined and measured.
- Investor wants to be liquid for a future deal. When that deal might happen is unknown.
- Investor feels there will be a correction in the overall property market or an individual deal will come along.
The ideal solution for this investor is to find a way to hold cash which has:
- high liquidity (there when you need it) and
- no volatility.
The current $x value in currency needs to be the same $x value in currency when the next motivated seller comes along.
Any alternative is an alternative compared to holding cash.
If the alternative is illiquid and/ or volatile, the alternative fails to meet the brief. In this context, any returns on the cash are almost immaterial compared to the brief.
The above counsel offered me deeper insights into my own thought-process. This wise counsellor reflected my own musings back at me with crystal clarity.
It quietly reminded me that even my assumptions about the property market might turn out to be wrong. And it cleared the haze, allowing me to see the road ahead more clearly.
Without his counsel, I might easily have lost my way when considering the potential profits of Bitcoin and the thrill of the chase — without ever considering the primary goal quietly phrased in my question.
This wise counsel will help inform my decisions about how and where I employ my investment capital going forward. It has helped me to stay on track.