Investment Theory: Buy Assets That You Need

I love finance and investing and have done so since I was a young child. I have spent many days thinking about he subject of investing and some principles have helped me through difficult markets. The cryptocurrency market is going through a difficult time as often immature markets contend. The main issue not supporting cryptocurrency prices is the fact that these currencies are not being used regularly in everyday transactions and so because their value is still being based on potential use and not immediate need they can be sold and the price driven lower. Many of these currencies will not survive this downturn I predict, only those currencies that have demonstrated a real everyday use will survive. In rising aspirational markets assets can walk on potential value but when the market changes to one of survival then a coin's value will need buyers who have to buy to support it's price level.

If this market is making you feel uncomfortable it is likely your aggregate asset allocation strategy is misaligned. For an investor most of your assets or wealth should be in assets that you need and that other people need as well and will pay you a lot to have. These assets include real estate, everyone needs a home to live in so for most of us our biggest asset should be our real estate. Second should be income producing assets such as stocks, bonds, and cash all invested depending on our expected need to access. If one will need these assets sooner they should be invested more conservatively towards more cash and bonds and if not more towards stocks. Stocks represent ownership of operating businesses that make money everyday producing goods and services our society needs, the income from these assets grows and we can reinvest this income.

Lastly a small portion of one's investment can be in assets that are not needed but are nice to have like nice cars, watches, gold, and jewellery. These assets may change in value but should be thought of as long term investments and only sold in emergencies. If one has allocated their investments well they will have enough cash and monetary resources to meet all their short to medium term needs and wont be required to sell their esteem assets.

Cash flow is a huge advantage to investing so having multiple sources of income creates financial strength and durability no matter the market environment. This is why earning greater income and investing in education to produce better income is probably the best investment one can make.

Cryptocurrencies are not being used as cash or monetary instruments yet and any growth in use seems to have slowed down or may have even declined given the increased transactions costs. Some currencies are trying to create demand other than being used as monetary instruments but that demand has not become significant so I am not surprised that the cryptocurrency market is going through this downturn. Given its persistency I don't think many coins will survive this downturn unless they show a real need for someone to own them that will have an immediate impact to their life that will benefit their life or provide them something that they need in order to live. Currently I have very little invested in cryptocurrencies, the one I add to occasionally is Vechain but I just don't see much reason to invest in most of these coins at this time. I don't have to buy any coins and no one else has to as well which should tell you where the price of everything is going to be heading. Lower, much lower, until they can't go lower anymore.