AIBU to think my husband shouldn't YOLO his bonu on Crypto?

[IndieR22]

Basically what it says in the title. My husband will get his work bonus at the end of November. He says that he will be YOLOing it all into his Crypto account.

For anyone who doesn't know what YOLO is, he wants to blast all his bonus into his Crypto account. For anyone who doesn't know what Crypto is, it's a decentralised currency (a currency not controlled by a single governing body).

Interested to hear other people's opinions.

Why are you paying 'halves' when you're at home providing childcare so he can earn his 'YOLO' money.

YOLO OP, give the eejit a wake up call.

It depends what he is planning to do with it.
If he is going to day-trade alt coins, then he might as well just shred the money now.
If he plans to buy something 'safe' like Ethereum and sit on it for five years, it could do very very nicely.

Aussie & read this as “Yolo his bono on Crypto”

My friend made £18k with Cordana this year. Just sayin!

Half it.

Put half into the family pot for next months bills, so it takes the edge off both of you.

The remainder, half again so he gets his half, you get yours to do something completely selfish with, as he is doing. He wants to buy magic beans, then great, but use your half-moon for something for only you - a haircut, spa day, hobby stuff, cleaner for a couple of weeks, whatever.

Vv volatile. Open to manipulation (eg musk recently).

Beloved by my male friends who work in IT and love wanking on about it cos makes them feel clever and cool.

It's gambling. Same as stock market.

I use credo never bet more than you can afford to lose.

Depends on your overall financial situation and how you organise things.

For vast majority of people that is a significant amount and would be joint convo about what to do with it.

In our financial situation I'd say ok 2k do whatever. The rest goes on debt savings home etc etc

I dont follow why you consider making investments 'yoloing'? Surely that's the total opposite. He isn't blowing it on a sports car he is making and investments in the future. Sure, it is a risky one if he doesn't know what he is doing but so is every investment.

Yeeesss

And it's extremely foolish to bet more than you can afford to lose, on anything.

OP seems like it's not a sum that is trivial to the family.

Some cars are excellent investments.

Vintage gorgeous rare etc.

@NiceGerbil

Some cars are excellent investments.

Vintage gorgeous rare etc.

True, some are if you can maintain them well. The average mid life crisis car bought with ones bonus tends not to be an investment.

I love dabbling with crypto. It's fun but it's definitely akin to gambling.

Although to be honest I've done really well on some of the alt coins this year. I have DOGE and SHIB and between the two of them I've quadrupled what I've put in so far...

You're going halves on mat leave? Yeah, he's a wanker.
A very selfish wanker. 👍

@Somuddled

I dont follow why you consider making investments 'yoloing'? Surely that's the total opposite. He isn't blowing it on a sports car he is making and investments in the future. Sure, it is a risky one if he doesn't know what he is doing but so is every investment.

A car is a much better investment - at least it has some use, and is never a 100% loss as it will always have scrap value if nothing else.

A more sensible approach would be to split the bonus across a purchase or Christmas, some in savings and 10% to crypto for fun investment.

The Facebook book crypto groups are full of recent incomers asking questions that show they've done no research and just expect to come in and make money. They're the ones who buy high when everyone is buying, panic when it drops and sell at a loss. See it time and again.
Better to not let FOMO kick in, drip spare cash in, leave it, recoup gains.

In 2017 BTC hit it's ATH (all time high) of $20k. It tanked down to $3k by Jan 2018. It was pretty unloved. That was an interesting time, lots to learn about it's fluctuations, how a large investor (whale) off loading can cause a decrease in the overall price (and gaining BTC a rep for being vunerable to price manipulation).

Now is still an interesting time, large institutions are investing in BTC - keen not to miss out on enticing returns (over last 10 years BTC has out performed pretty much anything), the ability to use PayPal to purchase etc all indicate mainstream adoption. Investors can buy stock market funds that track the performance of crypto. Its all promising. Well maybe. In crypto land ATH's often end in huge price corrections and long long long bearish (down) slumped periods that require conviction not to sell at a loss through when it looks like the shit is hitting the fan.

Personally if my partner was on mat leave or reduced income there's no way I'd be potentially spanking valuable cash up the wall while they wondered if we could have a nice family day out. I'd consider that selfish.

@TuftyMarmoset a run of the mill car is not an investment since it reduces in value over time.

Crypto is an investment but highly risky and speculative.

@nayday I know, my point was that crypto should barely be considered an investment either because most people who ‘invest’ in it lose all their money. (Same applies to CFDs and spread betting, the other high risk investments du jour) Hence the FCA statement. Whereas at least you are guaranteed not to lose quite 100% on a car!

Suprima I double my money yesterday/today.

This is meaningless. Get people to walk into a casino and make one bet on black, two days running, and 25% of them would be able to say the same. It doesn't follow that anyone hearing of their experience should try and do what they did.

The fact that you think this means something shows that you are deeply ignorant about investing. To be fair, so are many people whose job it is to invest money. A guy called Nicholas Taleb wrote a book called "Fooled By Randomness" where he explained that when he interviewed money managers for jobs, he always arranged the interviews in such a way that he could cut them short if the person started talking about the returns they achieved. If they didn't understand that their track record was utterly irrelevant to an assessment of their ability, they were so clueless they were dangerous.

It's gambling. Same as stock market.

Any fast changing number can be used for gambling, in that sense I agree they are the same.

There is a difference though. If you buy shares in the FTSE 100 you become part owner of companies that (relative to the current share price) have had profits averaging 7% a year for the past ten years, and this is a reasonable predictor of their returns in the next ten years. The return to investors over a given time period may not be the same as the underlying return, due to share price volatility, but with average luck, that's what you'll get. (You're as likely to get 50% more as to get 50% less.)

With Bitcoin, the fundamental return is 0% rather than 7%, so you will need more luck to come out ahead.

RandomLondoner I may be deeply ignorant about investing but I’m off to the shops to treat myself with the money I made yesterday. I’ve been day trading for years, previously banking and now Crypto. Sometimes ignorance is bliss.

@RandomLondoner when you say returns are you referring to dividend payment? Because not all stocks pay dividends and the gains to the investor are through stock price increase. This is similar to BTC.
If an investor had purchased £10 of BTC 10 years ago vs any share and held - BTC has outperformed all stocks in that 10 year comparison period.
I'm putting that here for accuracy - before anyone goes running to put their life savings in cryptocurrency - hind sight is a wonderful thing and the high risk of crypto should be respected. People have lost their life savings in this space by chasing the high and buying and selling low in a panic through price crashes. Buyers beware, here be dragons.

when you say returns are you referring to dividend payment?

No, I'm referring to the profits, the earnings yield. What proportion of profits companies pay out in dividends is neither here nor there. Historically around the world, companies used to pay out about half their profits as dividends. I don't know if this has changed since I last looked at it many years ago, it's not something I need to know.

Because not all stocks pay dividends and the gains to the investor are through stock price increase. This is similar to BTC.

It's only similar if you don't understand what's happening behind the scenes. Companies are retaining some of their profits and reinvesting them, increasing the size of the company. So returns compound internally, even when there are no dividends.

With Bitcoin, there are no returns, the price only goes up when people are willing to pay more for the same thing. That can happen with stocks, but with stocks the price also goes up because people are willing to pay more for more. Between you buying the share and selling it, the company may have used its profits to increase production and sell more goods to more customers, so the share is worth more. Even at a higher price, it can be just as good a deal for the person buying it from you as it was for you when you bought it.

The large, wildly profitable tech companies also provide returns to stockholders through stock repurchases. Apple, which also pays a small dividend, has done this with billions of dollars in spare cash.

Tech Giants Have Ramped Up Stock Buybacks. Apple Is the Champ.

This increases the price per share and because there are fewer shares outstanding, increases earnings per share, which also makes the stock look better and increases demand.

@Suprima

The only money to be made on crypto has already been made

What is he investing in?

This is nonsense, there is serious money to be made in crypto each and every day just depends how much risk you are willing to take .

For instance would you gamble 100k for a 8k return.?

Lots of high risk cryptos appear all the time

High risk but also high reward

But you do need to know what your doing.

It’s very difficult to make more than “lucky” returns in crypto unless you are willing to spend a lot of time in Discord. There are some interesting coins with a social purpose (eg Klima) albeit a slightly utopian expectation of behaviour. Some are just gambling, many/most are Ponzi or quasi-ponzi schemes that need to attract amateurs (aka apes) from outside the DeFi community to make money. In my view there are way too many IT types who don’t understand derivatives and trading properly involved. The only people who will ultimately make money are those who are out before the collapse that is sure to come.

And for what it is worth, I think the DeFi architecture underpinning a lot of this will change the world and some of the exchanges we currently know will be redundant in a relatively short period. I am convinced it is the future of asset management. Crypto coins? Not so much.

Expanding in my point a bit. The major difference between crypto and, say, stock in the FTSE is that stocks are underpinned by a visible and transparent entity in an efficient (ish) market. Global market abuse regs and insider trading law means that it is rare for there to be market moving info that is not in the public domain and certainly not in sufficient quantities to move the market without being visible to the regulator. It’s why bull runs are rare these days. It also means that price behaviour is driven by widely disseminated information. Simplistically, a good market statement and the price goes up, a profit warning and it goes down.

Crypto has none of that. It is, largely though not 100%, driven by sentiment and expectation. It performs far more like derivatives so swings are bigger and risk is much higher. In the main markets, it is difficult for individual investors to invest in derivatives because it’s too easy for them to lose or be wiped out by big players. Crypto is a mechanism for inexperienced investors to trade in very high risk / high return products that they wouldn’t be able to touch in regulated markets.

It’s the old adage, if you don’t know who the patsy is, it’s you.