Terra Luna UST Algorithmic Stablecoin Crash (6 painful reminders and lessons learnt)

It was a crazy, crazy weekend in crypto when Luna and Terra’s algorithmic stablecoin depegged from $1 and couldn’t keep the massive selldown from happening.

I never held UST or Luna before this meltdown, and I decided to gamble and catch falling knives, thinking that Luna’s CEO will save the day…but alas! I speculated with $6500-ish, and I think strongly believe that amount has gone for good.

I’ve been reading and listening on how so many people lost their entire life savings, some even their family money and it’s just been so heart breaking. Cry and grieve. It’s brutal. Just brutal.

But pick yourself up again, and start over.

For those who are still grieving, take a look at this from thewokesalaryman.

I was mulling over the events (as well as losing of some money), and was reminded of 6 important lessons in crypto investing:

Crypto is volatile AF

I believe crypto is an emerging sector in the S&P and economy, but right now, it’s not yet regulated. So it can be cowboy town with more than 90% shitcoins, rugpulls and scams left right center.

If you wanna enter crypto, please please please:

  • DYOR = do your own research
  • Don’t borrow money you dont have to speculate and gamble (you can win big, yes, but you also can lose big).

Diversify

I dont recommending going balls-deep and all-into crypto.

At most up to 20% of your total networth can be crypto, but even then, I wont put all this into one or two coins. It’d be diversified within crypto to a bunch of coins to spread out risks.

Yes, the rewards may be lower, but the #1 rule of investing is to not lose money.

Take profits** (rule of 2-5X)

This is a very, very important skill, rule and decision you need to learn and execute.

I learnt this when I entered crypto in 2017, doubled my paper gains, and refused to sell. It came crashing down more than 80% of my original amount (profits wiped out as well as principal — cry me).

Multiple similar experiences happened since then, and I learnt that I cannot always sell at highest and neither can I buy at lowest. The best solution for me was the Rule of 2-5X.

The most conservative approach is Rule of 2X, which means that once I double my money, I pull out my original investment. Eg if I invested $100 and it becomes $200, then I need to pull out $100. I can leave the remaining $100 to run and grow as house money. And take the $100 to invest in another. This is the most basic and conservative approach.

What I prefer is rule of 3X, where I can pull out 1.5X and leave another 1.5X to run. This means that I pull out both original invested amount AND profits already. And leave whatever balance to grow more.

Stable, regulated assets

Stable, regulated assets includes stuff like

  • rental properties
  • index funds
  • ETFs / individual stocks

These may not give the crazy growth like crypto, but they aren’t crazy volatile either lol – rental properties can be great for regular cashflow. Index funds are pretty standard returns, and great especially if you have time on your side.

Bitcoin and Ethereum

I think that in the end, whatever I budget for speculation and investment in crypto (say 20% of my networth), a big bulk of that will be in the blue chip of crypto ie Bitcoin and Ethereum.

These two seem to be the gold and silver equivalent, and maintain their value fairly well, despite market volatility and up downs. So if I have $1000 budget for crypto, what I will do is allocate $800 to Bitcoin and Ethereum; and the balance $200 to higher-risk-higher-return speculative crypto projects.

Diversifying and increasing your income is my answer

Learning to earn more income outside your main job continues to be my focus moving forward.

There are just so many benefits to building a profitable side hustle, from

  • diversifying from one main income
  • meeting and networking with more people
  • side hustle can be scaled bigger and more profits
  • etc

Earn $1200 monthly teaching swimming (just 4 x 45 minute sessions a week)…or more if you want

So I’ve been sitting in with my kids during their weekly swimming lessons (already 3rd lesson last week), and an idea popped into my head:

“How much does a swim coach earn?”

The gears started to turn in my head, and I created a calculation table (in the video), and I realized that getting paid to teach others to swim is a fairly good and nice lifestyle business.

Upsides

Basic calculations based on my own experience: we pay $75 per 45 minutes for 2 kids. Just 2 sessions a day (1.5 hours) x 20 days a month will yield a swimming instructor $3000 a month.

It’s not bad.

Scratch that – it’s pretty good!

Dont forget the other upsides:

  1. There are so many things in teaching swimming, but the basics is making sure newbies wont drown. And many parents are willing to pay for this
  2. Secondly, there are so many things one can thing, ie there is longevity in teaching swimming. From teaching swimming strokes and techniques, to improving stamina, or speed.
  3. It’s very visual AND social. Other parents will see you teaching kids, and they will enquire – if they like you and the way you teach, more often than not, they’d engage you. Also, parents will refer other parents (we refer all the time too)

Quite a lot of upside to make it easy to grow the business.

Are there risks and expenses?

Of course there are, and they include:

  1. transportation costs
  2. insurance costs
  3. certification costs
  4. cancellation due to weather (can consider indoor pools) or others
  5. advertising and marketing costs
  6. injury risks
  7. there are a lot of competition (but this is okay, as people usually follow and recommend teachers they like anyway)

Is it worth it?

That can be a subjective question, but for me, it’s likely a nice lifestyle business which you can choose to grow if you want to, or keep a limited teaching schedule.

It’s similar to how we physical therapists and hand therapists do house call.

And if you’re very driven, you can grow it by:

  1. growing your personal clientele
  2. hiring other swim coaches
  3. selling products such as floaties, swimwear etc (or price it into your fees as part of advertising)
  4. etc

Can Bitcoin price go up to $950K with adoption and government regulation?

Disclaimer: crypto is volatile and there are lots of scams out there – you can make a lot or you can lose a lot (or everything). Do your own research – this is not financial advice. I’m just showing what I’m doing, and I’m taking risks on my end too. I’ve been both right and wrong before, so do your research.

How I started in crypto

I entered crypto speculation in late 2017 when my best friend introduced me to it, and of course I was freaking skeptical when I first saw it. I was very cautious of it being a scam as I hadnt really heard of bitcoin or crypto before that (I’m in the offline physical therapy world).

I pored over whitepapers, got involved with different crypto and blockchain projects.

Of course, I definitely got rugpulled a number of times across different projects (the highest risks are with new projects with lots of hype and fluff and promises of high returns).

At the end of 2018, there was a massive crash (or correction?) as bitcoin went I sat on a paper loss of 80%++ – I was so sad and guilty when I told my wife, but I stayed for both the tech and adoption, which I believe will increase the price.

True enough, in 2021, my speculations in crypto sits currently at 300%+ of my original investment amount, and I’m sensing that it should have another good run as governments and regulations on board and after it gets regulated, the returns should be “normal like financial markets”.

Note #:1 regulations usually means that financial institutions, sovereign/wealth funds, pension plans etc will have more exposure to crypto as a whole.

I chanced upon some videos/articles and wanted to share this with you:

  1. Kevin O’Leary: Crypto Will Be the 12th Sector of the S&P https://www.youtube.com/watch?v=gSPSRVDN8l4
  2. Kevin O’Leary: 20% of my portfolio is in cryptocurrencies https://www.youtube.com/watch?v=vqkC_XcxxJg
  3. Kevin O’Leary: Buy The Dip And Chill For 1 Year – They Want To Fool You, Don’t Listen To Them https://www.youtube.com/watch?v=FKqEOFwTO2A
  4. Kevin O’Leary: This Is Your Last Chance To Become Millionaire – My Most Sincere Advice To You https://www.youtube.com/watch?v=5_cyE10Ljms&t=5s
  5. BlackRock, Fidelity and others to invest $400M in USDC stablecoin issuer Circle https://techcrunch.com/2022/04/12/blackrock-fidelity-and-others-to-invest-400m-in-usdc-stablecoin-issuer-circle/
  6. Coin Gecko https://www.coingecko.com/
  7. 2021 financial market value https://www.statista.com/statistics/421060/global-financial-institutions-assets/

I believe that crypto including bitcoin, ethereum, solana, ripple and other crypto/blockchain projects would be regulated soon enough, and that itself will lead to a global increase of crypto market cap value as a whole.

No dang crystal ball

Of course, I dont have a crystal ball though that’d be nice lol, but I am ready to hodl my crypto speculations for a good 5-10+ years and longer. Why this is the case is as crypto becomes mainstream, it’d become “normal” to have, own and use crypto as methods of making and receiving payment =)

Note #2 I made a mistake – I thought the global financial market is worth 105M (see link #7), but it’s actually closer to $460 trillion in 2021. And I hadnt factored in other types of investments such as real estate.

For reference, crypto market cap April 2022 is $1.9T. That’s a conservative 230X comparatively.

What you can consider

For those who want to dip their toes / speculate into crypto but unsure, you can consider

  1. speculating into the top 10 / 50 / 100 of listed coins on coingecko
  2. ask your employer/side hustle jobs to pay you in crypto/btc
  3. invest into companies that have crypto exposure such as Tesla, MicroStrategy, NVidia etc

Remember, direct crypto speculation can be very volatile though is an emerging asset class – do your research and assume you can lose your invested amounts.

I’ll be holding onto my crypto and 5-10 years plus and equally as important, is to cash out (take out principal invested and profits) regularly – makes me sleep like a baby because my loss-related stress levels go down significantly =)

As Kevin o’Leary said in one of his videos: buy the dip and chill.

One Of My Potential $1K to $370K Shiba Inu Gamble (Robinhood lists Shiba Inu in 2022)

This is not financial advice – I am showing you what I’m doing and you need to do your own research. Do not borrow to speculate, invest or gamble. Crypto is highly volatile and you may lose whatever you put in.

Resources:

So when one of my best buddies sent me an article where Shiba Inu, a popular meme crypto token (#15 in the world at this point of time) is officially listed on Robinhood, a very easy-to-use and popular investment / trading app with more than 22.5 million users, I got really excited for SHIB.

I mean, it was interesting enough then as a community token and the projects they’re doing – but going on Robinhood…is akin to going mainstream.

And that’s a big thing in my opinion.

This Robinhood listing caused a 25% price surge of Shiba Inu globally (which is nice bonus #1 ehehe) and I took a look, Robinhood app is pretty easy to use too, which is again another nice #2 bonus.

How many SHIB tokens can I get with USD 1000?

Current price of SHIB: $0.00002713

With $1000, that’s mean I’d get around 36,859,565.05 SHIB tokens (rounding up to 37 million for simplicity).

$1k to $370K? Really?

It seems that the community of Shiba Inu is trying (or hoping) for Shiba to grow in price with an aim for $0.10 possibly within next 8-10 years

Remember, cryptocurrency is very volatile and risky. My $1000 in Shiba Inu may be worthless by then.

With 36,859,565.05 SHIB, at $0.01, that’d mean $368, 595.65 – a nice multiple if you ask me.

Even if it hits half the target at $0.005, that’s transforming my original $1000 to $184,297.00, which aint that shabby too.

Of course, it’s a long shot, high risk, and possibly doesn’t work out at all, so the $1000 can become totally worthless, and if it does, it doesnt affect me much at all. But if it hits 1c, it’d change my life in a nice and good way =)

Whales Investing Too

🐳🐳 ETH whale “Light” just bought 287,355,928,094 $shib ($6,577,577 USD).

An Ethereum whale by the name of “Light” just invested USD 6.4M (that’s million) to purchase 287B of Shiba Inu tokens. These are not small game playing, and it’s definitely heavy weight players (link to article can be found here).

That’s just ONE Ethereum whale.

What if I told you that there is many, many more Ethereum whales buying and hodling Shiba Inu?

And what if Shiba Inu is their hottest holding?

As more whales started buying SHIB tokens at a large discount, the total USD value of SHIB holdings jumped to $1.19 billion, which put it in first place among all other assets.

Biggest Ethereum “Light” Just Grabbed 287 Billion SHIB as Shiba Inu Dominates Biggest ETH Whales’ Portfolios

Interesting stuff if you ask me.

So that’s one of my gambles on multiplying my money using Shiba Inu crypto token for the mid-term play.

3 Key Lessons From Rich Dad Poor Dad Book That Changed My Personal Finance

In this video I’m going to share with you the three key important lessons that i got from this book.

It’s called Rich Dad Poor Dad, and it’s authored by Robert Kiyosaki.

To me, it is my first book that opened my eyes and mind to the world of personal financial education – my parents never spoke to me about money and I just observed lots of weird money habits of borrowing but never about making more.

This book was so easy to read and understand, and I remember that I’ll pick it up every now and then to re-read it all over again.

Robert Kiyosaki Brief Background

If you read his books, you’d know that Robert is a successful entrepreneur and real estate investor, but he didnt start off that way. Robert’s story is a familiar-sounding rags to riches entrepreneur story.

His father is a school teacher, who didnt learn about money, and continued to go to school to get more degrees to earn more…who lost it all when he tried to enter politics and got smashed out. He then took his hard earn savings and tried his hand in a franchise…and then truly lost it all.

On the other hand, he has a very close friend who has a very very wealthy dad, and Robert soon realized that he could compare the money practices between his friend’s “rich dad” and his own “poor dad”, and that’s how the book came about later.

Robert started by being a fighter pilot in the air force, before going into doing sales at fuji xerox and then saving money into starting his first company: a nylon velcro wallet company in 1970s. It was a hit initially, with a lot of merchandizing deals but it eventually fell apart due to piracy and overseas competition, and he became a bankrupt.

He had a few other business but eventually succeeded in the business of financial education and personal growth. He gave seminars and taught around US and the world, until he published the book Rich Dad Poor Dad, together with the gamification of financial education with his tabletop learning tool, and that’s when his business took off

The 3 Key Lessons I Learnt From Rich Dad Poor Dad

#1 Make Your Money Work Harder For You

As an employee, most of the time, you get paid for your time.

Sometimes a little more.

And that’s pretty much it.

No work = no income.

The rich, on the other hand, though they work hard, they have a purpose and focus, which is to either raise money or provide cashflow to build or buy assets that make more money for them.

#2 Assets Put Money In Your Pockets and Bank Accounts

You got to know the difference between assets and liabilities – assets puts more money into your pocket, liabilities take the money away from you. Robert explains that rich people acquire assets such as investments and securities whereas poor people acquire liabilities such as commitments, obligations and shit that make them poorer.

I thought Robert was kidding…but over the years, this is true even till today. I see people making money for expensive cars and watches but shun away from investing.

Assets are anything that makes more money for you.

This can include

  • stocks which are mainly public listed businesses on stock exchanges
  • venture capital or angel investing
  • cryptocurrency
  • real estate

Let me give you an example, if you buy stock of a good business at the right time, you’re probably gonna make a positive return. Say you put in $1000. After 5 years, if you bought it at a good entry price, your stock would have grown positively and you can sell it for a good profit.

This is fundamental to investing. Put in X amount and get back more than X amount, ideally 2X or more.

See how that works about investing into assets?

Basically you need money, then pick the right investment, enter at good-ish time and do nothing but hold (or hodl?) and watch your money grow. After a while, you then can sell it for a good profit. Of course we’re not gonna just “all-in” into 1 investment right, that’s too risky, that’s why we have to have more than 3-5+ of these, depending on your budget, risk appetite and growth desire.

#3 Reduce Spending As Brutally As Possibly In The Short Term

Expenses are something that you can have more control over as compared to controlling market forces or share price (man if i could control those 2, i’d be a billionaire by now lol ehehe).

Aggressively kill off your unnecessary spendings and debts, and the purpose of this is by doing this, there is 2 very direct benefits

  • you need lesser to retire and become financially independent
  • you free up more money to buy more assets that make more money for you

Thank you for watching The Book That Changed My Financial and Business Life – 3 Key Lessons From Robert Kiyosaki’s Rich Dad Poor Dad

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When does passive income activity become non passive?

A man with his hands covered with mud

This is a great question, actually.

To me, passive income activities become non-passive when there is too much active time taken to generate and manage the activities that generate the passive income; or to manage the passive income itself.

I share much about two general types of passive income, which are:

  1. business passive income, where you build offline and/or online businesses, hire and delegate using processes, technology or people, to earn money for you even when you’re not working in the business (anymore or as much as before)
  2. investment passive income, where you invest your savings into dependable investment vehicles to work harder for you and make more money for you at a % return of investment (ROI)

Is investing passive?

Both aren’t exactly fully passive-passive, for example investment passive income.

Of course, even if you invested into index funds, dividend stocks and REITs, you will still have to

  • view your portfolio and adjust / rebalance your portfolio periodically
  • read and maybe respond to emails from your broker(s) and bankers
  • give instructions

Maybe almost-passive for those who do it that way; but you can also go the extreme end if you decide to read and research investment 12+ hours a day haha!

So if you’re the sort who wants to research a lot and spend more than 4++ hours a day on these activities, technically it’s already part time work.

But of course, if you like it a lot and it’s natural to you…does it count as well?

I leave that for you to decide.

Note: But to reach this level, you’d probably need a good chunk invested (to get $50K dividends a year on 5% ROI, you’d need at least $1M invested).

Good problem once you’re here if you ask me, heh.

Can businesses be truly passive?

For business passive incomes, it’s not as straightforward, because with business, many things can happen from a operational standpoint eg

  • accidents
  • health issues
  • absences
  • PR nightmare
  • vendor issues
  • product issues
  • etc

Anything can happen, anytime…and often without much warning.

Bloody good managers and stable business

If your offline business or online business is fairly stable and profitable, one of the best ways to make it as passive as possible, other than hiring and retaining good workers or freelancers, is to hire a bloody good manager.

Not a bloodthirsty mad bastard, but a bloody good manager.

A bloody good manager is a person that

  • that doesn’t thrive on creating drama/politics and making things go upside down
  • knows what the business needs and how to get it done in a consistent, sustainable basis
  • communicates clearly
  • fair, transparent and open

Yeah, it’s hard to find such good people, and normally I promote internally rather than bring in “external” managers to manage.

The “most” passive income stream?

40 year old me today believes that the close thing to passive passive income ie hands off as hands off can be is either of these 3:

  1. A well-oiled business with clear processes and management where the business has zero reliance on me, and still grows year on year.
  2. Continuously purchase index funds on a regular basis (where the dividends automatically gets banked into your bank account) (this can be for similar investment vehicles such as fixed deposits). This approach is good for most people.
  3. Trust with wealth management*. This is my ultimate end-funnel where all my investments and money go, and a set % portion is carved out for me and my loved ones to live on; and another % portion is to reinvestment to keep growing and counter inflation.