Your Plan for Building Long-Term Wealth

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The next 100 million crypto investors.

Health, Wealth, and Happiness

August 5, 2022

“Knowledge of hidden rules is crucial to whatever class in which the individual wishes to live.”

― Ruby Payne

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Must Read

Today’s most important story for crypto investors.

Ethereum After EIP-1559 (Coin Metrics): EIP-1559 was launched one year ago in a bid to make Ethereum faster, cheaper, and deflationary (meaning ETH could be burned and minted).

This is an info-packed summary of on-chain metrics since EIP-1559 from the Coin Metrics team. In short:

80% of Ethereum transactions are now using EIP-1559 (meaning Ethereum can evolve).
Ethereum's inflation rate is going down (good news for long-term investors as a shrinking pie means you hold proportionally more pie).
Average gas fees are going down (good news for everyone, as fees are the silent killer of building long-term wealth).

Investor takeaway: Ethereum can evolve. These metrics should make investors confident in the next big upgrade known as The Merge, which is currently scheduled for September.

Your Money is Growing

Truth in numbers.

This chart from the Coin Metrics report is a little hard to parse, so here's a breakdown.

The green line (occasionally dipping into red) is the amount of new ETH created each day. You see this number dropping after EIP-1550 (the dashed vertical line). Again:

More ETH = more inflation = your slice of the pie is smaller

Less ETH = less inflation = your slice of the pie is bigger

During times of market turmoil (the Bored Ape Yacht Club mint or the UST disaster), much more ETH is burned as investors try to get out of (or into) their positions. This has the effect of tightening up the ETH supply during difficult times, which is good news for long-term investors.

Investor takeaway: So far, the trend toward "deflationary ETH" looks good. The bet is that The Merge will make things even better.

The Investor Mindset

by John Hargrave

Our plan is to welcome the next 100 million crypto investors.

It’s an ambitious number, but I believe the Bitcoin Market Journal community can do it (wait until you see what we have planned).

I remember when Microsoft CEO Satya Nadella boldly proclaimed that Windows 10 would be on one billion devices (they met that goal last year).

I remember when Steve Jobs predicted the merger of NeXT and Apple would lead to Apple’s remarkable turnaround (today, it’s worth over $2.5 trillion).

I remember when Elon Musk predicted that most new U.S. cars would be electric by 2027 (we’re on the way).

These were bold statements that required courage and commitment. As crypto investors, there’s a lot we can learn from these visionaries.

When it comes to building long-term wealth, do you have a long-term vision?

Do you know how much you want to earn? Your net worth? Your lifestyle?

Have you written it down?

Have you told someone else?

The investing mindset means being clear about your long-term goals. It’s hard to predict the short-term movement of anything, but we can greatly influence our long-term destiny by doing a few simple things over and over.

Let me give you some examples.

The Average Investor

During crypto bear markets, newspapers love to write stories about all the “average investors” who have been burned (here’s a typical story).

These are lazy, fill-in-the-blank stories about humble, middle-class [day traders/DoorDash drivers/single moms] that were saving up for [new home/new car/new baby] and invested it all in [bitcoin/Dogecoin/crappy altcoin] based on advice from [Reddit/YouTube/astrology] and lost [var $total_amt_lost].

Of course, people lose money on bad investments every day. It’s part of investing: you trade risk for possible reward (as smart investors, our goal is to reduce risk while increasing the probability of reward).

What always strikes me about these stories is that there's no long-term plan. There’s a short-term plan: get out of debt, save for a vacation, or buy a Lambo. Why on Earth would you YOLO into crypto to pay off your credit cards?

If you lost $10,000 because you aped into bitcoin at its peak, consider that $10,000 well spent. It is tuition paid to the school of life (Hard Knocks University doesn't offer scholarships).

Smart investors have a long-term plan, like our plan to welcome the next 100 million investors into crypto. Here are some tips on building your own plan.

Building Your Long-term Plan

Ruby Payne is an educator and researcher who has spent a career trying to understand the causes of generational poverty and how teachers can equip students with new mental frameworks to escape poverty.

She spent decades studying folks from across the socioeconomic spectrum, from the very poor to the ultra-rich. The result is her classic book A Framework for Understanding Poverty, which I highly recommend to those looking to build wealth.

In a nutshell, we all have a mental framework we use for understanding our social and economic class. Odds are your friends and family are in the same class and you all reinforce these unspoken rules, behaviors, and beliefs to each other.

As someone who grew up in the middle class, what I learned from the book were the “hidden rules” of the very wealthy. I had never been taught these things, just as most who grew up in poverty have never been taught the “hidden rules” of the middle class.

Courtesy A Framework for Understanding Poverty

Take food, for example. Those in poverty just want enough (quantity). Those in the middle-class value the taste (quality). Those in the upper-class value the presentation (aesthetics). This is why expensive restaurants give you a tiny morsel of food that's beautifully prepared as opposed to, say, Cheesecake Factory.

Payne’s work provides insight into our beliefs and behaviors that need to change for us to jump social classes, i.e., to build long-term wealth.

The most valuable tool Payne gave me was her worksheet – used to help kids move out of a poverty mindset – on imagining one's “desired self.” You imagine “future you,” then you flesh out the details. For example:

How will "future you" look, think, and feel?
In work settings? Social settings? Academic settings?
Which forces opposing future you must be removed? Which should be amplified?
How can we strengthen the connections between current and future you?
How do we get from here to there?

The a-ha moment came when I realized we can use these questions to build long-term wealth. It doesn’t just work to move kids out of poverty. If your goal is to join the one percent, it works for that as well.

Personally, I don’t think money makes you happy. There are plenty of rich, yet miserable people! To me, our goal is not just financial wealth, but high-quality relationships, meaningful work, and high qualities of life… also summed up as “health, wealth, and happiness.”

Years ago, I filled out this questionnaire with my own desired future state. I re-read my answers once a week on Sunday nights. This is my North Star for who I want to become. It's my long-term goal.

Have you done this for yourself?

The Five-Step Process

Here’s how to plan for, then achieve, your long-term investing goals (or any other big ambition):

1) Define your goal. Be clear and specific. Fill in details. Try to bring the goal into laser focus. Get it into HD in your head. You can use tools like the questions above or my mind hacks on Your Best Possible Future.

2) Write it down. Writing begins to “make it real.” It literally brings the idea out of your head into the physical world. Keep your goals somewhere you can refer to them often (writing it down on your computer or phone is fine).

3) Repeat it. You can use the fifteen times a day approach, or you can re-read your goals weekly. The key is to keep reminding yourself. Don’t let the goals grow moldy in a file folder or desk drawer; give them fresh air.

4) Tell others. We are shy to tell others about our goals for fear of looking dumb if they don’t pan out. My experience is that no one will remember in ten years. In the meantime, they'll admire us for thinking big.

5) Work towards it. You have to do the work! Your investments can’t grow if you don’t invest in the first place. Goal setting is not just an intellectual practice, but an exercise in planning the work needed to reach those goals.

These steps mark the difference between the vast majority of crypto investors, who get excited about bitcoin when the market’s hot and pull out when it isn't, and us.

Spend some time thinking, recording, and planning your long-term goals today. It’s well worth the investment; it’s literally planning your own future.

That sound you hear? It’s future you saying "Thanks."

Health, wealth, and happiness

John Hargrave

Publisher, Bitcoin Market Journal

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