1. Early Start in Investing:
Ethan Nguonly, a 22-year-old software engineer, began investing in the stock market with parental guidance before his teenage years.
2. Impressive Portfolio Growth:
His current portfolio boasts nearly $135,000 in retirement and brokerage accounts, along with ownership of two houses.
3. Major Financial Setback:
However, Nguonly faced his biggest financial mistake, losing approximately $80,000 between November 2021 and June 2022 by investing in crypto on margin.
4. Margin Investing Details:
Nguonly invested $40,000 in bitcoin and ethereum, plus a few hundred dollars in altcoins. In a bullish market, he decided to buy an additional $15,000 on margin.
5. Brief Success and Drastic Turn:
Initially, Nguonly saw gains of about $50,000 as bitcoin reached its all-time high, but the crypto market reversed by the summer of 2022, leading to a 70% crash in bitcoin's price.
6. Overleveraging and Margin Call:
Investing with borrowed funds exposed Nguonly to heightened losses. Facing a margin call, he had to sell a significant portion of his holdings to cover the loan cost.
7. Caution on Margin Trading:
Investing on margin can amplify both gains and losses. Understanding the risks is crucial, as demonstrated by Nguonly's experience with the volatile crypto market.
8. General Investment Risks:
Investing in cryptocurrency always carries risk, even during market peaks. Experts advise investing only what you can afford to lose and avoiding techniques like options trading or margin investing if not fully understood.
9. Reflecting on Regrets:
Nguonly doesn't regret investing in crypto but acknowledges being overly optimistic. His critical error was overleveraging and investing money he didn't have on hand.
10. Key Lesson Learned:
The $80,000 mistake taught Nguonly a valuable lesson: "only invest money you have and don't go un-leveraged into very speculative investments."
11. Shift in Investment Strategy:
Despite continuing to invest in cryptocurrency, Nguonly now focuses on established tokens like bitcoin and ethereum, steering clear of riskier altcoins.
12. Evolution of Risk Tolerance:
With a larger portfolio, Nguonly's risk tolerance has decreased. He now opts for less speculative investments such as exchange-traded funds (ETFs) and real estate.$BTC #hodl