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As I learned about personal finance, I started with the envelope system, and gurus like Dave Ramsey are good at teaching this. Avoid consumer debt, live below your means, save the difference, pay yourself first, stay humble.

The next step was to learn better definitions of words like asset and liability, small business vs entrepreneur vs investor. The importance of cash flow over net worth. Robert Kiyosaki helped here. Don't listen to Dave Ramsey at this point, his advice on investing is horrible.

Next, I read Phil Town's book Rule One Investing, learned how to gauge a company's intrinsic value, and buy shares on sale. I also learned option trading from Phil.

More recently, I learned about Bitcoin primarily from nostr:npub1gdu7w6l6w65qhrdeaf6eyywepwe7v7ezqtugsrxy7hl7ypjsvxksd76nak and nostr:npub15879mltlln6k8jy32k6xvagmtqx3zhsndchcey8gjyectwldk88sq5kv0n. Sound money has got to be the basis of eveything with personal finance.

But I'm troubled by the "stay humble and stack sats " mantra, because it seems to be going back to the Dave Ramsey mindset that I already grew past. Maybe we are still too early in bitcoin to have investing for cashfow and growth oppotunities...

#asknostr #personalfinance

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Glen Robel 7mo ago

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caleb 7mo ago

Well said

I think your model of personal finance is generally true (investing in equity and responsible debt use), just not well adapted to a monetary transition? When the Bitcoin CAGR drops and stabilizes I’ll be looking for companies that use my capital profitably - but for now I don’t know where that is, and, if I found it, it would be further out on the risk curve than Bitcoin

GJM 7mo ago

Can you share the math behind CAGR and how you use CAGR to evaluate Bitcoin? I understand CAGR from the fiat world and how the math is used to average the different yearly interest or dividend returns when they are folded back into the original principal but I don’t understand how that math can be applied to the Bitcoin spot buy and sell prices. Genuine question because it gets talked about by some pretty well known Bitcoin influencers. I am unable to see how BTC has a CAGR based on how CAGR is used traditionally. I am probably missing something so any clarification would be greatly appreciated!

caleb 7mo ago

I and I think most people use it just as the annual price appreciation. AGR would be more appropriate, but CAGR is easier to say and more commonly cited. However, the two are trivially the same if there are no payments compounding (which is the case here)

caleb 7mo ago

Good question though - genuinely gave me a pause to wonder why everyone **is** saying CAGR.

GJM 7mo ago

It’s got me wondering as well. There was one influencer who was suggesting that listeners should look at an online CAGR calculator and set the start price at $10k for 0.1 BTC and a 60% rate of return with a 20 year time period. You get something like $64 million! He was using the example to hype listeners up as to the potential returns. Problem is that a CAGR calculator ALWAYS folds each years interest or return back into the principal amount so that the subsequent years principal can benefit from getting interest on a bigger amount, hence the word “compound.” From where I stand I am unable to find any similarity between tradfi CAGR and BTC spot prices for returns. Average Annual Rate of Return AARR makes sense, not CAGR. But obviously if I am wrong I would like to know about it!!

caleb 7mo ago

one slight benefit i see is that since bitcoin's ARR is equivalent to its CAGR (all paments during the year are of size 0), then you can compare Bitcoin's ARR to a company's CAGR and call them both CAGR for simplicity's sake.

Still, I agree that its sloppy.

Also, some people might just not know the difference and think that the compounding is just a yearly phenomena

GJM 7mo ago

Agreed. It’s misleading though if someone is using the CAGR math which includes the annual returns while simultaneously trying to wrap their heads around BTC, which truly is a different beast!

modulo 7mo ago

One premise of #bitcoin, is investing is no longer required, hence the stay humble and stack sats mantra.

If you want to invest I. Other things by all means go ahead, but measure your returns in the hardest asset—bitcoin—and you will find few investments match the potential to change everything and present such value.

GJM 7mo ago

Can you explain a bit more as to the difference between Ramsey and the mantra in question from your perspective? I don’t know of Ramsey but am interested in your thoughts about the mantra.