"What if" investments

[Leo]

• I heard about Bitcoin I think around 2013. I knew it will be another platform you can use to pay for things like Paypal so, at some point, I had about 100 bitcoin. Fast forward to 2017, I heard bitcoin was selling at 5k. I was so shocked. Imagine if I had kept my 100 bitcoin and sold it at 5k, it's like winning a mini lottery of $500,000.

• I'm a little into cars so I heard about Tesla around 2013 and when they released Model S, I thought it was innovative because it is electric, plus it was beautiful, it was super fast. Back in 2016 when I heard about their plan of releasing a cheaper model, I knew Tesla will be the next big car company. I was ready to spend just extra $2,000 and buy their stocks for fun. I didn't pull the trigger. Fast forward to now, they are trading at $880 a share. Imagine if I bought back then and sold it today, that would be 2100% gain!

I would hate to kick myself again if I found something and it became the next Microsoft, the next Netflix or the next Tesla. I already missed two boats I guess.

Currently, our net worth is 375k and half of it is in retirement accounts just safe S&P500 and little bit of bonds and gold. We don't have other investments outside yet because we are saving cash for a house downpayment.

So I guess my question is, if I find another thing or another stock that I think has potential, what is recommended to spend for a speculative investment? One month of paycheck? 2-3% of the current investment portfolio? or just extra cash that you are willing to lose like maybe just a few thousand dollars?

[kork13]

Speculative investments should not compose much (if any) of any serious portfolio -- <1%, effectively 'petty cash' that you can afford to lose, because speculation is basically just guessing/gambling. This is differentiated from well-researched, deliberate investments into a company that you understand and are confident it will grow strongly (for example, consider Singuy's very detailed analyses that he's previously laid out concerning Tesla, Fiverr, AMD, and others) -- something of that nature, normal advice would be that a single stock position could be up to 5%-10% of portfolio.

[disneysteve]

I had about 100 bitcoin.

That would be $3,800,000 today. But how could you have possibly known that back then?

I think you need to distinguish "speculation" from "investing". As kork said, if you are doing your due diligence and research and believe a company has strong potential, that's not really speculation. I'd agree with 5-10% into one stock in that case.

If you're talking about true speculation, like, "hey, this friend of mine is starting up a company to sell custom widgets and he says it's going to be the next big thing" but there's no track record or reason to believe he'll succeed, then I wouldn't put up too much in that setting. Definitely "play money" that you are totally okay losing.

[LivingAlmostLarge]

Also some people (i have a client who mines for bitcoin). His plan is to mine it (he's doing processing in his house). And he has been mining for years and pretty much is set as of last year. I would not call it speculative for him or to him. He'd argue he knows what he's doing.