114. Why Taking Profits Will Change Your Life

You build wealth through concentration, you protect wealth through diversification. But the third thing people don't really talk about is what is your plan to spend that money? How do you burn down on that? What are you going to spend it on? Like, people are great at being frugal and saving and making this huge nest egg, but then do you think they're magically just going to switch overnight and be like, okay, I understand how to spend now after you've been saving for decades and investing? No, it doesn't work that way.

Welcome back to another episode of the Ben and Bergs podcast. I'm Ben, your favorite high school dropout and founder of Collective Shift alongside Ms. Bergs, your favorite M&COO of Collective Shift, Australia's leading crypto portfolio insights company, providing professional analysis and portfolio strategies for crypto investors like you. We are a unique blend of the established and the self made and we're here to break down crypto business and personal growth. But we're not here just to talk crap. We're giving you the insights you need to make better investments, build successful businesses and level up your life. And today we're talking about taking profits and taking profits when we're not even at the peak of a bull market. We're talking about this because I recently took a little bit of chips off the table for reasons that were more personal and I think this is under spoken about thing. Many people, well, you know, including myself, super highly leveraged on crypto, you know, went from 99% exposure to crypto and decided coming into the Christmas period and I want to take a bit of a holiday in January, I was going to take some profits because I realized I was living life on hard mode, you know, not much cash, everything was in crypto ride or die and you know, it was creating some, you know, personal, you know, stress just for the fact that I didn't have enough cash in my bank to, to live normal life. And Bergs and I had a conversation recently around well like why don't you take some shifts off the table? Like and I made some pretty good investments this year. You know one of the investments that I released to our members three or four months ago, I think it's now up over 300%, bought in at 550, it's up to $20, I think it hit yesterday. So like you know my portfolio is looking amazing, you know, like my crypto net worth is brilliant but my cash net wealth.

Was, was, was, was very low. So yeah, recently took some, some chips off the table, not Because I don't think it's going to go higher. I 100% think it's going to go higher. But yeah, just took some profits to, to take some cash out and just live life a little more comfortably. And it's been nice Burgs, honestly, that's awesome, man.

I like that. Ride or die. Double R so good. And look, dear listener, we're walking in the streets of Melbourne. I'm walking with Ben, and every five minutes he's like, oh, this coin's up 20%. Two hours later it's up 50%. Next day it's up 100%. I'm like, Bro, you have $4 in your bank account. What is wrong with your life? Like, you get stressed out about this. Your asset allocation is going up, but you're not managing your cash flow correctly. And I think this is a key thing for people out there. And we talk about life changing amounts of money, right? And this can be very different for different people. It could be, hey, I can afford $500 to get a mountain bike, so I can now ride to work in 10 minutes instead of walking in 40 minutes. Or it might be, hey, I can take that small holiday or I can buy a car or a deposit for a house, or it may be even bigger. Like, you know, I can buy a business or I can buy an entire house. Like, it is different for different people. And Ben, I don't think you realized the amount of mental stress that was actually causing you until you decided you were going to do it and you sold some crypto and now you have that money and you can see that money in your bank account. How different do you feel now?

Well, yeah, it's much different. And it's been years since I've, you know, had, had had more than, you know, just a week's worth of expenses in cash. Because, one, I hate cash, you know, Two, we're building a startup, so all the, the money we make just gets piled back into the business, right? Like, it's not like we're taking massive wages. Like, we're, we're taking what we need to live and that's it. And everything's back in the business. So, you know, the business is in a good cash position, but that's not mine. So my personal cash position is just the, you know, the salary that we take each week, which pays for expenses. And the rest of my net worth is all in crypto. It has been for seven years. So, you know, to, to think about, you know, the next little, you know, couple of months. Wanting to take a bit of a holiday, you know, Christmas, just, you know, different bits and pieces.

To then take some, some chips off the table, which is very small, you know, maybe like 2 or 3% off my total portfolio in cash. And then just not have to stress about that, about, you know, going on a holiday, booking a couple of weeks away and doing different things. Totally different mindset. You sort of go from that and I mean, you know, ultimately.

That'S the goal of crypto, right? To be financially free. And, you know, arguably, you know, you are. You know, arguably I'd be financially free if I, I was to think of my crypto as an, not an investment, but just, you know, liquid cash. Right. But it's, it's tied up in assets and I don't want to sell it and holding for a long period of time. So what is your spendable, you know, assets or spendable, you know, cash was very, very low. So to flip, that was a whole different perspective. Whole different, you know, change of, change of mindset.

It feels different, doesn't it, having that buffer of comfort? And I remember for 10 years ago, I think it was for me, red, rich dad, poor dad. And just having that for me it was three months of living, expenses saved up. Don't worry about my investments, don't worry about anything else. House, don't worry about it. Just three months. So if I lose my job, I can figure it out. I expanded that to six months, then to 12 months because I wanted just a very large buffer where as I advance in my career, like the career choices I have are better, but I don't want to just settle for any job. I want the job that I want and I'll have at least 12 months to figure that out. Just having that gives you a level of comfort and safety and freedom. It's the equivalent of having a few money where if I don't like something, I say nah, and I don't do it. And I've got 12 months to figure it out. Amazing. Yeah. And then from there you kind of redefine as well. So what is life changing money for me now? So I'm like, shit, my goals aren't that big. I have to redefine my goals. What do I want to do with, you know, my family? Do I want to pay off a family member's home? Do I want to go on this holiday? Do I want another house? Do I want a fancy car? Do I want to not work for a few years? And I think constantly reassessing that, what life changing money Is for you is a really great thing to do. And I think a lot of the time it's actually not that much money. Like, even if you're earning a good salary, let's say.

You can have $50,000 profit, which might be a lot for, for some people, but in a bull run, that is, that is not much profit at all. If you put a thousand dollars in to see ridiculous things and you could just work part time for the year, or you could go and be a barista and supplement your income with that. Like, that is life changing. Imagine what that year will be like for you.

Yeah, this is. I've gone through the exact same process of thinking that, you know, the amount of money that I thought I wanted to make in a bull market was, you know, you know, millions and millions and millions. And I think, I think we'll be able to make that. But, like, there's a difference between, like, what you actually need and what you want. So, like, I was chatting to another crypto guy the other day, mate of mine, and we're talking about, like, you know, what's, what's the bull market car you're going to buy? Like, what's the, you know, at the peak of the bull market, you make a bunch of cash, like, what's the car brand? And I was like, I actually don't, I don't have a car brand. Like, it's like these sort of like, things to buy is not that exciting to me. It's fascinating. It's like, it's more about making the money that it is spending it. Like, there's actually, there's not many things that I have in my mind, apart from buying my mom and then a house and maybe getting it, you know, diversifying that I really want to buy. And then even taking these profits that I took the other day, right? Like 10, 20 grand, you know, just to disability cash in the bank, which is nothing made the world of difference. It's just like, what a, like, you know, what, what, what a change that is just to not have to.

You know, not have to think about, you know, being so levered up in one one. That's it.

Yeah. And what if an emergency pops up? You could just pay for that. I remember this is before I got into crypto, but my rich life that I wanted was to be able to go to an Italian delicatessen down the road. And whenever I went in there, I wouldn't have to look at the prices. I could just buy whatever I want. These are just like cold meats and cheeses. And all that kind of stuff. Some of the stuff does get expensive. But to not have to look at my bank account and know that I can afford it and buy those goods and go home with them was like, whoa, I've made it. This is it. That's what it was for me. And that was like, a really amazing feeling of wealth. And it doesn't have to be. Across every single area of this of your life, we get lulled into this weird thing where you save up 2 million, 3 million, $5 million you put in a bank account or you invest it, and then that pays for your cash flow. That's really not how life works. You get to choose the areas that you spend a lot in and the areas you do not care about and you do not spend on. Like, Ben, you don't give a shit about cars. You probably just take Ubers and public transport, or you buy a cheaper car or a scooter. You don't care about those things, right? Like me with my car. Like, I drive a V8 Commodore. Like, I've got no desire to own a Ferrari. I don't. What that would stress me out, owning that, right? But I like to go on good holidays, I like to stay in expensive hotels, and I like really good food. They're the areas that I'm going to spend a lot on. And if I can use my investments to facilitate that, that is absolutely what I'm going to do. I don't. That is the function of investments. I invest and I work in crypto, and I do this because it fulfills me. It improves my life. And those investments need to be converted into an asset that can improve my life. Otherwise, what's the point in stacking more and more and more marbles? When are you going to spend them? What are you going to do with them? What change are you going to see in the world for other people and yourself?

Really great points. I think that it comes back to understanding your goals. Like, what is the goal that you're trying to achieve through your investments, through crypto in your life? You know, like, you know, speaking to a guy the other day that had $10 million of Solana, I think I might have mentioned this on the podcast. And he's like, what should I do? I'm like, what are your goals? He's like, I don't know. What do you need $10 million for? He's like, well, I don't need $10 million. I'm like, well, that's probably one of the reasons why you're going to ride this all the way up and all the way down, because you have no idea when the time is to sell, because you know, you don't even know what you want to do with the money. And you might not even have any idea of what you're going to do with the money. But holding $10 million in a volatile asset probably isn't the best idea, you know, so thinking about what you need and that might only be, you know, five, ten grand, who knows?

And that's right. Defining those goals. And even if you're having a hard time defining those goals, if you have $10 million, take out a million or 1.5 million, because you'll have to pay tax and set that aside for a year, you're still going to have eight and a half million there to play with and to invest and do whatever you want to do with. Leave it there for a year and decide what you want to do with your life. You will still have $1 million there. And this goes for any amount. If you're at 100,000, you can still sell some and put it away until you decide what you want to do with it. Don't wait until it's too late. It's all or nothing. Averaging and average out.

And this is something we've spoken about before, around, like, wealth accumulation comes from, you know, focus, right? And having, you know, high conviction plays versus wealth preservation is when you start to diversify and you try and, you know, rotate your assets into, into other. Or rotate your capital to other assets. And this is a big mental switch that, you know, really how you become wealthy and, and that this guy didn't really hadn't thought about is like just, you know, holding $10 million of Solana isn't a great way to preserve that wealth, right? It's gonna be hugely volatile if you're gonna hold one asset with a shitload of capital. So starting to diversify, thinking about cash, think about property, thinking about bonds, stocks, whatever it might be to preserve that is the next step that we all need to be thinking about in this next cycle. Like, what are we going to do next after this bull market? What are we going to do with that money?

That's exactly right. And so to sum up what Ben said, you build wealth generally through concentration. You have a business or you pick an investment that goes through the roof, and then you protect wealth through diversification across different markets, different assets. So one goes up, one goes down. You're still protected. You don't lose all your money. But the third thing people don't really talk about is what is your plan to spend that money? How do you burn down on that? What are you going to spend it on? Like, people are great at being frugal and saving and making this huge nest egg, but then do you think they're magically just going to switch overnight and be like, okay, I understand how to spend now after you've been saving for decades and investing? No, it doesn't work that way. So slowly work your way towards living your life today. What is that life changing money for you? And if you need help, read the Psychology of Money and Die with Zero. Those books will help you a lot.

Love it, mate. I actually spoke to someone yesterday, it was a company. So there's one company that's retail owned called Block Earner. So basically what you can do, rather than selling your crypto, you can actually take loans now against your crypto through what's called collateralized loans. So you can take up to 50% I think of whatever money you deposit into these different providers to take out a loan. So it's a great way to not have to sell your crypto. And I believe this is a gray area but you know, it may not actually be a taxable event. But not sure if, you know, we need to maybe ask fors but you know, I don't think it's actually from what I heard, I don't think it's a capital gains event if you take a loan against that crypto. It might be. If it's not, that's a game changer because basically what you could do is you can take a loan against your crypto to take out cash without actually selling the asset and without actually triggering a capital gains tax. Obviously you have to pay the interest on the loan. I think block Earn is about 6% but it's another really cool way where you can cash flow your assets without having to sell them.

That's right. And there is a lot of complexity there. Do seek professional financial advice for your specific situation. And there are things like you can put your crypto in certain areas and earn a yield. You can, you know, put it away. Let's say you want to hold this for 20 years, why not redraw equity against it like you would your home or another asset? And you really need to look at first of all the company, the details around it, who custody is it, how much like loan to value ratio do you need before that gets called? There's a lot of complexity there. But speak to an accountant about that. Adrian, A crypto tax Australia will be across it, plus a few of our other partners. But think about these things and how you can use that asset instead of it just being over there. How can it change my life today?

Yeah, and I think for a lot of us, we're probably very over capitalized in the crypto ecosystem. And I definitely do think in this next cycle, like, we, we, we all need to think about how we're going to diversify and to preserve that wealth. So maybe some more topics we can talk about later on the podbes.

Absolutely, mate. I've loved this one. And Ben, good on you for taking profits. It's very difficult to do and I remember seeing your face when you just go, oh, I can just do that and my life will be fine. I'll have like X amount of money in my bank when I go to my ing, I open it and there's that money in my bank. And it sounds so simple, but you actually did the thing and you're a lot happier and you're a lot less stressed for having done that.

Well, it's funny because I've got all this crypto that I just like, don't want to touch. So you live life so frugally that you're like, it's, it's painful. And then you're like, well, why don't I just take, you know, like a couple of percent off and just live a great life? So I do that and now I live a great life.

It's like, why don't I do that before? Isn't it so crazy we, it's this all or nothing mentality that we tend to have. And don't touch my crypto. I need to accumulate more crypto on only crypto. Everything's going to zero crypto's going to. But you got to live as well. And you have to enjoy your life now because tomorrow isn't promised and maximize the time that you have now.

Well then, mate, great way to end. Thank you everyone for listening. If you have a friend or family member that needs to take profits, please send this to them. We'd love for you to share it with a friend. It's how we grow the podcast each and every week. And we thank you for listening, folks. We'll see you next time.

Thanks, J.