From Debts to 7 Figures in Crypto: Managing Wealth

From Debts to 7 Figures in Crypto: The Challenge of Not Squandering It

Having seven figures in the bank doesn't solve life's problems; it complicates them. A 40-year-old investor, with 20 years of work experience and a history of barely earning more than a minimum wage, suddenly found himself with a net worth that jumped from debt to seven figures in a matter of months. The credit, if it can be called that, goes to speculating with cryptocurrencies during 2021. The money arrived. The manual, didn't.

His goal is clear: to never work for someone else again. He had previously dabbled in forex, stocks, and funds, so he's not starting from scratch, although he admits his economic knowledge is "limited." He has already paid his dues: he converted some of the profits to euros to pay taxes, which he believes separates him from the gambler profile some attribute to him.

€800,000 in Property and €150,000 in Gold: The Portfolio They Propose

A recurring proposal is on the table: €800,000 in property, €150,000 in equities, €150,000 in gold, and between €350,000 and €400,000 in liquidity and bonds. An eminently defensive portfolio, with almost half of the net worth in real estate and a cash reserve that would cover several years of expenses. Some warn that this cushion is excessive if rental income covers a significant portion of current expenses.

The most common strategy—to the point of sounding like dogma—involves disciplined, installment-based purchasing of diversified products: index funds, dividend growth stocks, or permanent portfolios. All reasonable until the commission appears: the 2.5% charged by some advisors for precisely this.

Why Has Property Become Unattainable?

The original plan was to buy a third property. It's been scrapped. New construction prices rose by 50% in one year, and developments sold out without anyone knowing where the labor force will come from. The decent €300,000 to €400,000 range has disappeared; new properties now cost close to €500,000. In two months, another 20% increase.

The alternative he's considering isn't cheap either: renovating an old property costs around €100,000. The breakdown of numbers he's considering—what a tenant pays, the cost of a renovation, the return on each option—is the material that sparks the most debate and the one that requires careful pencil-and-paper analysis.

S&P 500, Dividends, or Waiting for the Crash?

Opinions are divided. Some advocate putting almost everything into the S&P 500 and sleeping soundly; others boast of having invested over 90% in Berkshire Hathaway, which is heading for a 15-16% annual return, while the index accumulates 10% losses. Veterans warn that index funds worked based on historical data, and history doesn't guarantee repetition.

Conversely, the current favoring tangible assets urges real goods: property, land, art, and physical gold at home, just in case. Gold, they point out, has already become too expensive.

Offshore Accounts and Strong Currencies

Another recommendation is gaining traction: moving some money out of the country, holding cash in pounds, dollars, or Swiss francs, and having accounts in various jurisdictions, some outside the EU. The protagonist has already done this with part of his capital. The antiestéticar isn't of default, but of a much worse scenario.

Several years after the first message, he remains in liquidity, with an updated car worth €40,000 to €50,000 and €30,000 set aside for expenses for a couple of years. He says he's waiting for a downturn to invest. Will he be able to distinguish opportunity from antiestéticar?