The DeFi Report: A Month of Strategy
A behind the scenes look at our crypto portfolio.
I love to pay for speed.
I’ve never been a fan of DIY, especially when it comes to big things I want to achieve.
I’d rather pay to be told exactly how to do it correctly the first time because for us, time is money.
For every month that goes by that we DON’T learn how to be smarter investors and better business owners, we lose out on the potential income we could have made if we started sooner.
I learned this frame from entrepreneur Alex Hormozi: Imagine we have a goal to make $150,000 per year in investment income but we are only making $100,000.
We are PAYING $50,000 per year (the difference) in an “education tax” until we learn the skill set needed to make $150,000 per year.
For the past 6 months, we have been part of a community based program to learn about the world of decentralized finance and crypto as a way of diversifying our investment income.
(Make sure you’ve read the first installment of The Defi Report Series called Our Plan to Scale our Cashflow Faster if DeFi is unfamiliar because it’ll bring you up to speed)
After understanding the basics of this new style of investing, we hired an expert 1-1 to help us create a strategy to begin scaling our income.
We started July 31.
I created this mini series called The DeFi Report to share everything we are learning in the crypto space.
Crypto can seem like a mysterious, kind of sketchy space from the outside.
Since we've been diving deeper over the last 6 months, I’m obsessed. It’s one of the most fascinating things I’ve ever learned about.
So to help demystify and shine light and transparency on what we are doing, I’ll be sharing the numbers as we grow our DeFi portfolio - the ups and the downs.
A Big Shift in Strategy
Note: This isn’t financial advice, so don’t copy what we are doing. If you want to learn it for yourself, here is the community we joined.
Since entering this space on March 8th of this year, we are down about $4,200.
There are 2 big reasons we are down in our first 6 months in DeFi (March 8-Aug 31):
1] We entered the market during all time highs and they’ve declined since then.
The market has gone through a correction, which is reflected in our current portfolio value.
Flynn (my husband) and I always joke that the best investment advice someone could take is to wait until AFTER we invest because it ALWAYS drops. 😆
In July 2021, we invested nearly $400,000 at the peak of the market in our regular investment portfolio and then watched the economy go into a recession and our investment value drop.
Markets are naturally going to move up and down and as long as you have a long term mindset and strategy, you’ll ride the wave.
That leads to the second thing we learned.
2] We didn’t have a strategy in the crypto space the way we did with our regular investment portfolio.
We know HOW to move money around and how to make money, but there was no clear plan driving our choices.
It felt very scattered and random.
For this reason, we brought an expert on board to help us understand and create a very simple plan over the next 12 weeks.
Go In With Outcomes, Come Out With Results
I’ve always been a stellar student.
I’m organized and I love a spreadsheet.
So when we showed up to our first session with our consultant, I had a written out document of every outcome we wanted to achieve from this investment.
Basically, I did a brain dump of everything I didn’t understand, needed to learn, and what I felt was missing for us to be successful.
I outlined our investor style, reasons for doing this and long term vision for our DeFi portfolio.
So we went to work.
Each week, we solved one variable from our outcomes document.
We are 5 sessions in and here is what we have developed so far:
An understanding of WHAT we are investing in
Deeper understanding of the terminology of crypto (it’s like another language!)
How to invest to mitigate risk and achieve our financial targets
How to take profit and what we are doing with the cashflow we make each month (ie: Use it to fund our lifestyle, reinvest it, hold it as a cash reserve, etc.)
How to ensure we take profit during the next bull cycle (rapid increase in prices)
How our strategy changes depending on what “season” of the market we are in - is it moving down, sideways or up?
The big takeaway from all of this?
We don’t wing it. We don’t guess. We don’t hope.
We use real numbers to make decisions and use a strategy to create results.
I believe it is one of the biggest reasons we have had success with investing.
This is not to say we haven’t had losses (we have), but we are constantly building what we learn into our strategy.
The DeFi Report for August
So let’s get to the numbers.
Over the month of August, we’ve added an additional $30,165 of capital to our crypto portfolio.
We achieved this by selling off underperforming funds from our main, traditional finance investment portfolio.
Currently, we have $52,191 invested into DeFi, divided as follows:
1] Buy & Hold Investments: These are assets (like Bitcoin or Ethereum or Solana) that we are holding in anticipation of an increase in value in the future.
Current Value: $5,328
2] Liquidity Pools: This is a service we provide to create liquidity in the market from which we earn “fees” or income. (I explained how this works in detail in this article)
Current Value: $42,318
3] Cash Reserves: This is cash we are holding to either fund our lifestyle or deploy if the market corrects and we see an opportunity to buy our favorite assets or coins at a discount.
Current Value: $339
How it breaks down:
As of August 1, 2024:
Capital Invested: $22,026
Aug 1st Portfolio Value: $20,368
Total Monthly Income: ~$888 per month (fluctuates day to day)
As of September 1, 2024:
Capital Invested: $52,191
Current Portfolio Value: $47,986
Projected Total Monthly Income: ~$3,641 per month (fluctuates day to day)
Since we added a large chunk of capital midway through the month, we won’t receive the full amount of monthly income this month.
That’ll likely be reflected in next month’s update.
In August, we earned $3,119 in income, which is a 5.98% return on our investment this month.
We are pretty excited about that!
But most importantly, we have a clear, simple strategy on what to do with our money every single month.
Final Thoughts
Having a plan makes it all feel very clear.
Knowing exactly what we want to get out of any experience helps us create the results we want.
I’m super excited for the next year and everything we will learn!
I know diary entries like this might be harder to digest than some of the fun, light hearted travel ones, but this is part of our journey.
This is how we’re making it work.
Curious about DeFi?
Here are 2 amazing resources you can check out if you want to learn more.
My podcast Becoming Limitless, Ep #136 The Velocity of Money: DeFi as a Business with Lucas Rubix.
I’ve been friends with Lucas for over 10 years and he started a very successful, multi 7 figure business teaching others how to invest in decentralized finance. I invited him on my podcast to talk about how it works, the risks and the opportunities available in the crypto space.Lucas’s YouTube Channel, CryptoLabs Research.
When I first went to his channel, it literally felt like a foreign language and I was confused and a bit overwhelmed. But when you want to learn something badly enough, you’ll figure it out.
Regardless of if you’re following along for entertainment, curiosity or inspiration on which direction to go next, I’m thankful you are here, reading this and being open to learning.
I hope it’s served you well.
Tanessa
P.S. - Have questions about this? I’m an open book! Leave them in the comments on the blog and I’ll happily answer them.