Cryptocurrencies have been buzzing our lives continuously ever since the Bitcoin boom at the year-end of 2017. The people who didn’t give a serious thought about investing in cryptos before that period has started taking it seriously, at least after that boom. One thing is for sure. Cryptocurrencies are here to stay; there is no doubt about that.
Hence, it is common for a potential investor to think if they should be investing in cryptos or not. Our answer is ‘Yes,’ they should be. However, investors should be very careful before investing in this space. So, we are providing some tips and considerations one should ponder upon before venturing into the world of cryptocurrencies.
📋 Always invest the money which you are ready to lose
We all save money for a rainy day. We are always advised by our parents when we start our financial life to save at least 10% of your paycheck. We never know what unexpected expenses pop up, and we should be able to face them without any inconvenience; otherwise, it is easy to fall in a debt pit.
Hence don’t ever invest in cryptocurrencies from your savings. We never know how the highly volatile markets of Cryptos will treat us. Always invest the money which you are ready to lose so that you don’t sell off your investments at the wrong time only because you need money.
📋 Do your research
Don’t invest in anything just because your friends/colleagues/cousins are doing it. Do your research before you venture into something new. Only after getting enough knowledge and when you think you have a grip on it, (like – when to buy and when to sell) start investing in cryptocurrencies. It is always advisable to start with the prominent ones like Bitcoin and Ethereum.
Then gradually jump into the niche coins if you want to. When one would like to invest in niche coins, it is better to go through the white paper, the tech behind the new currency, people who are developing the coin, etc. so that you will be aware if it is a scam. As the crypto industry is full of scams and fraudsters, we should be very cautious.
📋 Diversifying your investments
When people start out investing in cryptocurrencies, most of them start with Bitcoin and stay with Bitcoin only. There are many other coins other than Bitcoin. Try to invest in at least ten coins that have huge potential. You can check the market capitalization or pick the currency based on the number of coins in circulation. So that you won’t lose all your money when the value of a single coin has fallen.
We are all familiar with the saying, ‘Don’t put all your eggs in a single basket.’ Hence don’t invest all your money in only Cryptocurrencies. It would be helpful if you diversified the investment portfolio. You may invest in potential markets like Stocks, Mutual funds, Real estate, Bonds, etc. Since the cryptocurrency market is extremely volatile, it is advised that you may consider investing 10% of your portfolio in this space.
📋 Securing your coins
Once you invest in cryptos, you better don’t leave them in your accounts in the exchange. All the hacks that ever happened on cryptos happened on only exchanges so far. We have a variety of wallets to choose for, say paper wallets, electronic wallets, hardware wallets, desktop wallets, mobile wallets, etc. In turn, you can choose different wallets to use as well. For a long term investment, you may choose hardware wallets while for the short-term traders, mobile wallets can be used as they are easily accessible.
📋 Track the investments
Once you invest in cryptos, you should start tracking the performance of the coins so that you would be informed all the time. We have apps to monitor the same where we must enter the coin name, the number of coins purchased date of purchase, and other minor details. Apps like Blockfolio and Bitmap can be considered for this purpose.
While these are the essential points to consider, alternatively, you can follow people on different platforms who are best in the said fields, which reaffirms your learnings. Don’t sell off all your crypto investments when you say huge profits, try to sell on a percentage basis so that you can cash in on when there is a spike. At the same time, one will have money to buy in dips. Finally, be proud that by investing, you are a part of the crypto revolution. Cheers!