Crypto assets represent an intriguing investment proposition; that many have already used.
If you have yet to pull the trigger and buy crypto with the goal of seeing significant gains, this introductory guide will help you do so without making the same mistakes other newcomers do.
Buy your cryptocurrency through a reliable and reputable platform
First of all, you need to make sure that the funds you are buying come from a trusted and fully regulated exchange.
There are many less sensible paths to cryptocurrency ownership, but dabbling in the darker side of the market always leaves it open to exploitation by more experienced third parties.
As this SoFi investment guide explains, when you buy crypto through a platform you trust, it’s not only safer, but it’s also much easier to manage your assets.
Research coins carefully before committing
There are literally thousands of different cryptocurrencies, each of which can be chosen as an investment. However, there are vast differences between the designs in terms of everything from the purpose they were designed for to the amount of power they use.
The key here is to do your own research, just as you would with traditional investments. You should read as much independent coin documentation and information as possible to make an informed decision.
For many new investors, it makes sense to choose proven assets like Bitcoin and Ethereum, as they have a track record of being solid investment options. Beware of newer coins with limited details available, especially if they promise breakneck returns in a short period of time, as this is the quickest way to get burned.
Get familiar with the risks
Speaking of the possibility of running into problems when investing in cryptocurrencies, you cannot escape the inherent volatility of the market.
Even a supposedly resilient asset like Bitcoin is prone to significant fluctuations in value, and unless you are comfortable with the prospect of getting back less than you originally invested, this is not an area you should get into.
Consider your strategy
Every investor should have a solid strategy to back up their decisions, and this is as true in the crypto space as anywhere.
The approach you choose will depend on how much time you are willing to spend playing the market and trading.
For the average investor who isn’t going to spend hours every day juggling assets, the recommended approach is dollar cost averaging. Basically, this means investing a consistent amount on a regular schedule, regardless of market conditions, leaving you less exposed to peaks and troughs.
Another thing to consider is how diversified your portfolio is. If you go all-in on multiple assets, the fate of your investment is tied to them and is generally riskier. However, if you spread too much, your winnings could be diluted.
Consider your goals
With any investment, it’s a bad move to invest more than you can afford to lose. For crypto investors, the aforementioned volatility makes this more likely than in other markets.
However, play your cards right, plan carefully, and you just might win. It’s about setting goals and being willing to walk away once you reach them, rather than holding on to assets indefinitely, regardless of your original intention.
To end
It’s easy to get caught up in the hype surrounding cryptocurrency, but if you view it as a long-term investment rather than a get-rich-quick scheme, you can afford to take your time and choose carefully where to put your money.
Categories: How to
Source: HIS Education