Investing in cryptos might seem exciting — especially when you see stories of people getting to millionaire status essentially overnight. But these sorts of investment wins are difficult to get and are not as easy as you might think.
1. Expect chaos
When you put money into something like an index fund, you don’t have to keep a close eye on it. With crypto, you are signing up for a lot of chaotic ups and downs. This includes fast changes. It should not surprise you if your portfolio doubles in value or loses half of its value in mere days. While this sort of thing can be of course good, it can also be disastrous. Which brings us to point #2
2. Use small amounts of money
You can step into cryptocurrency by beginning with small amounts. But doing this, you can prevent a disastrous scenario where an important financial goal is ruined, like retirement, by a major loss
By sticking to smaller amounts of your capitol, your portfolio fluctuations won’t brother you as much. And even better, it will tell you how you deal with this kind of volatility with your funds on the line.
3. Watch it carefully
You don’t need to be glued to your screen all the time watching your crypto, but it is probably not the sort of investment you just invest in and forget about, like an ETF or index fund.
Cryptocurrency is different: You might end up trading more often to get profit from its volatility. And because of these cryptocurrencies fluctuating so much, it can be sometimes tempting to sell and buy often, maybe even daily.
But you need to time the market well and this can be hard and time-consuming. If you want to invest into cryptocurrency without having to deal with the volatility, a good alternative is to look for crypto-related ETFs or stocks.
Putting your money into cryptocurrencies might be lucrative, but this sort of reward normally comes with a certain level of risks. Successfully getting through this demands awareness of the dangers and bright spots so you truly grasp what your crypto journey should look like.
Author: Blake Ambrose