Any good trader or crypto investor is interested in making profits, but do they understand the inter-relationship between risk and profit? Dividing your crypto portfolio can help in smooth navigation.
The first tip to becoming a good crypto investor is understanding the basics. The first of every basic is not getting scammed of your BTC.
Surprised I mentioned BTC? This is because of the 2nd basic states that every investment must have an element of BTC (partially or completely).
In addition to this, you need to consistent with crypto market news, stay up-to-date with big shots (whales), and understand indicators.
Let’s clear the air regarding indicators. They are often used by traders to evaluate past transactions and fare better in future predictions. You also have to dedicate your time if you are to stay abreast with news and whale updates.
Overall, becoming a good crypto investor demands a lot, and only those willing to pay the price make breakthroughs. However, dividing your Crypto portfolio makes the journey a little smoother and faster, regardless of your status.
- You cash should work for you at all time. The worst you can do as an individual is to let your cash stay idle in bank accounts.
- There is a need to assess market conditions and interest rates before going into investment. If it is bearable or in line with your financial demand, please go ahead!
- The major purpose of dividing your crypto portfolio is to avoid losing out on a large scale or completely on your investment. The same way you ‘do not put your eggs in a basket’ in an online casino.
- Do away with complicated crypto exchange Binance Exchange: Beginner’s Guide networks. Go for any of Binance, Coinbase, Changelly, Easy Coin, and more.
- You need to understand how crypto works before investing. Most importantly stuffs like sending and receiving funds, reading and understanding market trends, knowing where to get the latest news, and the likes.
Become a Crypto Investor: What it means?
Investing in crypto simply means having a share in the project. Not all investments turn out well. When that happens, the best thing to do is to halt and have a rethink.
Halting means returning your money to where it came from initially (money manager, bank, or wallet). It gives you the freedom to think ahead concerning future market analytics.
Wrong Concepts you must Ignore
Bitcoin has digressed from what Satoshi intended it to be. This is because whales manipulate their tokens ONLY to favour themselves. Funny enough, young traders are doing the same. You can’t blame them, can you?
Trading or investing in BTC should not be seen as a get-rich-quick scheme. There is nothing bad in profiting off BTC but enough with the ‘I bought $10k BTC last year and I’m expecting it a minimum of $18k in the next 2 months’. This is not like gambling in a Bitcoin Casino.
BTC was designed to be a crypto everyone can afford — the original (balanced) concept. Do not let greed influence you into making the token more unaffordable for enthusiasts.
What we all fail to understand is that, with a balanced concept, everyone attains profit faster!
You need answers to these questions if you are to understand the concept of Crypto Portfolio Sharing.
Is Crypto Trading or Investment an end to a means?
Investing or trading cryptos is not an end to means neither is it a get-rich-quick scheme. Those who see it as one ends up getting scammed easily!
Hence, if you are hoping to have a good experience, what you should do is invest an amount you are sure you can push forward or consider as a long term investment in the event of an undesirable result.
When not to Trade or Invest in Crypto
You must be wondering, is there anything like the right time to invest in cryptos? The truth is, anytime is a good time to invest in a blockchain project provided you did not borrow.
FOMO is another factor to consider and control, and I’ll use myself as a case study:
Do you remember when EOS looked like the next big deal? Yes! That very moment we thought it was going to shoot up like Ethereum. At $18, I invested all I had for crypto that year because I did not want
to miss it. Long story short, EOS started to fall.
Do not invest when FOMO is the backbone of your decision.
Not confident about a blockchain project? Back out!
It is simple. Back out! But before saying ‘No’ to a project because it does not look convincing, ensure you have assessed the project’s roadmap, team, whitepaper, just to name a few.
If these features meet your requirement, you can proceed. If it is negative, you know what to do.
Which Crypto is the best?
This is down to what you believe in. I’m a big BTC loyalist, but this does not mean you should be too. Exhaust your options.
My friend advised me last year to invest in altcoins. At the time, BTC was well poised for $14k. I refused initially but later bought $70 Litecoin.
A few months later, I knew I made the right call backing Litecoin. He succeeded in making me a fan of risk spreading.
Here is how to Divide your Portfolio
I’m sure you have been looking forward to this part of the article. Well, here is the best approach to dividing your portfolio or spreading risks:
Let’s assume you sidelined $100k for investment. The best portfolio division model suggests that investors:
- Less than 30 years old should invest 30% ($30k) on Crypto and 70% ($70k) on Traditional Investments.
- Between the ages of 30–40 years (max) should invest 20% ($20k) on Crypto and 80% ($80k) on Traditional Investments.
- Above 40 years old should invest 10% ($10k) on Crypto and 90% ($90k) on Traditional Investments.
One way or another, traditional investment should take the big chunk. Why? Because they are much more reliable. Examples of traditional investment include bonds, real estate, equity shares, etc. Crypto casinos do not belong here. Be warned!
Portfolio diversification or risk spreading will make you better in the investment or trading scene. Nevertheless, there is no golden model for perpetual profit.
Like the Covid-19 pandemic, the unexpected may negatively impact the globe, slashing your portfolio without prior warning.
Therefore, it is crucial to always recall trading and investment as risky ventures, especially when it involves crypto. All I am doing is providing you with a layer of protection, and I hope you learned a lot?