If you're just starting to dabble in crypto investing, whether you plan on buying and holding; Bitcoin (Cryptocurrency: BTC) If you want to succeed with or exotic meme coins, you need to be mentally, financially and technically ready. So do these three things now. That way, you'll be well on your way to becoming more experienced.
1. Determine the amount of capital to allocate
The first thing new crypto investors should do is have a serious conversation about how much of their hard-earned cash they should put into cryptocurrencies rather than more conservative investments like stocks, bonds, or real estate.
If your portfolio is already well-diversified (which it should be before committing to anything in cryptocurrencies), that decision is intertwined with your risk tolerance. Cryptocurrency is a highly risky, volatile, and speculative asset, so the more uncomfortable you become with the idea, the smaller your portfolio allocation should be at first. Similarly, choosing the most established coins like Bitcoin can keep your exposure to risk low.
If you plan to invest for decades, it is acceptable to allocate around 5% of your portfolio to cryptocurrencies. Or maybe a little more than that once you know what you're doing. On the other hand, if he is nearing retirement, perhaps he would be better off allocating 1%.
Above all, remember that even in the worst case scenario, do not invest more than you can afford to lose without experiencing any significant difficulties. If a painful economic downturn occurs, at least some of your crypto investments will likely be worthless, so accept that and plan accordingly before proceeding.
2. Set up your account and optionally stage your assets on the blockchain of your choice
The next thing to do to start investing in cryptocurrencies is to set up various accounts and cryptocurrency wallets. You only need to worry about setting up a wallet if you want to manage your holdings directly rather than storing them on an exchange. The exchange handles most of the logistics.
Sign up if you're looking for the least friction solution, broadly suitable for most investors. coinbase (NASDAQ:Coin) It is enough to connect your bank account. It is perfectly fine to invest within the ecosystem it provides and never look at frontier coins that are not yet listed on a major exchange.
However, if you're willing to deal with a little more friction in your investment process, especially in the currently popular blockchain, there are many lucrative opportunities that lie beyond the walled gardens of Coinbase and other exchanges. Please note. Solana (Code: SOL).
Trading “on-chain” rather than on an exchange means no one else controls your coins, and also means you can invest in projects that are fairly early stage. This tends to be riskier than what exchanges offer and is only suitable for those interested in making serious cryptocurrency investments.
For stocks, this is the over-the-counter (OTC) trading of stocks. The problem is that you have to work a little harder to access the opportunity compared to what exchanges have prepared for you to buy, and you can use a service like Phantom to put your coins in a self-managed wallet. That's what you need to keep.
So when you're just starting out, no matter where you choose, park your cash close to where you plan to deploy it, preferably somewhere where it can hold its value.
3. Control your excitement
The third thing you should do if you are new to cryptocurrencies is to remain calm and temper your enthusiasm.
How many get-rich-quick schemes have you heard of where the participants actually made a penny? Probably zero. And approaching crypto investing with the idea of getting rich quick and easy is unfortunately a recipe for disaster.
No matter how excited internet commentators are about a particular coin, there's no need to rush out and buy anything. There's always another great opportunity to find. Money comes from patiently holding quality coins rather than buying the flavor of the day.
If you don't feel like you have time to research an investment or plan well what you're going to do with it before you buy, you've already missed an opportunity, and even if you chase it, you won't be able to start again. You can not. However, that could lead to bankruptcy.
Additionally, if you don't learn what types of opportunities to take, how much resources to put into each swing, and how to manage your own psychology when you win with investing, your chances of hitting a home run with investing are slim. there is no. Bringing value to your hands.
So slow down and review your investments with a calm and responsible mindset. Keep your expectations in check and stick to your plan. The rest will come over time.
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Alex Karkidi has positions in Bitcoin and Solana. The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, and Solana. The Motley Fool has a disclosure policy.
New to investing in cryptocurrency? Do These 3 Things Right Now was originally published by The Motley Fool.
