Do you think you might want to invest in cryptocurrency? It should be part of your portfolio: 1. As long as you can afford to lose the money you invest and 2. You will keep it for a long time.
Although it is a very volatile asset, you can build wealth over the long term by investing in cryptocurrency.
A study by the New York Digital Investment Group found that around 46 million Americans own at least some stake in Bitcoin. Its ups and downs can seem dizzying than a roller coaster, however.
Because of this, those who invest in crypto should undoubtedly also have an emergency savings plan and a solid retirement plan.
However, once it does, consider crypto as a key component of your long-term portfolio. You can then join the HODL crowd if you want.
Take into account your allocation and risk tolerance
Experts recommend keeping crypto in your portfolio at a low percentage, especially if you are a senior investor. Younger investors can risk the investment in the long term because they have more time on their side. (Some experts recommend only investing 5% of your portfolio in crypto.)
Experts also recommend investors buy crypto using strategies similar to those used for stocks, such as averaging cost. That means investing small amounts of money on a regular basis rather than buying everything at once.
When making the allocation, consider your risk tolerance. Does that sound like Investing 101?
Kind of! When you throw off all of your other investments, your financial goals can become difficult. And always remember that cryptocurrencies remain a seriously speculative investment right now.
Learn how to do it
Experts recommend sticking with the well-known cryptocurrencies Bitcoin and Ethereum. Expert Suze Orman says about meme stocks and other investments that get rich quick.
So how do you do it Learn the steps to invest in cryptocurrencies so that you can trade as carefully and effectively as possible:
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Step 1: choose an exchange.
You want to do some research so you know the right type of exchange. Make sure you choose a safe, legitimate platform. Take into account your purchase methods, coins you can buy, fee structure, user interface, and user experience. You can choose from hundreds of cryptocurrency exchanges, but some of the most trusted are Binance, Coinbase, Kraken, and CEX.io.
Step 2: create an account.
Once you’ve selected the right exchange for you, create an account. Depending on the policies of the exchange, you will need to enter different items. You may need to file records so the exchange knows you are who you say you are.
Step 3: Deposit funds into your account.
You can add funds to your account by linking your cryptocurrency account to your bank account. You can deposit by bank transfer using a debit / credit card. You may have to expect a wait before using your funds.
Step 4: it’s time to buy!
At this point you can select your cryptocurrencies. Here too, experts trust Bitcoin and Ethereum. You can choose both or just one. You may want to know the symbols for each cryptocurrency before you get to this point. Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE) for example.
You can keep your cryptocurrency on the exchange. However, cryptocurrency exchanges have been hacked before. That brings us to a storage method option.
Step 5: consider a storage method.
The safest way to store Bitcoin is by using a digital wallet. The way it sounds, a digital wallet stores your bitcoin until you need to use it. You can use hardware-based wallets or web-based wallets on your phone or on a computer desktop. You can even print out the private keys and addresses and use them on paper.
Are you considering simply leaving your cryptocurrency on the exchange? We strongly advise against getting a wallet so you know that your crypto will be kept safe.
Reason # 1 for long-term investments
If you want an inflation-proof, reliable store of value (no political body or government agency can dilute the value of crypto), consider crypto. Cryptocurrency experts have predicted that Bitcoin will replace the US dollar as the dominant form of global finance by 2050. It will surpass $ 66,000 by the end of 2021.
Reasons why you might want to avoid crypto in the long term
Do you think crypto just doesn’t make sense to you? Let’s examine a few reasons why you might shy away from traditional investments.
Reason 1: It’s volatile.
Well, this is hardly a news flash. Price charts constantly show large fluctuations. For example, the price of Bitcoin last fell below $ 30,000 to $ 29,514 in July. It did so after falling to $ 29,031 in late June – the first time it had fallen this low since January.
In other words, if you are looking for more stability in your investments, look elsewhere.
Reason 2: An evaluation is impossible.
There is no company that supports Bitcoin. For example, with traditional stocks, you would take a look at management and earnings. They would examine the likelihood of its products and services becoming mainstream.
Cryptocurrencies do not offer the same “luxury” because they are not really tangible.
Reason 3: You may find it difficult to make transactions.
Let’s say you want to buy a pizza with your bitcoin. Can you do this anywhere?
Not on your life. You need to find an entity that is ready to accept cryptocurrency. Will they break in on Main Street, USA as an acceptable payment option? It’s hard to say what will happen later. Because of this, you may not want to invest for the long term.
Reason 4: fraud and theft. Enough said.
Here, too, exchanges and unfortunately your wallet can be hacked. The Securities and Exchange Commission has issued an investor warning about fraud related to cryptocurrencies. Well, it is true that someone can access your bank account and do the same thing. So whether this argument is thin depends on your perspective.
Reason 5: No regulation.
The banking system does not support cryptocurrency. The government doesn’t support crypto. In addition, there is no regulation of the crypto market and it is not protected by SIPC insurance. Once your money is gone, it’s gone.
Reason 6: It is prone to tweets and other propaganda.
Look no further than Tesla CEO Elon Musk’s repeated attempts to change DOGE’s position. With a tweet, the cryptocurrency in question can go up and down. How can you prepare for the future with this volatility?
What does the future of crypto mean for you?
Cryptocurrency experts are touting Bitcoin’s future success, but you can stop yourself by looking at the Colonial Pipeline hack and other fiddling around.
In addition, the Federal Reserve has been investigating the possibility of a national digital currency. Will this leave Bitcoin in the dust?
It is possible.