How You Can Avoid Losing Money In Crypto
While cryptocurrency continues to position itself as a viable investment choice, the volatility of these investments remains constant. With the amount of publicity surrounding crypto, this has peaked the interest of wide-eyed investors. However, it is important for these new investors to understand what they’re getting into before they begin. The contents of this article should be taken into consideration before any major crypto investments are made.
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Determine Your Goals
Before even considering investing in crypto, you need to determine what your intentions are. Do you want to invest for the potential to profit? Or perhaps you want to invest for the purpose of protecting your money? Both are logical reasons to invest in crypto, however it’s important to understand a few distinctions.
Investing to maximize your return on investments, will carry more inherent risk compared to investing to protect your money. This distinction will determine which path you want to take, as well as who you take investment advice from. This leads us to arguably the most important way to avoid losing money in crypto.
Investors must be aware of who they are seeking investment advice from, this is important for crypto as well as stocks. Oftentimes investment experts have a hidden agenda, which entails boosting the value of a certain crypto they hold a lot of. This is a common strategy sometimes referred to as pump-and-dump schemes. Which means, someone is hyping up a specific cryptocurrency, then when enough people invest, they sell everything before the price drops. It is important to be aware of this, especially as a new investor who is seeking investment advice.
Individuals who insist on being bold will undoubtedly sink copious amounts of money into crypto. Which introduces a subjective investment strategy, employed by investors such as Warren Buffet. This strategy is diversification, in other words, spreading your investments out rather than sinking everything into one cryptocurrency. This can be a smart investment for a variety of reasons, first off, you have more skin in the game compared to just one singular investment. Also, since you don’t know which cryptocurrencies will tank or skyrocket, this allows you to depend on a larger portion of the market.
The final way you can avoid losing money is… abstinence… seriously. If you are paralyzed by anxiety over losing money in crypto, don’t invest. Furthermore, don’t invest in crypto if you cannot afford to lose money. This should go without saying, although the potential to profit from crypto is high, the potential to lose is even higher. For every millionaire success story, there are thousands of tragic failures.
Perhaps the stress and volatility of the crypto market is not for you, if this is the case, maybe try more traditional investment strategies. The stock market is still a great opportunity for many people looking to invest. Since the stock market has been around for a long time, it is easier to sift through the noise and find reliable advice.
One More Thing
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