1. Is it affordable?
This is an important thing to think about, don’t get caught in the hype of current prices. Only invest what you can afford to lose, re-mortgaging your house to invest is not a smart move!
2. Research the marketplace thoroughly
If you don’t know anything about the project you are investing into or the market itself, you are creating more risk. Education is paramount, if you don’t know anything about the market, find someone that does.
3. Time Horizon
Equally important to understand that once you invest, it may be some time before you can access your funds. Markets do not travel in a straight line, so some days you could be up and others you could be down. Timing is key, if you invest during a bear market you could be waiting a while to get your money back.
4. Pulling Profits
You need to execute a plan for reaching goals, this should include targets that you monitor and act upon to pull regular profits during times where the market goes up. This will not only start to cover your initial investment but also help educate you on when to take action to ensure you have a good return on your investment.
5. Create an emergency fund for unforeseen circumstances
There could not be a more uncertain time in people’s lives than right now. Jobs are at risk with lots of business closures as a result of Covid-19 and lockdown. We cannot look into the future but we can prepare for it. Try and get completely debt free and at least 3 months ahead for living expenses before choosing to invest. This gives you a cushion for some time if you lose your job and need to search for a new one.
6. Risk vs Reward
The cryptocurrency market is extremely volatile, this means that the risk vs reward is extremely high. There are over 5500 coins/tokens you can choose to invest into. Some are established projects that are changing the world and could become the new major players in town further down the line. Many of them are not, history teaches us that sometimes a fantastic idea can also be destroyed in seconds by a slightly better idea. This happens a great deal in this market, without educating yourself and following industry news, you can easily get caught out and lose money. Research and understand the projects, look into the team behind them, their activity and engagement online, their whitepaper and see what partnerships they have.
If you have helpful advice to add, please feel free to comment.
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