The question of how much one should actually invest in crypto is pretty common. The song of praises of digital currencies has been echoing for years now, so people are jumping on the wave. But how much is deemed fit to put into cryptocurrencies? We’re going to answer that and more in this article.
Keep reading to find out.
Living in a country like Nigeria, and even any country, to be honest, we are all looking for multiple sources of income, and it is not easy. Financial experts have said that having multiple income streams is the best way to build wealth.
You might have a 9-5 job, one or two (or even more) small business(es) on the side. What is left? Investments. There are lots of things to invest such as real estate, stocks, cryptocurrency, and more.
Over the years, cryptocurrency has increased in popularity, and Nigerians are taking advantage of these digital currencies. We cannot deny the failure of financial services in Nigeria, which has made people turn to crypto.
In fact, after the April crypto market crash, the intensity of internet searches for “investment in cryptocurrency” has declined worldwide, but yet Nigerian grow more curious about the subject daily, and it has been revealed that Nigerians search the most for terms like “cryptocurrency”, “invest in crypto” and even “buy crypto”.
The Nigerian Population has researched and widely accepted the need for investing in cryptocurrencies. But now, let us ask the question, how much should we actually invest in cryptocurrency?
Knowing exactly how much to invest in crypto and even which crypto to invest in is tricky. Because of the complex question that does not really have a direct answer, most people become uninterested and never look back.
Now, we will look at a few things you should know before investing in crypto, how much is deemed fit to invest and how you should go about it.
Let’s get into it.
Things You Should Know Before You Invest In Cryptocurrency
1. The Crypto Market is Volatile:
I’m pretty sure you have heard about this before- the volatile nature of crypto. In the crypto market, people have lost, and people have gained. Most people are discouraged because of all the bad stories they have heard about the market and industry at large, but it is not all crashes and dips over here. Many people have also gained a lot from crypto, and we have even seen people become millionaires. No, it is not a sure bet that you will become a Bitcoin millionaire from trading it, but you can earn a decent amount of money, enough for it to be considered a passive income, and maybe more.
The crypto market is highly volatile, so do not expect it to always be rosy. Over the years, we have experienced crypto market crashes and extreme crypto winters. Due to the volatile nature of crypto coins, you should adopt appropriate investment strategies based on your financial goals and other personal factors you might have.
2. Always Do Your Research:
The crypto market is filled with many people and self-proclaimed crypto and investment experts who just love giving out financial advice, even when it is not asked for. Most of this advice is given without in-depth knowledge of most people’s investment backgrounds, so what might work for them might not necessarily work for you.
Because of this, you must always do your own research according to what you want to achieve. Before making major decisions, you must do your findings and verify them from various sources. With this, it is less likely that you will fall for fraudulent activities.
3. Get the Right Crypto Wallet:
A crypto wallet is an electronic wallet used to store your crypto assets and make transactions. Getting the best crypto wallet in Nigeria is mandatory and essential for keeping your crypto assets safe.
The safety of your crypto coins is wholly left to you when it comes to picking a home for them.
How To Invest In Crypto
Below is a step-by-step guide on how to invest in a crypto coin. Let’s take Bitcoin, for instance.
- Join a crypto trading platform
- Get a Bitcoin wallet address
- Provide your bank account details (according to what exchange platform you are using)
- Place an order for Bitcoin on the platform
- Manage your investment
Managing your bitcoin investment basically involves you using the digital currency for transactions, holding on to it until it appreciates in value until you are ready to withdraw your profit, and using various (or even a particular trading strategy) to make the most out of your asset and gain more profit.
How Much Should I Invest In Cryptocurrency?
According to most experts, your investment portfolio should have only 5 per cent crypto.
According to the head of global expansion at Hashdex, Bruno Ramos de Sousa, he mentioned that “(this amount is) small enough to keep an investor comfortable in periods of high volatility, but also large enough to have a truly positive impact on the portfolio if crypto prices rise”.
When investing in Bitcoin, or any other crypto coin, there is no particular amount that is deemed fit to purchase it. You can start with any amount, but an important tip is that you should only invest what you are comfortable losing.
We have previously talked about the volatility of cryptocurrencies, and you should know by now that the crypto market is quite risky. You could make a profit today and procure a loss tomorrow.
That is why it is vital to have a financial goal to wish to achieve and map out a plan. Investing more than you can afford will only hurt you in the long run.
As a beginner, one strategy you should look into is dollar-cost averaging.
Dollar-cost averaging (DCA) is a strategy where you invest a fixed amount of money (usually a small amount) at intervals over time, regardless of the shift of price value.
The DCA strategy is excellent for helping you build a habit of investing over time.
Due to the inception of blockchain technology, cryptocurrencies have been created and they are taking the world by storm, bringing forth lots of cryptocurrency exchanges which have facilitated selling and buying cryptocurrencies. Now that people are investing in them, how much is deemed fit to put into it?
When it comes to how much money you should put into cryptocurrency, there is no clear answer. You can start little and build on that.
When picking a crypto exchange to trade on, pay attention to the minimum amount you can use to purchase a coin, as this differs by platform.
The crypto market has its ups and downs; you should be prepared for that as a beginner. Before investing in any crypto asset, you should thoroughly research it to know what asset to invest in, its history, future predictions, and more.
Also, before diving into it, you should have a clear end goal in mind. This will help you to know when to pull back and which strategies to adopt.
Kindly note that all information shared in this article is not financial advice, and make sure to do further research.