Crypto Investments: A Quick Guide for Beginners
By Giovana Vega
There was once a boy, about 6 or 7 years old, who was on his way to school when he spotted a game through a shop window. He instantly fell in love with it, dreaming of the day he would be able to play it, eager to have one of his own, but looking at the price tag of over $200, he knew he couldn’t afford it.
He slowly began to save – every penny, from his lunch money, his school bus fare to little gifts, ended up in his little piggy box. His determination trumped his temptation, leaving him hungry at school, and resisting the lure of the ice cream van on his walk home.
His efforts had finally come to an end as he placed the last coin in the piggy box, ecstatic knowing that he finally had enough. He carried his little piggy box with pride and ran to the store, drenched in the rain, but nothing could deter him. His steps came to a halt, and his smile waned as he stood in front of the shop window. $270. Dejected, he made the long solemn walk back home. And that brings us to the end of the ad with a simple saying, investment, not savings, is the way forward.
Now to the crux of this article, cryptocurrency is the better way to invest. The world will not retreat from going virtual anytime soon, and COVID-19 has testified to it. We all need to find an investment that will serve our future. The rise of cryptos, both in value and number, has proved it’s the next big thing – the future of investing.
Are you sceptical? Think of the most popular one that we often see plastered on the news: Bitcoin. Bitcoin first crossed the $1.00 threshold in February 2011. Today, Bitcoin is worth more than $60,000! Take the bold step and invest in cryptos. Some people are anxious and doubtful since they can’t see it physically, therefore see it as a risk. Well, honey, life itself is a risk, just as stocks, bonds and precious metals are.
How to invest in cryptos in 5 steps:
Step 1: Have a basic understanding of cryptos
Just like everything in life, you need to know what you’re going to invest in before you jump into it.
If you want to buy stocks or other financial instruments, you read up about it and do your due diligence on the company of your choice. The same applies to cryptocurrency. When Bitcoin started, it was the only one available. Now, we have over 6,000 cryptocurrencies as of 2021.
You’re not going to play the nursery game of eeni meenie miney mo, choose one and put your money in it. You’re going to have to do your research, find out how it’s doing in the market, the value, the pros and cons.
Step 2: What’s the future?
I’ve met numerous people who had the opportunity to make the best crypto investment decisions, but they declined because it wasn’t growing at a high rate. Guess what honey? They are biting their fingers in regret.
How can you determine the future of any crypto? Ask a question all investors ask: Will it continue to grow even if it may not be at a consistently high rate?
You need to be focused on the future and not what you see in the present or how a crypto has fared in the past. Find out how it will drive future returns.
Remember, investments are geared towards the future and never about now.
Step 3: Stability
Cryptos are volatile. The price can soar at the beginning of a day and drop at the end of the day due to a fickle or baseless reason such as a rumour.
Experienced investors thrive on this. They can make quick and good trades, and some of these experienced hands take advantage of the situation because they understand the way the market works. If you’re a new investor, you have to watch it, or you’ll be stepping on a landmine.
Sometimes the stability or instability of any crypto can be triggered by these experienced investors who might be trying to outdo other competitors. Some investors, especially new investors fall out in the process.
Understanding the stability of the crypto and the market will help you know when to step in, so you buy low and sell at a high price instead of selling out cheaply and buying at a high rate.
Step 4: Develop your system to manage your risk
I said manage, not micromanage. Some people are so risk-conscious that they can’t spot an investment opportunity; now that’s micromanaging.
However, if you’re going to make a short-term investment, you’ll need to manage your risk. This means you have to create a system for yourself that helps you and cushions the effect of your losses.
I don’t suggest that you copy and paste, which is doing what someone else has written about. For all you know, they may never have tried it.
To manage your risk as a short-term investor, you need to have rules to help you know when to sell, especially if the price of the investment has fallen by 10%.
If you’re aiming for a long-term investment, your best bet may be sticking with what you have no matter how much it drops.
Step 5: Don’t rush into a decision
I’ve met people who have lost so much they almost had a heart attack. Why? They put in a lot.
Don’t put in more than you can afford to lose, especially if you’re a beginner. Cryptos and any other financial instruments involve risk and as I said earlier, they can be volatile. Begin with just a little amount, and when you can easily predict the market fundamentals, you can trade with higher sums.
Final Word of Advice
If you’re a new investor, don’t put too much money in at once. Save some money and use part of it to invest, and if things go south, you still have some money to invest. Carry out due diligence on any broker you are using. Some brokers have swindled people, especially female entrepreneurs who don’t know much about cryptos but want to invest for the sake of their business. Know who you’re working with before you decide to work with them. In all my years as a trader and crypto investor, I ensure people understand what they are doing before jumping into this field. If you are interested in stepping into the crypto field, connect with me on my social media accounts.
Best Seller Author, Award Winner, Trader & Crypto Investor
Pioneer of Global Woman & Regional Director of Global Woman Club Amsterdam
CEO & Founder of Trading for Women
I’m Giovana, currently living in Amsterdam. I spent over a decade working for some of the biggest trading corporate firms in the finance sector before I quit my job to pursue a new path as a trader, crypto investor, and blogger. End your search now and grow your financial knowledge with my book. If there is an opportunity and adventure, count me in.