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Is it a Good Thing to Invest in Cryptocurrencies? (Explained in One Easy-to-Read Article)

Davida Ademuyiwa 26 80

Via Medium

Is it a Good Thing to Invest in Cryptocurrencies? (Explained in One Easy-to-Read Article)

“There are three types of people in the world,” someone once said, “those who can’t afford cryptocurrency, those who don’t understand cryptocurrency, and those who are already enriched by…

#2. You

Everyone is unique.

Every cryptocurrency investor comes into the cryptocurrency marketplace with their own background, financial and other circumstances, mindset and of course, understanding of the cryptocurrency market.

Now, each one of these factors will impact whether you will be a successful or an unsuccessful investor.

These are 5 things you need to consider about “YOU” to make the best decisions while investing in cryptocurrencies:

  1. your financial goals,
  2. your current financial situation,
  3. your understanding of the cryptocurrency market,
  4. your risk tolerance level,
  5. your fortitude to hold on, to see a financial return,

and… your mindset!

  1. Your Financial Goals

Why are you investing? What do you want to achieve? Are you looking to make a lot of money very quickly, or maybe just a moderate amount? Are you looking to save for you children’s school fees, pay off your mortgage, build up a pension pot or retire early?

Or, maybe you want to be a multi-millionaire who lives in a penthouse and drives a brand-new Maserati. It doesn’t matter. What matters is that you pick something that is challenging.

If you are very rich, maybe just making enough money to comfortably provide for your needs and those of your family will be enough of a goal for you.

2. Your Current Financial Situation

How well off you are now. Are you struggling just to get by each month, or are you doing relatively well? Do you have the luxury to put some money into cryptocurrencies or can you safely put a lot of money into it?

If you’re retired, are you living off your retirement savings? Are you struggling to live off your Social Security payments?

No one can answer these questions for you. You’re the only one who can.

3. Your Understanding of the Cryptocurrency Market

It’s generally not advisable to invest in anything you don’t understand or in a cryptocurrency with which you aren’t familiar. Doing so may make you vulnerable to fraud or scams, or give you a poor return on your investment.

It’s your money. If you choose to invest, do so only after you have considered ALL the facts and are 100% certain you want to do it.

That way, if you do lose your investment, you will at least have the satisfaction of knowing you did your due diligence and didn’t invest blindly.

4. Your Risk Tolerance:

How much risk you are willing to accept for cryptocurrencies for a potential financial reward.

This is different than your “risk-aversion” which is how much you hate risk! (Most people are quite risk-averse yet they will still take risks if the potential rewards are high enough.)

Your ability to tolerate risk will help you decide whether to invest in the cryptocurrency market or not, how much you will invest and how long you can keep it invested with the high levels of volatility in the cryptocurrency market, knowing that the whole of your investment could be lost.

5. Your Fortitude

A long-term cryptocurrency holder versus a short-term speculative trader: Which one will you be?

As a long-term holder, your ability to “Hang In There And Keep Going No Matter What”, is important, no matter how difficult, discouraging, or unpalatable the situation seems to be at the time.

This is where most people give up… because when the crypto market is heading downwards, it’s really hard to keep your optimism and hold your shares or know if to sell them and go shopping for the next big thing.

And… finally, Your Mindset!

and… that’s all about risk management and patience… but that’s a discussion for another day!