Like any other investment instrument, you risk your capital for potential rewards.
While investing in stocks or mutual funds is less risky. Thanks to the government rules and regulations. But when it comes to crypto, both the rewards and risk ratio is pretty high. Also, no one controls the crypto market. Hence, many newbie’s often wonder if crypto should be a part of their investment portfolio or not.
So if you are thinking the same, then I am here to give you some solid reasons why crypto should be a part of your investment portfolio. So let’s get into the topic right away:
Things You Should Know Before You Invest In Crypto
Before you decide to put your money in crypto and move away from traditional investment options, here are a few things you should know:
Crypto Market Is Unstable
You will notice that the crypto market is highly unstable. One day, the price of your favorite cryptocurrency will rise by 100%, and after some time, it can go below 100%. There is no guarantee about how much you will earn or lose each day.
Popular crypto media outlet The Money Mongers describes it as “If you are on the bullish side of the market, you will surely enjoy great returns on your investments. But if you are on the bearish side, you are expected to face some huge losses.”
However, many experts believe that cryptocurrency is safe to invest in. But you have to pick the right cryptocurrencies which have the potential to grow. But if you are investing in meme coins, then you might get good returns, but it comes with huge risks.
Crypto Is A New Thing
Although crypto came into existence a decade back, the tech is still new. There is a lot of confusion about how cryptocurrencies work. There is only a small percentage of people who understand crypto. Also, newer technologies are being introduced into the blockchain world almost every day.
As a result, if you do not understand how crypto works, don’t know about newer and potential coins, or how concepts or techs like DeFi, Staking, crypto futures work, and others, you better study them and then invest.
This would help you to lower your risk, and you will know when to invest and when to take an exit.
Crypto Offers Unexpected Returns
Some experts believe that investing in crypto is pretty much like gambling. You can exchange crypto without any regulations. Also, crypto is not really controlled by any government or regulatory authority.
As a result, there is no way to calculate how much return a cryptocurrency can give you the same way you usually do with your stock or mutual fund investments.
Most cryptocurrencies don’t offer you enough data or enough credibility. But still, these coins give you unexpected returns.
However, the thumb rule over here would be to invest in coins which have the potential to grow or become big. For instance, Ethereum is used for developing dApps and smart contracts, which would be a thing of the web3.
As a result, Ethererum as a blockchain network is going to be used by more and more people in the future. As a result, the value of the ETH coin is expected to grow.
Should Crypto be Part of your Investment Portfolio in 2022?
Investing in crypto is undoubtedly a good way to increase your wealth. But it is highly risky, and if you want a solid investment option, you should stay away from it.
But if you can open up to the fact of taking losses and holding coins for the future, you can definitely earn good rewards.
Cryptocurrency is no more considered a bubble or bluff. In the last couple of years, cryptocurrencies have gained extreme popularity. Some countries have approved Bitcoin ETFs, and there are lots of other countries planning to accept crypto.
So surely, the more popular cryptocurrency gets, its value will increase over time. But we also have to understand that there is no regulatory authority that can control the crypto market. As a result, you can end up losing all your money in the crypto market.
Hence, as per the experts, one should only allocate 1% to 5% of their money in crypto. Since it is a high-risk market, you should always consider it a long-term investment.
Along with that, it also depends on what types of coins you are adding in your portfolio. If you are only going for the meme coins, you can get good returns when there is a craze. But once the craze ends, you will only lose your money.
So as a thumb rule, it is better to invest in good coins which have potential or coins associated with blockchain networks that solve problems.
But if you wish to invest in meme coins, then always invest what you can afford to lose.
How do I invest in crypto?
Investing in crypto is pretty simple. You will need to use a crypto exchange platform such as Binance, Coinbase, Kraken, and many other ones. Just make sure that the exchange is operational in your country and offers you the best trading fees.
Once you have chosen a crypto exchange, simply sign up and complete the KYC process. After that, you can deposit funds using a credit/debit card, bank transfer, or other ways.
After depositing funds, simply place a buy order for your favorite cryptocurrency, and you are good to go. Once the buy order gets executed, it will be added to your portfolio.
Similarly, simply place a sell order when you want to make an exit. Also, to withdraw your funds back to your account, you will need to place a withdrawal request.
So that was the answer to whether you should have crypto in your investment portfolio or not. Investing in crypto can definitely bring you high returns. But there is also risk involved. So make sure you have proper knowledge before you think of investing in crypto.
Also, the above information is not financial advice and is for information purposes only. Do your own research before you invest.
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