How much can I start with? This is usually the first question I get when I try to introduce newbies to crypto investing.
And my answer always is any amount. But there’s a lot more to that question. and that’s what this post is all about.
For the newbie, this post will help you figure out how much you should start your crypto investment with.
And if you’re an experienced crypto investor, it will help you better advise those around you on this topic.
So without much ado, let’s get into the details.
Have an “investment” mindset
Most people view investing in crypto like some “money schemes” and that’s a big problem.
You can be “talking” about investing and having a money scheme mindset. That’s closer to gambling than investing.
The first thing you need before thinking of how much to invest is an investment mindset.
So what is an investment mindset?
Let’s begin answering that question with a few quotes from the real investor – Warren Buffet
First, the investment mindset involves focusing on the long-term.
Warren Buffet has this to say in that regard.
“If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.”
Chasing shortcuts and short-term returns almost always lead you to lose your money as…
“The crypto market is designed to transfer money from the active to the patient.”
Second, the investment mindset focuses on knowledge. And understanding what it is you’re investing in.
And Warren Buffet warns:
“Never invest in a business you cannot understand.”
The mistake many people make when they first come into crypto is, they want to trade.
Trading crypto is not the same as investing in crypto and the risks involved in both are very different.
The major takeaway from the foregoing is:
- Crypto is not a money scheme or some shortcut to riches. You can consider playing the lottery if that’s what you’re looking for.
- You must educate yourself about the market. There are enough resources everywhere to learn about crypto.
But if that’s too much for you. Then consider investing in crypto through licensed institutions within your jurisdiction. And skip the rest of this post.
How much capital can you summon?
I want to assume that you now know that investing in crypto is not a night flight to retirement.
Alright.
The next question you need to answer is, how much capital is (can be) available to you?
The amount of money at your disposal determines the kind of risks you can take. And the opportunities that you can access.
The mistake many people make when they first come into crypto is, they want to trade.
For example, liquidity mining is not suitable for someone with a small amount of capital.
With a small capital, I will invest more in altcoins which can do a 10X or 1000X. Rather than the more capitalised Bitcoin.
But that doesn’t mean I can’t invest in Bitcoin with a small amount.
It only means my returns will small compared to investing in a solid altcoin.
These are just simple examples.
The reality is that the amount you have determines the kind of investments you can make. And even the channels you follow to buy the coins.
How are you going to invest?
If you have done your homework well, by now you have ideas of the various aspects of crypto to invest in.
Are you buying and HODLing? liquidity mining? staking? yield farming, trading?
Are you exposing yourself to Bitcoin only or altcoins inclusive? What altcoins are you going to buy?
You get the point.
What is your crypto investment focus?
Answering these questions takes a lot of research and if you’re serious with your money you will do it.
Resources for you:
- How to perform a cryptocurrency fundamental analysis all by yourself
- 5 Important Factors to Consider Before Investing in Any Crypto
- 11 best cryptocurrencies to buy now for a rich and profitable portfolio
How long do you want to keep your investment?
Yes. I know we talked about investment being a long-term game in the beginning.
But now, you need to answer how long is long enough for you.
How long can you afford to live without needing the money you are investing?
Do you plan to live off of the returns from your crypto investment?
If yes, then we know you need a sizeable amount of capital.
And lending, staking, liquidity mining, borrowing against your crypto, and stuffs like that are for you. And you will want to avoid the HODL strategy.
Also, do you have an investment return target?
Like a profit target that you want to achieve, after which you will pull out your investment.
You can see how your goals and personal preferences dictate what and how you invest in crypto.
Conclusion
By the time you have answered these above questions, you will get a very clear idea of how much to invest in crypto.
Avoid crypto maximalists who wants to tell you what is the right or wrong way of investing in crypto for you.
Only you can determine what is best for you and that comes from doing your own research. And making informed and independent crypto investing decisions.
- Learn as much as you can
- Think long-term
- Consider your unique requirements and preferences
- Use your brain
Investing in crypto is easier and simpler than you think. Don’t let the fanatics confuse you.
Wait!
Before I forget. Beware of scammers. They’re everywhere.
In fact, assume every stranger that pops into your DM or inbox is a scammer until proven otherwise.
Click here to learn how to identify and avoid cryptocurrency scams.
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