There are three major reasons people invest in crypto: to build, grow, and preserve their wealth. And the strategies they employ to achieve these lofty goals are different.
In this post, I would be sharing with you the various strategies for building, growing, and preserving your wealth with crypto investing.
3 reasons people invest in crypto
The three major reasons people invest in cryptocurrency is to:
- build up their wealth
- grow their wealth
- preserve their wealth
Let’s discuss each of these crypto investing goals below and how to achieve them.
1. Investing in crypto to build up your wealth
People who are trying to accumulate money and have their first taste of riches fall into this category.
To them, crypto is an opportunity of a lifetime to get out of the rat race and attain financial freedom.
This set of crypto investors have very little capital to start with, usually between $1 to $100,000.
The best strategy for this group is to invest in promising, low to medium cap projects with plenty of room for their price to increase significantly (5x to 1000x).
Though the more established, large-cap coins still have lots of room to grow, you will make the most gains by investing in up and coming coins.
Therefore if I were looking to make my first money in life through crypto, I would invest in promising projects that have good fundamentals.
You will notice that this strategy of investing in low cap coins is more aggressive.
You should be willing to take on more risks to reap potentially higher rewards.
And if you do your research properly and invest in promising projects with solid fundamentals, I’m confident you will be happy with the result after a few months or years.
- How to do your own research and make great crypto investment decisions
- How to perform a cryptocurrency fundamental analysis all by yourself
2. Investing in crypto to grow your wealth
Investors in this category are already rich and living comfortably with minimal money pressures.
And they have raw investment capital of $100,000 to $5 million to play with.
Their major goal is to put their money to work through low-risk investments and grow their portfolio gradually.
They’re not too rich to want to make more money, and they’re not too poor to be desperate for quick fixes.
As such their investment strategy is passive-aggressive.
That means they tend to invest in both low cap, high-risk projects and large-cap, more established ones.
More importantly, they allocate a larger portion of their capital to large-cap projects.
So, while the up and coming projects are helping to increase the value of your portfolio exponentially, you have a secure position in the more established coins.
Even though the large-cap coins gives you far lesser returns, you’re comfortable with allocating the largest portion of your portfolio to them because they’re less risky.
3. Investing in crypto to preserve your wealth
The wealthy are only interested in protecting and preserving what they have accumulated.
These dudes see cryptocurrency investing as a way to hedge against inflation and preserve their wealth.
They are not eagerly going after the 2x or 5x and are mostly invested in between one to 5 major cryptocurrencies such as BTC, ETH, etc.
This is because these large-cap coins are less likely to die or lose value over time than the low-cap, up and coming ones.
So there’s a near-zero risk of you losing all your money invested in them.
At the same time, they’re volatile enough to give you some really nice returns (2x to 10x) in a few months to a decade.
Overall, the best strategy is to invest in both the promising projects and the more established, large-cap coins in a ratio that you’re most comfortable with.
At the same time, I don’t believe in the one-size-fits-all crypto investment strategy.
That is why I always encourage you to develop or adapt a working strategy that suits your unique financial situation and personal preferences.
The only exception is those with just $1 to $1,000 to their name to invest in crypto.
The large-cap coins cannot help you accumulate the riches that you want with such tiny capital to start with.
Thus the best strategy for you is to invest only in carefully selected up and coming projects with the potential for 10x to 1000x returns in a few months or years.