Reflections from Our Investment in Crypto
3 min read
*Disclaimer: this is by no means a form of financial advise. Invest at your own risk. This post is to share our thoughts and reflections regarding our own investments.*
Bitcoin and other major coins have been on the downtrend. What goes up must come down, right? We've reflected on our recent investments, and we've gathered some important reminders that may be relatable for you. These reminders can be applied to other forms of investments, not just cryptocurrency.
1. Do NOT invest more than you can afford to lose.
If you cannot afford to lose your entire savings, there is no reason for you to throw all of it into any form of investment. There have been people that have taken money out of their mortgage to invest in bitcoin and have lost a lot of money consequently. One of the key elements of investing is to know your risk and manage your risk.
2. Always have an exit plan.
"Holding on to dear life" (HODL) is not a strategy. Whether your making an investment for the long term or entering for a short play, know when you're planning to exit and stick to them. To do this, you need to know your long term and short term financial goals. If you can afford to hold a position for 6 months, I commend you for your patience, but always keep in touch with your position to see how things are playing out. For short term plays, a good entry is critical. If you're chasing a play, you just might get burned.
3. Cryptocurrency should not be your entire portfolio.
Investment gurus like Ray Dalio and Warren Buffett would tell you the same. You've probably heard of diversifying your investments quite a few times by now. Not only should you diversify your investments, you should diversify them based on risk. Stocks and cryptocurrency have a lot more risk than Roth IRA's and bonds (because of their volatile nature). If you're comfortable with high risk portfolio like me, it's understandable to have a significant amount in crypto or stocks.
Money is important to everyone, so it's important to be knowledgeable about your decisions. Anything we pursue has risks, but understanding the risks and our own tolerance to these risks will help make better decisions.
Here's a book to check out regarding managing your money. I've learned a great deal from it, and I've started applying the points that was made in this book. Managing money is not so much about what skills you have, but more so the mindset you have regarding money.
Again, this is not a form of financial advice. They should be treated as reminders to when we are making any investment decisions.