Building a Cryptocurrency Portfolio: Top 7 Things to Consider

Planning to build your own crypto-portfolio? But don't know how to? Investing in cryptocurrency has been and still is an abstruse concept. Here's 7 things to consider before diving in crypto.

20 Dec 2018 4 min read

This is a guest blog post by Annah Books, a numismatist from First Fidelity Reserve.

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Cryptocurrency has gained popularity in the last few years and a lot of people are eyeing this type of investment as a lucrative opportunity. However, it’s quite a complex idea and the populace is divided on whether to invest or to stay out of the crypto world.

As with any other decision, it’s very important to always look before you leap. You can’t just spare thousands of dollars in a popular coin platform and think it’s going to double overnight. There are factors to consider and thoughts to ponder.

If you want to build a cryptocurrency portfolio, here are the top 7 things to consider before jumping in the bandwagon.

1.  Invest Money You’re Willing to Lose

The number one rule in capricious investments is to always invest money you’re willing to lose. You have to understand the risks involved before diving head first in cryptocurrencies.

There are always risks in investments just like putting up a business. And cryptocurrencies are too fickle to even assume you’re going to make money out of it pronto.

A few questions you can ask yourself are:

  • How much money are you intending to invest?
  • Are you prepared to lose some or even all of it?
  • What are your investment goals?
  • Can you still make ends meet if you lose a huge sum of investment?

If you don’t have a fat wallet, make sure the capital will not affect your life – and expenses.

2.  Do Your Due Diligence

Cryptocurrency is a serious business and if you invest on impulse based on a random tip from a friend or from someone’s success story on the internet, you likely won’t even understand what it’s all about.

Do your research. Although there is a lot of information about the different cryptocurrency platforms online, some of them are the rotten eggs in the industry.

Cryptocurrency is a decentralized and open system hence; the concept is extremely easy to imitate and sometimes the investor’s ignorance could lead to crypto failure. Be a smart investor and know the ins and outs of cryptocurrencies.

3.  Have Accountability

Since you’re making this decision alone (with the help of some experts and thorough research, I hope); you are responsible for your decisions.

Whatever happens with the capital you’re going to invest, you’ll still be the one held liable for it. There are a lot of influencers out there claiming they’re successful with this and that.

But before you follow suit, know that they’ve also come a long way to get where they are now. They’ve probably lost thousands of dollars before gaining millions. So whatever your decision is – own it!

4.  Diversify Your Portfolio

A general rule of thumb is to always diversify your portfolio which is also called the “Modern Portfolio Theory” (MPT).

This hypothesis suggests that it’s always better to pay attention to the expected risk and return of several investments instead of just one.

Try to select coins that have various market caps.

Sort out coins with high, medium, and low market caps and try investing in a couple from each category; of course, these coins should be well-researched as well.

At least if all else fails, you have a handful of other coins that are on a high.

5.  Choose a Well-Rounded Team of Experts

Since cryptocurrency is an esoteric concept, more often than not, people want a hand-holding support all throughout their crypto journey.

Since the upsurge of the crypto market a few years back, nationalauthorities have implemented license regulations for financial advisers.

A crypto neophyte like you can get inspiration from these accredited experts.

Although people have a preconceived notion about cryptocurrencies, a lot of people are also happily trading and gaining from cryptocurrencies because they did their homework.

6.  Get Up-To-Date Information

Always stay ahead of the game. Investing in cryptocurrencies is considered an infinite process.

There are always new technologies and opportunities in the market.Always stay ahead of the game. Investing in cryptocurrencies is considered an infinite process.

There are always new technologies and opportunities in the market.

A cryptocurrency tool which is considered a household name in the industry is CoinMarketCap. When it comes to real crypto news and rumors, this tool never fails.

Another crypto tool must-have for every investor is CoinCheckup – a platform which provides a thorough observation of various cryptocurrencies.

7.  Patience is a Virtue

I know it’s quite tempting to cash out when you see those digits multiply. Try to be in it for the long haul. Be patient and wait. You’ll see that it’ll be worth it in the end.

Unless you’re a seasoned investor who can stomach daily trading, long-term holding strategies are probably preferable for a beginner like you.

An intelligent investor is someone who will take heed of these advises, so when it’s time to reap your investment labor – you’ll never regret getting down and dirty with cryptocurrencies.  

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Author Bio:  Annah Brooks, a frequent traveller and numismatist, loves to write about little-known facts and fun stuff about coins, travel, health and food.

She is currently working for First Fidelity Reserve, which specialises in rare United States coins and precious metals, including gold, silver, and platinum bullion and provides superlative service, insightful analysis and comprehensive consultation for rare coin investors and collectors.

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