If you opened this post because the title caught your attention, congratulations! You’ve taken the first step into the wide world of cryptocurrency!
Even with the recent market crash, I’m holding on and using dollar-cost averaging to invest during the dips to balance my positions in crypto.
I hope this little guide helps you get started in investing in crypto and possibly changes your life in the near future, like it did for me!
I call this ‘The Mountain of Investment’
- Step 1: Make sure to have at least 6 months of emergency funds to support you through tough times. Decide what counts as your emergency funds. Is it 6 months of your spending (like groceries, transport, entertainment) or 6 months of your salary? I know this sounds boring, but being cautious is necessary when taking risks. Focus on building this up before diving into something you don’t fully understand. You may hear about that one person who made a fortune overnight with $1000, but you don’t hear about the thousands who turned $1000 into just $0.1.
- Step 2: Start small and simple. Investing in stable coins like BTC and ETH is a good idea. This is known as dollar-cost averaging, and due to the price swings in crypto, you’ll either average up or down. Starting with $50-100 a month is a great way to kick things off! You can also spread your investment into other options like ETFs and bonds. You can put in more money once you have the means to do so. It can be more, depending on your personal situation (I have house renovation payments coming up).
- Step 3: After you’ve built a solid passive investment portfolio, you can consider active investing. Having a strong base from steps 1 and 2 is crucial to avoid big losses. Start small again and put a maximum of 10% of what you’re willing to risk into active investments. Look into ICOs, new coins, or crypto interest earning platforms to make yield from your crypto. For diversification, check out CeFi solutions like Hodlnaut, Nexo, Celsius, Anchor Protocol, and YouHodler Avalanche. You might also consider owning a masternode by staking 32 ETH. There’s also the option of leverage trading with your crypto. These are all medium to high-risk choices, so be prepared to lose money if needed. My strategy is to save up for 6 months and invest, let’s say, $5000 into BTC on an interest-earning platform, and just let it work while generating interest. I won’t feel the loss too much because I already created a secure foundation with step 1 and step 2!
- Step 4: This step is the peak of investing and might take you several years to reach. Eventually, you can start exploring higher-risk investments like DeFi protocols. These can offer insane returns over 100% APY in farms and pools, but be aware these liquidity pools come with risks, like impermanent loss. Only risk about 1-5% of what you can afford to lose. For example, pancakeswap, pancakebunny, and apeswap are protocols worth checking out!
In closing, I must emphasize that I am not a financial advisor, and this is just my approach to crypto investing! Please remember to do your own research, especially on DeFi protocols that can be complex with terms, fees, and processes involved!
I hope this helps a beginner, and I’m happy to share more insights 