Crypto Investments: How Much Money You Need to Begin?
The newness of the crypto market is pulling a larger audience towards investing in various cryptocurrencies. Also, a number of platforms have emerged that allow investors to buy and sell cryptocurrencies with a range of minimum values of investment. While some companies let you start making crypto investments with as little money as $1, some on the other hand have fixed their minimum trading requirements at $10. As a beginner, it is difficult to decide whether or not you should invest in such a volatile market of cryptocurrency and how much money you should start with. Not to worry as we have answered all your questions here.
How Much do you Need to Start Cryptocurrency Investment?
Let’s look at the minimum amount that you need to start investing in crypto for the top 10 cryptocurrency exchanges.
|S. No.||Name of Exchange||Minimum Account Balance|
Now the question is how much money should you invest in cryptocurrency in order to reap some good profits and not end up losing a lot of money? Here we have shared ways in which you can decide on how much money you should invest in crypto.
How Much Money Should You Put in Crypto Investments?
It is certainly not wise of you to put all your money in the crypto market at once. This is because crypto is a very volatile market and it’s almost impossible to predict when you are going to make profits and when you will lose money. It is very important to play safe when in the crypto pool. So, here are five money measurements that you can use to find out the amount of money that you should start investing in cryptocurrencies.
2 to 5% of Your Net Worth in Crypto Investments
The founder and financial planner of CapitalWe, Vrishin Subramaniam, suggests that investors should keep their crypto investments below 5% of their total investments. Keeping in mind the risks and volatile nature of the crypto market, the investors should invest at least 2% and not more than 5% of their shares in crypto in order to gain profits while avoiding risks.
1-4% of Your Investment Portfolio
All the brilliant investors suggest that newcomers diversify their portfolios. As cryptocurrencies are slowly gaining popularity and are even yielding great profits, investors should dedicate at least 1-4% of their investment portfolio towards crypto. If you are a pro-investor and don’t feel shocked with the volatility of the crypto market getting reflected in your portfolio, you can take your crypto investments up by a notch, accounting for 5% of your portfolio.
Not More than 1% of Your Total Assets
Considering the immature nature of the crypto market, Dan Herron, CPA at Elemental Wealth Advisors, suggests that beginner crypto investors must keep their allocations below 1% of their assets. It is because the crypto market is still young and not acceptable to a larger audience. Therefore, it is likely to fluctuate and even fall significantly. However, when the investors become more versed with the market, it is okay to increase the share of investments. But one should never take it beyond 5-10% of their portfolio.
Up to 3% of Your Total Liquid Assets
Liquid assets consist of those assets which can be easily converted into cash, like bonds, Exchange Traded Funds, stocks, deposits, and so on. When you start to invest in crypto, it is best to keep your allocations below 3% of your total liquid assets.
Things to do Before Beginning Crypto Investments
Cryptocurrencies are gaining huge popularity, witnessing a surprising surge in the number of people registering themselves on crypto exchanges every day. In addition to this, there are many places that have started accepting cryptocurrencies as a mode of payment. It is very easy to get lured by the instances of people taking out thousands of rupees from the crypto market at the end of the day. However, there is an equal likelihood of losses if you enter the market without any research, knowledge, or greed. Here are a few things that you must do to prepare yourself for entering the crypto world and being a successful investor.
- Every day, there are several projects which get listed on crypto exchanges. Some of them are genuine projects having a lot of potential for growth. However, some may be fake ones designed to rip off money from the investors. Therefore, it is extremely important to do thorough research on the project that seems interesting to you. Verify the information on their websites, social media pages, and their owner’s LinkedIn profiles.
- Do not enter the market with greed. If you do, you are bound to lose money. Always take small steps and invest your money in multiple cryptocurrencies, rather than putting it all in one.
- Be patient. The crypto market is highly volatile and it fluctuates every now and then. You never know which coin will be topping the charts and then be at the bottom at the end of the hour. Keep your calm because everything that is falling down will rise up again.
- It is good to take tips from successful crypto investors. However, you shouldn’t rely on their advice completely. Do your own research and find out what works best for you.
- Make yourself familiar with the way cryptocurrencies work and how the blockchain that backs them, works. Follow the latest updates related to crypto consistently and make informed decisions based on that. Also, read about the taxed regulations of cryptocurrencies in your country.
In a world that is being ruled by cryptocurrencies, it is easy to fall prey to websites and exchanges that are made to scam people. Be sure to read about the exchange on which you are starting crypto investments. It is advisable to choose platforms that are popular and are listed among the best crypto exchanges in the world.