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If you have been following the financial news, you may know that there are many investors who have made a lot of money from cryptocurrencies this year. And if you want to get in on the action, you could consider adding cryptocurrencies to your wallet.
Before you do, ask yourself these essential questions to see if this is the right decision for you.
1. Have I done my research?
The term “cryptocurrency” encompasses thousands of digital currencies. You may be more familiar with some of the more popular ones, like bitcoin and ethereum, but the reality is that there are many options. Check out the article: Gold Price – Prices Soar As Yields Fall. Before investing in cryptocurrencies, carefully study your options and do not assume that the most publicized currencies are the best to invest your money.
2. Do I understand the risks?
There is no such thing as a risk-free investment. But cryptocurrencies are notoriously volatile. See Also: ETH Crypto Investment Tip: Should You Invest In Ethereum At Current Price? The value of digital currencies tends to fluctuate more than that of stocks, which themselves can be volatile. Make sure you are prepared to deal with this situation before adding digital currencies to your wallet.
3. Am I looking for a short or long term investment?
There are many people who have had great success buying stocks and holding them for 40, 50, or 60 years. But cryptocurrencies don’t have the same background; they just haven’t been around long enough. On the same topic: Ripple cryptocurrency review: should you buy XRP at the current price? Digital currencies have only been around for a little over a decade, and that fact alone makes cryptocurrencies a bit speculative as a long-term investment. This does not mean that you cannot treat them as such, but it is good to decide what approach you will take with cryptocurrencies before buying them.
4. Do I have a well-stocked emergency fund?
You can lose money every time you invest. But since cryptocurrencies are riskier than a traditional investment, it is important to be financially prepared before investing money in them. Check your savings account balance to make sure you’ve set aside at least three months of current expenses. Otherwise, create your emergency fund before buying cryptocurrencies, or even stocks, for that matter.
Is Crypto Right For You?
While cryptocurrencies appear to be the best investment in 2021, that doesn’t automatically mean they’re right for you. Don’t succumb to peer pressure; rather take your time. Determine if there are more suitable ways to invest your money next year.
Also, keep in mind that if you want to get started with cryptocurrencies, it is best to start small. This could mean putting around 5% of your portfolio in cryptocurrencies and keeping the rest of your brokerage account in stocks, bonds, and ETFs.
Investing in cryptocurrencies could make you quite rich. But it’s important to get comfortable with this decision before diving in.
Top 3 Recommended Brokers To Invest In Crypto In December 2021
67% of retail investor accounts lose money when trading CFDs with these providers. You must ask yourself if you can afford to take the high risk of losing your money.
After studying economics, Olivier took a computer science course. Today, he combines these two areas of interest, managing the Fintech section of Miroir Mag.
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