What Percentage Of Your Portfolio Is Crypto?
Most experts will agree that your portfolio should only have 5 percent allocated to crypto due to the inherit risk and volatility in the crypto market. Nathan-Paul wanted to dig deeper into crypto investments and the associated risks involved as we enter this bull run.
My opinion is many young impressionable adults will utilize social media and get bombarded with short clips of social media personalities promoting their sponsored meme coin or alt coin going up 2000% causing FOMO (fear of missing out). People need to do their research and be comfortable with the risks involved as you can easily make huge gains or lose it all during a rug pull.
POTENTIAL RISKS INVOLVED INVESTING INTO CRYPTO
HIGHLY VOLATILE – There are a number of variables that can affect cryptocurrency prices, but both good and bad news and developments ultimately determine how much they change.
LACK OF REGULATION – The absence of an efficient regulating agency for cryptocurrencies puts users at serious danger. Theft is becoming more prevalent, and consumer protection laws are falling behind other types of regulation.
HACKS AND CYBERTHEFT – Cybercriminals find cryptocurrencies especially alluring due to their anonymity and reliance on the internet. To protect their funds, people and businesses who want to invest in cryptocurrencies must follow stringent internet security guidelines.
DISTRUCTION OR LOST PRIVEATE KEYS – If a private wallet key is lost, any cryptocurrency stored in that wallet will no longer be accessible or controlled. In actuality, private key loss or destruction accounts for about 20% of all Bitcoin losses. Your private keys should therefore be frequently backed up, ideally on a machine that is isolated and secure. Additionally, if your private key is not encrypted, you should never keep it on the internet.
TAXATION LAWS – Investors in cryptocurrencies must declare their profits as income on their tax filings. But not every cryptocurrency transaction is subject to taxes. Cryptocurrency purchases, storage, and transfers between wallets or exchanges are all exempt. The IRS’s virtual currency rules might help you learn more about the often complex laws pertaining to cryptocurrencies.
REASONS TO INVEST INTO CRYPTOCURRENCY
HIGH RETURNS – Every cryptocurrency asset can see abrupt increases and decreases. The supply and demand for coins are the main factors influencing price changes. For cryptocurrency investors, these supply-demand dynamics can result in significant gains.
PORTFOLIO DIVERSIFICATION – Cryptocurrencies present a special chance to diversify your investment holdings. Stable coins like USDT and volatile crypto assets like Bitcoin can be included in a well-balanced and diversified cryptocurrency portfolio, depending on your goals and risk tolerance.
SMALL INVESTMENT NEEDED – Compared to other investments such as stocks or real estate you can start with as little as a hundred dollars and start trading cryptocurrency.
TIPS FOR BEGINNERS INVESTING INTO CRYPTOCURRECNY
Finding out how popular a cryptocurrency is can also be beneficial for novice investors. The majority of trustworthy cryptocurrency projects include metrics that are disclosed to the public, including the volume of transactions occurring on their platforms. A cryptocurrency’s increasing use could indicate that it is becoming established in the market. Cryptocurrencies also typically provide “white papers” that outline their plans for token distribution and operation.
Before making an investment, it’s crucial to educate yourself on blockchain technology and cryptocurrencies, and to choose coins you believe will have a promising future.
