There’s a golden rule when it comes to investing money: never invest money you can’t afford to lose.
That goes double for assets as volatile as cryptocurrencies.
The good news is you don’t have to have a certain amount before you can purchase Bitcoin, Ethereum or any other coin.
If £10 is all you’ve got to spare, you can invest that. If you’ve got £100, then that works too.
Treating this initial investment as a learning exercise is a good strategy. By just investing a little bit, you can get a feel for the platforms and experience the volatility of the markets.
A key factor to keep in mind when thinking how much to invest is the understanding that this is not going to turn you into a millionaire in a month.
While there are stories of crypto traders hitting the proverbial jackpot, these are the exceptions and not the rule. At any rate, to make the most back from your investments, you have to be prepared to put a lot in to begin with – not the right approach if you’re just starting out.
The sunk cost fallacy
It’s also important to beware of the ‘sunk cost fallacy’ in the face of losses. This is the belief that you’ve invested too much to cut your losses.
Rather than selling and accepting the loss, some people may double down on risky investments in the hope of turning it all around.
As a way of protecting yourself against that, you may decide to spread your investments across different cryptocurrencies.
So, taking £100 as a starting point, you may decide to buy £50 worth of Bitcoin and £50 worth of Ethereum. Over time, you can see which one performs better and use that to guide any future trades you wish to make.
Above all, make sure you have savings separate and available to you before putting money into crypto. Many…
Read complete post here: