Investing in cryptocurrencies is growing in popularity and despite somewhat mixed responses from organisations, countries and governments across the world, the general consensus is that the world of blockchain and cryptocurrencies is here to stay. This has caused both existing investors and newbies to want to try their hand at crypto investments, but confusion over how to get started has prevented many from actually making their first investment. Andrew Pritchard, MD BlockSpace for The 10x Growth Account and crypto investor, discusses the five key questions to consider before investing in cryptocurrencies:
Question One: Have you done your homework?
As with any new investment, it is important to take some time to fully research the options, currencies, providers, platforms and strategies that are available to you. Investing in Cryptocurrency is an exciting space, but there are many different types of investments on offer, different ways of investing and different strategies on offer for helping you to grow your initial investment. Reading up on top tips articles such as this one, following successful investors and even doing a ‘practice-run’ investment on paper are all helpful ways to familiarise yourself with this new and constantly evolving space.
Question Two: How risky do you want to be?
There are opportunities to make huge returns in the world of crypto investing but alongside this there are also varying levels of risk. Determining just how risky you plan to be with your investments will help to narrow down the types of investments or coins you will ultimately invest your cash in. The more well known currencies such as Bitcoin have already made significant returns and as a result are more expensive to buy per unit, whereas new to market currencies, ICOs (Initial Coin Offerings) and some altcoins are trading at much lower per unit costs, which if you choose correctly and catch them before they spike, could deliver you much more bang for your buck. It all depends on how risky you want to be!
Question Three: What kind of investments do you want to make?
You have the option to invest in established cryptocurrency such as Bitcoin, Ripple, Ethereum and Litecoin, or you can look to altcoins and new to market ICOs. As previously mentioned, different currencies and types carry varying levels of risk and whilst you can obtain ICO tokens at rock bottom prices, their future is uncertain and so your likely returns are less certain than if you invested in a more established currency for which growth patterns and predictions have started to emerge. The type of investment you want to make will also impact which digital wallet you opt for, which you’ll need to buy your cryptocurrency, as not all currencies are accepted on all digital wallets. There are a number of providers and exchanges that offer digital wallets, although due to demand some of the more popular exchanges have stopped opening new accounts. It is worth taking a look at what’s on offer and shopping around for the best value, whilst also bearing in mind the ratings and trust value of the provider or exchange you opt for, as you’ll be paying your money directly to them and need to be confident the transaction will be processed securely, safely and as intended.
Question Four: How much do you want to invest?
It can be tempting to want to ride the current wave of cryptomania and invest large sums into cryptocurrencies, but is this the best move? Whilst you are getting to grips with this new type of investment, it could be wise to begin with a smaller investment and make a commitment to top it up by a fixed amount on a regular basis. By incrementally adding to your initial investment, you can benefit from greater experience as your investment journey progresses, whilst also reaching your desired investment level at a pace which is steady, manageable and progressive.
Question Five: Do you still need help?
Despite following all of these steps, you may still feel unsure about making the final step and investing in cryptocurrency. If you have friends or peers who have successfully invested, it may be worth speaking to them for some advice or tips, or you might want to follow the activities of an already successful investor or organisation who have published their strategies and tips for others to mirror. Alternatively, you can also opt for a managed cryptocurrency account like The 10x Growth Account, which is an investment fund managed by cryptocurrency professionals. Rather than investing in one specific currency, The 10x Growth Account invests in a portfolio of cryptocurrencies over a fixed period of 12 months, providing you with regular reports on progress. If you have a minimum of £1,000 to spend and feel more at ease with your cryptoinvestment being managed by an experienced third party, this could prove a great way to get started on your crypto journey, without all the stress of learning the ropes yourself.
Before making any investment decisions, you should alway seek independent financial advice and ensure you can only invest what you can afford, as returns are never guaranteed.