How Much Crypto Should Be in Your Investment Portfolio?

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It is a very popular saying that people should not eat with their ten fingers. As funny as this may sound, it applies to every aspect of our lives, including investment. This truth makes a little sense literally, but it means a lot figuratively. It is used to admonish people about the importance of saving for rainy days.

From an economic standpoint, Rainy days refer to potential emergencies and other unbudgeted expenses that could come in the future. Savings, on the other hand, refers to an investment portfolio. This portfolio contains all of a person’s assets, including stocks, cash, cryptocurrency, and any other investment channel you may consider.

There are different securities in an investment portfolio; ETFs, Mutual Funds, Bonds, and cryptocurrencies. You might need a crypto financial advisor like Paybis to help you section your investments and suggest securities to invest in. Many financial advisors now suggest that people put a small percentage of their portfolio in the cryptocurrency market.

Why Should You Have a Diversified Portfolio?

Investment portfolios are different from savings portfolios; they are created to accumulate profit over a period. Having an investment portfolio means that you are well aware of the possibility of losing your investment. Losing an investment is painful, but it will be tragic if that investment makes up the whole of your portfolio.

To offset the loss from an investment, it is very critical for you to have other investment channels. These investments will help to keep you at or above breakeven. This is why you need to make sure that all your investment eggs are not kept in one basket. When you diversify your investment, the profit from one channel can make up for the loss in another.

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An ideal investment portfolio should have three different kinds of investments;

  • High-risk investments like Bitcoin and other cryptocurrencies.

  • Medium risk investments like Stocks, ETFs, and bonds.

  • Low risk investments like Interest on Savings

Cryptocurrency Investment – An Overview of Its Risk

The cryptocurrency market is a high-risk investment option, and this is because of how volatile it can be. Today, Bitcoin prices can go up, and by the next day, it is crashing. So, before you use all your money to buy Bitcoin, you need to consider other options. Reflect on the effect of your action on your portfolio if the Bitcoin price plummets.

The cryptocurrency market is a very volatile one. It can multiply or burn your investment in a very short time. Despite the impulsiveness of this market, a lot of people still invest in cryptocurrency.

People who invest in cryptocurrency are exposed to a lot of risks. Hackers have been able to find their way into the crypto firewalls and duped cryptocurrency holders. Another risk associated with having cryptocurrency investments is losing the key to your blockchain wallet. If you lose this key, it is impossible to gain access to your wallet no matter how much you have in it.

The competition in the cryptocurrency market is very tough as there are over 13,000 cryptocurrencies in circulation. A large percentage of cryptocurrencies are specially designed to take your money. Only a small chunk of this number will succeed; hence, there is no guarantee that your investment will flourish.

Government regulations and the state-of-the-art technology used in the cryptocurrency market can also affect your investment portfolio. There are a lot of risks associated with cryptocurrency, and the success of any of these digital currencies is unpredictable.

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What Percentage of Your Investment Portfolio Should Be Taken by Crypto?

Before you buy Bitcoin with all or most of your investment, remember that it is a high-risk investment. If the Bitcoin price goes bearish, you might be staring at a fatal financial crisis.

Based on advice from several professional financial advisors, crypto investment should not be more than 10% of your investment portfolio.

A digital currency like Bitcoin is one of the most common options for investing in cryptocurrency. Many investors speculate. Bitcoin price will gain value in the long-term because of its fixed supply. However, the risk is high, and people who buy Bitcoin strongly believe that it will become the first global currency in the world.

There are other digital currencies like Ethereum that also have the potential to grow in the long term. Before investing in any digital currency, you must do your research to know if the currency will appreciate in the future. You should also ensure you are putting in money you are not scared to lose.

Most importantly, avoid emotional investment. If you must invest in cryptocurrencies, doing so from a calculated standpoint is important. Use the internet to your advantage and learn some of the best trading strategies from experts.

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