How to become a smart investor?
The value of cryptocurrencies is going up and down, and in the last few days we have faced some more ‘downs’. We are facing a crypto ‘Bear market’ and that usually causes a lot of people to ‘panic-sell’ — especially those who don’t know how to deal with this kind of volatility.
Sure, current cryptocurrency values are on their way down again, but already this year we have seen even bigger falls. So now the question is: How should a smart investor behave in such times? “Every smart investor should do one thing: rebalance. That means a balancing of investment classes in their portfolio. For example, let’s say we have 10 % of crypto investments in our portfolio, and now crypto has fallen to 7 %. It means that we need to buy, in order to reach 10 % again. Of course, in order to buy crypto again, we need to see where our other investments have grown. If we had, let’s say 40 % in shares and they grew to do 43 %, we would sell 3 % of the shares and buy 3 % in crypto. This is how a smart investor operates,” says wealth manager, Mitja Vezovišek. So, if you have some room in your portfolio for alternatives, such as crypto, you should buy.
What looks like quick earnings …
But, as he emphasized, this is very difficult because our emotions stop us from buying a falling investment, or an investment that has lost significant value. “Usually we do the opposite, but in the long run, it’s a mistake.”
Given the volatility of the crypto market, there is an open question — is it better to avoid it entirely, or to ‘jump in’ and earn something quickly. But, if jumping in — how to catch the right moment? “Everyone has already realized that quick earnings are not possible, not even in the cryptoworld. What looks like quick earnings and a nice opportunity, eventually end up in a headache because investments are long term and crypto investors are finally having to admit that the cryptoworld is no different,” adds Mitja Vezovišek, MoneyRebel CEO.
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