How much money should I invest in Bitcoin?
How Much Money Should I Invest in Bitcoin?
Most Bitcoin investors are first time investors. They haven’t dabbled with traditional investing and they see cryptocurrency as being something highly profitable and relatively easy to get into. If Bitcoin (or Litecoin, or Ethereum) is about to be your first investment, you need to lay down some ground rules. The most important rule is how much you’re going to invest. In order to calculate the perfect number, there are a few things you need to take into account.
Make a Detailed Budget
Let’s say you just came into $25,000. It’s amazing, it’s wonderful, and you want to use that money to make more money. Don’t assume that just having it makes it safe to invest. Consider your household budget. Do you have a few bills your behind on or debts you need to pay? How much of that money do you need to use right away? Don’t be surprised if you wind up with less free cash than you think you do. At the end of the day, investing $500 you can actually afford to spare is better than investing $5,000 you need and can’t get back.
Don’t Forget Savings and Other Financial Goals
The money you invest shouldn’t detract from things you absolutely need. Be sure to throw some money into your savings or retirement account. If you know your car is going to give out on you any day now, investing a large amount of money into Bitcoin might have to wait. Factor in costs you know are coming up soon in order to give yourself an adequate safety net.
Watch the Market Closely and Make Your Move
Buying a whole Bitcoin is expensive, even when prices seem a lot lower than normal. Many people make the mistake of believing that they need to invest in an entire Bitcoin, which amounts to thousands upon thousands of dollars. Bitcoin can be purchased in pieces, and it’s best to purchase a piece of Bitcoin you can afford at a time when the prices seem to be going down. History shows they’ll go back up again.
If you want to increase your investment without spending any more of your own money, it’s easy to do. Buy $500 worth of Bitcoin, wait for it to double (or triple), sell, and reinvest a portion. This is what the majority of Bitcoin investors do, and it’s the reason why the market is perceived as so volatile. You’ll get a little bit of profit and a little more to invest with without technically losing a thing.
