This article was made with cryptocurrency in mind but is relevant for all types of investments. The term investment in this article will refer to the long-term accumulation and transfer of assets over space and time (investing).
Research what you want to invest in
It is easier to buy a product when you are informed about it. The same goes for investing. Understand what you are about to buy. Learn about the industry, its growth, the asset history; learn everything you can. Do your best to become an educated buyer. Uneducated buyers are the ones that usually take a risk at the wrong time and end up with a loss.
Determine a reason for investing
Is the asset a breaking technology, does it solve a problem, or is a world development occurring? How can this thing you want to invest in change the future, and who will it affect?
Some crypto projects solve a unique problem. Some crypto projects solve the problem created by other crypto projects. If you have a problem that a project solves, the chances are that the project will help a lot more people. That could lead you to determine whether or not a project is a good investment. If the problem solved is very unique and does not affect many, perhaps it will take a long time to be realized/adopted. This could lead one to determine a project unworthy of investment.
Determine a time frame for investment
Based on your research and reason for investing, you can determine roughly how long you want to be engaged in the investment. Do not buy into an asset without a time frame in mind, or you will get lost in emotions along the way. When you do not have a time frame in mind, you can easily be swayed by a market movement or get greedy with profits.
You do not need to stick strictly to the time frame you have given yourself. In trading, time frames are everything. With long-term investing and wealth accumulation, you have some wiggle room. The time frame should be used as a guide. New time frames can be developed after additional assessments once new information is presented.
If you invested in something that performed well but retraced heavily for some reason, you could decide that you want to leave the investment with what profits you have left. Or you may determine that your reasons for investing were solid and accumulate more at a discounted price. Do you see how two minds can see the same scenario differently?
Determine what your investment strategy will be
When it comes to investing you must have a strategy or you will get torn apart. Will you buy no matter what the price is every time you get paid? Will you buy every time there is a 10% deviation? Will you leverage an entry during a market slam or will you cut out and seek another position? Will you milk profits from one investment to begin or grow investments in other projects? If so, on what basis? After every 10% gain? After every eight months?
Sooner or later, your investments will turn into a portfolio that you must manage. How much of an asset do you want? How will you structure and maintain your portfolio? Would you like to get 50% BTC and 50% ETH? And how will you keep the balance of this portfolio? Will you grow it proportionally? Will you buy BTC one week and ETH the next week?
Investing is scary for the newcomer hoping to change their life. Countless investors have arrived eager and left defeated. Perhaps, one of the biggest problems for new investors is the lack of strategy implementation. If you have a game plan and stick to it, you will be able to stomach volatility and make conscious decisions.
Things to avoid when investing for the long term
FOMO: Fear of missing out. FOMO is that sensation you get when the market is booming, and people around you are making profits, but you aren’t. When you get this feeling, it may prompt you to make an investment you haven’t thought through.
Don’t invest substantially in “the hottest new token” or “the latest crypto trend”. “Seasonal” investments that can prove profitable over a short period. Using Doge and Shiba Inu as examples, these tokens defied great odds and gave phenomenal returns to investors over a short time frame. Many got in at the right time, many got in at the wrong time. Some investors had little to no reason for investing in these assets other than “my friend did and made some money.”
Don’t invest more than you can afford to lose. We say this all the time – but does anyone listen? If you are investing with money you shouldn’t, you will have uneasiness in your mind and it will affect your ability to reason . If you start thinking you must make “x” amount in “y” time for “z” reason, then you will get thrown off. The same happens when you have made an investment, and it is losing, so you may think you have to take a rash action to “get the money you need in time for (rent, car payment, loan, etc.).” Don’t play with money you can’t afford to lose and you will not burden yourself with the feelings that accompany the many situations you could face.
Doge and Shiba Inu may have another rally and shock us once more. The key to investing successfully (even with shitcoins) is research, reason, timing, and strategy. Any investment can flop. If you choose investments without a good reason, you increase your chances of picking floppers. There is a lot that goes into strategic investing, and there is a reason the top 100 wealthiest people all manage investments. Start your investing journey at Crypto University.
By viewing any material or using the information within this publication you understand that this is general education material. You cannot hold any person or entity responsible for loss or damages resulting from the content or general advice provided here. Trading cryptocurrency has potential rewards, but also potential risks. You must be aware of the risks and be willing to accept them in order to invest in the markets. Only trade with funds you can afford to lose. This publication is neither a solicitation nor an offer to buy/sell cryptocurrency or other financial assets. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in any material on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.
Written by Edward Gonzales © Crypto University 2022