[ad_1]
Written by Ashish singhal
With growing awareness around the digital asset, retail interest in the new cryptocurrency asset class is at an all-time high. For the uninitiated, demand for cryptocurrencies is high across the globe, predominantly among retail investors, and now Indian retail investors are also joining the bandwagon.
Furthermore, due to Covid it has caused turmoil in traditional markets, which may be another reason for Indians’ growing appetite for cryptocurrency investments. But investing in an entirely new asset class can be a tricky business, so you need to do extensive research before diving in.
Here are some tips that a first-time retail investor should keep in mind while investing in cryptocurrencies:
Choose from the winners
Although past performance is not an indicator of the future, one can start with cryptocurrencies such as Bitcoin, Ethereum, Ripple, etc. Which have been popular and have generated high returns for investors in the past.
Hence, fully understanding the best players in the market is in your own best interest.
Diversify but don’t over-commit
Diversification is the holy grail of any investment and also applies to cryptocurrency investments. Therefore, creating a diversified portfolio with different types of cryptocurrencies is something that investors should keep in mind.
Also, you should never invest more than you can afford to lose in any one business. Over-engaging in a cryptocurrency or asset class, in general, is something to avoid in order to cut the associated downside risks.
Research is the key
There are thousands of cryptocurrencies available in the cryptocurrency market and not all are created equal. Therefore, doing thorough research on the cryptocurrency you intend to buy just like you do for companies before buying stocks / bonds is a good practice to follow in the process.
And during the research it is necessary to take a good look at the background of the founders and developers, what problem they are trying to solve, how many coins or tokens are pre-mined and what is the circulating supply with the coin inflation program.
Keep your cryptocurrencies safe
Cryptocurrencies are intangible digital assets that must be stored in secure wallets. Also, as these are digital assets, all the best practices of the online world must be followed. That’s why choosing the cryptocurrency trading app wisely is another thing that needs to be seriously thought about, and security along with ease of use should be high priority selection criteria.
Have an entry and exit plan
Benjamin Franklin says, “If you can’t plan, you’re planning to fail!”
The same rule also applies to cryptocurrency investments because many investors who invest don’t have an entry or exit plan, which can be detrimental to their financial planning.
Decide the plan first, how much will you enter and exit a particular cryptocurrency? What are your expected returns? Are you too busy? Etc. And then start your investment business in it.
Ashish Singhal is CEO and co-founder, CoinSwitch Kuber
