Two of the most common questions you get from people from the crypto community are: what are you investing in and what are the best investment strategies? As a rule, the best investment strategy is aimed at maximizing profits while minimizing risk.

Historically, the best assets that fit this profile were stocks, bonds, and real estate. A well balanced portfolio should have a distribution of all three. Each investment strategy should always have a long-term horizon, and investors who start investing in their 20s have an exponential advantage over those who start saving later. In addition, investing money that is not needed to cover expenses and leaving them on the market as long as possible is the main method of accumulating wealth faster than any other separate strategy. Ultimately, it’s the secret to getting rich!

Long-term and short-term investment

There is a significant difference between long-term and short-term investments. Many people, especially millennials, do not invest in stocks because they are afraid of losing money in the short term. If invested in the long run, there is very little risk in legacy markets. Shares may decline, but over any 10-year period in history they always increase by at least 7% per year, when profits and losses are averaged. With a longer-term horizon, stocks have never been a bad investment.

Outside of your assets (home, cars, collectibles, and art), you might want to hold 60% of my capital in index funds, trust funds. The remaining 20% ​​falls on individual stocks such as Amazon, Apple and other large companies. The remaining 10% is invested in physical real estate and real estate investment funds (REITS). But nowadays you should also have 10% of your capital in cryptocurrency funds.

It’s also a great idea to invest in tax shelters such as Roth and SEP IRA, so as not to pay income taxes. You should try investing in index funds with the lowest possible commission.

So where does cryptocurrency fit into the investor profile?

Usually people feel comfortable investing about 10% of their capital in cryptocurrency. An investor prone to greater risk would probably limit it to 5%. However, most people investing in cryptocurrencies are millennials. For a younger investor who is keen on crypto space, an increase of 25% may be justified. Obviously, no one should be all-in in an asset or asset class.

So how to actively invest in markets to maximize your potential income?

As Albert Einstein once said: “Compound interest is the eighth wonder of the world. He who understands it earns it… he who doesn’t… pays it.”

As defined by Investopedia: “the process in which an asset’s earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. This growth, calculated using exponential functions, occurs because the investment will generate earnings from both its initial principal and the accumulated earnings from preceding periods. Compounding, therefore, differs from linear growth, where only the principal earns interest each period.”

Increasing profits is the key to wealth accumulation. There are three key rules to maximize the benefits of addition:

- Reinvest dividends or interest in an asset.

- Add more to your investment when possible.

- Invest for a long period, the younger you start, the more powerful the result will be.