Every time I go on a subreddit or any type of Cryptocurrency chat board this same questions come up. Some rookie who is new to all of this hears about a giant price increase or decrease and wants to know if they should invest their money. So I thought I would put together this article to answer this question for everyone. When I give people advice I usually give them three pillars for advice. Number 1; Asses your risk tolerance. Number 2; Have a plan. Number 3; RESEARCH. I am going to go through all three of my pillars in depth so this same question of “should I invest” is answered for anyone who asks.

Assess your risk tolerance

Compared to traditional stocks, Cryptocurrencies are much more volatile. This means that the prices are much more prone to moving up or down super rapidly. Certain Altcoins can go up by 50 or even 100% in one day or go down by that same amount. So the approach I take to investing is that if my principal amount fell to zero, would I be able to shrug it off or be financially devastated. This is the mistake that killed so many people during the 2008 financial crisis. People put more money than they could afford in the stock market and used almost as a checking account. When the prices fell, people realized they had money they needed to live in investments and took it all out. This whole effect made prices fall more than they needed to. So the moral of the story is to only use money you can afford to lose. Many financial experts only recommend to have about 10% at most of your wealth invested in “high risk” outlets like stocks or Cryptocurrencies.

Have a plan

Most people when they ask if they should buy Bitcoin have no actual plan. Some just hope to make a short term profit and others are in it for the long term. So you need to ask yourself; Do I think it is the right time to buy for a short term profit? Or do I think Bitcoin has the potential to rise in price in the long term? My personal plan is to slowly accumulate Bitcoin until the end of college, where I can then sell and have enough money to buy a car or an apartment. Whenever I trade Altcoins, which I do for fun, I wait until I have gotten at-least a 20% rise in price and then I sell. I am bullish on Bitcoin long-term, meaning I think the price will rise and not so much on Altcoins. Every investor needs to have a plan and there is no right or wrong plan to follow. I could be completely wrong, nobody who claims to have a 100% formula on how to get rich from anything is telling the truth.

Research

Do you know how Blockchain technology works? When an investor in steel shows up to the trading floor, he needs to be an expert on steel in order to predict future prices. Same goes for Bitcoin, just because you go on a news channel and see that the price is skyrocketing does not mean it automatically will skyrocket in the future. There is an abundance of reasons; mostly geopolitical but some analytical, to why Bitcoin is rising. In order to feel comfortable putting you hard-earned money into something you need to know how it works. Don’t get me wrong, the intricacies of the Blockchain are super complicated, and if you are not the most computer savvy person in the word it can be overwhelming. But there is a plethora of information online, where people explain how Bitcoin works in simple analogies that anyone can understand. For example, if you want to know how Bitcoin is generated, you can check out my “How Bitcoin Mining Works” article where I explain in a way that will make anyone understand. As soon as you understand certain geopolitical issues such as the scaling debate, Chinese exchanges, or the WannaCry hack, it will give you more insight onto the short term or long term price of Bitcoin. Research can only help an investor that is just starting out, and when you feel like you understand what you are investing in, it will make you much more comfortable with putting your money in. If you only saw Bitcoin as price numbers on a screen, as soon as the price went down you would panic sell as they call it. But if you knew certain information and the price went down, you would hold and hope it will rise in the future.

Overall there is no 100% for sure answer for if you should buy Bitcoin or not. There are so many factors like your financials, short/long term goals, and your knowledge that nobody can just sit there and teach you to become rich with simple steps. Sure people like myself can give you advice, but you need to be the one that analyzes all these factors and makes the decision for yourself. I hope this helped you answer you question, and for the people who see this, click on the affiliate links on the bottom of the article, or donate to keep frequent posts coming!

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