As with any new investment, it’s important to do your research, and understand all of the risks. For every cryptocurrency that you invest in, be sure to do some research and learn as much as possible about how to invest in cryptocurrency. If you do this step, you should be able to manage the investment risk as part of your overall portfolio.
When experts say you shouldn’t invest in cypto, it means you can’t meet other financial needs, like paying off debt, building an emergency fund, or maxing out other retirement accounts.
If you search Google for an answer about how much to allocate to cryptocurrencies and you’ll get a wide variety of results. One “expert” recommends that investors allocate 2% to 5% of their net worth, while another in the same article cautions no more than 1%. In another article, a financial planner says investors can allocate as much as 10% of their risky investments to cryptocurrencies, and possibly more for younger investors.
Source image: Erik Finman’s Twitter
Based on a media who managed to interview a 22-year-old Bitcoin millionaire, Erik Finman, says to invest at least 10% of your income into the top cryptocurrencies.
He stated, “Once you’ve determined the amount money you’re putting into cryptocurrency, keep it there, while still closely watching the market in case an obvious better currency comes along.
Additionally, it’s important to note that most personal finance experts suggest you live by the 50-30-20 rule, by which “50% of your income goes to towards necessities, 30% towards discretionary spending, and 20% towards saving”.
In that case, you’d consider investing some percentage of that 20% you’re saving, as opposed to the full 1%-10% of your income that other expert recommends.
