Life doesn't always turn out the way we want it to. Do you know what else doesn't always turn out the way we want it to? Money. Money is quite interesting. Sometimes I feel like money should be a subject that needs to be studied. A clear understanding of how it functions can help some of us avoid some mistakes.
I am not a financial analyst but experience they say is the best teacher and experience has schooled me the hard way on how to avoid certain mistakes with money especially when it comes to cryptocurrency. Last year, 2021 witnessed a bull run and a good number of people made huge gains. Sadly, a good number of us also lost a lot of money, partly due to our carelessness and greed.
I've been writing on crypto blogging platforms for five years now but the year 2021 was my first time dabbling into investments. I learnt some financial lessons the hard way. These lessons are definitely not new to those who have been into crypto investment for years but may just come in handy for the newbies who are still trying to learn the ropes.
Here are some of the lessons I learnt.
You need money to make more money- It's all about risk.
Last year changed the lives of so many. These are people who are willing to invest and take risks. Cryptoverse is a place where you need money to make more money. You don't invest, you end up with an empty wallet. Investing in crypto is very calculative. It's important to know the right time to go in and just how much to go in with. Cryptocurrency works with the principle of the more you give, the more you earn. If you desire to make it, it's important you discover the gems and invest early enough so you'll be among the early reapers.
Do not invest because others are investing
As a rookie, I wanted to know other people's portfolios so I'll know what to invest in. I mean if they are making profit, I can as well dabble into it. What I didn't know was how early they aped into the project. That they have it doesn't mean they just bought it. Aping in at that time might make me the scapegoat as I'll end up buying the top. Do your own research. Find out about the project. How long have they been in existence? Check out their social media handles for activities. Read about the project. Study their road map. Is it worth investing your money? Are you buying the news instead of the rumour?
Invest only what you can afford to lose
This is a crypto slogan. The crazy thing about this statement is we know it but a lot of us do not practice it. The fact that cryptocurrency is all about risk and the more risk one takes, the more the reward is very tempting. This is why in addition to the above statement, we are reminded to invest only with spare cash. Cryptocurrency is very volatile and unpredictable. Just as higher risk yields higher reward, higher risk also yields higher loss. It can go either way when you least expect it and if it goes South, you don't want to end up homeless and hungry. Better safe than sorry.
Keep tabs on your assets
I made a terrible mistake of investing but not staying on top of my investment. In my crypto group, we have a way of saying someone didn't keep tabs on their asset to know the latest about it. We simply say the person "slept on it". This is what I literally did. I wasn't checking my portfolio. Why should I? The people I bought the same assets with would always bring information about these assets. It doesn't happen that way. No one is under any obligation to feed you information on your assets. It's your sole responsibility. Someone once said, "Check your wallet at least ten times a day". This is the best way to keep up with the market. It helps you to know when to hodl, take profit and when to close the deal and move on. Don't ever let it be too late.
Manage your greed.
It's exciting to see your wallets performing wonders. Such a great feeling watching your portfolio double then triple etc. Yes! I was once there but then I didn't manage my greed and I lost a larger part of it to the dip. Like my brother says,
"The money was never yours, the market gave it to you and the market took it away". This is a simple fact.
Dip gives no sign when it's about to happen.
Maybe the professionals have a way of figuring it out but for us that are still finding our feet, the ability to manage your greed is knowing when to take profit. The market will not always be green. Convert some profit to stable coins and wait for when the market turns red. This way you will have funds to DCA( Dollar Cost Averaging) and also buy back when it turns green again.
Don't forget the reason you started investing in crypto.
A good number of us started this journey to earn some money to take care of our basic needs and wants. Unfortunately, when the money starts coming, we forget to take out just what we need to solve our pressing problems. We want it to be more before we can take out something. Nobody solves all their problems at once. The money will never be enough and problems will never finish. Why not take it one at a time? Don't let greed take the better part of you because the dip cometh and the whole profit will vanish. It's a job, pay yourself a salary. It could be weekly or monthly. Use it to sort out real life issues. During the dip, when you look at what you've achieved with this money, it gives you motivation to keep on.
Like I said at the beginning of the post, I'm not a financial analyst but experience has never failed to be the best teacher. I am still learning and will appreciate some other great tips in the comment section.