What To Know Before Investing In Cryptocurrency – Investing in cryptocurrency is tempting right now, but you should remember these three things before you do.

Investing in cryptocurrency can be as easy as a few taps on your phone, and with all the news and conversations with friends about the arrival of cryptocurrency, it’s tempting to dive in.

What To Know Before Investing In Cryptocurrency

What To Know Before Investing In Cryptocurrency

However, depending on your financial situation and appetite for investment risks, cryptocurrency may or may not be right for you.

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“I’m the biggest crypto hippie you’ll talk to in a long time,” said Tyrone Ross, CEO of Onramp Invest, a cryptocurrency platform for registered investment advisors. And yet he warns against it. “I don’t think the general public should invest in cryptocurrency.”

Think of your finances as ice cream with crypto as the cherry on top. It makes up a small portion of the total sundae, and not everyone likes it.

Before fishing the cherries out of the jar, you need to assemble the rest of your dessert. In layman’s terms, this means building a solid financial foundation and learning everything there is to know about cryptocurrency before investing real money.

Workers who lost income last year due to the pandemic had to use savings, take out loans or enter hardship programs to pay off their debts. This season is a powerful reminder of the importance of an emergency fund.

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“When you’re young, you feel like Superman or Superwoman, but when a bubble pops, you’re out of a job for nine to 12 months,” says Theresa Morrison, a financial planner in Tucson, Arizona, USA. . “Underestimate Systematic Shocks in Markets”.

Morrison recommends saving for six months of living expenses if you’re single, or about three months if you’re sharing expenses with a working spouse or partner. But stashing away even a few hundred dollars can be useful in case you’re hit with an unexpected expense. If you have high-interest debt, such as credit card debt, paying it off will strengthen your finances.

Consider your insurance coverage as well, as these policies can provide much-needed cash during tough times. Life insurance becomes even more important if you have dependents.

What To Know Before Investing In Cryptocurrency

Once you’ve set aside money for emergencies, start thinking about your short-, medium-, and long-term financial goals. Of course, saving for retirement is a big deal, so contribute to retirement accounts (especially if you have access to a matching plan with your employer). But set specific savings goals for other major life stages.

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“Most people want to travel every year, buy a house in 10 years, get married in 10 years. Those things cost money,” Morrison said.

“Write down how much that is in today’s terms and find out how much you could save from your salary every month. In my experience, it can be as little as $1,000 (€1,164) a month.”

You have money and are ready to jump on the cryptocurrency bandwagon, but you don’t know how to buy cryptocurrency. Or how it fits into your overall financial plan. Or if it’s too risky for you.

Time is up. Don’t do anything with your money that you don’t understand. Take the time to learn everything you can about cryptocurrency.

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Understanding the mechanics is important, but so is learning what kind of investor you are, as this will also affect the types of investments that are right for you.

“You have to go through a process to determine if this new asset class is right for you. What’s your plan? How old are you? What are your goals? How tech savvy are you? Do you understand the value of keeping these things? Are these things and their insurance that you don’t have something to offer?” If so, does your family know how to return them?” Ross said.

“People don’t do their due diligence before throwing money at something. I know that’s not a sexy answer, but it’s true.”


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