Building a Cryptocurrency Portfolio is Essential for any Cryptocoin Investor.
That’s because building a cryptocurrency portfolio gives you, as a cryptocoin investor, perspective on your asset allocations. Up until recently investment portfolios were the legerdemain of investors in the stocks and bonds markets. Yet asset allocation is equally applicable to cryptocoin investing in the sense that investors need to balance risk and reward when choosing which cryptocoins to invest in.
That’s because building a cryptocurrency portfolio gives you up to the minute perspective of where you stand as a cryptocoin investor.
Picking which cryptocoins to include in your cryptocurrency portfolio should reflect your own risk tolerance just as with stocks. If you’re a person in your 20s or early 30s you’re more capable of investing in riskier digital currencies since you could recover from even catastrophic losses because time is on your side to regroup. Investors in their late 40s into their 50s should be less risk averse as pouring money into a cryptocoin that’s on a downward or crashes entirely.
Safer investments in the stock market would mean investments in blue chip stocks or, for those more tolerant of risk, midcap stocks or funds. In the cryptocurrency world that translates to Bitcoin, Litecoin and Ethereum. While all of them are volatile by any investor’s standards they have a proven long-term track record for gains over time. Then there are cryptocoins such as Iota, Dash, Monero, Ripple and Neo among others that show a lot of promise but might not suitable for you based on your investment objectives.
Then there’s the murky world of altcoins where quick money can be made if you’re actively trading cryptocoin as opposed to adopting a buy-and-hold strategy which is my personal preference. Altcoins like Zcash and Electroneum are certainly worthy of consideration when building a cryptocurrency portfolio as long as you are mindful of the short-term and long-term perils as well as the potential gains.
Building a cryptocurrency portfolio should be balanced with the same approach of any investment portfolio factoring in the offsets of risk and reward, Relatively speaking, put the right percentages of your money into more stable cryptocoin like Bitcoin (I stress the word RELATIVELY) and more unpredictable cryptocoin like Pascal or Siacoin.
If you keep your cryptocoin portfolio to the “big three”; Bitcoin, Litecoin and Ethereum then Coinbase is the way to go for buying and selling cryptocoin and having an up-to-the-second view of your portfolio. If you take a walk off the beaten path with altcoins then you should investigate cryptocoin portfolio software to make tracking your cryptocoin investments easy,
As with any and all investment decisions do you own research and due diligence when building a cryptocurrency portfolio. And while some people are putting every extra penny they own into cryptocoin investments I advocate Mark Cuban’s official position: Only invest money you are prepared to lose. On that note a word of caution: Avoid ICOs. They are extremely unpredictable, many of them are money losers and a good number of them have proven to be out-and-out scams. That being said, most cryptocoin investors focus only on Bitcoin which does make things simpler in one sense.