My first foray into cryptocurrency was disastrous to say the least, but it taught me a very valuable lesson: the importance of not jumping on the bandwagon without doing the necessary basic research.
It was October 2017. I was only 20 years old then and serving my NS duties. While having some lull time, I was chatting with my great and trustworthy buddy then about Bitcoin and Ethereum which was all the craze during that period of time. Hearing about the background and vast potential of cryptocurrency, I was eager to cash in on this potential money-making trend. Hence, I decided to “invest” $400 to buy 1 unit of Ether (cryptocurrency on Ethereum platform). While $400 did not seem like a huge sum of money, it was actually almost half of my monthly army allowance. However, I did not hesitate as I thought that it was sure to reap the rewards of this “investment”.
As luck would have it, the price of Ether skyrocketed to a high of $1800 at one point at the beginning of January. However, having read about the potential of Ethereum in news articles and the high prices that it could continue climbing towards, my greed got the better of me and I decided to hold on to it. However, my stubborn persistence proved to be fatal as the price plunged to $100 at the end of 2018.
1.NEVER invest in something you have no knowledge about
Just because everyone is buying a stock or a certain investment product, this does NOT mean that you should follow in their footsteps.
2. Investing in Cryptocurrency is highly speculative and risky
It should not be something for a beginner to start investing in.
3. Do the necessary research before investing
Do NOT purely rely on what analysts say because they may have their own vested interests. They may also make assumptions in their calculations which may not be revealed to you.
4. Have a target price to sell the investment product to stop losses
It is easy to let emotions get the better of you. Have a target price to sell the investment product to minimize one’s losses.
5. Have a proper strategy to invest
It is important to adhere to this strategy to reap the rewards. However, the problem may lie in finding a suitable strategy. It is advisable to read up on different investment books to understand the different strategies and approaches and decide which is the most suitable for oneself. I will talk about my own strategy in my upcoming articles. Stay tuned!