This post Investing in Cryptocurrency for Beginner highlights six important considerations before starting your crypto journey.
I wrote this piece based on my own experience of investing in cryptocurrency since 2017.
If you are planning to start investing in cryptocurrency, I trust you’ll learn practical and useful tips for your own cryptocurrency journey.
Table of Contents
[Disclaimer: I am not a certified financial planner. My sharing is purely based on my own research and personal experience. To make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a certified financial planner if necessary]
Six important considerations before investing in cryptocurrency
As shared earlier, I started my first crypto journey when I had my first Bitcoin trade in 2017. Since then, I had completed at least 30 trades from two different crypto platforms.
I learned valuable lessons about investing in the unique asset class throughout the past few years of buying, owning, and selling my cryptocurrency.
As such, here is the list of important things to consider if you are investing in cryptocurrency as a beginner:
1. Your crypto knowledge
The first thing I deemed important before you start investing in cryptocurrency as a beginner is how well your crypto knowledge is.
Why is crypto knowledge important? Can you imagine putting your money somewhere you yourself are unsure of and hoping it’ll grow? In most cases, very unlikely your money will grow.
Instead, you’ll risk losing your money.
Personally, I only invest in investments I am familiar with. And this also applies to cryptocurrency investment.
As new things emerge now and then, you don’t have to know everything about cryptocurrency. But make sure you know the basics of cryptocurrency, such as:
- what is cryptocurrency?
- who created the first cryptocurrency, Bitcoin?
- what are the major cryptocurrencies?
- why does cryptocurrency exist?
- what kind of solutions can cryptocurrency solve?
- what are the different ways to own cryptocurrency?
- how to keep your cryptocurrency safe?
And below are some great websites that have helped me to better understand the concept of cryptocurrency:
- Cryptocurrency by Wikipedia
- Cryptocurrency Definition by Investopedia
- Bitcoin.org (highly recommended to understand Bitcoin in detail)
- Ethereum.org (a great place to learn about the Ethereum community)
While learning about cryptocurrencies and performing your crypto research, you can start short-listing and decide which cryptocurrencies you think are worth investing in.
Based on my experience, gaining more crypto knowledge does improve my confidence along my crypto journey. Subsequently, this helps me make better crypto investment decisions.
2. Your cryptocurrency investment amount
The next important consideration is how much you want to invest in cryptocurrency.
I know you want to earn good and fast money. Who doesn’t want, right? But, cryptocurrency is such a unique asset class that is highly volatile and risky.
Its price can swing up and down in a matter of minutes. And sometimes, the swings can be very drastic.
Based on the Bitcoin price chart above, you can see:
- Bitcoin price dropped from RM164,590 to RM124,582 within 3 weeks
- Bitcoin price soared from RM124,852 to RM232,932 within 3 weeks
To be on the safe side, don’t just look at the increased part but also consider the price dropped as well. Instead of telling yourself, hey! I can make RM5,000 in days, warn yourself, I can lose RM5,000 in hours.
If you’ve read genuine write-ups about investing in cryptocurrency for beginners, I believe you’ve heard the phrase, only invest the amount you are willing to lose.
For my crypto investment, I hold on tight to this statement. Because humans tend to get tempted, especially when the market is bullish.
The main point here, only invest the amount you are comfortable losing.
3. Amount of time to spend on your cryptocurrency investment
Investing in cryptocurrency requires some of your precious time, especially for a beginner.
For example, right now you are spending time reading this write-up to familiarise yourself with cryptocurrency. I guess you’ll continue searching and taking time to read other crypto articles before you start investing.
Although I consider myself more of a long-term crypto holder, I still spend time on my crypto investment for the tasks below:
- checking on the crypto prices at least 3 times a day (morning, afternoon, and night).
- searching, reading, and digesting crypto news especially when there’s a huge movement in crypto prices.
- casual reading to keep me updated on crypto development.
- recording and planning all my cryptocurrency transactions.
- the undisturbed moment when executing my crypto trades.
Do also take note, don’t just read the good side of cryptocurrency but also invest your time reading views from those unsupportive of cryptocurrency. You’ll be surprised by the things learned!
Thus, as a cryptocurrency investor, be ready to spend some time monitoring and updating your crypto knowledge.
4. Your holding power
Another important consideration before investing in cryptocurrency is your holding power. Holding power is the ability to hold on to your crypto investment without being forced to sell them.
Holding power is actually related to point number 2 above. If that money is the money you can afford to lose, you should have stronger holding power.
Generally, the stronger your holding power, the better your ability to hold onto your crypto investment.
For example:
- You bought 1 Bitcoin towards the end of 2017 at about RM80,000 per Bitcoin.
- About one and a half months later, the Bitcoin price dropped to about RM40,000 per Bitcoin.
If you don’t have the holding power, you’d be very worried and panic looking at the crypto price tumbling fast. Probably planning to sell your Bitcoin to cut loss.
On the other hand, if you have the holding power and you are willing to take the risk, you will have the ability to sail it through and wait for the crypto market to rebound. Which, Bitcoin did rebound towards the end of 2020 to RM116,000 per Bitcoin.
Personally, holding power enables me:
- to be less emotional with my crypto decisions
- to better control the urge to panic selling
All I can say, holding power is one of the most important factors in successful investing, including cryptocurrency. It gives you the flexibility not to force yourself to sell your crypto investment.
But, it’s also worth taking note of, holding on to the wrong crypto might make you lose all of your investment.
5. Your cryptocurrency investment plan
Next, to have a successful cryptocurrency journey, you’ll also need the right cryptocurrency investment plan.
Some of the questions to consider include:
- Do you want to engage in short-term investing?
- Or do you prefer to buy and hold for a longer term, say, 5 years?
- What is your investment objective(s)? Is it to own 1 Bitcoin within 1 year? Or to accumulate RM50,000 from your cryptocurrency investment within 1 year?
- Do you plan to take a profit when your crypto price soar and doubles or increases tenfold?
- Do you have a specific cryptocurrency investment strategy?
Personally, I allocated around RM10,000 for my cryptocurrency investment. And I follow my simple crypto investment strategy to take a profit at the right time.
So far, I have gotten back all my initial investments with some profits as well.
With this, I can say it’s important to have a crypto investment plan and even more important to execute according to the plan.
6. How and where to buy your crypto?
Now, after you’ve equipped yourself with sufficient crypto knowledge and planning, you’ll need to consider how and where to buy your first portion of cryptocurrency.
Generally, there are several options to own cryptocurrencies. Some options are as below:
- to mine the crypto yourself
- accepting cryptocurrency as payment
- to buy cryptocurrency from crypto exchanges
Unfortunately, mining it yourself and accepting cryptocurrency as payment is not something easy for most of us. That means the most viable option for you to start investing in cryptocurrency is to buy it from crypto exchanges.
At the moment, there’re many crypto exchanges available for Malaysians to buy cryptocurrency.
As for me, my preferred crypto exchange is Luno Malaysia. I consider Luno the best crypto exchange in Malaysia.
These are the main reasons why I choose to buy and sell my crypto through Luno Malaysia:
- Luno Malaysia is approved by the Securities Commission (SC)
- Luno Malaysia has a local support team
- The Instant Buy and Instant Sell feature
Other than the above, I also find the Luno promotions attractive and generous. For example, as a new user, you are eligible for the Luno promo code that rewards you with RM75 worth of free Bitcoin.
If you haven’t signed up for Luno, register now and claim the RM75 in Bitcoin.
In case you wish to use other crypto exchanges, please make sure the crypto exchange is registered with SC unless you know what you are doing and you are willing to take the risks.
Final thoughts
With the above, I hope you find my sharing of important considerations before investing in cryptocurrency for a beginner helpful to your crypto journey.
Lastly, do take some time to read my other post on Cryptocurrency Investing Mistakes to Avoid.
Image Credits
Featured image by Miloslav Hamřík from Pixabay
All Screenshots were taken by the author
