Start Small
Any new technology can seem intimidating. While many don’t make it, there are several that change the way we do everything.
Think about the internet and how it changed the way we do life with smartphones, social media, streaming, and the way we shop and work from home. How many wish they would have invested in some of those technologies early on?
Cryptocurrencies are still very new and may seem very intimidating, especially with the volatility and learning of a new complex technology.
Start Small
I know a lot of people say that if you can’t explain to a first grader why you’re investing in something, then you shouldn’t buy it, but I don’t necessarily always agree with that. Yes, I feel you should understand your investments, but sometimes I think it could be beneficial to purchase a small amount of something you are interested in. That doesn’t mean to just buy anything frivolously, but if you are truly interested in an investment, then I think you could go ahead and purchase a small amount as it could help you avoid analysis paralysis, help you make more informed decisions as you now have skin in the game, and gain practical hands-on experience. This will help deepen your understanding of the investment.
Remember: NEVER invest more than you can tolerate to lose. Your small amount should be small enough that it won’t impact you if that investment goes to zero.
Why Start Small?
Less Intimidating: Investing a small amount reduces the fear of losing a significant portion of your savings. It allows you to learn and make mistakes without severe financial consequences.
Hands-On Learning: By starting small, you can gain practical experience. You'll learn how exchanges work, how to use different wallets, and how to move assets between them.
Understanding the Market: The crypto market is highly volatile. Starting with a small investment helps you get a feel for the market's ups and downs without risking too much. It can help you decide if this is for you.
How to Start Small
Set a Budget: Decide on a small amount of money that you can afford to lose. This could be as little as a few dollars. The key is to start with an amount that won’t impact your financial stability. (Note: Be sure to have a solid emergency fund and a well-diversified portfolio before investing in anything this volatile. If you want to understand how to make a plan for your money, check out the Make A Plan page.)
Choose a Reliable Exchange: Research and select a reputable crypto exchange. Look for ones with strong security measures and reasonable fees.
Learn About Wallets: Understand the difference between hot wallets (connected to the internet) and cold wallets (offline storage). Decide which one suits your needs for storing your crypto securely, and learn how to move assets between different wallets.
Learn About the Different Cryptocurrencies: Learn about the utilities (the problem the crypto aims to solve), the tokenomics (how the coins are created and distributed), and how each crypto is being adopted. Be sure to find information that is for and against an asset, and MAKE YOUR OWN DECISION.
Diversify: Even with a small investment, consider diversifying your holdings. This means not putting all your money into one type of cryptocurrency. Spread it across a few different ones to mitigate risk.
Have An Exit Plan: This can help you manage risk, ensure you capitalize on gains before the market turns, and help with emotional control.
Stay Informed: Keep up with the latest news and trends in the crypto world. Join online communities, read articles, and watch videos to expand your knowledge.
Starting small with cryptocurrencies is a smart way to enter this exciting and rapidly evolving market. It allows you to learn, grow, and build confidence without taking on too much risk. Remember, the goal is to understand the cryptocurrency and market and how it works before making larger investments. Happy investing!
Check out this Cryptocurrency page for more information.
Let me know your thoughts about cryptocurrencies and blockchain technology, and if you think starting small with some investments could be beneficial.
