Time to market exceeds market timing
This article aims to help you cut down on the noise and see through the short-term negative hype. By sticking to the 5 Simple Investing Rules and Principles we present, you will learn how to manage these exciting times that we find ourselves in. While others may make ill-informed and hasty short-term decisions, following these rules will help you stay calm. and weighted as you navigate the world of crypto investing.
Although we have seen a recent pullback in the cryptocurrency market, the phrase that still rings true is: "It's not about timing the market, it's about spending time in the market."
This couldn't be more true for Bitcoin itself, as even the worst possible Bitcoin buy generates a minimum return of +27% per year. But this only applies if you have had it for a period of 5 years. This equates to a return of +230% over those 5 years, demonstrating the true power of long-term investing.
1) Compound interest: the eighth wonder of the world
But how can I leave my money invested for so long?
Well, that brings us to the next point...
Would you rather receive €1 a day or €0.01 that doubles every day? “Of course I would choose the dollar, it is 100 times more money! »
What most people don't understand about investing is compound interest, the eighth wonder of the world.
After 16 days, if you choose the dollar, you will be €16 richer. If you choose 1 cent, you would be €327,68 richer. How can you ask? Compound.
After just 28 days, the €0.01 would have doubled 27 times and be sitting at a whopping €1,342,177.
What does this tell us about investment?
No matter the size of your first investment, what matters is consistency. Invest regularly and let your money accumulate and grow like that original penny.
Compound interest works like magic, but it only works if you leave it for a long time.
2) Do not invest money that you cannot afford to lose
The amount of gold to invest is different for everyone depending on their situation. But one thing is constant for all investors: do not invest more than your financial situation allows.
The key to finding the right balance is through an investment strategy called cost averaging.
The key to being able to leave your money invested for long periods of time is knowing your ideal position size.
Position sizing is the process of deciding how much to invest in a specific asset. This is a crucial skill that keeps you invested for the long haul.
If you are overinverted and an unexpected accident or expense occurs, you will need to sell your investments to make those payments. Therefore, you should not invest the money you need to meet normal responsibilities. This deed of sale interrupts your compounding process and reduces the power of long-term investments.
If you are subinverted You risk not getting the full return on your investable cash, but at least you have the opportunity to increase the size of your investment by buying small amounts on a weekly or monthly basis.
3) Strategy: dollar cost averaging
I'm sure we've all been in the situation where you put your extra money into an investment and a week later that investment is down -10%. Now you're sitting there wishing you had more money to invest. This is where DCA becomes an integral part of an investor's success.
DCA is an investment strategy where you divide the total amount you want to invest over a period of time into small, frequent purchases of the desired asset. The most common DCA schedule is to purchase such assets at the beginning of each month. The goal is to reduce the impact of price movements and make the investment process a habit.
Does dollar cost averaging work for crypto too?
If you look at the chart below, we are comparing €100 invested monthly in BTC and gold. Over the 5 year period, you would have invested €100 60x, bringing your total invested capital to €6,000.
We can see this strategy not only working for Bitcoin, but significantly outperforming its yellow metal counterpart. If you had chosen DCA on Bitcoin, your wallet would be worth €67.176 (+1.019,61%) while your Gold wallet would be worth just €7.307 (+21,79%).
4) Understand the asset class
Crypto is like an early stage technology investment.
Like all early-stage tech innovations fighting for market share and adoption, volatility is part of the growth process.
With crypto, an entire parallel financial ecosystem is being built live, before your eyes. A financial ecosystem built by people, for people. An ecosystem that promotes transparency, collaboration and the free market. Sure, there will be growing pains, mistakes, and failures, but that's the price of real progress.
Now that we know what it is, we need to understand the potential problem it solves and the value it creates.
In the case of cryptocurrencies, this allows a financial system and products to become transparent, faster, and more efficient, while protecting many from inflationary practices and corruption. It allows the transfer of value from one to another without the need for intermediaries, obtaining great benefits to move our money.
For the most part, human beings hate change.
With the most innovative technological advances, humans resist first. So they disagree with the necessity. So they finally try to destroy it.
It came to the internet in the late 90s. It was a time when many thought that using email or a website was completely unnecessary because we had a working postal service and physical stores.
As we can see below, it happens again.
Over the last 13 years, various people and sources have tried to convince the world that cryptography is unnecessary. Like the Internet, cryptocurrencies and blockchain technologies will become so embedded in our lives that you cannot imagine a world without them.
But which cryptocurrency should I choose and how do I know if it will be the winner?
5) Diversification
Investing is one of the best ways to build wealth and achieve your long-term financial goals. But choosing the right investment or asset class to help you achieve your goals can be difficult. Diversification helps solve this problem by spreading your investments across a group of assets or asset classes so you don't risk everything on one asset that tries to deliver big returns.
The idea is that by exposing your portfolio to multiple cryptocurrencies, you will enjoy uncorrelated returns.
Of course, you will not get the same returns as if you were to go with the higher performing cryptocurrencies. But, on the other hand, you don't risk having all your eggs in one basket. Instead, through diversification, you spread the risk and benefit from a much less volatile ride down the road.
Not only that, we can see diversified packs actually outperform some of the major cryptocurrencies.
Although easy to understand, diversification can be difficult for some to practically introduce into their portfolio. The large amounts of assets in the investment world, especially in the crypto space, can be difficult to navigate.
Where can I find these various crypto packages?
Revix, a Cape Town-based crypto investment platform, was founded to solve this problem. In addition to making it easier and safer to buy individual cryptocurrencies, Revix's fame lies in its Crypto Bundle offerings.
In the same way that you would buy JSE Top40, Revix Bundles allow you to seamlessly invest in a pool of cryptocurrencies.
Revix currently offers 3 packages:
el Top 10 packages it is like the JSE Top40 or the S&P 500 for crypto. It offers equal weighted exposure to the top 10 cryptocurrencies that account for over 75% of the cryptocurrency market. This package has significantly outperformed Bitcoin in the last 12 months.
el Smart contract set offers equal weighted exposure to the top five smart contract-focused cryptocurrencies such as ethereum, solana, and polkadot. These cryptocurrencies allow developers to build apps on top of their blockchains, similar to how Apple builds apps on top of its iOS operating system.
el payment package offers equal weighted exposure to the top five payments-focused cryptocurrencies looking to make payments cheaper, faster and more global. These cryptocurrencies include Bitcoin, Ripple, Stellar, and Litecoin.
Reap the rewards of financial health in 2022
2022 is the year to increase your investments and improve your financial health. The Revix Financial Fitness Challenge 2022 is your way to start the year off right and build lasting healthy habits.
Keep up the momentum by completing daily challenges. They will give you bonus Revix points that can be exchanged for Bitcoins. This challenge is a marathon, not a sprint.
Get started now and see how good it feels to be financially fit.
Promotion valid from January 14 to February 25, 2022, T&Cs apply.
About Revix
Revix brings simplicity, trust, and excellent customer service to investment. Its easy-to-use online platform allows anyone to securely hold the world's best investments with just a few clicks.
Revix guides new clients through the registration process to their first deposit and first investment. Once set up, most customers manage their own portfolio, but can access support from the Revix team at any time.
For more information please visit www.revix.es
This article is intended for informational purposes only. The opinions expressed are not and should not be construed as investment advice or recommendations. This article is not an offer, nor is it the solicitation of an offer, to buy or sell any of the assets or securities mentioned in this document. You should not invest more than you can afford to lose and, before investing, consider your level of experience, your investment objectives and seek independent financial advice if necessary.
Presented by Revix.