How To Invest In Cryptocurrency: Easy Ways To Buy Crypto
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If youre looking for an investment that has the potential of producing strong returns, you may want to consider cryptocurrency. Bitcoin, Ethereum, and other popular cryptocurrencies have generated incredible returns over the past few years. With blockchain technology being used in more ways, many experts believe the adoption of crypto will continue to increase.
Investing in digital currency doesnt come without risk. Prices are extremely volatile and can swing 10%+ in a single day. However, many investors are bullish on the long-term value of Bitcoin and other crypto tokens, so it could be a good investment depending on your risk tolerance.
In this article, well look at how to invest in cryptocurrency for beginners. Well present several specific and easy options to buy cryptocurrency .
This article should not be taken as investing advice. Youll need to do your own research and decide if crypto is right for you based on the inherent risks. Dont invest any money that you cant afford to lose.
I’d Slowly Branch Out
But what if you do have the time and interest to become a savvier investor, and you want to aim for market-beating results? Then, once you’ve read and learned enough to be comfortable with what you’re doing, you might add some carefully chosen individual stocks to your mix. You don’t need to completely sell out of your index fund holdings: You might just sell a portion, or you might leave your holdings intact and wait until you have a little more money on hand to invest in your first individual stock.
A great place to start is with dividend-paying stocks, because they offer a one-two-three punch. First, just as with non-dividend-paying stocks, if the company is healthy and growing, you can expect stock-price appreciation over time. You also receive regular income from the company — and it will arrive no matter whether the overall market is swooning or surging. And best of all, healthy and growing companies will also tend to increase their payouts over time.
Those are three good steps to take if you’re looking to start investing — and there’s a good chance you only need the first two. If you’re not saving and investing for your future, you’ll thank yourself later if you start doing so soon.
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Invest In Your 401 And Get The Matching Dollars
If you have a 401, your company offers to match your contributions and youre not taking it up on that offer, this decision is a no-brainer: Go after that match. Many companies match half or all of your contributions, up to 3% to 6% of your salary. Its the highest guaranteed return in investing.
You typically cant deposit a lump sum like $5,000 into your 401, but you may find that having that money in the bank gives you room in your budget to start grabbing those matching dollars. Those 401 contributions will make your paycheck smaller, but you can repay yourself from that $5,000, either after each paycheck or whenever money runs short for the month.
» Are you on track for retirement? Find out with our 401 calculator.
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Why Are Regulators Concerned
The FCA has also warned investors to be wary about companies that promise high returns from cryptocurrency. The nature of investment means that there is never a guarantee of making money.
From January 6 this year the FCA banned the sale of complex derivatives that speculate on cryptocurrency movements.
This means that financial services cant offer retail customers contracts for difference, spreadbet options, futures and exchange traded notes that focus on digital currencies.
Maintain A Healthy Crypto Portfolio
Keeping a healthy portfolio means creating your core investment, and making sure you diversify by adding in a number of satellite investments. This helps to even out your returns as the winning picks offset any losing picks.
This is true of diversifying your entire portfolio by including cryptocurrencies and its true of the crypto portion too. By adding a number of different cryptocurrencies youre diversifying your risks and spreading your exposure to a broader mix of assets.
While this type of diversification means youll almost surely have some losers in your portfolio its far better to lose a few while winning some rather than losing it all because you kept all your crypto investment in one coin. You might not get the eye watering returns of a single rocketing coin, but you also wont risk losing everything if the coin you pick crashes and burns.
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Everything You Need To Grow Your Money
This article is provided for informational purposes only. It does not cover every aspect of the topic it addresses. The content is not intended to be investment advice, tax, legal or any other kind of professional advice. Before taking any action based on this information you should consult a professional. This will ensure that your individual circumstances have been considered properly and that action is taken on the latest available information. We do not endorse any third parties referenced within the article. When you invest, your money is at risk and it is possible that you may lose some or all of your investment. Past performance is not a guarantee of future results. Historical returns, hypothetical returns, expected returns and images included in this content are for illustrative purposes only.
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Invest With Betterment Through Robots
The risk level of investing your $5,000 in the US varies. Thus, if you plan to venture into the stock and forex exchange market, Betterment can offer a better choice. Once you have created your Betterment account, you will deposit your first investment, draw your financial objectives, and capitalize on your risk acceptance.
In this case, the website utilizes technology to trade your investment without necessarily spending hours comparing various options or companies. Other than researching on your own, this type of investment allows you to utilize a short and precise questionnaire to establish what you think could be a possible risk level within the market worth taking.
The good thing with Betterment is that it helps to rebalance your portfolio as required. If your risk tolerance changes, you can easily log into your Betterment account and make adjustments to your preferences.
The first step requires you to open a Betterment account by filling in your details, including your home address, email, phone number, banking details, and social security number.
Betterment allows you to deposit funds into your account electronically. Once you have done that, Betterment will take charge of growing your wealth depending on the goals and timeline of your investment.
Since you need to pay some fees on your investment, you can easily opt for commission-free investment platforms.
Maximize Your 401 Contributions
If your employer offers a 401 retirement plan, you should use this tax-advantaged retirement account right away. The reason is that a 401 is an excellent tool if you want to invest in the golden years of your life.
Although $5,000 doesnt seem like much if you think about retirement and how much money you will need to live comfortably, this sum can make for a perfect foundation to base your future contributions on.
The way a 401 works is that every dollar you contribute to your retirement plan until the annual limit of the IRS will be deducted from your income when filing your taxes. This will reduce your overall tax bill.
Although your employer will decide on the plan provider, you can choose the investment vehicle, how much risk you want to take, and how much you want to contribute. Besides, some employers offer to match your contributions by 50% or even 100%. This matching can significantly increase your contributions. So if you havent maxed out your 401 contributions, now is the best time to do so.
Never Invest What You Cant Lose
When you first start investing it can be very exciting, and even addictive for some. This can be especially true if your first purchases occur during a bull run, when everything is heading massively higher. You might think things will be like that always, and that can lead to over committing yourself and your capital.
Experienced investors know that there is always an element of risk in any investment. While some do have lower risks, the cryptocurrency class has some of the highest risks youll find. That means cryptocurrency investing should be approached carefully. Start with small amounts and grow your account slowly. And most importantly dont use money you need for rent, food, or other necessities.
For some reason there are those who feel like they need to purchase 1 BTC or 1 ETH. This simply isnt true. You can get started with cryptocurrency investing using as little as $10. Brokers and exchanges will let you purchase just 1 satoshi, which is the smallest fraction of Bitcoin and is equal to just one hundred millionth of a single bitcoin .
Start small and slowly build up your crypto portfolio over time is the prudent course.
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Where To Stake Crypto
There are a number of ways and methods to stake cryptocurrencies. Some require you to hold them in a specific wallet, while others have minimum staking requirements that make it more feasible for most users to delegate their tokens to an actual node operator. And many are now supported by the various centralized cryptocurrency exchanges, with yield being paid out simply by holding the tokens in an exchange wallet.
In addition there are new services that have been created specifically to allow users to deposit and stake. These services specialize in staking rather than exchanging or brokering. They include Staked and Stake Capital.
Its worth noting that youre going to find different terms, requirements, fees, and rules at the different staking platforms. Its worth your time to examine these at the various places where staking is support in order to be sure youre getting the best deal, and that your goals align with the offerings of the service.
How To Invest In Cryptocurrency: Final Thoughts
Cryptocurrency is an intriguing asset class that more and more investors are turning to. With the growing popularity of blockchain technology and NFTs, digital currency is something you may want to consider. If youre wondering how to invest in cryptocurrency, thankfully, there are multiple solutions There are a growing number of ways to invest in crypto, either directly or indirectly.
Weve covered what we think are some of the top options to buy cryptocurrency, but be sure to do your own research. Crypto is highly volatile and while theres a significant upside, its possible that youll lose a lot of money with these speculative investments. Be sure youre comfortable with the risks before making financial decisions like purchasing crypto.
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The Best Ways To Invest $5000
Jeff Rose, CFP® | August 20, 2021
If you wouldve asked me about the best ways to invest $5,000 a decade ago, I probably wouldve told you to invest into a high-yield savings account, to park your money in index funds, or to open an account with a peer-to-peer lending platform like LendingClub.
But now that were well into 2021, the investing world is considerably more diverse than it used to be. In fact, there are cryptocurrencies, robo-advisors, and all kinds of platforms that didnt even exist 10 or 20 years ago.
The sheer number of investing platforms and apps today can make it harder to figure out what to do. That could be why, according to a study from Magnify Money, 60% of Americans feel anxiety when they think about investing in the stock market.
The way you invest should depend largely on your goals. Are you investing for retirement? Or, are you investing money youll need five years from now?
The bottom line: Your timeline should play a huge role in the way you invest your money, and so should your tolerance for risk.
Teen Bitcoin Millionaire Erik Finman
An investment of $1,000 would be $180,000 today, $5,000 would be $900,000, and $10,000 would have been $1.8 million. In six years, Bitcoin would have easily made almost anyone a millionaire, and Bitcoin is not the only digital asset.
During the same period, Ethereum would have yielded a x1,480 ROI and Litecoin would have yielded a x71 ROI. The same holds for many other digital assets. The key to making a 1000x ROI, or more, in crypto, is holding the asset for longer than usual.
If you miss out on early investment, the next best thing is buying and hodling. For this to be the case, the crypto you decide to put your money behind must be future-proof, not a pump and dump scheme, more on that later.
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How Does Bitcoin Work
Bitcoin is built on a distributed digital record called a blockchain. As the name implies, blockchain is a linked body of data, made up of units called blocks that contain information about each and every transaction, including date and time, total value, buyer and seller, and a unique identifying code for each exchange. Entries are strung together in chronological order, creating a digital chain of blocks.
Once a block is added to the blockchain, it becomes accessible to anyone who wishes to view it, acting as a public ledger of cryptocurrency transactions, says Stacey Harris, consultant for Pelicoin, a network of cryptocurrency ATMs.
Blockchain is decentralized, which means its not controlled by any one organization. Its like a Google Doc that anyone can work on, says Buchi Okoro, CEO and co-founder of African cryptocurrency exchange Quidax. Nobody owns it, but anyone who has a link can contribute to it. And as different people update it, your copy also gets updated.
While the idea that anyone can edit the blockchain might sound risky, its actually what makes Bitcoin trustworthy and secure. In order for a transaction block to be added to the Bitcoin blockchain, it must be verified by the majority of all Bitcoin holders, and the unique codes used to recognize users wallets and transactions must conform to the right encryption pattern.
Hot Wallets Vs Cold Wallets
Lets understand the basic distinction between the two with a real-world example. Hot storage is like the wallets that you carry around in your pocket. The Cold storage is basically somewhat akin to your savings bank account. Keep this distinction in mind as we move forward. Basically, if you want to use your digital currency frequently then you must use hot storage. On the other hand, if you want to store your money for a long time then you must use cold storage.
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How I Passively Grow My Crypto Investment
Having a healthy lump of money in crypto is the first step. The next step is to grow your crypto assets.
If youve read this far, you know Im not a huge fan of trading. Day trading is a bad option for most people because of likelihood of human error plus the anxiety of watching those candles rise and fall.
Thats why I grow my portfolio passively using a cryptocurrency trading bot, the renowned Notorious Bot. Having a bot that trades for me, without emotion, using an advanced algorithm, allows me to grow my portfolio in the background without it cutting into my time or stressing me out.
You can grow your portfolio the same at ProCryptoBots.com.
How To Invest In Bitcoin And Make Money
Like any investment, making money depends on what price you buy and sell an asset for. If you sell when its price is higher than you bought it for, you will make money.
If you sell for a lower price than you bought it for, you will lose money.
- If you had invested in bitcoin at the start of 2020 and sold on 31 December 2020, you would have made a 300% profit
- If you had invested in bitcoin at the start of 2018 and sold on 31 December 2018, you would have made a 73% loss
Bitcoin is extremely volatile so the trick is not to panic and crystallise your losses by selling when its value inevitably falls. This is the same with all investments.
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