Entering the world of finance is exciting, especially for first-time investors. They enter it with zeal and enthusiasm along with a lot of eagerness to make more money (grow their finances). This zest often leads to impulsive actions for some, if not guided properly or under circumstances of less research. The rage these days is cryptocurrency. Not only is it attracting people with an excess of money to spare but it is also appealing to those who do not have extra funds to invest. That is the promise that cryptocurrency is deemed to show. Cryptocurrency has become a phenomenon and this could be due to the fact that it is so easily accessible to users all across the globe.
As people see the chances of a great amount of monetary gain, their actions might not always see reason. This could be a major factor for huge losses in money, debts, or loans that cannot be repaid. Investing is supposed to be the opposite of it. People usually follow the trends and the surges in the market, which is why maximum investors are looking to buy bitcoins before even looking into the other opportunities out there. While following the trends may not be a bad idea, it may not always lead to growth tailor-made for personal needs.
Here are 5 errors to look out for while purchasing cryptos like bitcoins:
- Thinking short term – Many individuals investing in cryptocurrencies, especially bitcoins, begin because they have seen the dramatic rise of its worth. This is why the thoughts behind these purchases would usually be short-term oriented. If the expectation is ‘easy’ or ‘fast’ money, this myth might be busted largely upon entering the markets. Crypto is a highly volatile market at the moment – it is new and several areas are still untapped. Because the market might explode or fall in minutes, it would be much better to plan and think long-term while investing in bitcoins. Most financial advisors would recommend the investors to keep investing a certain percentage of their salaries or allotted funds every month into cryptos to reap maximum benefits.
- Not researching enough – Some people are influenced by tales heard by friends or close ones regarding how they made quick money by investing in the market of cryptos. Being eager themselves, some individuals make impulse buys without getting to know the nuances of the industry they are entering into. Naturally, they would often find themselves lost in a sea of new terms, different characteristics, and a lack of proper guidance. Therefore, as hyped as it may sound, educating oneself completely about the different terminologies and aspects of the crypto world would be a great idea.
- Not using a trustworthy platform for crypto exchange – Developers have not wasted time in creating several mediums and platforms for potential investors to use for trading. However, finding the best BTC exchange platform would guarantee safety and security for any amount that would be invested. One of the best platforms in India that provides an option to deal in 100+ cryptos with about 11million users on a global scale would be CoinSwitch. The website recognizes the need to be flexible with the trading amounts and therefore, users can start investing from 100/- INR.
- Getting carried away by scams – The internet is not always genuine, many-a-times, cheats, and scamsters are looking to make money off of the novices on the platforms. Whether it is by making promises to double or triple their money using a particular ‘scheme’ if they send money to a particular wallet or offers of ‘free’ money, the manipulation tactics do not have any limit. Additional techniques like coming up with an idea of fake coins or developing malicious software wallets, there can be a threat of several dodgy schemes on the internet. This is another area wherein diligent research and homework can come into play. If one is already aware of the ethical platforms, coins, and terminology, they are less likely to fall for such scams thus protecting their money.
- Investing more than one can afford – It is very easy to get swayed by what others around are doing. There is a need to match certain standards or blind faith in the trading volumes and a market cap of cryptos like bitcoins which leads to people often feeling the need to gamble and invest more money than naturally affording. Conducting a thorough risk assessment and investing only a certain percentage of the overall money would be the best plan for most individuals, especially those with a lower tolerance for risk. Dividing their investment into a diverse portfolio would yield better results than putting it all into a certain kind of stock or crypto. This reduces a chance of a bigger loss.
Needless to say, avoiding these mistakes does not automatically guarantee the growth of the assets, however, it does reduce the risk factors associated with higher losses. Following the steps even as an expert would be advised as there are no ‘safe’ bets in the crypto market. Make the most of investing by taking into consideration things that could go wrong and preparing for obstacles.