Whether it is low interest rates for savings in the bank, or increasing concerns about their future pensions— more and more people are looking into investing in cryptocurrencies.
Especially with Bitcoin taking giant leaps towards the $10,000 mark (again), cryptocurrencies are moving towards the forefront of people’s minds, as an alternative to disappointing fiat investments
But when is the best time?
As the saying goes, “The best time to plant a tree was 20 years ago. The second best time is now.”
Most investors’ main regret is, that they didn’t start earlier. Crypto or not — the best time to start investing is always “yesterday”.
For people who think they missed the Bitcoin train and want to feel extra regretful, the internet provides a wonderful Crypto Coin Time Machine, which tells you how much your investment would be worth today, if you had invested x amount in Bitcoin or other crypto assets at some point during the past ten years.
Let’s not do regrets, though. There’s no point in beating ourselves up about things we didn’t know in the past. We always do the best with the knowledge we have at the time.
I found Bitcoin about 3 years before I put my first money in.
I spent about one year educating myself on money in general and cryptocurrencies in particular. But the two years before that, I had totally forgotten about it, because it simply wasn’t part of my world and I had no need for it.
I had a private pension plan, I was a good saver, I had a good income, and I didn’t feel I needed anything else. I didn’t have a problem that needed to be solved.
Of course that all changed when the interest rates on my savings dropped down to 0.1%, when I moved countries and my income became unstable, and when I realized that the annual costs of my pension plan were pretty much eating up my profits, and I would never ever get what I was promised by the time I’m 65. I definitely needed an alternative!
I also learned that the next financial crisis (or the real delayed impact of the one of 2008) could hit any moment, because it is extremely overdue, so I became really motivated to protect myself from it.
Investing in cryptocurrencies is the best protection strategy, in my view, because they are literally the only asset group that is NOT part of the system that will be impacted by an economic crisis. It is highly likely that they will increase in value when everything else is going down.
So really, everyone should have a little bit of “crypto” to counteract the impact on their traditional assets in the event of a crisis.
Here is when
I know it says “the second best time is now” up there, and it is, however that only applies to you once you feel ready.
Don’t let anyone persuade you before you’re ready, and don’t jump in because of a hype and because everyone else is going in. Rushing things is the perfect way to lose your money.
You decide when it’s time.
Here are few pointers to know when you’re ready:
- You have a problem that (an investment in) cryptocurrencies can solve
- You understand enough about cryptocurrencies to tell good from bad and can avoid scams
- You feel confident about the process and your ability to keep your private keys safe
- You have a strong belief that this is it
That last point is very important. Why would you invest in something you don’t believe in?
Another question closely related to “WHEN” is “HOW MUCH”.
If you don’t tick all of the above four boxes, but still want to put some money in, then use an amount that you don’t care about. Because all you really want in that case is,
- to have some skin in the game
- to belong and not feel left out
- to avoid regrets later
Be aware that this is a gamble, because you don’t understand things well enough yet (“you’re not ready yet”) and you might put your money on the wrong thing, or misplace your private keys, or make other mistakes.
Things can go wrong. Everyone has some kind of crypto war story to tell. That’s fine, as long as you’re aware that you’re gambling and only use an amount that you consider “play money”.
The less you know, the less money you should put in.
Also: buy low, sell high
This sounds like common sense, but most people do the opposite, because: psychology!
Emotions, FOMO, panic, belief… This happens especially to first time investors. They don’t invest when Bitcoin is at $3,000, because they think (believe), “Oh, it used to be almost $20,000 — that must mean it’s dead now.”They will buy when it’s over $10,000 or $15,000 again.
Experienced investors, who have a stronger belief in Bitcoin, think, “Wow, 85% discount! Let’s buy more!”
So what do you do when prices are high, but you were told, “the time is now”?
Well, one option is to monitor the market and wait a few days or weeks until prices go down again. Experience shows, however, that — because of psychology — you’re not gonna do that. If prices keep rising the next day and the next, at some point you’re gonna go in out of FOMO “before it’s too late”.
Of course once you’re in, that’s probably when the prices will drop :)
The solution is (again) to go in with a very small amount, just “to be in”.
When prices rise even higher afterwards, you’ll be happy because your investment grows. If they fall, you’ll be happy too, because you can buy more for half the price.
If you put several small amounts in over time — say $100 a week over the next 10 weeks — rather than $1,000 in the beginning, you’ll probably end up with a good average price over time. It’s called “Dollar Cost Averaging” and most investors say it’s the best strategy.