How to invest your money in cryptocurrencies.
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F ace years, I didn’t know anything about cryptocurrencies but managed to turn a hundred dollars into six figures. I’m not a genius, but I followed the basic principles that many investors use today. You also can.
Let me explain, this is not the same as what day traders do. Personally, I am not a fan of buying and selling in a day or two.
You don’t need a college degree or an education as a financial advisor. These are simple rules that you can easily follow.
This does not guarantee that you will see six figures, as your results may vary.
Personally, I have invested for the last two decades, so I was used to turbulence in my investment. The turbulence, or rise and fall, of cryptocurrencies is something you’ve never seen before unless you’ve traded penny stocks. That’s how volatile this market is.
Cryptocurrencies can suddenly drop thousands of dollars before you even wake up. The Bitcoin whales are doing their thing and trying to get you to sell your investment at a loss. Don’t fall for it and be patient.
The market will be back before you know it.
“It’s money 2.0, something huge.” Chamath Palihapitiya
In 2017, it took me a while to understand Bitcoin and the cryptocurrency market. Bitcoin reached its previous all-time high of around $ 20,000.
At that time I didn’t understand the market, but luckily I didn’t have much invested. I invested $ 100 in Bitcoin.
Then I started adding more Bitcoin and altcoins, cryptocurrencies that are not called Bitcoin.
I got involved with some platforms that didn’t work and I lost some money. Be careful when investing in cryptocurrencies under the umbrella of a multi-level marketing (MLM) or network marketing company. These usually don’t work in the long run.
Then the Bitcoin market fell and continues to fall. I was hoping the market would rebound, but it never did until a year ago.
Compound interest is the eighth wonder of the world. Who understands it, earns it. He who does not pay it, pays it. “- Albert Einstein
You probably don’t have five figures in your bank account. But I’m sure it can have three figures from time to time. Even double digits can help you get started.
When I read stories from Robert Kiyosaki, the author of Rich Dad Poor Dad, he told me to pay yourself first.
Basically, when you get paid for your work, invest in yourself. Take out some of your income and invest the money. When you do this, you are paying yourself first.
Make sure you have enough to pay your rent or mortgage and enough to put food on the table. If you don’t, you probably need to find a second or third job.
You have to invest with what you already have. Don’t try to take out a personal loan or your mortgage money and invest it. This could easily backfire and you could end up losing your home.
When you invest about $ 100 each month, the money will accumulate and grow. It may seem small at first, but you need to be patient.
Don’t worry too much about the price of Bitcoin when you buy. Basically you are using dollar cost averaging when you shop every month or on a schedule that works for you.
Example of average cost in dollars with Bitcoin
For example, you bought Bitcoin and the price was $ 100 for a month. This is an example, as the price of Bitcoin is higher today.
The following month he bought Bitcoin, and this time the price was $ 150.
In the third month, he bought Bitcoin, and this time the price was $ 90.
For three months he paid $ 340. Since he bought Bitcoin for three months, the average price he paid for Bitcoin was $ 113.33 (340 divided by 3).
As you invest your money, month after month, you will see the money grow slowly. It will go from three to four figures and then from four to five figures. Then one day, you will cross the six-figure mark.
“Since I don’t know of any way to reliably predict market movements, I recommend that you buy Berkshire shares only if you expect them to hold them for at least five years. Those looking for short-term gains should look elsewhere. “Warren Buffett
Many times you will see someone on social media talking about earning three or four figures from a trade they made. Many times, people talk about their victories but will not show you their losses.
You can trade cryptocurrencies, but the more times you buy and sell your cryptocurrencies, you could receive a tax bill that you weren’t ready for.
A general rule of thumb is that if you sell your cryptocurrencies in less than a year, you will pay taxes as a short-term trader. This is usually higher than if you had your cryptocurrencies for more than a year.
When you keep your cryptocurrencies for a year or more, you will pay less tax. You will be classified as a long-term holder.
Make sure you run your cryptocurrency gains and losses with your accountant. They will help you determine if you owe money to the IRS.
You don’t want to be surprised when the IRS tells you that you owe money for the cryptocurrency exchanges you made. The IRS is getting smarter and gaining access to exchanges in its operations.
Don’t try to outsmart them. The IRS generally wins.