Should Low-Income Earners Be Investing In Crypto?

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Should you invest in crypto? Is crypto a good investment strategy for low-income earners? Digital asset popularity has been on the rise, especially with countless countries now recognizing crypto as a form of currency. 

Despite what you might believe, you don’t have to be wealthy to invest in crypto. In fact, you can purchase fractions of coins, helping low-income earners invest with as little as $10. In this article, we’ll cover three strategies you can use to determine if you should be investing in crypto, regardless of your income level. 

Evaluate Your Priorities

First, it’s important to evaluate your priorities. Why do you want to invest in crypto? Is it because of its popularity or because you believe crypto has appreciation potential? By understanding your priorities, you can determine if crypto is the right investment for your goals. 

For example, if you invest in crypto to make quick cash, the risks might not be worth it. Crypto hasn’t existed for decades, making the asset price volatile. On the contrary, if you want to invest in crypto to unlock appreciation over the next ten years, the potential gains might be worth it. 

Diversify Your Portfolio

The next factor to consider is portfolio diversification. Diversification is the process of buying different asset classes to avoid a total loss. When it comes to crypto investing, you don’t want crypto to be your only holding. If the price does plummet, you could lose your entire investment. 

Instead, consider purchasing crypto alongside other investments, such as a broad market mutual fund or ETF. The stocks in total market funds have been around for decades, lowering your portfolio risk. Even if the price of crypto drops, you have other investments to preserve your portfolio’s value. 

Set It and Forget It

Like most investing strategies, crypto should be a set it and forget it strategy. If you only plan on holding crypto for a month or two, the potential losses might outweigh the risks. Instead, you might be better off putting the funds in a high-yield savings account. 

Before you purchase crypto, it’s important to have the right mentality. Just like you refrain from pulling funds from your 401(k), your crypto investments should be left alone to appreciate. Over time, the risk of losing your investment begins to decline. If you aren’t planning on leaving your crypto investments to appreciate, invest elsewhere. 

Be Prepared Before Investing

Crypto investments can lead to significant gains. In fact, Bitcoin has appreciated nearly 975% over the past five years, according to Yahoo Finance. This means a $100 investment five years ago would be worth $975 today. Before deciding to purchase crypto, evaluate your priorities, ensure portfolio diversification, and adopt a set-it-and-forget-it mentality.

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