As you invest into this emerging asset class of cryptocurrency, how will you know if you've set yourself up to do the right thing?
Cryptocurrencies can be complicated and as a busy medical professional, you likely don’t have time to research tokens or the nuances of this specific asset class. As you invest into this emerging asset class, how will you know if you've set yourself up to do the right thing? As prices zoom up and down, it feels like you should do something in response to market movements...but what exactly?
At Makara, the first automated crypto investment advisor registered with the SEC, we believe investing in crypto should be smart, low-cost and simple. We've distilled our philosophy down to five key rules.
1) Stick to your plan
These markets are very volatile and markets will go up and down. A lot. You can't control that, but you can dictate when and how much you invest. Be consistent, and focus on what you can control. Investors who chase good performance or run away from poor performance are less likely to be successful.
2) Don't try to time the market
It is difficult to know where cryptocurrency prices will move in the short term. The trick is to not worry about the short term market at all. Focus on the long term and invest your money when you can. Don't waste time guessing where prices will go next and instead focus on investing over long time horizons.
Diversification can reduce risk without hurting returns. We've long known this about in the traditional investing world, but it has been slow to arrive to crypto. Some assets go up in price, others go down. A balanced approach can make you better off.
4) Invest in yourself while you invest in the market
Learn about what you're investing in along the way. The technology behind crypto is fascinating, and learning about it can be done in small steps. Developing an appreciation for crypto's innovations will give you the conviction to stick with the asset during volatile times.
5) Start early
If you believe that crypto will be valuable over the long term, you benefit by getting started sooner rather than later. The best way to take advantage of the next wave of crypto excitement is to invest today.
If you are already investing or considering investing in crypto, the five tenets above serve as a foundation to incorporate crypto into your larger investment strategy.
Jesse Proudman is the co-founder and CEO of Makara as well as the co-founder of Strix Leviathan, a crypto hedge fund. Prior to Makara and Strix Leviathan, he served as an IBM Distinguished Engineer, focused on blockchain and cryptocurrency. To learn more about crypto investing, visit makara.com.
Makara Digital Corporation (“Makara”) is an investment adviser registered with the US Securities and Exchange Commission. Registration as an investment adviser does not imply a particular level of skill or training. Makara exclusively provides investment advisory services related to investing in cryptocurrencies and other digital assets. Makara is not a broker-dealer, exchange, custodian, or wallet provider, and is not intended for frequent trading activity. Investing in digital assets is highly speculative and volatile and Makara is only suitable for investors who are willing to bear the risk of loss and experience sharp drawdowns.