There are a few pieces of advice that every person should generally follow within investments. This is in regards to investing in general, including crypto, stocks, and collectibles, as such, it is sort of broad advice for a general financial area that covers multiple different, very broad topics, with different needs. I will create more specialized advice later for each type of investment.
Generally speaking, before you begin to invest in anything, you need to think about your ability to manage risk. Savings are fluid cash that you can access immediately, if necessary during crises. Generally, most people will tell you to have at least 3-6 months of rent saved in order to act as a buffer. This is different for everyone, for instance: if you are living with your parents, or under 18, you may not need anywhere near that much money. On the opposite side, if you have a 13 year old car, you may need to account for upcoming repairs or replacements and have an even larger pool of savings prepared for additional problems. This should not be skipped, and it can be tempting to think, well, I want to make more money, and that pile of money sitting in savings isn't doing anything, gaining .3% at BEST a year. The thing is, you can't see that savings as an investment, it's NOT an investment, it is a protection. You are protecting yourself from life, from accidents, from a speeding ticket, from something that may require you to dip into your investments at a bad time. By not protecting yourself, you're basically ASKING life to come and steal all of your newfound money in one fell swoop.
Savings should be your primary fund you put money into first, until it is at a reasonable level for your current needs.
Be aware of how you're investing. Are you trying to day trade? Do you plan to long-term hold a specific type of coin? Are you planning on staking crypto for years to come? Do you want to transfer between crypto during dips in one to maximize others? ALL of these are different strategies. You can certainly do them all, but you need to stick to an investment strategy when you buy a specific coin. For instance, I currently utilize Algorand & Cosmos as my staking currencies, and I am thinking I may stake a portion of my ETH as soon as I am verified on Binance US. I do not sell them, I do not worry about their prices now. They are long-term earners building growth through APY. Meanwhile, VET I purchase with short term fluctuations in mind. I will buy low, and sell high, as consistently as I can to maximize gains in its volatility. Will these strategies change? Certainly! As VET becomes closer and closer to a stable, less volatile point, I will switch my mindset for it to either a long term currency, or perhaps, it will even become as stabilized as XLM, which I currently utilize as an occasional short term placeholder for sales (along with USDC/USDT if I believe XLM is overvalued at the time). The point of all of this is that your investment strategies can change, and should change, but that you should have an idea of what they are, or else you're really likely to mess up, lose out, or make mistakes simply trying to capitalize on all of these different strategies which at times are at odds with each other.
I'll talk about investing strategies more in another article in the future, but even just you thinking about it from a strategic point of view is already going to put you at an advantage and decrease your chances of making mistakes and/or losing money.
Diversification is talked about by almost every investor there is. Occasionally, you will find the person who put all of their money into Tesla initially, and ended up becoming millionaires, but more often, you're going to see the person who put everything into a single investment and then lost everything. Diversification is a barrier between you and risk, it places your investments into different aspects of stocks, crypto, etc and creates a network of protection where the gains of one area can offset the losses in another, insuring that you are regularly ahead. You should strive to keep your investments diverse, by investing into multiple types of revenue. For instance, within just Crypto, you could allocate some of your portfolio to high APY staked tokens, some to NFTs as a digital collectible asset, some to some high growth Altcoins, and finally, a portion of your money to a bigger stablecoin, like ETH, BTC, etc. etc.
Since this is a Crypto and NFT focused website, I won't say you can't have most of your investment in crypto, but be aware of the risk that comes with lacking diversity. If you're invested in Crypto, NFTs, Stock, real estate, and precious metals or collectibles with a decent amount of cash savings, you will almost ALWAYS have money, and be ahead of the curve, even when one, or two, are doing poorly. Diversification ensures that when one area does poorly, or full on collapses for a bit, you are not irreparably damaged by it and forced to pull out your investments during low points.
That being said, there are two things that change this:
1. You do not want to spread yourself too thin. Think about it like an egg carton, you want a few good eggs, maybe one for tomorrow, one for a week from now, etc. etc. you don't want ALL the eggs in the grocery store.
2. if you are a micro-investor, or somebody who is slowly working up your investments, this is less important initially, as spreading your cents or dollars out across multiple investments is simply not possible, but you need to steel yourself for any dips in the market, panic selling is your worst enemy. Your end goal should still be a diversified portfolio at the end of the day, it just might take you longer to get there. Remember, slow and steady wins the race, and also remember that you can't ever win if you don't start.
This one will also be under the Crypto specialized article, but I felt it should be put twice for good measure.
Don't. Imagine if you gave your friend your bank account, now make that person a stranger on the internet instead. Don't.
Protect your codes, keep them in physical copies, and keep them safe. You CANNOT get back a lost seed phrase, 9 times out of 10. If you lose it, everything you own in that wallet is gone, there's no insurance or calling and complaining enough to get it back. You put your money in a safe and dropped it randomly into the ocean and then burned the coordinates.
You will also hear this a lot, but remember the phrase: Not your keys, not your coins. Own your crypto!
I would go a step further, and say that you should treat your investment money as simply spent, or lost money. Pretend like that $60 you just put into crypto went into a game instead. That depreciates 90% of the time and we're still okay with those purchases! This will make you less susceptible to panic selling, and it will give you a bigger perspective on your investments. None of your losses are real until you sell it, and if you didn't need that money, then you don't need to worry about it right now. Don't sell low, and you won't have realized losses. It's obviously not that simple all the time, but anytime where you can reasonably decide that, do so.
Always do your own research. By pairing this with this specific bit of advice, you will be AWARE of when you should sell because the investment is flatlining, or if the investment is simply going through a dip in which it will resurge and hit higher highs. Luck is involved only as much as you are willing to let it be.
Note: This is also MUCH easier to resist panic selling when you have a diversified portfolio of investments. Who cares if one crypto is down 30% when your others are booming?
I hope these little bits of advice help, as they are the core of many investors and serve as something to protect you from mistakes & scams.
If you'd like to see a more in-depth article, or have questions, be sure to leave them in the comments!
Want more specialized advice? Check out these articles coming soon:
5 Rules & Advice for Investing in Collectibles (Coming SOON)
5 Rules & Advice for Investing in Precious Metals (Coming SOON)
5 Rules & Advice for Investing in Art (Coming SOON)