If you are new to the crypto market, probably the first question you have in your mind is which coin to buy. In today's article, we will look at how a beginner should build their portfolio:

1) How much should you invest?
Cryptocurrency is a vast world and you can never learn completely. So, spend the first few months in learning about it; read articles, watch YouTube videos, join some good social media groups or channels.
When you are confident enough, you can slowly start investing. Start with $50 maximum during the first few months. When you gain confidence, you can add more. Also start with Spot trading, and don't go into margin or futures as they can result in you losing your entire investment within minutes as you are completely new to it.

2) Good coins vs Bad coins
As per Coinmarketcap, there are at least 11,000 coins in the market. So how do we decide which is good and which is bad. An easy method is to choose coins with the highest market cap. Then go on to read their white papers. Watch videos comparing coins, about their strength and weaknesses.

3) Diversifying based on risk
Invest at least 50-100% in low risk coins such as Bitcoin and Ethereum. Not only they give respectable returns, they won't die off in a bear market, and you can be 100% sure they won't be scams or rugpulls.

If anything is left after Low-risk coins, allocate the remaining 0-50% in medium risk coins which include Binance Coin, Cardano, Polkadot, Solana, Litecoin, etc

Still if anything is left, make sure it is less than 10% of your total investment. That you can use to buy any coin that you find attractive. Don't invest in coins outside of the Top 100 market cap valuation initially.

4) Diversification based on Use case
Each coin is different and they have their own utilities. So, diversifying based on utilities on top of risk diversification is a good idea:

I) Store of Value: Bitcoin
II) Smart Contracts: Ethereum, Cardano, Polkadot, Solana
III) Currency: XRP, Litecoin, XLM
IV) Exchange tokens: BNB, Uniswap token
V) Utility tokens: Vechain, Chain-link

This is just an example I provided above. There are so many other categories such as Privacy coins, meme coins, stable coins,  NFT coins etc.

Combining this with Risk diversification, you can make a good portfolio

5) Don't overdiversify
A common mistake most people do is overdiversifying their portfolio. It leads to two main problems:
a) Your profits from good coins and be minimised by losses from the bad coins you put your money in
b) You may not be able to monitor news and articles of all the coins you hold, if they are too much in number

6) Stay away from Scams and shit coins
I know it is easier said than done. That is why I asked you to do enough research before entering the market.
Sometimes a hidden gem might be hiding under these shit coins. On how to identify that is beyond the scope of this article. So more on that later.

7) A model portfolio for $50
a) The easiest one is put all in Bitcoin, or divide between Bitcoin and Ethereum, say 30-20
b) $25 Bitcoin
$15 Ethereum
$10 BNB
Also note that most exchanges have a lower price limit for buying coins, eg., In Binance you must atleast buy worth $10.

Thank you for reading till the end. All the best for your Crypto journey.
Cheers ☺️

PS: Not Financial Advice