Have you ever considered investing in cryptocurrency? It’s important to understand what you’re investing in before you, well, invest. You wouldn’t just put your money in any kind of stock; you’d want to research the best stocks to invest in before committing, and the same goes for cryptocurrency.
Doing research is important when it comes to cryptocurrency. It can be a little tricky getting into it and understanding all the ins and outs of the industry. However, many people that have invested in cryptocurrency have seen a positive outcome for themselves and their cash and enjoy the extra money it can bring them.
The more you understand cryptocurrency, the more likely you’ll be able to know where to invest, when to take out, and how to manage your money overall. These are 5 things you should know before going ahead and investing in cryptocurrency:
1. Growth Rate of Crypto
Similar to stocks, crypto is always changing in value. It’s important to have a plan for how much you want to invest in cryptocurrency. A good rule of thumb is to never invest more than you’re willing to lose. That goes for any investment you make and it works for cryptocurrency, too.
There are over 3,000 cryptocurrencies available for people to invest in. That’s a lot to choose from! That’s also a lot of currency to keep track of. Do your research and choose a few you feel are a good fit for you.
Rather than putting all of your eggs in one basket, choose a few different cryptocurrencies and invest a little in each one. You’ll want to diversify your crypto portfolio in case you happen to lose in one, you aren’t losing it all; you have others you can depend on to provide you with gains.
One of the most popular cryptocurrencies is Bitcoin. You can actually watch the rise and fall of the Bitcoin price index to see when it’s a good time to invest.
2. The Best Time to Purchase Crypto
Unlike the stock market that’s only open during certain hours, the crypto market is open 24/7. So you can invest whenever you’d like. But there must be better times to buy compared to others, right?
In fact, Crypterium suggests purchasing Bitcoin specifically on Sunday or Monday for the best return. The reason? Simply because that’s typically when Bitcoin has the lowest prices during the week. Similar to stocks, with crypto, you want to buy low and sell high.
3. Where Will You Keep Your Crypto?
Whenever you have something of value, you want to keep it safe. That’s why people put their valuables in safes, have a secure bank to watch their money, and locked cabinets for important documents. But what about cryptocurrency? It’s not a physical asset that you can hold, so where can you put it so it stays safe?
It’s extremely important that you have a safe space to store your crypto before purchasing any. Some hackers have found ways to steal other people’s cryptocurrency that hasn’t been securely stored. That’s why it’s wise to have something like a crypto wallet to keep your investment safe. A crypto wallet is a software you can download and use to keep your cryptocurrency safe and locked up with passcodes and other hacker-blocking software. It’s great to have for peace of mind and it keeps your cryptocurrency safe!
4. How Much Time Do You Want to Invest?
There are those that simply want to invest in crypto and watch it grow. Then, there are those that truly invest their time into cryptocurrency by mining it. We’re not talking about mining in the ground, but rather, mining through a computer software system. Many people invest time and money into great computer systems that are capable of mining for cryptocurrency.
In fact, did you know that you could potentially get a tax break if you’re a crypto miner? Those who choose the crypto mining route need large computer setups, space, and pay a higher electricity bill to have those computers running all day. If filed correctly, you could get a tax break or a deduction for the materials you use to mine crypto.
You certainly don’t have to go that route, but if you’re really interested in getting deep into crypto, mining is a cool way to get involved with it.
5. Crypto Taxes
One of the most important things to keep in mind with cryptocurrency is the taxes that come along with it. Many people often ask: do you have to pay taxes on your cryptocurrency?
The answer is both yes and no. If you invest in a cryptocurrency and end up with a loss for that year, you don’t have to pay any taxes on it. However, if you gain anything in your crypto investment, then you will have to pay taxes on it.
The next question people often ask is: how much do I have to pay in taxes on my crypto? That’s where it’s helpful to have a crypto tax service help you calculate that exact amount. Crypto taxes can get complicated, so it’s helpful to have an expert that understands the ins and outs of cryptocurrency.