The bitcoin crash was the talk of the moment last week. We all know that crypto is very volatile and can go up or down in split seconds. People were put into a state of distress because they were losing money. LUNA, a very popular coin, even went as far as going down to less than a dollar from a 100$ all-time high. It was a distressing moment for crypto holders. The purpose of every situation is to learn from it. So what can we learn from this when applying it to general investment decisions? These lessons have been listed below:
Do your research
Before you put money into any investment, do your research. You shouldn’t put your money into what you don’t understand or know about. Check to understand the business dynamics and how they make their money. Check to see what others are saying about it. You should enter an investment with your full eyes open, understanding the risks involved.
Diversify your portfolio
It is important to diversify your portfolio when investing. This means that you share your money amongst different projects. Don’t put all your money into one project. Investments are not 100% safe as there are risks involved hence it’s important to share these risks amongst different projects so that if one fails, your other investments can cover up for it.
Put only money you can afford to lose
Time and again, this has been the number one piece of advice when someone is looking to start investing. Don’t put money you can’t do without or afford to lose. In other words, you should not invest your house rent, school fees, or even emergency funds. Investment is risky and can also be profitable in the long run but you need to be at rest that losing your money at any time will not give you a heart attack.
Understand that investment is long term
Investment is not a short-term thing. Avoid being greedy. The need to get rich quickly has clouded our minds that we do not know when to draw the line. Investments are profitable in the long run but in a bid to get all the profits at once, we end up making irrational decisions that we would regret later.
Don’t borrow to invest
I don’t know how people do this but it all boils down to greed. Investment is clearly a risk. Do you think it would be wise to gamble with someone else’s money? People enter into depression and situations that take time to resolve and redeem because of this type of decision. If you don’t have money to invest, hold your peace.