How To Make Informed Investment Decisions
This is article 5/8 in Part I of our How To Build Wealth and Grow Crypto Assets and Income by Staking series. It will help guide you into making better investment decisions.
Be sure to check out the previous article: Simple Business Ventures as Alternative Investments: Affiliate Marketing.
Today’s Key Takeaways
1. Understand your goals
2. Possibly consult a financial advisor
3. Have a well-defined investment plan
4. Research investments
5. Diversify your portfolio
6. Monitor your investments
7. Maintain a long-term perspective
8. Have an exit strategy
For links to resources and to see the FAQs please read this on our blog.
Making smart investments
Before investing your money, it makes sense to get informed. DYOR is the acronym you’ll see on social media. Do Your Own Research to increase your chances of achieving long-term financial success. You will sleep better at night knowing you did the work.
Here are a few things you can do to make more informed investment decisions:
1. Understand your investment goals: This is #1 because it’s the most important part. Before investing it’s essential to understand what you are trying to accomplish. Then, you can figure out how to get there.
This includes knowing your risk tolerance, time horizon, monthly cash flow, what you’re saving for, and overall financial situation.
An investment plan serves as a roadmap for your investment decisions. So, set goals, create a budget, and allocate your resources accordingly.
Check out the various retirement planning calculators and portfolio templates online. Click through to our blog for links.
2. Research the investment: Before putting a penny to work, research the company, asset, industry, and the economic conditions that may affect your investment. Evaluate potential returns and potential risks.
Remember, it’s risk vs reward. Safer investments are less volatile and generally produce a little income. Think about a savings account vs bitcoin. Each serves a different purpose in a portfolio, so they both have a place.
3. Diversify your investments: Don’t put all your eggs in one basket and plan on having a well-diversified portfolio. This is key.
Your investment portfolio can include a mix of stocks, bonds, real estate, and alternative investments like commodities, crypto, or hedge funds.
Diversification helps to spread the risk across different asset classes and sectors. This can help reduce overall portfolio volatility and the impact of underperforming investments.
4. Monitor your investments: Keep an eye on your portfolio, the industry, economic conditions, and any news that may affect its value. Pay attention to interest rates, the dollar’s relative value, inflation, GDP, and other economic indicators that can affect the performance of your investments.
Additionally, watch for natural disasters, political changes, and technological advancements. Google alerts are an excellent way to stay informed with minimal effort.
5. Have a long-term perspective: Investing is not trading. It is a long-term strategy. Making short-term decisions based on the news or your emotions is a sure-fire way to lose money.
Instead, focus on your long-term investment goals. Be patient and disciplined when making investment decisions. Have a plan and stick to it, especially during market downturns.
In fact, bear markets can be excellent opportunities for patient investors to buy trophy assets at a discount!
6. Consult with a financial advisor: All of the above can be quickly accomplished by meeting with a financial advisor. They can provide valuable insight and help create a customized investment plan that fits your needs and goals.
Financial advisors won’t likely know much about crypto and alternative investments, but can be of great value when developing a framework and financial plan.
7. Have a well-defined exit strategy: This is a plan for when to sell an investment, either because it’s reached its target price, or because it’s no longer in line with your investment goals.
Having a plan in place can help reduce your emotions and impulsive decisions when markets are volatile.
Buying is the easy part. Knowing when to sell takes discipline. I can’t tell you how many times I’ve watched a token 5x or 10x and gotten greedy, only to see it then fall by 75%.
A great strategy for crypto: sell 1/3 of your position on a triple. Get your principle investment off the table and let profits run. You are then playing with “the house’s” money and it will be much easier to remain unemotional.
To sum it up, making informed investment decisions means understanding your goals, possibly consulting with a financial advisor, having a well-defined plan, researching investments to evaluate the potential risks and rewards, diversifying your portfolio, staying up to date with economic and market conditions, having a long-term perspective, and having a well-defined exit strategy.
Phew! That was a mouthful.
And, remember to stay patient and disciplined. We hear about those who got rich overnight, but it is exceedingly rare.
Be on the lookout for our next article, because we will explain why decentralization is so important.
Until then, be well!
Check out the previous article too: Simple Business Ventures as Alternative Investments — Affiliate Marketing.
Nothing we say is financial advice or a recommendation to buy or sell anything. Cryptocurrency is a highly speculative asset class. Staking crypto tokens carries additional risks, including but not limited to smart-contract exploitation, poor validator performance or slashing, token price volatility, loss or theft, lockup periods, and illiquidity. Past performance is not indicative of future results. Never invest more than you can afford to lose. Additionally, the information contained in our articles, social media posts, emails, and on our website is not intended as, and shall not be understood or construed as financial advice. We are not attorneys, accountants, or financial advisors, nor are we holding ourselves out to be. The information contained in our articles, social media posts, emails, and on our website is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation. We have done our best to ensure that the information provided in our articles, social media posts, emails, and the resources on our website are accurate and provide valuable information. Regardless of anything to the contrary, nothing available in our articles, social media posts, website, or emails should be understood as a recommendation to buy or sell anything and make any investment or financial decisions without consulting with a financial professional to address your particular situation. Blocks United expressly recommends that you seek advice from a professional. Neither Blocks United nor any of its employees or owners shall be held liable or responsible for any errors or omissions in our articles, in our social media posts, in our emails, or on our website, or for any damage or financial losses you may suffer. The decisions you make belong to you and you only, so always Do Your Own Research.
