- Grant Sabatier is a podcaster, entrepreneur, and author of Financial Freedom.
- He says limiting your exposure to 5% or less of your net worth is the best way to go about investing in cryptocurrency.
- Sabatier also says to hold a diversified portfolio, avoid MEME coins, and put down smaller dollar amounts spread out over time.
Crypto is everywhere. And while it’s hit the mainstream, it’s still early.
There are only about 78 million crypto-holding wallets and there are 7.9 billion people on the planet. So less than 0.98% of the world’s population holds crypto.
This is an opportunity — perhaps a once in a lifetime investing opportunity.
A lot has changed since I first invested in Bitcoin in 2013.
Not only has the value exploded, but so has the number of coins and altcoins you can invest in. The choices are immense and now there are more altcoins than all the Bitcoin that will ever exist (only 21 million BTC will ever be circulated).
You can invest in pretty much any coin or token around any topic. Want to own a virtual plot of land in Decentraland? Check out MANA. Want to invest in Defi (decentralized finance)? Check out SOL or ETH. There are an infinite number of use cases for crypto and Web3 is accelerating at warp speed.
There has never been a time in history when you can get so rich with just a few clicks on your phone in the middle of the night.
But I’m sure you know there is massive volatility in crypto markets.
Fortunes are made and lost in minutes. There are also a ton of scams.
Just in the last few weeks SQUID, a token marketed as being an invite to a future game modeled after the popular
Netflix
show Squid Games, was actually a “rug pull,” which is when the creator of a currency cashes out and disappears. In this instance, investors lost over $2 million.
So how do you best invest in crypto?
1. Limit your exposure to 5% or less of your net worth
While I’m bullish on blockchain technology and do believe it’s the future, it’s too early to take too much risk investing in any cryptocurrency. I see far too many investors putting all, or most, of their net worth in crypto.
I get emails every week from people who have taken out loans, second mortgages, or leveraged their crypto holdings to buy more crypto. This is dangerous and dumb. Why risk so much of your life security and freedom in one investment?
While some will strike it rich, would you bet your financial life on a coin flip? I’m a big believer in taking risks, but it needs to be calculated risk.
It doesn’t make any sense to invest more than 5% of your net worth into crypto — and even less if you’re just getting started. You should be investing most of your money in more historically predictable asset classes like stocks, bonds, and real estate.
As your net worth grows and you learn more, you can definitely invest more of it in crypto, but you need to feel comfortable with your risk. Are your crypto holdings keeping you up at night? Would your life be ruined if your crypto portfolio went to $0? …….