Finally, going from scraping by to having enough to start investing in your future feels amazing! It’s an exciting opportunity you wouldn’t want to squander through hasty decisions and short-term thinking.
The internet is full of beginner-level tips that will help. Rather than repeat those, this article focuses on the advice new investors need to hear but often overlook.
Risk Management
Not understanding risk is what trips many bright-eyed new investors up and can severely impact future gains. Some focus on a single investment, thinking it’s a winner because its value has been steadily going up. They confuse the asset’s volatility with opportunity and then get burned once expected returns don’t materialize.
Diversifying works only if you invest in independent asset classes. Buying a spread of altcoins sounds like a good way to cushion the blow if any of the individual ones underperform. However, it’s not really diversification if they’re all affected by the price of another asset, like Bitcoin.
It’s important to keep the asymmetry of risk in mind. If the value of an asset you own drops by 20%, it will need to rise by 25% just to break even. Moreover, you might not even be able to sell if there’s no demand, which will hurt if you really need the money.
The trick is not to overcommit, even if that one investment sounds like a sure thing. Some losses are inevitable, and playing the long game means you’ll have more opportunity to bounce back. Set yourself up for success by figuring out your financial and emotional limits while keeping some funds liquid.
Cybersecurity Concerns
Keeping your accounts and assets safe from cyber crooks is a completely different but equally important risk that no one talks about.
If anything, brokerage platforms are more tempting targets than bank accounts. The assets they hold tend to be worth more. It’s also easier to chalk smaller losses up to market movements without becoming suspicious. Even if no assets get stolen, a breached account can still expose the personal and financial information the crooks need to commit identity theft.
How to stay safe
Staying safe means being aware of threats that target you directly and securing everything with the appropriate tools. For the former, read up on how to recognize and avoid phishing and investment-related social media scams. If the returns seem unreal, so is the “opportunity.” Pair being vigilant with the best VPNs to keep your traffic harder to snoop on, especially when you’re logging in while traveling.
Different tools are needed for different situations. If you own digital currency, get an offline wallet and keep your keys private. Secure all investment-related accounts with unique passwords and multi-factor authentication.
How you access these accounts can make a difference. Mobile networks are much more secure than public Wi-Fi, so use them when on the go. It’s also smart to use different networks for financial activities. If you don’t know what eSIMs are, it’s about time you do. It’s because eSIMs make connecting easy without having to switch SIM cards. They let you isolate investment-related traffic from casual browsing, adding another layer to your cyber defenses.
Not Taking It Seriously
Investing is a long-term commitment, not a box to tick to prove you’re living an aspirational lifestyle. Doing it the right way means meeting prerequisites like having an emergency fund and enough cash to cover current and unforeseen expenses.
Imagine putting the first and only $1,000 you saved up into a stock whose value tanks overnight. Now you’re both at a loss and have less cash to cover expenses that are sure to pop up eventually.
Going in without a plan and realistic expectations will likely lead to disappointment. Keep a cool head and don’t let early wins go to your head. Similarly, speculation and investing aren’t the same. Learn the difference to keep on track and not become a victim of market whims.
