Are you ready to finally begin investing in Bitcoin? You may have decided that it’s time to pull the trigger and make your move. Why? The economic uncertainty in the US is scary to say the least.
More than 40 million people lost their jobs back in late March and early April 2020. Although investors are playing a dangerous game on the stock market, the overall economy hasn’t turned around yet. In fact, the current unemployment rate is still 17.8 million people and many businesses haven’t survived the pandemic.
Why am I mentioning this? Simply put, this data proves that the US economy is still in serious trouble. The stock market and investors are trying to ignore the facts. But things aren’t as rosy as they want you to believe.
With such high unemployment, we’ll soon begin to see these issues trickle down. People will stop paying their credit card bills. Foreclosures are going to reach higher levels. And before long, the US dollar will become so inflated that it seems practically worthless.
On the other hand, Bitcoin will continue to do just fine in this struggling environment. It doesn’t rely on any government for support. It doesn’t count on big businesses to maintain its value. And it doesn’t care if the US falls into a recession. In fact, it doesn’t matter if the entire world falls into a recession. Bitcoin can withstand all of these negative things because it isn’t tied down by our traditional financial system.
How much should you invest in Bitcoin? That isn’t the easiest question to answer and it’s very personal for each individual. I’m going to present some factors to consider that’ll help you determine how much you should invest. And I’ll also share percentages based on risk tolerance and other considerations.
#1 Bitcoin Investment Factor – How Well Do You Tolerate Risk?
Although Bitcoin isn’t directly tied into current world financial markets, it’s still a volatile asset nonetheless. When you ask yourself, “How much should I invest in Bitcoin,” you have to decide how quickly you’re willing to grow your Bitcoin IRA.
But as I mentioned, Bitcoin trades like stocks on the stock market. It can gain massive value very quickly and you could end up rolling in dough fast. On the flipside, it could also lose value just as fast and your investment could get a haircut.
That’s why I always tell investors to open a Bitcoin IRA to invest for the long term. By investing this way, you don’t have to focus on the day-to-day price action. You don’t have to worry when Bitcoin loses 1000 points in a single day. When this happens, the investing world thinks the sky is falling.
But you can remain insulated from these temporarily frightening scenarios by trusting the process. If you feel confident that Bitcoin will gain value over time, you only have to check your investment periodically. Instead of tracking daily price swings, you’ll look at a yearly chart to see how your investment grows over time.
To help you determine your level of risk, please consider the following questions:
- Are you willing to lose your entire investment? Will you feel comfortable doing so? Could you risk losing all of your full $10,000 or more investment?
- Would you kick yourself and call yourself names if your investment fails? Would losing your entire investment make you lose sleep at night? And would it make you consider personally harming yourself in any way?
If anyone answered yes to the questions mentioned above, you should avoid this investment or invest less than $10,000. It seems that your ability to handle risk isn’t as strong as you’d like. You might accidentally sell in a panic when Bitcoin is having a bad day because your emotions are too strong.
#2 Bitcoin Investment Factor – How Well Do You Tolerate Profits?
Right now you’re thinking, “This guy is out of his freaking mind! What does he mean asking how well I tolerate profits? Tolerating profits isn’t an actual problem, right?”
Yes it is. Just like losing your entire investment is a highly emotional situation, so is making 20 times your investment. And this is very possible as a Bitcoin investor.
Believe it or not, a 12-year-old kid used a $1000 gift from his grandmother to purchase his first Bitcoin. He has subsequently purchased 400 more Bitcoins in the ensuing years. His name is Erik Finman and he was a Bitcoin millionaire by the time he turned 18!
Guess what? His current Bitcoin investment is worth $3.7 million at the moment. This brilliant young man was obviously able to handle the emotional aspects of making huge wins. Are you?
You have to be reasonable and steady-minded when you become a Bitcoin investor or an investor in other cryptocurrencies. Or open a Bitcoin IRA, set up automatic investments, and ignore checking your account until you get closer to retirement.
Why is this so important? You could end up becoming so excited by your investments that you end up selling them too early. Because making money is very emotional and a lot of people have a difficult time handling it.
Some questions to consider about tolerating profits include:
- What will you do if you increase your investment by 20 times? Will you sell them early and take the profits? Will you cash out your IRA to buy a bigger car or bigger house?
- Or will you hold your cryptocurrency investments forever?
As a long-term Bitcoin IRA investor, it’s best to remain emotionally detached as best you possibly can. Why? Because you have to wait until you’re 59 ½ years old before you can begin cashing out your IRA account. If you cash out too early you’ll end up paying additional taxes and penalties, which everyone should avoid.
Take a moment to check out our review of the best Bitcoin IRA companies. Read through the information and choose the ideal company to meet your personal needs.
#3 Bitcoin Investment Factor – Portfolio Diversification
Some people like putting all their eggs in one basket from an investment standpoint. They only invest in stocks, bonds, or mutual funds as an example. But this is a foolish way to protect your nest egg. In fact, anyone heavily invested in the stock market in February/March 2020, lost about 50% of their portfolio.
Guess what? Investors noticed that diversified alternative IRA investments made huge scores at the same time. Gold, silver, platinum, and palladium gained value. Bitcoin took a dive along with the markets, but it’s rebounded by 50% since its March lows.
The moral of the story is simple: you need to diversify your portfolio. Adding Bitcoin to the mix is a great way to spread your risk. So when one investment begins to go sour – albeit temporarily – your other investments can prop them up so your portfolio doesn’t take a total beating.
No one is saying you have to diversify your portfolio. You can continue to take whatever risks you’re willing to tolerate. But at the same time, opening a Bitcoin IRA means gaining exposure to a lucrative and volatile investment. This investment can earn big bucks over many years. Do you really want to pass up such a huge opportunity?
Take the bull by the horns and remember to read our review of the top Bitcoin IRA companies. Use this valuable information to choose the right company to help you get your investments off on the right foot.
Examples of Risk Tolerance Percentages
As you are about to learn, some people have greater tolerance for risk than others. If you aren’t sure how much you should invest, please consider the following percentages as a guideline. They include the following:
- Conservative Bitcoin Asset Allocation: 5% to 30% for a conservative investment portfolio
- Moderate Bitcoin Asset Allocation: 31% to 60% for a moderate investment portfolio
- Aggressive Bitcoin Asset Allocation: 61% to 90% or more for an aggressive investment portfolio
Just because you choose a particular investment style, it doesn’t mean you’re automatically going to gain value. You could invest aggressively and potentially lose money in the short-term. The beauty of a Bitcoin IRA is that it’s a long-term investment. You aren’t concerned with the day-to-day cryptocurrency prices. You only care that the investment will continue to gain value over a 20-25 year timeframe.
How to Begin Investing in Bitcoin the Right Way
At this point, you’ve likely figured out that I’m a massive proponent of Bitcoin IRA investing. Why do I feel so strongly about this investment style? I want you to live happily and healthy in retirement. I want you to have more than enough money to retire comfortably and live a good life. That’s why I want you to buy Bitcoin in a tax-deferred or tax-free IRA account and experience the full benefits.
Before you go, I strongly recommend you take a few minutes to read through my review of the top Bitcoin IRA companies. I put this information together to help you choose the best company to meet your financial needs.