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.
My #1 pick is Regal Wallet for many reasons that you’ll learn in the review. Please take a moment to find out about the top cryptocurrency IRA companies to help you along your investing journey.
I find your article very interesting reading. I have no experience with bitcoin other than to say I remember it being in the news as gaining wildly in price, and then falling rapidly with people losing a lot of money. How can I find out more about this product before I invest money in an IRA? I always wonder where Bitcoin actually gets it’s value from. I other words, investments like gold have value from the metal being considered precious metal. Gold is also used to make jewelry, so I can see the value of gold or silver. But, I don’t understand how the Bitcoin is valued or why it’s price fluctuates so wildly.
Hello Chas! Bitcoin gains value as people put more money into it over time and despite short-term ups and downs, it has gained in value tremendously from its beginnings. Bitcoin and other cryptocurrencies are only expected to rise in value as they gain support from investments in the future and that is only one of the few reasons I recommend investing in them in a cryptocurrency IRA. Thank you for the feedback and the inquiry, Chas!
I do have some investments in cryptocurrencies including Bitcoin, but only a small amount at this point. I also have made some investments in blockchain companies. This is investment money that I am willing to lose. I always put aside some money for some risk investments as well as having much more conservative investments with the majority of my funds. I agree with you to determine risk tolerance and diversify your investments.
Hello Joseph! I’m glad that you’re investing at least a small amount into cryptocurrency. The minimum for opening a cryptocurrency IRA is $5,000 and I would recommend that option if you are investing in cryptocurrency but that of course is up to you. Thank you for dropping by and sharing your experience with us, Joseph!
Hi David
I think you have raised an important issue as people seek additional resources to make money but the question that arises is investing in bitcoin the right way. Investments are risky as you can lose as much money as you invest. Some people do say that bitcoins are too risky but if you are not prepared to take risks then you cannot reap the rewards. The problem of buying bitcoins is still an issue but I am glad that you have come up with recommendations. As ever how much money to invest is dependent on how much you are prepared to lose. A great article.
Thanks
Antonio
Hi Antonio! Thank you for the feedback and the compliments as always! You are right that investing in Bitcoin for the short-term is risky but in the long run it should be worthwhile. See you again!
You open with real truths about the state of our economy, dismal, but true. Thank you for bringing this important topic to the fore front, you have my attention. I agree, this is best for long term investments, negating the day to day stress from being watchful. Your 2 risk level determining questions are right on, do not invest what you cannot afford to lose. This honesty is appreciated. You give good advise about the emotional aspects of investing in Bitcoins, this is something every investor needs to hear. Diversification is good, solid advise for investing for your future. Thank you and I shall look into Bitcoins via your sight in more detail.
Hello Vincent! I’m glad you agree with the main points of my article and that you seem to have gained much perspective from it! Bitcoin and other cryptocurrencies should be invested for the long-term and I am glad you agree on that as well. Thank you for the feedback and I hope you continue to find the right information on Bitcoin to pursue your interests!
This is a big post because one doesn’t really know what to do when one sees that there are a whole lot of people who are already investing into Bitcoin and one is missing out. Now I see that although Bitcoin grows, it can come crashing down anytime and there is a more sustainable way for me to invest my money.
Hello Payton! People may be kicking themselves for missing out when Bitcoin was very cheap but it’s still not too late! Many experts predict that Bitcoin will reach the hundred thousand or even million dollar mark in the future so it’s still a good idea to invest in it for the long-term in a Bitcoin IRA. I hope you take that into consideration! Thank you for the feedback, Payton!