People are making some huge mistakes that will cost them a lot this year. While some of the more well "heeled" investors may find this un important, most of us generally have a problem losing money.
Always keep in mind that as you develop your investment strategy (if you don't have one or know that you need one keep reading), so these are some suggestions you will need to consider as you go, in order to avoid costly mistakes.
Due diligence is just good investment sense, so consider these 'best practices' as part of that "due diligence":
Study your investment
Jumping into a token without knowing what it is, what it does, the idea behind its value, etc, is what's called "Las Vegas" style investing, in other words: pick a winner!
Small investors will tire of this quickly and bigger investors will bleed out gradually.
Create a game plan and stick to it.
Know how much you intend to invest, how long you plan to hold it, and what you plan to do with it after that. Then do your best to follow it. Realizing an investment can only be achieved when meeting investment time goals. If you don't give it time, and bolt each time the market shifts you will incur greater costs and loss of your initial investment. Hold firm.
If you are a person who hold their tokens, your plan will be different than one who lend their tokens. Know what you plan to do with your tokens while you have them, and ultimately how you plan to dispose of the profit.
Test the waters before committing
Before you send ten thousand dollars to some new exchange, send fifty. Test the exchange with smaller sums before entrusting your entire investment. There are still huge problems in the crypto world which remains largely unregulated and un censored.
In many respects the investor is at the mercy of these companies, exchanges , and communities. Take time to better understand the community and its reason for existing.
Make sure the project makes sense
Regardless of the hype, a token is only as good as its daily yield. Make sure you know why a particular project exists, find out about the community, check out its feeds subscribe to its alerts. When you see red flags, don't hesitate to run, and always remember that if you cant understand what they do... chances are other investors won't either.
Don't Fall In Love With Your Own Investment
The more upfront information you have, the better informed you are as an investor and the less you are inclined to "identify your investment" with your "ego". You will know this if and when you find yourself defending an apparently bad idea...
Know When To Walk Away
After identifying and obviously bad investment, do not hesitate to walk away. This includes finding out some vital flaw surrounding its tech, community, idea, marketing plan, the problems can vary but the consequence is the same, poor return or loss of principle. That isn't even the worst thing that can happen.
There are many illigitimate projects with unscrupulous sposors. Don't be afraid to dive into the company chat streams and really get a picture of how each project runs. Worse things that can happen is that these companies walk away with your money, or use your information to take even more of your money. It happens in ideal settings, let alone in a rapidly evolving world of blockchain finance.
Seek Higher Knowledge
Don't be afraid to add to your education. Its never too late to learn and life is a process of discovering new ideas. If you have the time and energy enroll in free or low cost blockchain certification courses. If you haven't been in school in a while, this is a great time to start as we are at the beginning of a new frontier in finance and global commerce.
Don't be educated out of the market. As schools churn of better educated youth every year, for many, the gap between education and success has only gotten smaller. That's not the case for millenials. For those left behind the upcoming decades will deal harshly, in terms of progress, growth of wealth and income development.
Keep in mind that developing a passive income means becoming and active investor. That starts with education as streams, youtube infomercials, and chat rooms can only take you so far before a certification or degree become ideal.
There are many ways to get a free education and many companies will even pay you to learn about their products. Step out of the box, or die in it.
Learn the art of making a zero sum investment
Ideally when it comes to making a game plan a person invests in a way that eventually they get back their principle and earn a profit off their interest which they reinvest to earn "compound interest".
This is ideal, but not always easy. More so if you know what the hell your doing. For beginners, the goal is to invest, earn, take out the earnings after a set time, then reinvest those earnings until your have taken out the equivalent of your initial principle.
This can be a detailed discussion and I will expand on it in future articles, however for the sake of this discussion our goal is to earn back the initial principle which you can then re-invest and continue to grow your passive income.
Build A Network
The blockchain world is filled with interesting and colorful communities. Get to know them, and try to team up with other like minded investors. Having direct industry knowledge will always beat reading the white paper. After all these are the people to whom you are giving your money.
Over time however you may come to know and respect the people you will come into contact with. Everyone has a value and are a potential source of unknown information, cooperation and inspiration. Don't be foolish, but also don't be shy.
The world is rapidly becoming a much smaller place, and the blockchain communities are no exception so connect with balanced, trustworthy and like minded people who are as invested in these ideas as yourself. The bigger the network, the better!
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