Be sensible and follow all of the basic rules of investing. A few people have got burnt fingers by not following some of the most basic common sense rules which apply to all forms of investing. I have made a list of the main ones to consider. Here they are.
Number one: Invest only discretionary money in Cryptocurrency
The money you are using to purchase Bitcoin, Ethereum, and the like must be money you can fully afford to lose. It must be discretionary spending money. You wouldn't go to the races or the betting shop with your retirement fund and use that to gamble with. Cryptocurrency investing has to be treated in the same way. It is highly volatile. The number one rule is to purchase cryptocurrency with money you can fully afford to lose using only your discretionary spending money.
What is discretionary spending money?
That is up to an individual's own priorities and personal circumstances. One person may consider money set aside for a holiday to the islands as discretionary spending but someone else may not want to risk that money in Bitcoin.
Number two: Assess the risk
As with any investment it is important to assess the risk. It is no secret that Bitcoin is volatile but if you abide by rule number one then there will be little or no change in your financial situation if the cryptocurrency market takes a tumble. Market volatility is not the only risk investors in some countries have to face. China imposed a blanket ban on all crypto transactions in order to stop all cryptocurrency related activities.
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