I'd like to present a simple investment strategy that you can apply to invest in crypto currencies. This is based on the dollar cost averaging strategy and the portfolio rebalancing strategy.
Crypto currencies are very volatile (see https://coinmarketcap.com/) and follow pump and dump patterns. You can of course trade this. But trading requires a lot of time, skill and mostly luck. For the busy long term investor it is much better to apply the following system:
- Invest up to 30% of your monthly savings in crypto every month
- Diversify by keeping equal amounts in different currencies or coins.
- If one holding becomes more important than the other, sell a bit to reduce your holdings in that coin.
- Inversely, buy more of the coins that got cheap.
- Buy the most liquid (highest market cap and trade volumes) coins only (like bitcoin, ethereum, litecoin, dash, monero)
- Be adventurous and put 10% of your holdings in promising ICOs
Why 30% max? Because everything may go down to zero. Invest what you can afford to loose. You should also invest in real estate and company shares. Why buy every month and not in one go? Imagine we are the top of the market and just after you buy, the market does -70%? Now if you put only a little money and next month you could buy a lot more coins on a massive discount.
Let me know in a few years time if I made you rich!