What should you invest?

After the cryptocurrency market crashed recently things now seem to have calmed down and all set to go on a bull run once again. Many people are thinking about getting in to cryptocurrencies at this point, but how much should you invest?

So before I even start about cryptocurrencies: Do you have any major debt or do you not have any savings at all? Start by paying it off or creating that financial buffer. Safety first!

“Never invest more than you’re willing to lose” is what the smart people always say, but how do you know how much that is?

Cryptocurrencies got me started with investing and personal finance when I put my first money in Bitcoin in January 2016 and it has been an amazing 2 years for me. Still, even though I’ve made incredible gains in crypto in the past, I’m not putting all my money in cryptocurrencies.

The way I’ve learned to think about my finances in the past 2 years is by dividing my income in three major buckets: One bucket with money I can spend, one bucket with money I save and one bucket with money I invest. You can play around with the way you divide your income over these three buckets. Obviously it’s best to allocate as much of your income to saving and investing as possible if you want to grow financially, but then again you also want to have a life. You’re doing better than most people if you can manage a 70/10/20 ratio.

In the investment bucket I also allocate my money in three different ways: Security, growth and dream bucket. Again you can play around with the way you allocate your money here. Generally when your younger you can allocate a bit more money in the growth and dream areas of your portfolio, whereas if you’re older you would focus more on security.

As I’m quite young (26) I allocate my portfolio 40% security, 40% growth and 20% dream bucket. And it’s only that last 20% (of the previous 20%) I recommend anyone to invest in cryptocurrencies. As much as I love them, they truly are an extremely risky and volatile investment!

Most of the idea’s about income allocation I used above I got from Tony Robins’ book “Money Master The Game” which I recommend anyone who has an interest in improving his or her personal finance to read.

So this is the strategy I currently use and it has served me well so far. I’m very curious about the way you guys approach investing in general and investing in crypto specifically. Please leave a comment in the comment section bellow.

Cheers,

Peter

Photo by Andre Francois on Unsplash