Buying Bitcoin, Ethereum? Earning Steem?
From my last post I discussed my 4 top tips for building a cryptocurrency portfolio. These tips included; (in short)
1./ spreading the wealth (buy multiple currencies to create diversity),
2./ keep building (topping up your amounts allowing to smooth out any peaks and troughs of market volatility,
3./ know when to get out (keep updated on industry trends),
4./ keep a watchful eye on commissions (understand fees when buying/ transacting coins).
So you can either ‘set-&-forget’ your currencies or you can watch their performance over time. If you are like me, you’ll enjoy watching your coins movement and spending time learning about them and their applications.
I’ve built a simple spreadsheet to track them over time using CAGR (Compound Average Growth Rate). CAGR is a progression ratio that provides a constant rate of return over a set time period. In other words, the increase or decrease in value between two time periods (e.g start and end of a month). I’ll share a simple formula that you can use in excel to achieve this.
*This is a fictional spreadsheet with coins, values and dates made up. See diagram below.
Step 1: Create a spreadsheet with your currencies in Column A and the amount you have invested in Column B.
Step 2: In Column D put the price of each of the currencies
Step 3: In Column E. This is the amount of ‘coins’ you own. The formula is: =B4/D4
Step 4: In Column G we have the latest date
Step 5: In Column H we have our latest value of our investments. The formula is G4*E4
Step 6: Is our CAGR. Us the formula: =(G4/D4)^(1/(2-1))-1
You can then drag this across the other boxes.
Step 7: In H13 we can look at the latest total of our investment. It has gone from $8000 to $12,309.40 in one month..
Step 8: Finally I have given a ROI in H14. Use: =((H13-B9)/B9)*100/100
This gives us an overall ROI (return on investment) of 53.87% over the month.
I hope you find this simple spreadsheet helpful.
Remember:
The Bottom Line
Investing can, and should be fun. Treat it as educational, informative and rewarding. By having a little bit of discipline and using diversification, your long-term rewards should be beneficial. Enjoy.