Recently a few friends have asked me how they can buy Bitcoin. I'm not a financial advisor, but here are a few things that come to mind:
Don't invest what you can't afford to lose.
If the price falls 50%, you need to be able to wait whilst the price recovers.
Write down the following:
- How much can you afford to invest? Consider how much cash you will need over the next year, how long it would take to recover any losses, etc.
- How long do you want to invest for?
- How much profit do you want to make? Don't have an open-ended goal.
You will need to get good at identifying and ignoring the following, even from your friends:
- Fake news
- Fear, Uncertainty, Doubt (FUD)
Don't trust without verifying.
The previous point is really important, and also difficult.
By putting something you care about in a risky situation (it is risky) you will experience anxiety and excitement. You need to control your psychology and identity when other people are trying to manipulate you. This is useful in all areas of life.
Investing is good mental exercise because money has an intensely psychological quality about it, and crypto currencies are the most intense trading experience there is right now.
Almost no one has a clue what's happening. Conventional economists and traders certainly don't. This is crypto-economics and the rules haven't been worked out yet. We've never had this tech before, and the internet has made everything - communication and innovation - much quicker. This is a powerful combination of factors and we haven't seen them play out before.
Take some time to read about the fundamentals and understand the tech as much as you can. Think about why people would behave in certain ways and what makes bitcoin useful, or not. Get started on this today, it will take some time.
If you're going to lose sleep over your investment, invest less.
Don't buy at an all time high. Do your research, wait for the price to correct. Prices fall. The chart at the top of the page shows the 20 day and 55 day moving average compared to the daily price. My opinion is that by early January the price will have returned to between the 20 day and 55 day average before beginning to rise again.
Coinbase is a user friendly and reputable exchange, there are other good exchanges too.
Don't make financial decisions when you're feeling rushed. Check your psychology.
If you've bought some Bitcoin or other cryptocurrencies, don't store them on an exchange. Transfer them to a wallet that you control. If you don't own your private key, you don't own the asset. If you don't know what that means, google it (Point 8).