Cryptocurrency volatility can have a significant impact on your portfolio when market swings occur. A serious drop in crypto value can slash your assets and potentially jeopardize reaching your long-term financial goals.
Robert Kiyosaki, author of “Rich Dad Poor Dad,” recently shared his insights on how to stay up when Bitcoin prices are down. Here are nine things you should do, according to Kiyosaki.
1. Stay Up to Date on Crypto Trends and News
Staying informed on the latest cryptocurrency trends and news can certainly help you get ahead when it comes to crypto investments. Not all cryptocurrencies are worth investing in, and many coins can be a riskier investment than others. Be sure to do your research and use discretion before investing, especially when crypto prices are down.
2. Stay Focused on Long-Term Financial Goals
Hitting your long-term financial goals should be a priority. Cryptocurrency volatility can have a significant impact on your portfolio when market swings occur. A serious drop in crypto value can slash your assets and potentially jeopardize reaching your long-term financial goals. Carefully review your long-term financial goals before buying more Bitcoin when prices are low.
3. Set Clearly Defined Milestones
Be sure to set clearly defined financial milestones before sinking your money into cryptocurrency. For example, maybe you’re saving for a down payment on your first home or you need to buy a new car. While crypto prices can soar, they can also come crashing down. Saving for these goals might warrant other forms of saving and investing that are less volatile, like parking your money in a high-yield savings account or investing in low-risk mutual funds.
4. Diversify Your Investments
Diversification is key to shielding your money from volatile market swings, often associated with cryptocurrency. It’s advisable to have a healthy mix of cash emergency savings, stocks, bonds, ETFs, and mutual funds to mitigate your risk and ensure long-term financial growth. Once you’ve achieved a healthy mix, then you might consider buying some Bitcoin.
5. Practice Discipline and Patience
While crypto market swings can be frustrating, it’s crucial to exercise discipline and patience when investing in any type of cryptocurrency. If the price of a coin drops significantly, it can be tempting to sell it to cut your losses. However, being patient and holding for the long term can result in improved returns over time. Be careful not to be too emotional or impulsive when investing.
6. Practice Dollar-Cost-Averaging
It might seem smart to buy stocks only when prices drop, instead of buying them when prices are up. However, this strategy typically doesn’t yield the best results. Consider dollar-cost averaging instead: consistently investing in stocks at regular intervals, regardless of the price. This practice usually yields better returns over time.
7. Improve Your Mental Well-Being
Investing is very important to improve your financial standing. However, your mental well-being is arguably more important. When Bitcoin prices are down, take time to center yourself and focus on relaxation. This can mean taking a hike, enjoying the great outdoors, engaging in meditation, or watching a funny movie — whatever activity brings you comfort.
8. Build a Financial Safety Net
Before investing in Bitcoin, be sure to build a financial safety net first. As a general rule of thumb, you’ll want to save 6-9 months’ worth of living expenses in a high-yield savings account (more if you can). Ensuring you have cash reserves can protect you from life’s surprises, like a huge medical bill or a necessary car repair. It’s safer to buy crypto once you already have a sufficient financial safety net.
9. Create a Mindset of Resiliency
Partake in activities that promote resilience. These can range from journaling, self-reflection, therapy, or exercising. Your mindset guides your investment decisions which can determine whether you reach your long-term financial goals and dictate how you react to market swings. So, building a more resilient self is key to making more sound investment decisions, which is especially important when investing in Bitcoin and other crypto.
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