The Importance of Using Cold Cash for Crypto Asset Investment
The world of crypto investment has recently become a hot topic of discussion among the public. The huge profits obtained through crypto-assets make most people interested in starting investments there. According to data from the Commodity Futures Trading Regulatory Agency (CoFTRA) there are at least 4.2 million people who make crypto as an investment asset today.
Not a few millennials and gen Z are starting to be investment literate. Cryptocurrency is an investment instrument that is currently increasingly in demand by young people. In the midst of crypto investments that are on the rise, many take the wrong steps and instead only invest to follow the trend or FOMO (fear of missing out). Because they are in a hurry to follow investment trends, not a few have experienced losses in investing.
Investing with hot money or even with online loans often creates new problems, so it is advisable to invest in crypto assets using cold money. As is known, crypto assets are volatile or the price can change quickly, so the risk is also high. But now some people who are not very familiar with crypto assets are rash in making decisions.
Invest with cold money
Sentences that are often used when providing education about investment, namely use cold money when investing. Cold money in question is a term that is often used by investors. Cold money or idle money is idle money that is set aside in addition to funds for daily needs.
It is better if this cold money is specifically allocated for savings or as an emergency fund, so these funds are ideal for investment, right.
The difference with hot money
Hot money is money that is used for daily needs, so this money cannot be contested. The daily needs in question such as installments, transportation, food, electricity, and so on.
Investing yourself has its own risks. There are investments with low risk, medium risk, or high risk. Cryptocurrency itself is a type of investment with high risk, so it is advisable not to use hot money.
Tips for Investing Crypto Assets with Cold Money
As already explained, it is advisable to invest in crypto assets using cold money. For that, you must make a financial plan so that you can monitor your expenses and income in a month. From financial planning, it can only be known what percentage is ideal to invest in crypto assets. The application of this financial planning can also make you more disciplined and consider each of your expenses.
If you want to enter the world of investment, of course, it is very important to do an analysis. Don’t just follow the trend or FOMO. There are several analyzes that can be done before investing in crypto assets such as sentimental analysis, technical analysis, and fundamental analysis. You can read the further explanations here.
For beginners, to minimize losses in investing in crypto assets, you can diversify crypto. This diversification strategy involves investing funds in several different crypto projects with the aim of reducing the risk if one or more projects perform poorly.
For example, you can start by investing in two or three crypto coins that you have analyzed. So if one or more have a poor performance you do not immediately get a loss.
Using cold money does not only apply to investing in crypto assets but also to invest in other instruments. How do you already want to start investing after reading this article? Don’t forget to do your own research every time you want to invest (DYOR). Also follow developments about the crypto world in the Litedex community and our social media on Instagram, Twitter, and Tiktok.