Hi Holders! Let’s talk about how to create Cryptocurrency Portfolio? And the first part is about Asset Allocation Strategy! But before we talk about how typical cryptocurrency investor or any investor create their portfolio.
There are two approaches to creating an investment cryptocurrency portfolio. First is philistine, from the bottom up, from selection of individual instruments and their collection in the portfolio. Second approach is professional, from top to bottom, goals and constraints of investor to portfolio structure and only then to choice of investments.
Talk about newbies! Usually beginners invest on a bottom-up basis. He looks for signals, reads forums, watches bloggers, reads HYIP books and the main question in his head is “Where to invest money?” As a result, he is looking for investment tools.
As a result, the choice of a novice investor becomes random.
He seeks advice or sometimes hears that it is necessary to invest in this tool. And at this moment he thinks about investment instruments. The result is not a portfolio, but a warehouse of investment instruments. Sometimes such an income can be profitable, not random and not very profitable, and most importantly – these are big risks.
The investment portfolio looks different.
Conclusions about investing newbies, from top to bottom:
1. Search for investment instruments without their analysis and evaluation
2. Acquisition of investment instruments on advice “Where to invest money?”
3. Random returns and big risks
Right approach to creating an investment cryptocurrency portfolio
This approach begins with a study of the investor, not a search for tools. It is important to understand goals, resources, risk attitudes, investment horizons, and other aspects of investing.
For example, not everyone is ready to sit a year or more with a drawdown of more than 30%.
In case of this approach, a strategy is developed. When you have an understanding of your strategy or your crypto portfolio strategy, you can proceed to the tactics, namely choice of specific tools.
Dividend shares are suitable for one investor, a crypto portfolio for another, a mix of stocks or a cryptocurrency for a third.
You must understand that all investors are different and portfolio strategy is different too. Everyone has their own investment goals, risk attitudes and investment preferences. You need to know the structure of your portfolio and understand it, because it contains your ideas and principles.
A simple rule, start with a strategy, start with yourself (with your own investment psychology) and go to tactics to choose investment tools.
Holderlab.io is a free service for automated crypto portfolio management with automatic rebalancing of assets (threshold or periodic), searching for efficient frontier and analysing assets using a correlation matrix and other crypto investments tools.