Diversification

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Don’t put all your eggs in one basket. I am sure you have heard this before and the same thing goes for your crypto portfolio. All your money in Bitcoin, what happens when it drops? If you invest in only one thing your risk is far higher. You only have one chance to hit a big return.

But if you diversify your risk goes down and your chance of getting a profit goes up. Here is a general layout for how to diversify.

  1. Buy some coins you will hold on to long term. Even if you have only heard of Bitcoin don’t buy just that. On Coinbase you can buy Bitcoin, Ethereum, Litecoin, and Bitcoin cash. Get some of each or at least invest in two of them.
  2. Allocate 40-50% of your funds to these long term holds. If you do not want to buy any altcoins then put all your money into the above mentioned four coins.
  3. 25% into established and well know alt coins. These could be characterized as medium risk and generally people get 2-3 . These are going to usually be found in the top 20 listed on coinmarketcap.com. Some examples are NEO, Monero, Ripple, Dash, and IOTA.
  4. 25% into higher risk coins. These are coins that may not be well known and you have found out about yourself. A good place to start is to get 1-2 of these coins.

This is just a general outline of a diversified portfolio. How it is done can depend on many different factors. For example, money available to you, amount of risk you are comfortable with, and if you want to invest in alt coins.

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