Mark Tencaten - Should you invest all your Money in Cryptocurrency?
As per Mark Tencaten, the major draw of cryptocurrency investing is the potential for a significant return on your investment. Since cryptocurrency is so erratic, it may make you wealthy. Alternately, you may lose virtually all you invested in a matter of seconds.
If you follow cryptocurrency news, you've certainly read accounts of people who invested all their money there. The fortunate individuals have even succeeded, with some earning millions of dollars. During bull markets, success tales like this become far more prevalent and are sufficient to leave you wondering, "What if?"
Mark Tencaten says to imagine that you choose to invest all of your money into cryptocurrency. You may expect a couple of things with absolute certainty, despite the fact that it is impossible to forecast what the outcomes would be.
Even greater emphasis is placed on secure storage.
Choosing a storage location for a cryptocurrency is one of the issues it presents. There isn't a perfect answer, which is concerning if you invest all of your savings in cryptocurrencies.
Storing your cryptocurrency with the application, exchange, or stock trader where you purchased it is the easiest choice. From a convenience standpoint, this is ideal because you don't need to move your cryptocurrency anyplace. Additionally, you may reset your password to gain entry to your account if you forget it. But according to Mark Tencaten, there are certain drawbacks to doing this with your cryptocurrency:
· Scammers frequently target crypto exchanges. You must safeguard your login credentials and be on the lookout for phishing schemes.
· You might lose your cryptocurrency if the exchange fails. Exchanges aren't often nearly as secure as they look, as the fall of FTX has demonstrated.
Alternatively, Mark Tencaten suggests you might utilize one of the several crypto wallets as storage. Your cryptocurrency is totally in your control when you use a wallet. This implies that even if the platform where you purchased it closes, you won't lose it. However, if you lose your wallet and the recovery password for it, you will also lose access to your cryptocurrency and will not be able to retrieve it.
Even if you are fortunate, you will still need to make difficult choices.
The ideal situation is for your cryptocurrency investments to be profitable. This is clearly a long shot. Even if it does, what happens next may be far more difficult than most individuals realize.
Suppose you decided to invest your entire $50,000 in cryptocurrency. Your choice was successful, and your assets are now worth $100,000 six months later. The question is, what do you do right now? You might:
ü Just leave things untouched and keep everything the same. After all, if the value of those cryptocurrencies continues to rise, you don't want to lose out.
ü Profits should be kept, but some money should also be invested. For instance, you may sell $50,000 worth of cryptocurrency to recoup your initial investment and keep the balance of $50,000.
ü You should sell everything and pocket the $50,000 profit. You won't be in danger if the value of those cryptocurrencies drops this way.
Even when you're in a fantastic situation, choosing what to do is not simple. You'll also be subject to short-term capital gains taxes if you decide to sell something since you didn't keep your investment for a minimum of a year. Ordinary income is taxed like ordinary capital gains. You can wind up owing crypto taxes equal to 30% or more of your profits, depending on how much you earn and your other sources of income.
A lot of investors want to include cryptocurrencies as alternative investments in their portfolios. There is nothing improper about that, within reason. Mark Tencaten advises you can go for it if and invest 5% to 10% of your portfolio in cryptocurrencies because you believe it's future or you're motivated by the possibility of financial gain. But it's not advised to invest everything in cryptocurrency. This is the reverse of what you're looking for in an investment plan since it is just too risky. When it's all hypothetical or when you only have a tiny percentage of your cryptocurrency portfolio, the market's volatility is much easier to bear. When cryptocurrency makes up the entirety of your portfolio, the volatility is both less interesting and more stressful.