How to Create a Long-Term Crypto Investment Strategy

We wish that cryptocurrency were a get-rich-quick type of thing, but the reality is—it’s not. Unless you get really, really lucky (and we do mean really lucky), chances are you will have to spend at least some time in the cryptocurrency market in order to make a profit.

From what we’ve seen (and experienced ourselves) the best cryptocurrency investment strategies are the long-term ones, but how do you create a long-term strategy? Read on to find out.

1. Set Investment Goals

Before we dive into the nitty-gritty aspects of creating a cryptocurrency investment plan, you need to take a look at your own finances and decide your personal goals. Are you looking to make a passive income? Or do you just want a nest egg for the future? It’s important to make these decisions now as they will influence how (and when) you invest.

2. Choose a Strategy

In the aforementioned step, you set investment goals for yourself. Now it’s time to turn those into a general strategy.

Passive Income

If your goal is building passive income, you’ll want to focus on staking and yield farming. It’s okay if these words are foreign to you now, as learning about them is in step 3.

Nest Egg

For building a nest egg, the best options are hodling (buying a quality cryptocurrency and just holding on to it), and NFTs. Both have their pros and cons, which we will discuss later.

3. Choose Your Risk Level

By now, you should have narrowed down your personal goals, as well as seen at least two options for your strategy. Now it’s time to choose how much risk you are willing to expose yourself to.

Don’t be mistaken, investing in cryptocurrency is always risky, but there are a few options that are more risky than normal. For example, if you choose passive income, staking is less risky than yield farming. For those who want to build a nest egg, hodling tends to be less risky than investing in NFTs.

So, decide whether you want to go with the riskier option, or the less risky one. If you are struggling to decide, know that you can pursue both, but since cryptocurrency is already considered to be a diversification from a fiat portfolio, you may find yourself spread thin depending on the capital you have available to invest regularly.

4. Study Your Strategy

Now that you know where you will be directing your money, take a little time to evaluate all of the options that strategy has to offer. It might take some time to learn, especially if you choose yield farming or NFTs, but don’t worry—you don’t need to know everything before beginning your journey.

No time to study? Below are starting points recommended for beginners for each strategy:

·      Staking  Ethereum

·      Yield Farming Axie Infinity

·      Hodling Bitcoin

·      NFTs Solana

We aren’t saying to invest in these without research, just that these are good places to focus your research if you don’t want to spend weeks learning the ropes.

5. Decide How Much And When You Will Invest

The thing with a long-term strategy is that we aren’t expecting you to put in all your money at once. Only have $50? No problem, that’s actually better for our purposes. What makes a long-term investment strategy great is the fact that the barrier to entry is low, and you make money by being consistent—investing the same amount of money at the same time every month.

Generally, we recommend investing at least $50 per paycheck, but if you can afford more, go for it. Setting up auto-invest is the best choice, as it ensures you won’t forget accidentally. Do note this may not always be possible if you choose the NFT option.

6. Find a Platform

Of course, it’s a bit hard to set up automatic investments if you don’t have a platform just yet. For this particular case, we recommend choosing a platform you are already comfortable with, if possible. For example, if you chose staking or hodling, Coinbase or Binance will work just fine.

Some people will tell you to shop around and find the lowest fees, but know that with a long-term investment strategy, this isn’t always worthwhile. Because you will mostly be buying in, with an unknown divestment date several years in the future, and fees you see now would likely change before your divestment date anyway.

For those who chose NFTs or yield farming, it will take a little bit longer to find a platform. However, as mentioned above, for NFTs, a Solana account will work well. For yield farming, we recommend trying to buy into a pool, or if you can’t find one, searching for a farm that is already set up and profitable, which you can take over.

7. Set It and Forget It

This is the part that most people struggle with. For a long-term investment strategy, you will need to spend some time setting it up, but once you do, it’s time to step back. Don’t watch the news, and don’t panic if there is a dip. With long-term investing, the small market fluctuations mean nothing. We know it might feel different when you see the headlines, but remember, you are in it for the long haul.

Obviously, there are times when you may need to check in on your investment just to make sure everything is still going smoothly. We recommend scheduling a date once a year for this purpose. Anything more will have you sweating.

And just like that, you now have a long-term investment plan! Whether you found this process easy or not, the benefit is that once you do it, it’s done for a while! While we can’t guarantee any investment strategy discussed here will be a winning one, know that long-term strategies do perform well when set up correctly. If you have questions or struggle with what to choose, ensure you discuss your concerns with a financial advisor or someone you trust before investing.