Diversification with cryptos: how to spread the risk?

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I’m sure we can all agree that there is hardly any return to be achieved with conventional investment objects such as savings accounts and time deposits. In times of low interest rates, it’s almost going so far that you have to bring money with you if you want to keep your money safe in the bank. So alternatives are needed. One of these alternatives are the cryptocurrencies, and above all Bitcoin.

In order to trade the cryptocurrency, trading robots like immediate connect are increasingly being used, which automatically place orders in order to benefit from price movements. One of these robots is Bitcoin Profit. The dealer should be supported by such software and the Bitcoin Profit experiences are quite positive here. But also if you think about a manual investment in cryptos. Above all, diversification is important in order not to put your own financial situation in checkmate with a wrong move.

Which cryptos should I buy to spread the risk?

Diversification means dividing your investment into different areas in order not to suffer high losses if the chosen type of investment suddenly does not yield the hoped-for profit or even falls below the value for which you bought the investment. In the worst case, this can lead to the total loss of assets.

In this respect, it is best not to limit diversification to just one type of investment, such as cryptos, but to choose different investment options as a first step in diversification. In addition to the cryptocurrencies, there are also some alternatives that also bring a good and safe return. That would be for example:

• property
• Shares
• precious metals
• Valuables (art, wine, cars)

You can now diversify even further within each of these investment types. This ensures the best possible distribution.

It should be noted, however, that this is about investment sums that have a certain volume. It is also about safe and long-term investments. This approach certainly does not apply to those who may only invest a small sum but would like to achieve a high, albeit risky, return.

Diversification in cryptocurrencies

As mentioned, Bitcoin is the cryptocurrency that has probably had the greatest success so far. Experts are expecting further price increases in the near future. Ether ranks second in the hit list of cryptocurrencies. However, since ether is much younger than bitcoin, it has experienced its increase in value in a comparatively shorter time than bitcoin and great things are still being predicted for it. For 2021 alone, it is expected that the value will surpass the US$ 3,000 mark.

The number 3 cryptocurrency, Ripple, may also be worth investing in. Other cryptocurrencies to keep an eye on are Litecoin as “The Hidden Champion”, EOS, Binance Coin and Tether.

The amount of money that you want to invest in cryptocurrencies clearly depends on the risk tolerance of the respective investor.

Diversification when investing in stocks

But there are also important things to consider when buying shares . Perhaps one is tempted to place the entire portion of the sum intended for investing in shares on one card, i.e. on one share. That may give an insane return on the stock that meets expectations.

However, this also means that the entire sum disappears into nirvana if this one share experiences a total crash and from then on only ekes out its existence in the share portfolio as a penny stock. Here one can perhaps still hope for a price explosion, but whether that will happen is in the proverbial stars.