Did you know that the cryptocurrency market is worth roughly $1 trillion? With such a staggeringly large market, it’s understandable why people want to jump into the industry. To that end, understanding crypto portfolio management is a crucial factor.
If you’re curious about crypto investments, we’re here to help. Read on to learn about how to meet your financial goals using crypto.
What Is an Investment Portfolio?
To start, what is an investment portfolio? If you’re interested in investing, there’s a high chance you’ll come across the term.
A portfolio is your collection of investments, to simplify. Your investment portfolio contains everything that you have an investment in.
When looking at your portfolio, you can see all the investments that you’ve made. By keeping your assets organized in such a way, you make future investments easier.
Benefits of an Investment Portfolio
An investment portfolio can help you keep track of your investments, how much you invested, and when. With this organization, you can better work to maximize your returns.
Not knowing how long it’s been since you invested can make it challenging to weigh the long or short term. You may also fail to keep proper track of your profits.
One of the best benefits of an investment portfolio is that you can see your diversity. Investment diversification is crucial to defending your profits and investments.
In investing, it’s best not to have too much in one asset. If you’re overcommitted, you’re vulnerable to losing more on a bad market day. If 100% of your investment is in one crypto and that crypto drops, your investment takes the same hit.
Crypto diversification can help you avoid such a situation. With more cryptos in your portfolio, one being hit won’t hurt your investing as much. You’ll also have the option of switching how much money you have in each investment, should you find it necessary.
You also stand to maximize profits better. Every separate asset in your portfolio is another chance for a bullish market day. On the best market days, you may find a large chunk of your investment portfolio turning bullish.
In short, portfolios help you stay organized and keep your investments informed. They can help you to improve your investment strategy and ensure you’re making the most of your crypto investment.
How Can a Professional Help?
Now that we know more about portfolios, it’s likely something you can manage yourself, right? Why bother building your portfolio when you could join a hedge fund? These questions are one point of view, but underestimating a professional manager is a mistake.
Investing is difficult, risky, and requires a great deal of knowledge. Active management is a time-consuming and stressful occupation. So why take that burden on yourself?
Hiring a crypto portfolio management professional is a great way to improve your portfolio. Here’s a small selection of the dozens of perks of hiring a professional.
Understanding the Tools
If you’re starting on your investment journey, you may find yourself overwhelmed. There are plenty of tools and platforms to understand.
Crypto is particularly difficult to comprehend at first. Traditional stocks are easier to quantify, understand, and select. Many investors choose stocks they’re personally invested in, such as medical marijuana or gaming.
There are similar personal investments for crypto, but they’re more challenging to form. You also have multiple platforms and tools you’ll need to understand. Even simple cryptocurrency bar charts can feel alien at first!
You can find platforms that allow you to trade in dozens of coins. However, you can also find platforms that focus solely on a few cryptos. Some are devoted entirely to a single crypto!
All of these platforms and tools can overwhelm new traders. Your professional manager can navigate these tools with ease and experience.
Bringing in a professional manager helps you skip the growing pains of learning new tools. You may let a manager handle your portfolio until you’re comfortable. Then, once you feel you’ve learned enough, you can regain control of your portfolio.
Overall, a professional manager is a great way to skip the countless mistakes any beginning investor is bound to make. Do your best to understand the platforms and tools, but if you’re struggling, bring in a professional.
Proper Mental Models
Another important factor of investing is the “mental model.” You can think of a mental model as a mindset or understanding of the industry.
Forming a mental model can challenge many investors. It’s easy to lose patience, get sucked up in a trend, or chase fruitless investments.
When these issues occur, your investment can struggle. You may lose a considerable amount of your capital or cash out too early.
Your portfolio manager has the mental models already built and knows what the industry requires. You can count on your manager to have patience, understand the industry, and work for your benefit.
Managers are also better at avoiding “FOMO trading.” The fear of missing out leads many investors, especially beginners, to make risky and impulsive investments.
Cryptocurrency is especially rife with FOMO trading. Many influencers support coins or cryptos in brief promotions. These cryptos are often less effective than investors are led to believe.
Your manager can avoid jumping into these trends so you can focus on maximizing profits.
Excellent Performance Tracking
Tracking your performance during trading is another vital step of active management. How do you know you’ve made a good choice if you aren’t following your investment?
Many beginning investors are disorganized. Even experienced investors may fail to keep proper tabs on their investments.
Checking daily and seeing how your investment has grown can help you predict trends. You can also see what assets are performing better than others.
If you drop your capital in and check back to see that it’s fallen, it isn’t easy to know why. Crypto is exceptionally volatile, so keeping proper track of your performance is crucial.
Your manager can keep a comprehensive report on your investment’s performance. That way, you and your manager know which assets to focus on (or ignore) in the future.
Deep Experience
One of the essential things in trading is the experience that comes with the industry. Of course, there’s no way to rush experience—you learn as you go!
Wouldn’t hiring a manager to take over the work for you shortchange your experience, then? What’s the benefit of having a manager do the trading while you learn nothing?
Ideally, you would take part in your investments as well. You can communicate with your professional manager to see what moves were made and why. You can also keep track of your assets and your manager to learn as you go.
You also have the option of saving some capital outside of your primary investment fund. With this extra capital, you can invest as you see fit and compare your performance to your manager’s. Just be careful not to feel competitive—you’re both there to maximize your investment!
Hiring a manager doesn’t cheat you out of earning experience but amplifies your experience. You also don’t need to learn every lesson the hard way. Your manager can teach you to avoid specific trades without you losing hundreds of dollars to learn the lesson.
Strong Diversity and Knowledge
Above all else, your manager brings a more profound industry knowledge of trading and cryptocurrency. There’s more to your manager’s ability than tools and avoiding bad trades.
Your manager is a professional with years of experience in the investing industry. Many professional managers also have backgrounds and education in finance.
Additionally, most managers make investing their full-time occupations and hobbies. They’re up to date on the latest trends, upcoming and collapsing currencies, and more. The knowledge managers bring isn’t something you can easily learn, certainly not quickly.
Your manager will also understand what makes your portfolio genuinely diverse. Is splitting your portfolio into halves between Bitcoin and Ethereum the necessary diversity? What about dozens of investments into minor cryptocurrencies worth minute fractions of a penny?
Adding diversity to your portfolio is more than maximizing how many cryptos you’ve invested in. Understanding which cryptos are worth investing in is more important than a shotgun approach. Your manager has this knowledge and continues to learn more each day.
Using Proper Crypto Portfolio Management
Crypto portfolio management is a demanding occupation that requires years of experience and a deep understanding of the industry.
Jumping into investing as a beginner is a risky move made safer by jumping in with a professional. Your professional manager can help you diversify your investment, maximize crypto returns, and avoid common beginner mistakes.
For more information on making your jump into cryptocurrency investing, contact us.
