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Bitcoin for Newbies: The Most Common Mistakes

It is not always easy to enter the world of investing. Obviously, it is not for lack of information. In fact, what happens is exactly the opposite. Information abounds too much. In fact, there is so much information available that it is all terribly overwhelming. Everyone seems to promote an agenda and it is not easy to identify the reliable sources. Who do we listen to?

“Bitcoin is going to rise” is not the best financial advice. That is the great fault of most of the so-called “influencers”. Price predictions are not financial advice. And the urge to get rich in a matter of months is not a strategy. The hunches of the “friend who knows a lot about that” all they do is feed our delusional thinking. Naivete and greed are the favorite vices of the novice investor destined to lose money.

Now, let’s talk about the most common mistakes when investing for the first time.

The idealization of Bitcoin

I’ve seen it a thousand times. The smart young man who experienced a mystical encounter with Bitcoin after watching a documentary on YouTube. In a matter of days, the bitcoiner culture is totally immersed and invests a lot of emotion in a specific narrative. He becomes the militant of a pseudo-political cause and pretty much assumes the personality of an Herbalife salesperson. He has not yet bought his first satoshis and is already trolling on Twitter against the dollar, the banks and the Federal Reserve of the United States.

Read on: Bitcoin: Is It Time To Invest Or Is It Too Late?

Calm down, people. Of course, everyone is within their rights to subscribe to whatever cause they please. However, when it comes to investing, it is important to keep things as cool as possible so as not to lose objectivity. We must remember that Bitcoin is not a messiah who comes to save us from all evils. Bitcoin is simply a code, created by a fallible person, used by fallible people, and promoted by fallible people. Its an instrument. A technology. It is not a sacred or magical object. Which implies that we can analyze, criticize, and redefine. We do well to demystify Bitcoin up front.

Putting Bitcoin first

Time to invest in Bitcoin It is not very sensible to start with Bitcoin. The reasonable thing is to start with the investor in question. Think of yourself first. What is your income? What are your expenses? Capital available? Debts? Age? Burdens and responsibilities? Experience? Country of residence?

The goal is to grow financially. As simple as that. But to grow it is necessary to know our financial situation very well. If my 95-year-old grandmother who lives on a modest pension and doesn’t understand much about investing expresses interest in Bitcoin, my recommendation would be to enjoy life and not think about those things. On the other hand, if my 10-year-old nephew asked me about investing, I would open a portfolio for him and donate some satoshis. Different situation, different solution. Obviously, medicine is not the same for everyone. A young entrepreneur, an unemployed person, a housewife or a retired millionaire is not the same.

Read on: What is the best strategy to invest in Bitcoin?

To invest we need capital. Do we have capital? How many? First, we must understand very well what is being talked about when we speak of “capital”. Here we are not talking about money per se. We are talking about capital. It refers to that money that we have exclusively to invest. In other words, idle money that we do not need at all. It is not the rent money. It is not the emergency fund. Nor is it the money to pay the credit card. It is what was left after all the expenses were made. From there, we design an investment strategy.

Invest with faith

Many invest in Bitcoin, because they think it will go up in price. As simple as that. Which on a first impression might seem reasonable, because, after all, that faith is the motivation behind any investment. Nevertheless, there is an abysmal difference between the pilot who flies airplanes and the madman on the roof of his house believing himself to be Superman. In the first case, we have a scientific faith. In the second case, we have a rather insane delusion. Faith without good sense is pure madness. We may have an illusion, but it is a mistake to be an illusion.

I always tell people: “Remember that Bitcoin can go down in price at any time.” Instantly, they answer me with a frown: “I don’t think so. A friend told me (a friend who knows a lot about that) that Bitcoin will keep going up. ” Obviously we are dealing with a person who invests with pure faith and lacks a strategy.

Don’t think about the risk

We are wrong if we think that Bitcoin is a safe investment. By definition, every investment involves risk. In fact, the high profitability of Bitcoin is closely related to its level of risk. Everything that goes up can come down. Obviously this is not a criticism of the asset. It is simply a description. When we talk about risk, we are talking about volatility. The more an asset rises in price, the riskier it is. The idea is to minimize the risk.

Risk is not a reason for discouragement or fear. Nor does it mean that the asset is bad for being risky. Risk is something that must be managed. If we buy high (near the historical maximum) and use all our savings hoping to double the investment in a couple of months, here the risk is high. Secondly, If we buy at a good price (close to the annual minimum) and use a manageable part of our capital, having low expectations regarding price and timing, we are facing a much more mature investor.

There are several factors to consider when it comes to risk. The allocated capital, the attitude toward waiting, and the purchase price are probably the most important. Suppose we have a patient and sensible investor with a diversified and balanced portfolio. The investor who bought early at a reasonable amount and is willing to wait for years and decades is in a better position than the naive investor who does not manage his risk due to naive and reckless greed.

Keep reading: For the eternally indecisive: Is it time to invest in Bitcoin?

Think we are smart

It is not about intelligence. It’s about character. The most powerful weapons of a good investor are patience and objectivity. The investors’ enemies are fear, fantasy, and greed. It is the coldness of the methodical mind against the erratic of the impulsive heart. Invest in a habit. Let’s say it’s a routine. Boring and repetitive. It is something that is done out of habit. It is not a scheme to get rich overnight.

The reader may find these recommendations very obtuse. Here’s the irony of it all: Hot, money-obsessed heads are the first to lose their investment. Success requires self-discipline. It is a long-distance race. It is not the 100 meter dash.

Tammy Sewell is our Writer and Social at OICanadian.com. Tammy loves sports, she writes our celebrities news. She spends time browsing through several celebs news sources as well the Instagram. Email: [email protected] Phone: +1 513-209-1700

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