How much is too much? You’ll be surprised by what part of their income people invest in crypto

Reddit user reben002 told how much he hodls in cryptocurrency. According to him, more than 40% of his total portfolio is currently in crypto. Given the crypto winter, it sounds pretty dangerous. One of the leading cryptocurrency investing principles states that you shouldn’t invest more than you are ready to lose.

It turns out that the author is prepared to sacrifice almost half of his savings. Courageous, but is it reasonable?

At the beginning

Some newbie investors think it is enough to buy a few up-and-coming cryptocurrencies, and they will be rich in a few years. But if you randomly gather coins into a portfolio, you may earn nothing and lose all your funds in the worst case.

It is not easy to create a well-balanced portfolio: you have to consider all the risks, decide on the desired level of profitability, and choose a strategy. Also, you can’t simply copy a successful investor or trader’s portfolio because everyone has different goals, opportunities, and levels of participation. By the last point, we mean the amount of investment, in other words, how much of your primary income you are willing to invest in cryptocurrency. At this point, the key message is: invest only the money you’re ready to lose.

Crypto winter shows that cryptocurrencies are hazardous and volatile assets. Their value can skyrocket several times in a single day and collapse drastically. Therefore, experts don’t recommend investing all your extra money. They also advise against buying cryptocurrencies with all your savings or even more so with borrowed funds. Everyone knows this, but, unfortunately, not everyone follows this rule.

There is an opinion that the more often you invest, the higher the profitability of your portfolio and the lower the risks. It is more favorable to buy $5k worth of coins every month than to buy a $50k price of coins once. And the central issue is how much I should invest in cryptocurrencies. The fact is that the question is personal, as it all depends on your savings, income level, readiness to take risks, degree of interest in the industry, and how you belied in digital assets.

How much…

If you believe in the prospects of specific cryptocurrencies, you can hodl from 5–10% to 20–30% of your saving on them. This is at least what BTC investor Paul Tudor Jones advises. Also, many do not recommend investing only in cryptocurrencies. reben002 followed this strategy and kept his funds in the following ratio:

Crypto: 42%

– ETH: 38%;

– BTC: 4%.

Other: 58%

– Global index funds: 58%.

Is that a lot? Let’s compare with other Reddit investors who have willingly shared their strategies.

• trustjosephhs — 1%, he calls himself “microplankton.”
• 20seh — 50% cash, 25% index fund, 25% crypto (ETH, ADA, DOT, ALGO, BTC). 50% in cash? Why?
• LordBobTheWhale — 10% cash, 75% 401k (it is a retirement saving and financing plan that employers contribute from the salaries of employees), 10% IRA (Individual Retirement Accounts), 5% crypto (50% BTC, 40% ETH, and 10% alts: XRP, ADA, SOL, ALGO, and DOT).
• Intelligent_Page2732 — almost 100% in crypto. It is worth mentioning that he is hodling not everything in the same basket: multiple exchanges and wallets. Someone likes to live dangerously, doesn’t he?
• SpuddyA7X — almost 33% in crypto, 33% stocks, 33% cash. It’s about balance, haha.
• vnielz — 95% in crypto (70 in BTC, and 25 in ETH), 5% in cash (only needed for everyday expenses/bills);
• monsieur_feu — 35% dividends, IRA 20%, 20% in crypto, 15% in cash, 10% in gold and silver. Full house!
• Informal-Comfort-231 — 50% in crypto, 50% S&P 500 is a stock market index tracking the stock performance of 500 large companies listed on exchanges in the United States.
• Illuderis — 90% in crypto, 10% in stocks;
• ThenScore2885 — 10% in crypto, 5% in physical gold, 25% in cash.
• and the last one is Puzzleheaded-Pin-587. Excepting property, he hodl 62% in crypto and 38% in Costco stocks.

“I could get in as high as 80% crypto this bear market, but we’ll see how I feel. My portfolio was built with ETH as a backbone, and I expect to hold it at least through the next bull. After that, I was looking for solid projects sub $200m Mcap, and focusing mostly on DeFi (again for the next bull run) and identity protocols for long-term hodl (+Arweave),” he said.

The Redditor also added that if he can make 20x, he will probably start skewing things far more conservatively, which means, as he said, “shifting into 50% COST stock.” He invests in the following cryptocurrencies (in descending order): ETH, SHR, LYXe, PNG, CSPR, AR, GRT, AAVE, COMP, CRV, ALGO, MANA, CAKE, DOT, SOL, SUSHI, HEX.

As it turned out, the post’s author is not the only one who invests about 50% or more of his savings in cryptocurrencies. When sharing their strategies, people also wrote how old they are, and we noticed that most people under 40 years old take such risks, investing 50% or more in cryptocurrencies. This includes reben002. According to him, given that he is relatively young, he can afford to take such risks. What about you, guys? How much do you invest in cryptocurrencies?