You’re excited to invest in cryptocurrency. That’s great — but you shouldn’t let that excitement cloud your judgment. This is how mistakes get made — and how you lose money. So, read ahead to find out some of the biggest crypto mistakes you should try to avoid:
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Mistake 1: Not Having Safety Nets
Before you do any investing, you should have a personal budget. You should have control over your debt repayments — you know that you can pay your bills on time, your credit balances are well below their limits and you don’t have bill collectors coming after you. And, of course, you should have an emergency fund that you can use to handle any urgent, unexpected expense that comes your way. These safety nets are essential.
Think of your finances like a home. Before you think of expanding on the house and adding renovations, you should make sure that the foundation is safe and strong. You don’t want to build on something that’s vulnerable.
Mistake 2: Using Your Emergency Savings
Some people make the big mistake of using their emergency fund to invest in cryptocurrency. Why is this such a big mistake? First, your emergency savings are not guaranteed to grow exponentially — cryptocurrency is an often-volatile investment. While this may be a fine risk to take with some of your money, it’s not wise to do with your emergency savings.
Second, using your emergency fund to invest in crypto will defeat the entire purpose of your safety net. Now it can’t help you in a time of need. What will you do if your car needs urgent repairs? What if your roof has a leak? What if you need to rush to the dentist for an emergency appointment?
If you’ve made this mistake, you should try to withdraw your investment as soon as possible to cover an emergency right away. If you’ve lost too much through this risky investment, you can turn to online personal loans as a solution. A personal loan could give you the funds that you need to resolve the issue and move forward. Then, all you need to do is manage the steady repayment plan.
When applying for an online loan, make sure that it’s available in your location. So, if you’re living in Honolulu, you should take a look at the personal loans offered through CreditFresh in Hawaii to deal with your emergency. You can rest assured that they have loans available in your home state.
You can avoid this entire situation by keeping your emergency fund far away from your crypto investments. If you want to see your emergency savings grow, you should move it into a high-yield savings account — this type of investment is low risk and won’t dismantle your safety net when something goes wrong.
Mistake 3: Falling for Scams
Another mistake that you should try your best to avoid is falling for a scam. According to the Federal Trade Commission, Americans lost over $80 million in cryptocurrency investment scams since October 2020. That’s a lot to lose.
How can you avoid falling for a scam and losing out on your investment? First, don’t click any suspicious links or messages offering crypto opportunities. If it’s not from a reputable source, ignore it. It’s likely trying to lead you to a fraudulent site.
Second, check out the tips for avoiding cryptocurrency scams put together by the Federal Trade Commission. Following all of these should stop your investments from getting into the wrong person’s hands.
These mistakes aren’t inevitable! You can follow these simple tips to avoid them and protect your finances.