How to build an investment portfolio. Professional guide

Colin Baseman

The crypto market is a unique place because of its high volatility. One may make a lot of money in just one day, though lose it within the same time frame. The coins experience a high rise and a sharp decline which are so difficult to predict, especially if you are not a professional trader. The key to risk-management on the crypto market is not putting all your eggs in one basket. Make sure that you diversify your portfolio. How to do it properly?

What is a cryptocurrency investment portfolio?

Cryptocurrency portfolio refers to all the assets of the investor, which are associated with blockchain technology, collected together in order to generate income by selling them at a higher cost. The article "Investments in ICO" offers to learn more about investments in blockchain projects. 

The main purpose of the investment portfolio is risk diversification. By investing all funds in just one asset one would either increase his capital or lose the invested funds. The use of several cryptocurrencies allows to reduce the risks of fixing losses.

The scheme of forming the investment portfolio

A conservative portfolio is a good solution for inexperienced investors. It is characterized by low risks. This portfolio includes: 

  • Top coins – 80% of invested funds
  • Promising cryptocurrencies at the stage of growth – 15%
  • Cheap tokens that can "go to the moon" - 5%

If you already have some experience in investing, you can form an aggressive portfolio. It includes:

  • Main TOP cryptocurrency – 60%
  • Popular coins not included in the TOP-30%
  • ICO – 10%

Many experts recommend to include bitcoin in any portfolio, since it is mainly the altcoins rate that focuses on it.

Principles of asset selection for investment portfolio

Experts recommend diversifying portfolio by investing in 3-9 cryptocurrencies. When selecting them, the following criteria should be taken into account:

  • Perceptivity. It is good that the coin solves some real problem of users and can be used practically, but not just as money in the account. What advantages does cryptocurrency have? This can be a high exchange rate, complete anonymity of transactions, etc.
  • News background. In what context do the media talk about this cryptocurrency? Is it mentioned or listed on trustworthy web-sites? Isn't it just a some kind of a manipulative hype?
  • Trends on cryptocurrency exchanges. A large trading volume reports that the coin is in demand. Taking into account the cryptocurrency's behavior in long terms together with its market rate is crucial. The growing popularity of the token is a good sign, since the token rate may sometimes be artificially inflated by manipulators
  • Own community. It is good to have a large community behind the cryptocurrency. An additional plus is the presence of an open platform for developers and an official community.

Forming a cryptocurrency investment portfolio is a smart step to start with. Use it wisely. You should carefully choose proper coins and find ways to balance the risks and potential profitsPay attention to each and every feature and factor when adding a cryptocurrency. This will allow you to select the best options for investments.