The saying “never put all your eggs into one basket” epitomize the golden rule of investing. Many investors stress the importance of diversifying an investment portfolio. And much like any financial portfolio, diversifying a cryptocurrency portfolio will minimize the risk of an investment yielding a low return.
Here’s our brief cheat sheet on the steps you should take to diversify your portfolio properly.
Diversify the length of investment too. Diversification is a cautious approach to investing, which calls for crypto investors to spread their funds across different avenues. Thus, if one asset from an investor’s portfolio takes a financial hit in the market, having a diverse portfolio of assets will mitigate the investor’s risk of a low return. With that said, you don’t only diversify assets, you should diversify the length of investments, too. With long-term investments, you can yield a long-term profit for additional security, while trading for shorter-term gains will help you to leverage the everyday market.
Do enough research. Some crypto investors don’t properly diversify their portfolio just due to the lack of research. This might be their biggest mistake ever since catching up with the market news and trends can suggest the next successful move like nothing else.
Go beyond coins. Once you’ve invested in enough of different coins, further diversify your portfolio across different applications, industries, and categories, such as utility tokens.