Investing is a crucial life decision, as it involves laying out your assets to build wealth. Exciting, isn’t it? Regular investing is a great way to achieve your financial goals, and with crypto assets garnering all the rage, it only makes sense to create an account on Binance and start adding them to your portfolio – especially since experts highlight the potential for making huge profits.
For instance, the price of Ethereum is projected to grow considerably in the future; some predict that it could surpass s $11,926.18 in the next five years.
However, if you decide to invest in digital currencies, setting realistic goals is key to a positive and successful experience. You can’t just place your hard-earn money on the market – creating an effective strategy is paramount, as it will help ensure you make cautious moves, thus maximizing the potential for long-term rewards.
Why is it so important to set realistic goals when investing in cryptocurrency?
Setting investing goals provides clarity, helping you create a plan and take the first step towards something unfamiliar to you. Getting started with investing can be nerve-wracking, especially given the market volatility.
Despite the successful stories, it is well-known that crypto also involves the risk of losing money (which is something that naturally scares people). So, understandably, you can feel genuinely overwhelmed when trying to figure out the best way to invest and how to keep your funds safe as you navigate the crypto space.
You need to consider different factors when setting an investment goal, including your investment understanding, time horizon, and risk tolerance, among other things that may impact your goals. It is scientifically proven that setting goals plays a considerable role in reaching financial success.
For instance, a popular study conducted by MBA students clearly highlighted that writing down your goals makes you more likely to achieve financial wellness than if you don’t set any goals at all.
As a rule of thumb, you should set SMART goals, which stands for:
- Specific: To set a specific goal, you must figure out how much money you want to save and why. Just like you’d do with any other asset, conducting detailed research is imperative when investing in cryptocurrency. Determine if you wish to take a short-term or a long-term approach – this is important because your goals will look different depending on your choice. For instance, the long-term approach is recommended if you want to build a diversified portfolio and invest regularly. However, taking the short-term route is more suitable if you want to achieve immediate financial goals.
- Measurable: After deciding to invest in crypto, you may feel perplexed about how much money you should put into this new market that is susceptible to swings. Well, in the crypto space, there is a golden rule that every smart investor follows: investing only the amount you can afford to lose.
- Actionable: When setting investment goals, it’s crucial to ensure they are achievable – otherwise, you may lose your motivation quickly. Don’t get us wrong; wanting to achieve more is perfectly fine. But it’s completely unrealistic to expect that you will become a billionaire right after you make your first investment. That will only set you up for disappointment. Instead, you should join crypto communities and ensure you read the right information. Before investing in a coin, evaluate its purpose and developers and read the whitepaper.
- Realistic: Professional investors use realistic indicators when looking for an asset to invest in. Essentially, this means relying on mathematic indicators and undertaking technical analysis, which helps predict future trends. A realistic crypto analysis is a critical aspect that investors should consider before setting goals.
- Time-Bound: Time is another factor to keep in mind when setting a goal because it will help determine the ROI. Not specifying the time limit when setting a goal is like investing money without understanding the benefits of doing so. Hence, you want to select a start and finish date for your goal. How much time do you need to achieve the goal using your resources? Is it a month? Six months? Three years? It all depends on the nature of your goal, so think about it carefully.
How to set goals effectively: Things to keep in mind
Before setting a goal, you first want to assess your current financial situation. This includes your income, expenses, debt, and assets. Only after you do so can you set goals aligning with your values. Here are some tips for setting goals effectively:
- Consider your capital. How can you invest in crypto if you lack capital? You can’t, of course! Think of crypto investing as a tournament: to stay afloat, it is paramount to survive the bearish markets and generate profits during the bullish period. When setting goals, you want to ask yourself whether you can withstand the downturns in the market and make decent returns without dipping into your emergency funds. Investing in crypto ultimately comes down to balancing risk and reward.
- Choose an investment strategy. What kind of crypto investor are you? This is an essential aspect of figuring out how to use all the resources available. Perhaps you prefer to flip coins constantly, or maybe you want to buy and hold. Whatever your preferred investment strategy, it’s essential to ensure that your portfolio includes assets with different levels of risk.
- Start small. Taking baby steps is essential when investing in crypto – in fact, it is the best approach to take! For instance, you can set the goal of making a profit of 10% in a month from now on. Although it may seem like a small amount, when it comes to investing, a small success matters more than you think, as in time, it helps you generate more and more capital. The gradual growth approach is much better than trying to get rich overnight.
- Monitor your progress. Your job is not completed once you start building your portfolio – you must ensure you’re doing the right thing by keeping track of your progress. One of the best ways to evaluate your success is through a financial planning tool or an app that will show you whether you are on the path to achieving your goals successfully. If not, you should be ready to change your investing approach by making the necessary adjustments.
The bottom line
It can take time to understand the intricacies of the crypto space. You must conduct comprehensive research and follow the trends in the market. Above all, it’s essential to set practical goals to put you on the path towards successful investing, helping you thrive financially in the long run.
