In this first part of the series "Crypto index investing" we talk about:
- Stick to strategy
- The right mix
- Time Saving
- Rebalance
"Don't look for the needle in the haystack,
Just buy the haystack!"
- John C. Bogle -
Stick to strategy | How to take Right Investment Decisions at the Right Time? What is a good basic strategy? Active investors try to beat the market in all kinds of ways. Passive (index) investors follow the market and are satisfied with a competitive return. Choose either way and follow that approach consistently!
The right mix | This post we are going to talk about index investing. The basis of this strategy is to purchase a package of CryptoCoins that is equivalent to, for example, the Crypto20. You can also compile your own “index” based on experience and market research. But remember: keep this cryptocurrency forever and do not trade it on the exchange. Buy & Hold!
Time Saving | The big advantage of this strategy is that you only have to delve into the many types of CryptoCoins once. You apply this knowledge when putting together your mix and you hardly have to worry about your portfolio anymore. You can spend your time on other things! All you have to do is remain passive no matter what happens on the stock market.
"We continue to make more money
when snoring than when active."
- Warren Buffet -
Rebalance | After boarding, it is time to relax. You only take action for minor maintenance. Restore the original ratio of the Cryptocoins once a month. With rebalancing you sell the coins that have increased in price and you buy cheaper coins.
The chance that a currency that has risen in price will slow down is greater than that the ride will continue upward. In addition, the chance that the undervalued coins will rise in price is greater than that they will fall further.
You need to recalibrate the investment mix to restore the desired risk profile. In technical terms this is called: “Reversion to the mean”.
Which Crypto Coin do you think should not be missing from the perfect Index? Comments are appreciated!
