1. Vrishin Subramaniam: 2-5% of your net worth

Vrishin Subramaniam
Vrishin Subramaniam

Investors who are interested in crypto should have between 2 and 5% of their net worth in it, says Vrishin Subramaniam, founder and financial planner at CapitalWe. “Two to 3% is usually what we see for most clients who are not tracking crypto markets more than once a week.” 

The risks and volatility associated with cryptocurrency has much to do with its relatively short track record, at least compared to the stock market. Subramaniam advises clients that they can adjust their crypto strategies accordingly as more time passes and we learn more about its performance. But until then, Subramaniam recommends reducing your risk by keeping crypto holdings to a smaller share of your investments.

Why has bitcoin dropped?

The price of bitcoin and several other leading cryptocurrencies suffered huge falls in December 2021 and prices have been on a downward trajectory so far in 2022.

The Fed’s January meeting to decide whether to raise interest rates saw crypto fall along with other stocks and shares.

The bitcoin price is around $35,000, as of 24 February, according to data from Coinbase*. That’s a long way from the all-time high of $69,000 seen in November.

The recent turmoil has been caused by:

  • Uncertainty around rising interest rates in the US and UK, causing a sell-off in risky assets
  • China making cryptocurrency transactions illegal
  • Suggestions that Russia could ban cryptocurrency trading and mining, causing prices to plummet

There have also been threats of further regulation for cryptocurrency investments in the future.


How to Store Your Cryptocurrency

When we say “send it to your wallet,” we don’t mean you put your Bitcoin into an actual wallet. To store your currency, you need a cryptocurrency wallet, which is necessary to securely store the code that makes up your cryptocurrency portfolio. You can have either a software wallet or a hardware wallet. Software wallets are necessary to enable active trading, as they make accessing your currency much easier. If you sign up for a Coinbase account, you automatically receive a Coinbase software wallet.

Hardware wallets are physical devices — they look a bit like USB drives — and they are more secure than software ones.  You can use them for currency that you don’t expect needing frequent or easy access to. Think of a software wallet like a checking account, whereas the hardware wallet is more like your savings account.

Still Worrying About Making The Wrong Decision?

If you’re still afraid of investing in your first pieces of Bitcoin, follow these advice that will help you get started smoothly:

  1. Invest even $10 on any recommended cryptocurrency exchange or broker. This way you’ll get started and you’ll have a much better understanding of what it is to be a cryptocurrency investor.

  2. Divide the budget you had in mind and invest it over some time -. 1 month, 3 months, 12 months – it’s your call. But doing so will prevent you from making costly mistakes and save you money.
  3. Remember that you can still reevaluate your decision in the future.
  4. Choose the best platforms to buy Bitcoin. To make it simple for you, I’ve compiled the list of my favorite exchanges below. 

*eToro Disclaimer: Your capital is at risk

Now, let’s dive into my cryptocurrency-related recommendations, and specifically 5 factors you should consider when deciding how much to invest in Bitcoin and the best way to invest in Bitcoin.

Factor #5: Diversification

Diversification is a technique any mature investor uses to reduce the importance of luck. It means you will not only invest in cryptocurrencies but also allocate your capital to different investment vehicles, such as real estate, stocks, gold.

You can also leave some of your money at your bank to earn a small interest rate.

All in all, don’t put all your eggs in your crypto

All in all, don’t put all your eggs in your cryptocurrency basket. It would be like playing roulette martingale. You’ll win, and win, and win, but when you lose, you lose everything.

Diversification also applies to your cryptocurrency portfolio. Find out the 10 Best Cryptocurrencies To Buy Right Now

The ups and downs of bitcoin

It is hailed by fans as a market-disrupting liberation and demonised by many personal finance experts as a dangerous creation. One things for sure is that bitcoin is volatile. 

Since December 2020, bitcoin has enjoyed a theatre of dramatic ups and downs. We outline some of these here: is a bitcoin crash coming?

The problem is that the price of cryptocurrencies is not underpinned by any intrinsic value. It is determined by one thing: confidence, says Mark Northway, investment manager at Sparrows Capital.

So if you decide to invest, be prepared for a bumpy ride.

Cryptocurrency investing FAQs

How much money do I need to start investing in cryptocurrency?

In theory it takes only a few dollars to invest in cryptocurrency. Most crypto exchanges, for example, have a minimum trade that might be $5 or $10. Other crypto trading apps might have a minimum that’s even lower.

However, it’s important to understand that some trading platforms will take a huge chunk of your investment as a fee if you’re trading small amounts of cryptocurrency. So it’s important to look for a broker or exchange that minimizes your fees. In fact, many so-called “free” brokers embed fees – called spread mark-ups – in the price you pay for your cryptocurrency.

How does a blockchain work?

Cryptocurrency is based on blockchain technology. Blockchain is a kind of database that records and timestamps every entry into it. The best way to think of a blockchain is like a running receipt of transactions. When a blockchain database powers cryptocurrency, it records and verifies transactions in the currency, verifying the currency’s movements and who owns it.

Many crypto blockchain databases are run with decentralized computer networks. That is, many redundant computers operate the database, checking and rechecking the transactions to ensure that they’re accurate. If there’s a discrepancy, the networked computers have to resolve it.

How do you mine cryptocurrency?

Some cryptocurrencies reward those who verify the transactions on the blockchain database in a process called mining. For example, these miners involved with Bitcoin solve very complex mathematical problems as part of the verification process. If they’re successful, miners receive a predetermined award of bitcoins.

To mine bitcoins, miners need powerful processing units that consume huge amounts of energy. Many miners operate huge rooms full of such mining rigs in order to extract these rewards. As of early 2022, running the Bitcoin system burned as much energy as a medium-sized country.

What are altcoins?

An altcoin is an alternative to Bitcoin. Many years ago, traders would use the term pejoratively. Since Bitcoin was the largest and most popular cryptocurrency, everything else was defined in relation to it. So, whatever was not Bitcoin was lumped into a derisive category called altcoins.

While Bitcoin is still the largest cryptocurrency by market capitalization, it’s no longer as dominant as it was in the very early days of cryptocurrency. Other altcoins such as Ethereum and Solana have grown in popularity, making the term altcoin somewhat outmoded. Now with a reported 15,000 or more cryptocurrencies in existence, it makes less sense than ever to define the industry as “Bitcoin and then everything else.”

Is It Smart to Invest in BTC Right Now?

Bitcoin’s price has been declining for the past few weeks. It lost almost 20% of its value in the past seven days, so it’s safe to say that we’re in the middle of a bear market.

Source: coinmarketcap.com
Source: coinmarketcap.com

Market data shows that Bitcoin’s price will likely continue to fall in the near future. Most experts are predicting that it will find a support level at $30K, but we think it’s possible the cryptocurrency will go even further down. After all, we’re currently in the middle of one of the worst bear markets in recent years.

It is always better to invest in an asset when its value is going down; however, it can be hard to find the best entry point. What if you buy a hundred Bitcoins today at the price of $33K, but tomorrow (or a week later), it drops to $25K? Well, at the end of the day, it’s important to remember that trying to predict and outsmart the market will always be a gamble. 

Technical analysis from TradingView is currently giving Bitcoin a “sell” signal, so its price will likely continue to decline. That said, we recommend you to DYOR before making any Bitcoin transactions.

Wanna see more content like this? Join Changelly’s newsletter to get weekly crypto news round-ups, price predictions, and information on the latest trends directly in your inbox.

What Do You Need to Invest in Bitcoin?

You don’t need very much to invest in Bitcoin! You only need the following:

  • Personal identification documents

  • Bank account information

  • A secure internet connection

Keep in mind—if you’re going to be purchasing coins through a stockbroker, you may not need to supply your personal information or financial information because your stockbroker will likely have all that on record.

What Are the Steps for Purchasing Bitcoin?

The process to purchase bitcoin consists of four steps: choosing a venue or exchange to place your order, selecting a payment method, and ensuring safe storage for your purchased cryptocurrency. Depending on the type of venue chosen in the first step, there might be additional steps involved in the process. For example, if you purchase the cryptocurrency through Robinhood you might need to factor in additional costs for an online wallet and custody of your bitcoin because it does not offer these services.

Tips For Investing In Bitcoin

If you do decide that you want to try Bitcoin investing, be sure to heed the following tips:

  • Understand your risk tolerance: As mentioned before, Bitcoin is a high-risk investment, and you should carefully review your risk tolerance before you invest. If you don’t feel comfortable investing in volatile assets or only have a small sum of money to invest, you may want to consider other investment options.

  • Diversify Your Portfolio: The best way to protect yourself from investment losses is to diversify your investment portfolio. Your primary investments should be low-risk, like government bonds or index funds. Next, you should go for medium-risk investments, like real estate or corporate stocks. High-risk investments, like penny stocks or Bitcoin, should be your smallest and least-prioritized investments. Bitcoin is essentially the “icing on the cake:” the investment that could yield substantial profit but which you could still do fine without.

  • Start Small: If you’re on the fence, start small. Cliff Auerswald, President of All Reverse Mortgage, recommends investing $10 per week. “Many people still are unsure about whether or not crypto-currencies will pan out. With all the buzz surrounding crypto, though, many are still interested and don’t want to miss out,” he says. “One of the most effective ways to invest in BTC is to just put $10 a week into it. That way, it’s not a risk if it doesn’t end up panning out – but over time, you’ll have a healthy investment.”

When You Would Have Needed To Invest in Bitcoin To Be A Millionaire

The history of Bitcoin is volatile and turbulent. Long gone are the days that you could make a token investment in Bitcoin and become a bitcoin millionaire seemingly overnight.

To give you a bit of context:

About the Author

Scott Jeffries is a seasoned technology professional based in Florida. He writes on the topics of business, technology, digital marketing and personal finance. After earning his bachelor’s in Management Information Systems with a minor in Business, Scott spent 15 years working in technology. He’s helped startups to Fortune 100 companies bring software products to life. When he’s not writing or building software, Scott can be found reading or spending time outside with his kids.

How Much Should I Expect to Pay to Purchase Bitcoin?

Typically, the price for purchasing bitcoin consists of a fee per trade plus the cost to convert a fiat currency (generally dollars) to bitcoin. (Cryptocurrency exchanges and payment services make money off of this conversion spread.) The fee per trade is a function of the dollar amount of the trade. A higher trade amount will carry higher fees. The overall purchase cost also depends on features offered by the venue. For example, Robinhood does not currently offer an online wallet for storing bitcoin. Therefore, you will need to budget for online wallet costs for your purchase.  

Can You Lose Money on Bitcoin?

There are many ways in which you can lose money by trading or investing in Bitcoin. Firstly, you may sell it at an inopportune moment and lose your initial investment. Secondly, your wallet may be stolen, or you might lose access to it. Thirdly, you may run into a scam… And the list goes on.

Spoiler alert: it’s hard to refund crypto and Bitcoin transactions, so make sure all info you enter when making a purchase!

We give a few general tips on how to not lose your money while exchanging crypto in our article on refunds.

Anecdotal Examples

In case the above arguments didn’t convince you, some anecdotal examples prove that you can start investing in cryptocurrency with almost nothing and still be highly successful.

For example, take Erik Finman, who started investing in cryptocurrency at age 12 with only $1,000; by age 18, he had a net worth of $3.4 million. Granted, Finman began to invest in cryptocurrency long before it became mainstream. Additionally, he made some intelligent (and lucky) transactions early. However, he still became a multimillionaire after making a relatively small investment.

2. Figure Out How To Store Bitcoin

You can store Bitcoin in a hot or cold wallet. Hot wallet transactions are quicker, while those in cold wallets have extra steps to maintain security. The latter takes longer but is more secure.

Hot Wallet

Storing your cryptocurrency in a hot wallet means the assets are stored by a provider or trusted exchange in the cloud. You can access your Bitcoins through a computer browser or an app.

All trading exchanges come with complimentary hot wallets where all your Bitcoins are automatically stored. If you want to store your Bitcoin in a third-party hot wallet, you can download a free app and use it to keep your assets safe.

Some hot wallet providers include Coinbase, Blockchain, Electrum, and Mycelium.

Some pros of a hot wallet include:

  • Quick to access
  • Easy to use
  • Usually free

However, hot wallets are connected to the Internet, making them susceptible to hacking and presenting other, more technical vulnerabilities.

Cold Wallet

A cold wallet is an offline encryptable device where Bitcoins can be downloaded. You can carry the device around. It’s considered safer than a hot wallet and costs around $100.

For example, two cold wallet providers are:

  • Ledger: Their cold wallets cost $60 to $120
  • Trezor: Their cold wallets range from $80 to $170

Learn More

When you’re creating digital wallet accounts, make sure the passwords are strong. Here are some pros of cold wallets:

  • More secure than hot wallets
  • Completely offline

On the flip side, cold wallets are expensive and require you to carry the device with you if you want to make regular transactions.

Most Popular News

5. Michael Kelly: 1-2%

Michael Kelly
Michael Kelly

Depending on your situation, a low allocation can present new opportunities for a healthy investment portfolio, says Kelly, CFA at Switchback Financial. But remember, crypto is volatile. 

“Depending on the client’s unique risk return profile, I see that a very minimal allocation, 1 to 2%, can be a potential opportunity,” says Kelly. “I view it as a valid asset class in a portfolio due to its lack of correlation with the traditional investments of stocks and bonds.” 

For Kelly, crypto’s volatility and unique characteristics also present an opportunity. “Although it is high volatility, the lack of correlation reduces the overall portfolio volatility and provides the potential to have significant upside for returns. Having just a small allocation in a portfolio can have massive return potential with minimal downside risk.”

Alternatives To Winning Big In Crypto

If you are an individual of “normal” risk tolerance, Bitcoins probably don’t excite you too much. The risk/reward profile of the Bitcoin market is not going to be very appealing to the savvy investor. This is just a chance to either make a quick buck, or lose everything.

That is one reason why most savvy investors will keep the majority of their money in reliable investments like index funds.

Plus, depending on when you started investing, index funds may outperform Bitcoin anyway.

For example, From March 2021 to March 2022, you’d see the following returns:

  • Bitcoin: -21.28%
  • S&P 500: +14.49%

You would have done remarkably better investing in simple index funds over the last year than Bitcoin.


Some limitations prevent newcomers from fully jumping into the crypto investing game. However, there’s a lot to learn, there are many opportunities for failure, and you should have at least some disposable income or capital before you begin investing.

That said, the barrier to entry isn’t nearly as hard as some people make it out to be. And, you can start investing in crypto even with a small amount of money.


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