5 Ways to effectively manage a crypto portfolio for new investors

Many new investors entering the cryptocurrency market only focus on buying and selling coins. However, their crypto performance all depends on sentiment and the community behind a project. Building a crypto portfolio will help protect traders from excessive losses. In this article, we will learn about cryptocurrency portfolios and how to manage a crypto portfolio most effectively.

What is a Cryptocurrency Portfolio?

If you own 10 different crypto assets like BTC, ETH, SHIBA, ADA, USDT etc, your portfolio includes those assets. Simply put, all the cryptocurrencies you own represent your investment portfolio. How much your portfolio is worth depends on the current market price of the cryptocurrencies you hold.

If you are new to cryptocurrency, your portfolio may only have a single asset. As investors begin trading multiple assets, their portfolios will tend to become more diversified.

Why should investors have their own crypto portfolio?

Risk is an unavoidable factor in investing, especially in the cryptocurrency market. A successful investor is someone who can balance two factors: risk and profit. Knowing how to manage your investment portfolio is an important way to manage risk. So what are the benefits of owning an investment portfolio?

Optimize profits and allocate risks

The first benefit of having a scientific investment plan is to optimize investment returns and allocate risks to achieve your financial goals.

A good investment portfolio will bring the highest expected profit and the lowest level of risk. Just like if you put eggs in a basket and the basket falls to the ground, all the eggs in the basket will break. So having a portfolio and knowing how to optimize it will help you achieve high returns per unit of risk for investors.

Create a comfortable mentality when investing

Psychology is one of the important factors that determine the success of investors. Once you have an investment plan and scenarios in place to deal with your assets if any risks occur, we will feel more comfortable. This will not affect your trading psychology.

Control greed

Having an investment plan from the beginning and set goals helps us control greed as well as avoid the psychological syndrome of FOMO (fear of missing out). In addition, this goal also helps you avoid multi-level projects and scams that damage your assets.

Focus your attention on your main work

After controlling greed, feeling comfortable and having a properly allocated portfolio, the time you spend trading will be more optimal. From there you have more time to focus on your main work, increasing your income. You then use the profits to reinvest quickly and effectively.

How to effectively manage your crypto portfolio

Having an investment portfolio is essential. However, how to manage your crypto portfolio effectively is important. For new, inexperienced investors, how can portfolio profits be guaranteed?

Divide investment portfolio according to risk level

Divide your portfolio between high- to medium-risk and finally low-risk investments. Investors then give appropriate proportions based on each person’s risk appetite. A portfolio dominated by high-risk investments will be unbalanced. Profit often comes with risk, so to balance your portfolio and manage risk, you should divide cryptocurrency investment assets appropriately.

Consider holding stablecoins

Stablecoins are highly liquid coins that can help you take profits or exit a position easily. Especially in a frequently volatile market, stability is always highly appreciated. You can also earn interest through stablecoin staking (hold and lock a certain amount of coins to receive rewards). The more coins you stake, the more money you will earn.

Allocate capital appropriately

If we do not apply a capital allocation strategy when investing in coins, we cannot control our assets. Capital allocation is a strategy that helps you avoid placing too much emphasis on any one crypto asset in your portfolio.

Maybe you previously made a high profit and want to “go all in” on a coin that you think has potential. However, don’t let greed control you, but consider where better to pump your money.

Regularly monitor the investment process

We cannot always accurately predict market changes, leading to losses and account breakdown. That’s why you should monitor your assets to eliminate risks caused by misjudging the direction of the market. Using crypto portfolio management applications will help investors grasp their account situation and make reasonable adjustments.

Use the 85/15 management strategy

One of the effective crypto portfolio management methods that many investors apply is 85/15. Of which, 85% of your portfolio is allocated to safe long-term investments. These can be coins that are less volatile and have potential for development when considering its long-term nature such as top coins, floor coins,… The remaining 15%, we can allocate to the short-term trade portfolio. like highly volatile coins.

However, you can also divide the account in the portfolio to suit your investment strategy and needs, not necessarily a fixed number of 85/15. What works for others doesn’t mean it will work for you.

Trading coin surfing can x5, x10 assets but the risk of burning your account is also high. If you are not someone who can spend a lot of time observing the chart regularly, it will be more reasonable to hold potential coins for investment.

Note: There are only the following reasons for us to sell or adjust our long-term coin portfolio:

• Sell coins to use that money to cover your living expenses when needed
• When you want to rebalance your investment portfolio by adjusting asset proportions to optimize profits and minimize risks.
• When you need money to reinvest your portfolio, for example sell some Solana coins to add to a coin that you think has more potential.
• When you change your perspective on your category. Because it is true that there are some potential projects right now, but you also need to consider the market situation to make reasonable adjustments.

Thus, knowing how to manage your crypto portfolio will help you achieve your financial goals. Hopefully the above knowledge is useful for you in finding smart investment strategies for yourself.