Investing in stocks, mutual funds, and exchange-traded funds (ETFs) is common nowadays, and so is investing in cryptos. You find a crypto exchange, buy from the platform, and keep it in safe storage. When the price of the crypto you’ve bought increases, you can sell it to gain profit.
That way of investing in crypto is known as spot trading, but there are other ways to grow your investment portfolio in crypto. Here are some smart ways you can try to start investing in cryptos:
1. Invest In Crypto ETFs
Crypto ETFs are similar to traditional ETFs, fund-based financial products listed with traditional equities on mainstream stock exchanges. Like stocks, you can buy and sell shares in an ETF, giving them more liquidity than mutual funds. ETFs invest in a portfolio of securities around a selected theme, which comprises a collection of assets. Meanwhile, a crypto ETF contains a collection of cryptocurrencies or takes its value from the digital currency markets.
Its value will reflect the value of the digital currencies that it holds. When this is so, it means that the crypto ETF is investing exclusively in tokens. Thus, ETF’s track the price of multiple coins included in the fund.
Another type of crypto ETF is when it invests in companies around the crypto marketplace aside from holding direct investments in tokens. This ETF is known as an asset class. Its goal is to avoid the risks associated when buying specific cryptos and reflect the value of crypto as an asset. Thus, it invests in options contracts and futures built around cryptos, or it holds shares of stock from companies that make crypto trading tools or crypto wallets.
Like any ETF, you can buy crypto ETFs through online brokerages. After creating an account, you can buy several shares of different ETFs depending on your investment risk appetite. Similar to spot trading, you can hold these shares before you sell them when their prices go up.
2. Invest In Companies Involved In Cryptocurrency
You can also buy shares from companies subject to regulatory oversight with tangible services or products. It’s like buying shares from companies, but choosing companies exposed to blockchain or cryptocurrencies is the difference. This type of investment also requires an online brokerage account before buying shares from such companies. The following are some companies involved in crypto assets:
- Square (SQ): Since October 2020, this company has owned over USD$220 million worth of Bitcoin. Square is a payment services provider, and its Square Cash App allows people to store, buy, and sell cryptos.
- PayPal (PYPL): It’s a payment platform where people can transfer money to other people or use it to buy items online. PayPal has expanded its services to make people buy and sell cryptos like Bitcoin and Ethereum using Venmo and PayPal accounts.
- Nvidia (NVDA): The heart of the systems used to mine cryptos is from the graphics processing units that Nvidia designs and sells.
3. Add Crypto To Your 401(k)
Although it’s a new endeavour for retirement savings providers, you may want to check with your company if they offer a crypto option for your 401(k) account. If they do, it means you can keep a portion of your retirement savings in cryptos like Bitcoin.
You can arrange with your employer to allocate a percentage of your paycheck to your target crypto in your retirement account. The retirement savings provider will then buy the cryptos on your behalf. They’ll store your coins in a ‘digital assets account’ containing short-term money market investments and cryptos.
However, the exchange limits and team member contribution limits to your account relies on your employer. The latter will decide whether to offer such an option to the employees.
While crypto investments may be riskier than other assets, this type of investment will be a better option if you’re many years away from tapping into your retirement savings. With such, you may want to consider devoting at least 1% of your fund to crypto today.
Besides, doing this will keep you on the safe side. At the same time, it allows you to grow a crypto investment portfolio that can help you get with your finances later in life, especially with positive crypto predictions for the future.
Conclusion
There are many more ways to buy and sell crypto. You can go for spot trading because it’s the easiest. However, if you want smarter ways to invest in cryptos, consider buying crypto ETFs and shares from companies involved in digital coins and adding them to your 401(k) fund. Whatever your choice is, it’s best to start investing now to gain more profits in the future.
