First, make sure you’ve paid all your bills and have some funds set aside to carry you for the next couple of months. The worst thing you could do is throw all your money into Bitcoin, watch the price fall a few weeks later, and be forced to sell at a loss because you’re in dire need of the funds.
Take some time out to look at your income and expenses over the next few months. Then, look at your assets and debt. Are you in the best position to invest right now? You can review the numbers yourself or work with a professional who can help you reveal blind spots in your financial plan.
Understand your investing goals and the potential risks
If you’re ready to invest, you should identify your investing goals in order to create the best plan for you. Don’t just invest in Bitcoin and other assets because everyone else is doing it. The clearer you are about your investing goals, the easier it will be to choose assets that align with them.
Then, consider the risks. Bitcoin has delivered big profits, but the journey hasn’t always been filled with consistent victories. This cryptocurrency is very volatile, quickly undergoing daily dips and climbs that can come when you least expect it. So, if you need the money next month, you may be taking on a big risk. Also, you might be stuck with a huge tax tab that could eat into your profits if you sell too soon and are in a high tax bracket.
