How much money should I invest in cryptocurrency if I’m just getting started

You can invest as much as you’d like in crypto, as long as you can afford to lose it (Getty)

There’s a golden rule when it comes to investing money: never invest money you can’t afford to lose.

That goes double for assets as volatile as cryptocurrencies.

The good news is you don’t have to have a certain amount before you can purchase Bitcoin, Ethereum or any other coin.

If £10 is all you’ve got to spare, you can invest that. If you’ve got £100, then that works too.

Treating this initial investment as a learning exercise is a good strategy. By just investing a little bit, you can get a feel for the platforms and experience the volatility of the markets.

A key factor to keep in mind when thinking how much to invest is the understanding that this is not going to turn you into a millionaire in a month.

While there are stories of crypto traders hitting the proverbial jackpot, these are the exceptions and not the rule. At any rate, to make the most back from your investments, you have to be prepared to put a lot in to begin with – not the right approach if you’re just starting out.

The sunk cost fallacy

It’s also important to beware of the ‘sunk cost fallacy’ in the face of losses. This is the belief that you’ve invested too much to cut your losses.

Rather than selling and accepting the loss, some people may double down on risky investments in the hope of turning it all around.

As a way of protecting yourself against that, you may decide to spread your investments across different cryptocurrencies.

So, taking £100 as a starting point, you may decide to buy £50 worth of Bitcoin and £50 worth of Ethereum. Over time, you can see which one performs better and use that to guide any future trades you wish to make.

Above all, make sure you have savings separate and available to you before putting money into crypto. Many investors have lost big sums after overreaching and investing more than they could afford to lose.

Sam Volkering says...

Sam cautions beginners against putting too much in too quickly

You can get started in cryptocurrencies for as little as you want.

If you put $100 into something and it went to zero, would you lose any sleep at night over it?

Sam Volkering writes about cryptocurrencies and other tech-based investment trends at Exponential Investor.

You can follow him on Twitter here.

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