How much should I invest in crypto every month?

How much should I invest every month in crypto? 

Many financial advisors suggest keeping between 1-10% of your investment capital in crypto (the lower end is considered more stable, while the higher end is considered riskier). 

 It’s recommended to put the majority of your investment capital in less volatile assets — such as stocks and ETFs.

If you’re just getting started in cryptocurrency, it’s generally recommended to put 1-2% of your investment capital towards crypto and invest a small amount every month — such as $100. This can be a great way to build up your holdings over time while you learn more about the ecosystem. 

Tips for investing in crypto 

Before you get started investing, it’s important to make an assessment of your financial situation. Remember, crypto is a highly volatile asset, and while it has the potential for high returns, it also comes with significant risk.

Here are a few tips for beginner investors: 

• Never invest more than you can afford to lose: Crypto markets can be unpredictable, and prices can swing dramatically in short periods.
• Consider your risk tolerance and investment horizon: Before you get started investing, consider how much risk you’re willing to tolerate and your investment horizon. If you’re investing for the long-term, you may be willing to tolerate more short-term volatility. 
• Use trustworthy exchanges: Get started with a reputable cryptocurrency exchange — like Coinbase or Kraken — that follows security best practices. 
• Do your research: Before you invest in a cryptocurrency, take some time to understand the utility and underlying technologies. YouTube channels like Coin Bureau or Crypto Casey can be great resources! 
• Stick to well-known cryptocurrencies: It’s important to remember that smaller and newer cryptocurrencies are riskier and have a higher chance of failure. That’s why it’s recommended for beginners to stick to established and widely adopted digital assets like Bitcoin and Ethereum. 

If I’m younger, should I put more money into crypto? 

It’s important to remember that your portfolio may look different based on your age, your investment goals, and your financial situation. 

• Younger investors (20s and 30s): Younger investors often look to take on greater risk, and may have a greater proportion of their net worth in cryptocurrencies. 
• Older investors (40s and beyond): Older investors may focus on preserving their wealth, and may have a smaller proportion of their net worth in volatile assets. 

How much of my income should I invest? 

You might be wondering how much of your income you should allocate to investments. Remember, the answer depends on your age and specific financial situation.

The more you invest early in your career, the more your savings will compound over time! 

If you’re 25 years old and want to retire with $1 million by 65, you’d need to save about $530 per month, assuming a 6% yearly return.

What are the tax implications of monthly crypto buys? 

It’s important to remember that cryptocurrency is subject to income tax and capital gains tax. 

Here are a few tax tips for beginner investors: 

• Understand crypto tax: Before you get started investing, understand the tax implications of cryptocurrency. Remember, there’s no tax for buying cryptocurrency. However, selling or trading away your cryptocurrency is subject to capital gains tax. Earning cryptocurrency income is subject to ordinary income tax. 
• Keep careful records: To accurately report your cryptocurrency taxes, you’ll need complete records of your transactions. Make sure to have a record of your buys, sells, and transfers — including the date the transaction was made and the price of cryptocurrency at the time of the transaction. 
• Use crypto tax software: Crypto tax software like CoinLedger makes it easy to generate a complete crypto tax report. You can connect hundreds of wallets and exchanges in minutes, and get CoinLedger to calculate your taxes with the click of a button! 

In conclusion 

How much crypto to invest every month may vary based on your financial goals, risk tolerance, and overall investment strategy. Before you get started, consider how much risk you’re willing to take on and be prepared to handle any tax obligations.