Investing is a very personal endeavor driven by your personality, goals, and ability to handle pressure. There are many types of investing techniques that can suit your persona.
Some types of investing are real estate, dividends, capital gains, content creation, automated business, physical business, e*commerce, bonds/interest, collectibles, and cryptocurrencies.
Of these strategies, cryptocurrencies may be the most misunderstood, mischaracterized, and misinformed. Many people want to jump into crypto but have no idea how to start.
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I was one of these people almost a year ago. My friends would talk about crypto at work, and I was completely lost. Because I had my blog and Facebook Group (Military Family Investing), I made it a point to get started with cryptocurrencies.
Today, I have published multiple books on crypto, including the massive “Counting on Crypto 2,” which includes almost everything to this point.
What have I learned? Before getting started with crypto, you have to determine what type of investor you are and want to become. Crypto is not a playground where you can do what everyone is doing.
Cryptocurrencies go through enormous swings, sometimes jumping 20-40% in one day, only to lose those gains over the next few days. You can become a day trader, early coin investor, or invest for interest.
You can also go into decentralized finance (DeFi) and find new ways to invest almost daily. How deep you go is up to you. But before all of that, let’s discover who you are as an investor.
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What is investing? In the basic sense, investing is doing something to get a return on your resources. Your resources can be your time, money, or energy. In “Rich Dad’s Guide to Investing,” I learned that you could create assets from thin air—no money required.
I bring this up because often we hear, “it takes money to make money.” Money can accelerate your gains, but you can create money from nothing.
Once you understand the overall purpose of investing, you can make better decisions as you move into the crypto-space. So let’s explore time, money, and energy briefly.
Investing with money. When most people think of investing, they envision putting money into the stock market or buying rental properties. Yes, those are fantastic ways to get an ROI on your hard-earned income, but there are more ways.
You can buy a website, a food truck, a liquor store, or vintage wine. There are many ways to expand your exposure to various assets; you only need to read and understand.
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When investing with money, don’t pigeonhole yourself into only stocks, bonds, real estate, and crypto. Part of being a great (crypto) investor is knowing other ways to make an ROI.
Knowing various methods to multiply your money ensures you don’t take unnecessary risks in the crypto markets. Investing should be as boring as watching paint dry.
Investing your energy. You can easily confuse time and energy, but I’ll distinguish the two. I like the phrase “Don’t exchange time for money; exchange time for assets.”
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When I speak about investing energy, I call this researching and evaluating. You may be spending your time deep-diving into topics, but it may not necessarily produce an asset.
Here are some things I consider investing energy: reading books, checking investing news sites, reviewing sites like Zillow, and creating “what-if scenarios.”
These may not lead to a direct asset, but they make your mind sharper. “What if scenarios” are like wargaming or studying playbooks in football.
For example, you can review Zillow and find houses for sale. You can evaluate how much you could rent them for, how to house hack, increase revenue, or when to sell. These “wargames” help you hone your investing mindset.
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Investing your time. Investing your time is exchanging a specific period to create an asset. For example, I build a new book every morning. It takes roughly 4-5 hours, but in the end, I have an asset I can leverage for the rest of my life.
Creating content is the best example of investing your time for assets. I explain the six types of content over the Passive Income from Creativity series (music, photography, art & design, video, audio & speech, and writing).
I always talk about creating content because it is zero risk with a higher rate return than cryptocurrencies. People always say they 5X or 10X their money in crypto; however, creating content allows you to achieve an infinite return.
If you can invest money in an asset, remove all your money, and keep producing a return, you have an infinite return. Yes, if you 2X your money in crypto withdraw your initial investment, what’s left is an infinite return.
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However, for that initial investment, you took a considerable risk. If you doubled your money in less than a few months, you played with some of the riskiest investments out there.
The Rule of 72. It’s essential to understand the rule of 72 as an investor. The rule of 72 states that you can divide the yield of a product by 72 to see how many years it will take to double.
For example, a good dividend yield on the stock market is 4%. This yield will take me 18 years (72/4) to double my money. I seek a 10% yield with income investing, which will take me 7.2 years (72/10) to double my money.
Now, back to content creation. If I make one dollar from my YouTube video, I have already doubled my money because I haven’t spent anything. The same with books, blogs, and music. I may have a small investment in equipment, but I can recoup that in two years.
Beware of crypto. I went this long roundabout way so you can see how dangerous crypto investing can become if you are uninformed.
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Remember, real estate takes years to double your money, as does the stock market. Creating content gives you a reasonable rate of return, but you are paying with years of your life building an audience.
So when people talk about doubling your money in crypto in 2-3 months, be very leary. Even if you double your cash consistently over one or two years, do you think you can continue to do so for another 20-30 years?
The purpose of investing is to build wealth slowly. Yes, specific investments may accelerate your return. Still, once you take those profits, you invest them into bland, slow vehicles like self-storage, blue-chip stocks, or a vending machine business.
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Why crypto has a bad name. Crypto has a bad reputation because people are constantly trying to hit home runs. Someone may win big on a coin (say Dogecoin), but then they roll their profits into a crap coin.
It is vital to understand tons of different ways to invest time, money, and energy. That’s how you will ultimately succeed in crypto.
Say you 10X your money with Dogecoin from $10,000 to $100,000. If you know how to invest that $100,000 into various other investments, you will win.
Once you learn how to “wargame” this scenario, you have proven that you are a bonafide investor. For this scenario, I would do something like crypto ($20,000), storage shed ($20,000), index funds ($20,000), income portfolio ($20,000), and USDC ($20,000).
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Now, I am earning some nice income from rents (storage), interest (USDC), and dividends (income portfolio). I am also keeping my money working safely (index funds) while continuing to speculate (crypto).
Conclusion. Before jumping into the crypto markets, understand how to invest time, energy, and money. You’re in the wrong game if you are jumping into crypto to 2X your money in 2-3 months.
Even people who do 2X their money in a short period aren’t telling you the complete truth. Yes, one coin hit it big, but they may have spread their money across ten coins.
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People like to brag about their big wins, especially in crypto. You have to be immune to this manipulation. I’ll cover more ways to prevent this FOMO in subsequent articles in this series.
This article may have been long-winded, but it is vital to becoming a true investor before jumping into the crypto markets. Crypto, especially DeFi, is only for adults—only big boys and big girls should enter.
Next, we will discuss setting goals and ensuring crypto is only 2-10% of your portfolio. In the meantime, read the book “Don’t Gamble with Retirement 6” if you want to expand your investing acumen: Good Luck, and thanks for reading.
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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