Hyderabad:Digital currency has been instrumental in raising people's financial status and in the fall of some investors globally. For instance, the popular cryptocurrency Bitcoin hits lifetime highs twice. The value of each coin reached Rs 51 lakh in May, after which it fell sharply. It went up to Rs 54 lakh again in November. Now, it is close to Rs 35 lakh. Since Bitcoin is the largest cryptocurrency, its price fluctuations affect other cryptocurrencies as well. Despite financial experts dismissing crypto as a mere 'bubble', many believe that they missed a good opportunity to earn big bucks, Do you have a similar idea?
As an asset...
At present cryptocurrency is not recognised as a legal asset in our country. These coins are expected to pose a threat to the economy. Investors want to use crypto as an investment scheme and for payment. This is also because merchants in some countries accept crypto payments. In fact, cryptocurrencies have no inherent value as an asset. In this speculative investment driven by blockchain technology, except for a belief in another person that he will pay more than what you have invested in. There are many exchanges available for trading. You can register with any of them, transfer the money in Indian rupees and start trading. Though easy to invest, but should be cautious.
Personal research
There are thousands of cryptos available these days. Each one is uniquely loaded with complexity and ambiguity. When you want to invest in crypto, it is better to study it deeply before putting in your hard-earned money. Go through as much material available on it, along with participating in crypto forums. On one hand, there is no 100 per cent reliable information about any crypto, on the other, some cryptos are fraudulent. Finding the right one is the key to investing. Hence, start investing in digital currency keeping in mind the high risks involved in it.
Minimise investment
It is well known that investments always have to be widespread. To achieve your fixed financial goals, investments should be mixed up with real estate, gold, equity, mutual funds, small savings schemes, bank deposits. Largely depending on your life goals, risk appetite and earning power, you need to decide how much to invest. For small investors, first-time investors, it is best to stay away from cryptocurrencies. Just earmark one per cent of your total investment amount for cryptocurrencies to withstand the onslaught of losses, if any. Because even if you lose one per cent of your investment, you can make up with other investments.
Quite unstable...
Now, crypto is a two-trillion-dollar market. Every month it witnesses significant fluctuations in prices, hence, is considered one of the most volatile assets because most of the cryptocurrencies are run by speculators. The chain of investment will collapse for some days and it is bound to push investors into big losses. Surely, not meant for people, who can't bear with fluctuations and losses. It is also not meant for people, who are investing and saving money to meet certain goals in their respective lives. Rule out borrowing money for investing in digital currency. For instance, fixed deposits in banks are insured up to Rs 5 lakh, but no such safety net for crypto investments.
Avoid greediness.
Crypto markets are not bound by any rules and regulations. It is as easy to double your money, similarly, chances of your investment vanishing into the air is also a possibility. Avoid greed and fear while operating in this high-risk market. If you earn 50% of your investment as planned, exit the market, since there is no guarantee of your money fetching more gains or the possibility of losing the entire amount can't be ruled out. No doubt, crypto is fetching good returns these days. Newcomers in the market have to invest in small coins since the risk-reward is immense. From April 1, profits on cryptocurrency transactions will be taxed at 30 per cent without any exemptions. Do not resort to illegal methods to evade tax, which could lead to more difficulties, says Adhil Shetty, CEO, Bankbazaar.com
Read:30% tax on income from cryptocurrency, virtual assets: Finance Minister
