If you want to secure your financial future, you need to find smart ways to invest your money. A lot of people are opting to put their money into cryptocurrencies, like Bitcoin, because they have heard stories about people making millions on their investments. It’s unlikely that you’ll make that much, but Bitcoin is still a good investment opportunity. However, new investors often lose their money because they don’t really know what they’re doing and they make some basic errors. If you are going to put your money into Bitcoin, it’s important that you know how to avoid these pitfalls. These are some of the biggest mistakes that new Bitcoin investors always make.
Photo by Crypto Crow.
Falling For Scams
There are a lot of scams out there that prey on new Bitcoin investors that don’t really know what they’re doing, and it’s important that you learn how to avoid them. Never put money into a site before doing your research because there is a high chance that it’s a scam and you will never see any Bitcoin in return. Phishing emails that appear to be from your Bitcoin wallet provider are very common as well, so be careful before you click any links. Pyramid schemes have also found their way into the cryptocurrency world, so be aware of any site that asks you to recruit new investors in exchange for more Bitcoin.
Not Paying Tax
Many people assume that Bitcoin works differently from other investments and they are unsure about the tax laws, so they don’t pay tax on their gains. While some countries have not written specific tax laws about, others have. For example, Canadian cryptocurrency tax reporting laws consider cryptocurrency a commodity. That means that anybody investing in cryptocurrency in the country needs to report their gains and potentially pay tax on them. Many new investors make the mistake of thinking that they don’t need to pay any tax on their Bitcoin investments and that lands them in big trouble.
Buying During A Spike
When the value of Bitcoin is shooting up, many new investors assume that it will continue to grow, so they invest a lot of money. Unfortunately, they often end up buying at the top of a peak before the value starts to dip again, and they make big losses. It’s common for cryptocurrencies to see an artificial spike that soon corrects itself, so it’s important that you don’t get caught up and buy during this spike because you will lose a lot of money. Spend some time learning how markets operate and what the trends are before you start investing so you can avoid this mistake.
Emotional investing is common among new investors, and it simply means making rash decisions that are not based on the facts. Bitcoin is very volatile and the value often goes up and down a lot. It’s important that you don’t panic and sell all of your Bitcoin because you have noticed a small dip which will likely correct itself in a few days. Emotional investing is one of the easiest ways to lose all of your money, so it’s important that you avoid it.
As long as you can avoid these mistakes, you will be a lot more successful with your Bitcoin investments.