Investing is the process of buying cryptocurrencies, stocks, property, etc. to generate more income. For example, we buy cryptocurrency to sell it for more in the future. We buy a house to rent it out and make a profit. We invest in Apple or Amazon to sell the stock higher and receive dividends.

In you are going to get crypto to invest into, investing has a special dynamic due to the high volatility of the market, which opens up opportunities for significant profits, but also carries risks. For example, you can buy Bitcoin or Ethereum at a low level and sell at the peak of the price using fundamental or technical analysis to predict the market. So, what is an investment? In this article, we will tell you how to invest money and increase your capital.

What is investment and how does it work?

An investment is the allocation of funds or resources into various assets (such as cryptocurrencies, stocks, real estate, businesses, bonds, etc.) with the aim of generating profit or increasing value in the future. The cryptocurrency market is based on the principle of supply and demand. If an asset is in high demand (for example, Ethereum after the launch of an update), its price increases. Investors who bought it earlier make a profit by selling the asset at a higher price.

However, successful investing requires knowledge, analysis, and risk management. Beginners should first learn how to invest correctly, start with small amounts, study the market, and understand that every investment is associated with both potential profits and possible losses.

Why do people choose to invest?

Investing is not just a way to make money, but a tool for financial freedom and capital growth. Here are some key reasons why you should start investing today:

• Protection against inflation. Money that is simply lying in a bank account or “under the pillow” depreciates over time. Investing allows you to not only preserve but also increase your capital.
• Passive income. With the right investments, you can earn a stable passive income. For example, dividends from stocks, interest from bonds, or rental income from real estate.
• Financial independence. The more you invest, the less you depend on a job or a single source of income. This opens up opportunities for early retirement or personal projects.
• Capital growth. The markets for stocks, cryptocurrencies, real estate, and other assets have historically shown growth in the long run. By investing today, you can significantly increase your capital in a few years.
• The ability to achieve financial goals. Whether it's buying a house, educating your children, or traveling the world, investing helps you realize your dreams faster and more efficiently.
• Flexibility and freedom of choice. You can choose different investment strategies, combine assets, and customize your portfolio to meet your financial goals and risk level.

What do successful investors invest in?

1. Investing in crypto currency means buying cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), and other coins to make them grow and sell them for more. For example, if you bought 1 Ethereum in 2020 for $200, then a year later you can sell it for $1400 (a profit of $1200). In 2022, the price of Ethereum is already 3300 dollars!

2. Investing in stocks and bonds. When investing in a company, you can buy shares. A share is a small part of a business that gives you the opportunity to make a profit (dividends). In addition, the value of shares increases, and you can sell them for more. For example, Apple shares were worth $70 in 2020 and now they are worth $170. In addition to the dividends received, the share price has increased – a profit of $100! You can also buy an index. An index is a set of the 500 largest stocks (SnP500), which allows you to profit from the growth of index prices, just like in stocks.

3. Investing in business. Buying a part of a company, franchise, or equipment. This can be profitable because you have the opportunity to receive income not only from the growth of the business value, but also from active participation in its development. For example, buying a stake in a startup or a successful company can provide you with a profit interest or dividends. Investing in franchises allows you to take advantage of proven business models while significantly reducing risks. Investing in equipment for certain production processes or infrastructure allows you to increase business efficiency and generate additional income from increased productivity.

4. Investments in precious items. Precious metals and stones, paintings, alcoholic beverages, and tobacco products. Such assets usually maintain or even increase their value over time, especially in times of economic instability. For example, gold is often considered a “safe haven” in times of economic crisis, and its price can increase. Investing in art allows you to generate income through the growth of prices for paintings, as well as through exhibitions or auctions. Wine and alcoholic beverages can become collector's items, the value of which increases over time due to limited quantities and rarity.

5. Real estate investments. Profit from renting out or increasing the value of real estate. Buying residential or commercial real estate during the construction phase or in the early stages of neighborhood development can significantly increase capital in a few years when the price of real estate rises. Renting real estate provides a stable income and allows you to provide yourself with passive income, especially in places where rental demand is high. Investing in commercial real estate, such as offices or retail space, can be lucrative due to long-term leases with large companies.

Types of investments for crypto traders

Crypto as an investment is becoming increasingly popular, as it has a number of advantages, such as high liquidity, potential for significant growth, and the ability to diversify a portfolio. There are various strategies for investing in cryptocurrencies that allow both minimizing risks and maximizing profits. In this section, we will review the main cryptocurrency investments to help you choose the most suitable approach to achieve your financial goals.

• Long-term investing (HODL) is a good crypto investment strategy in which cryptocurrencies are bought for several years based on their potential growth. Example: those who bought Bitcoin in 2013 for $100 now have assets worth tens or even hundreds of thousands of dollars.
• Short-term investing (Swing Trading) – buying and selling assets on medium-term market fluctuations (from several days to a month).
• Daytrading is a type of investment in crypto currency that involves active intraday trading and the use of short-term price movements to make quick money.
• Investments in DeFi (decentralized finance) – investing in tokens, staking platforms, DEX liquidity (Uniswap, PancakeSwap), and pharming to earn interest.
• NFT investments are the purchase of unique digital assets that can grow in value due to limited issuance and project popularity.

Is crypto coin a good investment? Yes! Master every aspect of successful crypto trading with Bikotrading Academy and build a strong foundation for confident investing in the crypto market. Our Buy/Sell Crypto Alerts program will guide you through:

• The best investment opportunities on the market.
• Pro traders’ tips on how to invest in crypto money.
• Identifying the best entry and exit points for trades with alert.
• Proven tools and techniques for bigger profits.

Start your journey today! Follow the link and join the Bikotrading team Buy/Sell Crypto Alerts to get the most promising coins and remain profitable in any market conditions.

Risks and security of investments in cryptocurrencies

The cryptocurrency market is one of the fastest growing and at the same time the most risky financial sectors. High volatility can bring both huge profits and significant losses. Therefore, every crypto trader should understand the main risks and know how to protect their investments and how to find the best crypto to invest in.

The main risks of investing in cryptocurrencies are as follows: 

• High volatility. Cryptocurrency prices can change by tens of percent in a matter of hours. For example, Bitcoin can fall from $40,000 to $30,000 in a day due to news or market manipulation.
• Market manipulation. The crypto market is often subject to such phenomena as Pump & Dump, when large players (whales) artificially raise the price and then sell the asset en masse, causing a collapse.
• Regulatory risks. Governments may impose restrictions or even ban the use of cryptocurrencies, which negatively affects their value. For example, China's decision to ban mining led to a sharp drop in the market in 2021.
• Hacking exchanges and wallets. Even large platforms like Mt. Gox or FTX were subjected to hacking attacks and bankruptcies, resulting in the loss of millions of dollars by investors.
• Phishing attacks and fraud. Hackers often create fake exchange websites, Telegram bots, or send suspicious messages to steal private keys or wallet passwords.

How to protect your investments?

Safe storage of assets. Use cold wallets (Ledger, Trezor) for long-term storage. Also, keep minimum amounts on exchange accounts – only for active trading.

Use strong account security. Enable two-factor authentication (2FA) on exchanges and wallets. Use unique passwords and password managers (1Password, Bitwarden). And never share private keys and seed phrases with anyone!

Build a proper risk management system even before choosing what crypto to invest in. For example, don't invest more than you can afford to lose, use stop-losses and take-profits to minimize losses. And importantly, diversify your portfolio – don't invest everything in one asset.

Diversify your portfolio. Diversification is a key strategy for crypto traders to help reduce risks and stabilize profits. This means that you should not invest all your funds in one asset but rather distribute them among different cryptocurrencies and instruments. For example, most of the portfolio can be invested in BTC and ETH, it’s always a good crypto to invest, and the rest in altcoins, stablecoins, DeFi tokens, or NFTs to increase potential income. Proper diversification helps to balance risks and achieve stable growth even during market corrections. It is important not to overload the portfolio with a large number of assets and to have a reserve in stablecoins to reduce volatility. The main principle is a balance between stable assets and riskier investments with high potential.

Use reliable crypto investment platforms. Our main advice is to analyze the teams, tokenization, and roadmap before investing. Do not make crypto investments in dubious projects without a history and real partnerships. There are many options for investing. Our company specializes in investing in cryptocurrencies, so we have prepared a list of cryptocurrency exchanges that we have been using for over 3 years – Binance and ByBit.

And finally, learn! It is important to understand investments from the inside, how to start your way to the crypto market, how to invest in crypto coins, and how to manage your assets properly. This will help you to learn the basic principles of the market, trends, and strategies that work in conditions of high volatility.