How to Build a Profitable Portfolio: Yes, Including Cryptos!

How to Build a Profitable Portfolio: Yes, Including Cryptos!
5 min read
16 November 2022

Crypto investment doesn’t work like some people would assume. The idea that you can get rich quickly is a sham. As much as the probabilities are concerned, you will always have a 50% chance of winning and a 50% chance of losing. But gladly, you can change this ratio in favour of success. 

There lies the importance of having a solid portfolio, in which many investors also include cryptocurrency. This document would say a lot about you as a business person, and to a great extent, it will affect how you conduct financial transactions on any given platform. 

Given the importance of having a portfolio, it is simply logical that you do enough research and analysis of all the aspects involved in the business plan you’ll be pursuing. In particular, you must determine an asset allocation that matches your investment goals and risk tolerance. 

Several crypto exchanges, platforms, and websites can equip you with the right tools to learn more., for instance, is a free trading platform that connects you with reputable brokers and provides you with the necessary tools and information to tame the crypto market. 

Such tools should be prepared for future capital requirements and give you peace of mind. The process is pretty simple, but you have to consider all essential aspects, which are discussed below, along with the steps that you need to follow. 

  • Determine the Right Asset Allocation

What is right for one investor may not be right for the other. The criteria for asset allocation vary for every person. But common factors need to be considered as you prepare this document. First, you have to ascertain your current financial situation and goals. Your age, time horizon, and capital for investment also matter in the process. 

Second, you have to assess your personality and risk tolerance. If you have a high-risk appetite, then going into cryptocurrency might suit your portfolio if you have a high-risk appetite. After properly assessing these factors, you might be better positioned to determine how much of your assets should be allocated to a given business opportunity. 

  • Accomplish Your Investment Portfolio 

Once a specific asset allocation is determined, the next stage is dividing your capital between the available asset classes. The process is self-explanatory: you have to allocate equities for equities and cryptos for cryptos, for example. However, it’s also a practice to have subclasses, which entail different risks and potential returns. 

This means you can divide your crypto investment between two or more coins in the market. You may also consider several ways to choose assets and fulfil your asset allocation strategy. The most common nowadays include stock picking, mutual funds, bond picking, and exchange-traded funds. 

  • Reassess Invest Portfolio Performance

How to Build a Profitable Portfolio: Yes, Including Cryptos!Once your portfolio is established, it is important to analyse and rebalance it periodically. This is because price movements are constant, which might cause your initial allocations to change. To perform the assessment focusing on asset allocation, you need to categorise the investments and determine their values’ proportion to the whole. 

Other related factors may likely progress over time, including your financial situation, risk tolerance, and future needs. If there’s any significant change, adjusting your portfolio is necessary. For instance, reducing the number of assets to hold may be needed if your risk tolerance has dropped. How to Build a Profitable Portfolio: Yes, Including Cryptos!

  • Rebalance Asset Allocation Strategically

Suppose you have already determined which assets to reduce and how much; the next thing to do is decide which assets to buy with the proceeds from selling the over-weighted allocation. 

For example, when your cryptocurrency investment has appreciated over the last period, you may rebalance your investment portfolio but, at the same time,  incur capital tax gains when you sell your assets. In this case, the wise move would probably be contributing to any asset class while other allocations are continuing. This strategy will reduce your asset’s weighting in the portfolio without incurring any taxes.

Special Considerations

During the construction of your investment portfolio, it is vital to maintain diversification above all considerations. Remember that it is not enough to own cryptocurrencies; you should also diversify within the asset class. 

This strategy will require your holdings to be distributed across various subclasses. When you’re good to go, keep a positive mindset towards your investment when you're good to go because it makes a huge difference. 

Alex 10506
Joined: 4 years ago
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