How Much to Invest in Crypto per Month
A common question that every investor has while making a crypto investment plan is how much to invest in crypto per month. Due to the price fluctuations of cryptocurrencies as well as their tremendous growth, it becomes difficult to determine an appropriate crypto investment budget for every month.
While deciding monthly crypto investment, it is essential for investors to consider their risk tolerance, financial goals, income allocation, and their overall monthly savings. The goal of this guide is to provide valuable information on “How much should I invest in Bitcoin” from some of the most accomplished experts in this field to help investors formulate a unique crypto investment plan.
Understanding Current Financial Situation
Understanding an investor’s financial situation before determining the starting amount for Bitcoin investments is essential. This helps identify the ideal crypto investment amount per month.
- Income Allocation & Disposable Income – It is important to determine how much of the disposable income can be allocated towards the Bitcoin investment amount. Avoid investing any amount of crypto that you cannot afford to lose, especially in high-risk investments like cryptocurrencies.
- Emergency Fund First – As a thumb rule, it is highly recommended to have an Emergency Fund Calculator for 3 to 6 months’ worth of living expenses before allocating any money towards crypto investments. This helps to ensure that the investments do not jeopardise the financial security of the individual.
- Financial Goals & Investment Horizon – While creating a crypto investment budget, think of long-term holding (HODL), financial goals, short-term gains, retirement savings, recurring investments, and other pertinent questions. These responses will help determine how much to invest in Bitcoin to make money and how much risk to handle.
Determining Monthly Crypto Investment Budget
The amount investors should invest every month in cryptocurrency depends on multiple factors. There is no single answer that all can agree on. There are, however, acceptable percentage-based formulas, according to common financial planning principles –
Percentage-Based Approach – FCA recommends setting aside no more than 10% of total net worth to invest in crypto due to the market volatility and other high-risk crypto investments.
This approach can help maintain portfolio diversification and not allow crypto investments to take up a substantial portion of the total investment strategy.
Monthly Dollar Amount –
- For beginners – $25 to $150 per month
- For moderate income – $200-$500 per month
- For high income – $500+ per month.
Remember, these amounts take into account the emergency fund and monthly savings in place prior to investing any other funds in alternative investments like cryptocurrency.
Concrete Starting Point – A good starting point based on the monthly income of $3000 would be 1%-5% of the monthly income, which is $30 to $150 allocated to crypto. By Dollar Cost Averaging (DCA), investors can invest the same amount of money in crypto every month, regardless of the crypto market cycles.
How Much Should I Invest In Cryptocurrency As A Beginner?
Start Small & Gain Confidence – Many beginners ask, “How much crypto should I buy?” The pro tip is to invest a small amount, anywhere between $50-$100 per month. This allows new crypto traders to learn trading and understand market dynamics to make investments without feeling emotionally invested in the buying and selling of crypto. Also, use the DCA strategy to reduce price fluctuations. Start with an amount you can afford to lose in total in case of a worst-case scenario.
Bitcoin Investment Strategy – If you are specifically searching for the minimum Bitcoin investment, note that most beginners invest amounts as low as $10 to $50 per month until they become accustomed to this market. As time passes, this monthly investment amount can be increased. Based on historical performance and market share, Bitcoin is generally recommended for all investors at the core of a crypto portfolio.
Lump Sum Investing vs Recurring Investment – Lump sum investing involves investing the entire available cash balance at once. This can result in significant returns if done perfectly. However, this can also expose investors to market cycles and significant price fluctuations. Recurring investment or DCA helps reduce the emotional risk associated with investments by allowing investors to purchase a certain amount of crypto every month. The DCA strategy is best for volatile assets like crypto, and most experienced investors prefer this strategy as it provides consistent long-term appreciation.
Risk Capacity & Market Volatility – The crypto market has been an attractive destination for first-time crypto investors, especially for its utility and market risk. Investing too aggressively, however, can have negative consequences. Beginners interested in crypto investments need to consider the key risk factors, such as –
- Risk Tolerance – Do not invest money that you can afford to lose.
- Market Cycles – If you know how to read crypto charts, you will be aware about the price of crypto within the market goes through boom or bust cycles. Diversification – Diversifying investments involves holding multiple types of assets to reduce investors from the downsides of market fluctuations. This helps manage overall risk while preserving growth potential.
Steps For A Sound Crypto Investment Plan
1. Create a Budget – Create an emergency fund of 3 to 6 months’ worth of savings and deduct fixed and essential expenses from the total. Then, determine how much of the disposable income is available to invest in crypto.
2. Determine Crypto Allocation –
- Conservative – 1-3% of the total available funds for investing in crypto
- Moderate – 5-10%
- Aggressive – Above 10% only if the investor is comfortable with high-risk investments.
3. Set Monthly Allocation –
| Income Level | Monthly Suggested Crypto Investment |
|---|---|
| $2,000 | $20–$100 |
| $4,000 | $40–$200 |
| $8,000 | $100–$500+ |
Adjust these amounts based on your personal financial goals, risk tolerance, and investment time frame.
4. Automate and Stick to DCA – Use the best crypto exchange to set up automatic purchases every month. This takes away the stress of making investment decisions every month based on emotional factors.
5. Review Annually – Review the monthly crypto investment amount annually to change it based on the current financial situation, long-term outlook of the cryptocurrency market, and any changes in the investor’s long-term personal financial investment goals.
Conclusion
How much to invest in crypto per month varies based on your own financial goals and available funds. New investors can benefit from taking a disciplined approach and making monthly incremental investments of 1%-10% of their total investment amount. This method allows new investors the opportunity to learn about the crypto market while not overwhelming their overall finances. It is recommended to first determine what is affordable for you. In addition to investing in cryptocurrency, you should also consider creating a savings account for emergencies, engaging in DCA strategies for long-term investments, and evaluating your investment goals periodically to ensure that they align with your overall goals.
Now that you know how much to invest, let’s take a look at the best cryptocurrencies to start your investment journey.
