Hi Stackers, Megadump here with a quick guide to help you start building a stable stack, also known as a balanced investment portfolio. Please note this guide is based on my own experience and is aimed at beginning investors who want to take control of their finances and start building a good stack. The information here does not constitute specific or personalised financial advice – you should talk to your local financial advisor for that. Instead, this is a general guide to help you get started.
Why is it Important to Build a Stack?
We are all aware of the turmoil going on in the world around us. Financial problems such as out-of-control inflation and debt, low wages and skyrocketing unemployment are all indicators of money trouble. Cash-in-the-bank literally loses value every single day. Creating a stack of investment assets that increase in value over time rather than decrease just makes sense.
A lot of folks these days work long and hard hours at their jobs just to make ends meet, and for many people the idea of putting a little some-some aside each week is out of the question. By the time they’ve paid rent, power and food, and maybe made a car payment, there’s often just nothing left for savings. I don’t blame anyone for being in this situation. It’s a hard world to survive in these days, let alone thrive.
I’m here to help you do both.
Find Your Reason
First up, you need to make a quick evaluation of your own needs. What do you want to achieve from your investment plan? In other words, why do you want to build a stack? Is it to save for a house; to set yourself up for dating, marriage and a family life; or perhaps just to secure your financial future in the face of uncertainty? Whatever it is that you need, it is up to you to work towards that and make it happen.
Fortunately though, you are not alone. The rise of cryptos and social media has led to the formation of various communities and channels that encourage and nurture budding investors. The challenge of course is to sift out the scammers, grifters and shills – these guys can really waste your time and money. Shills can be useful in some cases as they often represent products that actually have value, despite their over-zealous promotion methods. Scammers and grifters however, just suck unnecessary oxygen and should be ignored as much as possible.
Use online resources to your advantage. Take in a ton of information; filter out and incorporate the facts into your own thoughts; then formulate a workable strategy. The more you learn, the more possibilities will open up in your own mind.
What Makes a Good Stack?
A good portfolio provides stability through troubling times as well as the opportunity to make decent gains when conditions change. Stability is achieved through diversification; opportunity for gain is made possible by speculation. Your own sense of balance will be determined in large part by your acceptance of risk. Do you risk it all for a chance at a big win with meme coins or do you play it safe with a simple blend of precious metals and bitcoin? Alternatively, do you take a more nuanced approach, stacking the major portion but also having a flutter on some new coins and projects that might give a 100x? Ultimately, the decision is yours. Just keep in mind that if you risk it all at once, the chances of catastrophic failure are high. For the purposes of this guide, I am going to assume a desire for minimal risk and optimal wealth protection. You can look at higher risk strategies at, well, your own risk.
Flipping the Risk Upside Down
In years gone by, cash has been held in high regard by investors due to its status as the most “liquid” asset. Cash has been prized for its stability and universal acceptance. Cash in hand has been revered above all payment methods. These days however, holding large sums of cash either in hand or in a bank account is often viewed as a downright risky endeavour. Bank failures and rampant inflation present a slew of risks that can erode the spending power of cash.
On the flipside, with the drop in value of any fiat currency, alternative asset classes increase in value. For example, high inflation in the US combined with the emergence of the BRICS alliance forces the value of the US dollar to fall, with a corresponding rise in the price of gold and silver in local markets. In this scenario it is probably wise to store your wealth in non-cash assets such as cryptos and metals.
Check out this article detailing the recent buy-up of gold by the Chinese government. They obviously see a better future in holding metal rather than US Treasury Bonds.
Stay Informed on World Economics
The internet gives us instant access to world market information as well as “exchanges” that allow us to trade various assets. Make it a part of your daily routine to study some market data or financial information so you can spot upcoming opportunities and threats. Allow your personal knowledge base to guide your attitude towards trading but make sure you act based on facts rather than emotion. That way, you will avoid FOMO mistakes.
Funding Your Investments
For many people it is enough of a struggle just to make ends meet, and their budget has little to no wiggle room for investing money on a regular basis. Times are tough – I understand. Taking a second job is not always feasible nor desirable.
Work Online for Cryptos
One option for the newbie investor is to spend some time each day to earn coins on a crypto platform. With dedication and care, this approach can generate an ongoing flow of coins that can be either held, crypto-traded, or used to buy other asset classes such as metals or stocks. Online bullion brokers are more than happy to accept bitcoin, litecoin and various other cryptos as payment for physical gold and silver.
Invest a Little in Referral Advertising
A further extension of this method is to invest some of your online earnings in advertising to gain referrals using one or more bitcoin advertising services. In reality, a high number of crypto earning sites these days have their own PTC ad section and referral banners that can be effectively used for this actual purpose. Referrals can provide an ongoing source of crypto income, and should never be dismissed out of hand.
The Start of Your Stack
Set up a decent multi-asset wallet that gives you control of your private keys. A desktop wallet such as Exodus now also has a linked mobile app so you can access your cryptos across devices. This type of setup is highly convenient. Make sure to keep a secure copy of your keys and passwords to mitigate the risk of accidental losses.
The Art of the HODL
Crypto coins are fun to earn and accumulate in your own wallet. There is a sense of satisfaction and increased motivation to be gained each time you get paid from a platform, and that sweet clink sound of coins hitting your desktop wallet is worth its weight in gold… so to speak.
So for the sake of example, let’s say you’ve worked an hour or two each night for a week to earn your first withdrawal. You pasted your wallet address into the site and now you’ve been paid. Congratulations! You’ve earned your first bitcoins/litecoins/dogecoins etc, and now have a few dollars’ worth of cryptos in your wallet. Rinse and repeat, right? Hit the platform again tomorrow; put in a few more hours; earn more coins. The cycle continues.
Sooner or later, you’re going to want to do more with those coins. And it is up to you which way you go. Do you exchange into other big altcoins or perhaps dabble in a meme? Is it time to cash out to fiat, or consolidate all your cryptos into bitcoin?
At this point I will just mention the risk of being overly-diversified. Spreading your funds across too many cryptos can mean that your chance of winning big from a moonshot are nulled. Yes, you want to have a few irons in the fire, but each one you have in there needs to have enough mass to make it worth doing. Think about holding bitcoin and maybe three or four alts rather than spreading across ten coins. Again, it is of course your choice but at least think about what you’re doing.
A Good Stack is a Safe Stack
If you’re thinking about holding cryptos long term, you will no doubt be tempted to speculate on some new alts or meme coins. Sounds like fun, and I’m sure there are big bucks to be made in doing this. I would just suggest that you decide what portion of your holdings to put toward that purpose, and stick to it. Remember, if you work on cryptos for two months then blow it all with a bad speculation, you just set yourself back those two months. At the end of the day, you should never risk more than you are willing to lose.
If you find the temptation to speculate becomes too hard to resist, consider using some of your cryptos to buy a few ounces of silver first to protect the bulk of your wealth.
Gold is the Goal
Somewhere along the line an investor needs to come to the personal realisation that the ultimate investment asset is gold. In no way do I mean to dimish the power and value of bitcoin – it is a fantastic technology and a wonderful asset – but gold is the eternally reliable store of wealth. In the long run, the chance for wealth gains are probably stronger in cryptos than in metals, but when the lights go out, I will personally turn to my store of metals to be my ultimate safety net.
Cryptos are a great way to generate wealth: gold is the best way to store it.
