My name is Neal and I'm a total noob when it comes to crypto. But I'm pretty experienced in financial markets, money management, trading, etc. Thanks to my buddy @ashe-oro for dropping some knowledge on me about a bunch of details that I had no idea about.
In the traditional financial markets I mostly sell index options using my own formulas for generating nice steady cash flow with a minimum of worry. Generally I make about 30% per year. I hope to do a bit better with crypto.
So here I'm going to detail how I plan to invest some cash in the crypto space, generate yield, compound, and hopefully end up with a nice ROI.
First up is the problem: I don't know where the market is going to end up long term. Even though I've been passively monitoring BTC since 2011, we are still in very early days of the crypto market. Will Russia's cryptoruble dominate everything? I doubt it, but crazy stuff happens.
Just like when cars were invented, or home pcs, radios, or whatever, there is an explosion of innovation which is then followed by the market (hopefully not legislators) picking winners and losers. The winners consolidate and the industry matures.
Bitcoin is obviously the early leader in crypto, but nobody buys a Farnsworth TV these days. The first is not always the best. In fact, it usually isn't since the subsequent developers see the problems in the original and react to them.
So where does that leave me, a financial guy, to invest money? The simple answer is diversification. So here's my investment plan:
I'm going to be diversifying across several different blockchains because each has their own pros and cons. As the market evolves I'll adjust allocations to whatever seems appropriate.
For right now, I like:
BTC/BCH for the name recognition.
ETH for name recognition and smart contract possibilities
EOS for potential distributed asset allocation
XRP for international banking support
BTS for distributed exchange capabilities and pricing derivatives
Cash flow plays like STEEM and DBET for generating internal yield and rebalancing
If you're reading this on steemit, you probably know about the pros and cons of the different currencies already. You might be wondering, "What about dogecoin?" Well, this is my list. You can put dogecoin on your list.
Next is the internal mechanics of yield and rebalancing.
The cash flow plays are important because they will generate the internal profits to rebalance and increase the portfolio over time.
Rebalancing is critical in any kind of asset allocation system because it allows you to harvest volatility by selling things that are expensive and buying things that are cheap. Over time, it increases profits while decreasing risk.
And last is building more positions.
On top of just buying in with USD, I'm also buying mining equipment. I run a little bit of mining on my gaming laptop, but on Monday I'll be picking up a 225 MH/s ethereum rig to start off. Potentially I'll be putting a lot more money into mining equipment or mining leases to increase hashing power and generating more yield.
Mining is very attractive to me because it is fixed capital creating ongoing yield. Just like buying a house and renting it out, cash flow is king. In the crypto case, there is effectively foreign exchange risk, but my fundamental trading thesis is that the crypto market will attract more money as an asset class over time. So even though there might be outright crashes in the near future, it'll work out in the long run.
So the TL;DR is buying into crypto, diversifying, generating yield, rebalancing, and HODL