Investment contracts are investment of money; in a common enterprise; with an expectation of profits; and solely from the efforts of others. Building a well-balanced crypto portfolio has the basic rules like building a traditional portfolio.  Different types of investors are comfortable with different degree of risk.  Cryptocurrency portfolio should be built considering the personal risk tolerance of the investor.

Types Of Cryptocurrency Portfolios

The financial goal of the investor will determine the kind of portfolio to be built.  When investing in cryptocurrencies all investors think that it is all about creating income, but in reality there are several types of portfolios.

1. The income portfolio is where the financial goal is to generate an income.
2. The value portfolio is where the buyer focuses on buying cheap assets by valuation and when the overall economy is suffering the investor will be able to extract fair value out of this investment.
3. The growth portfolio is where the investor tries to take greater risk anticipating growth
4. The conservative portfolio is where the portfolio is defensive and the focus is on capital preservation.
5. The aggressive portfolio is where the focus is on risk taking by investing in high risk asset types.

An investment portfolio is not always about buying selling and profit making.  Depending upon the target financial goal of the investor, the kind of portfolio created and the way the investment is handled will differ.

Cryptocurrency Market and Dramatic Price Changes

Investment in the cryptocurrency market will not stay still it will be subject to market volatility. Long-term investing is the key to investment success.  Heightened volatility leads to bizarre prize swings. Price going straight up makes investors happy and the prices going low down makes investors not so happy; however, those who love to buy cheap would like it.  Being in the market is about staying in the game long-term.  The cryptocurrency market is not for conservative investors.

Those investors who cannot handle volatility should not invest in cryptocurrency.  Profits from cryptocurrency is about equity and averaging out from volatility. Cryptocurrency markets do not give profits all the time.  There are long periods of time when the market is boring the price is trending in ranges. And, there will be those short periods with substantial ups and downs in prices.

Big market drops and massive market crashes are common.  Investors should expect to stomach these massive extremes and they should avoid the temptation to panic sell. Cryptocurrency investors should have the strength to wait for recovery.