ASK VIV

Q.	How much should I invest in crypto?

For education only, not financial advice. Crypto assets are volatile and you can lose all the money you invest.

The question

Hi, and welcome to Ask Viv, where I answer your cryptocurrency questions simply and honestly.

Today's question is: how much should I invest in crypto? I get asked this one a lot. It's one of the first questions almost everyone asks when they are getting into crypto is, how much should I invest?

There isn't one number

And the honest answer is, there isn't one number that works for everyone. If someone tells you that you should put in exactly 5% or 10% or 50% of your money into crypto, be very careful.

The right amount depends on your personal financial situation, your goals, and how much risk you can actually afford to take.

Start with the basics

Before thinking about crypto, start with the basics. Do you have enough money to cover your normal living expenses? Do you have an emergency fund? Do you have expensive debt that needs to be paid down? And are your essential financial commitments already covered? Because crypto can be highly volatile.

So the first rule is simple: don't invest money into crypto that you may need in the short term. If losing 50% of your crypto investment, or maybe more, would mean you can't pay your mortgage, rent, bills, or other essential expenses, you are probably investing too much.

How much risk you can tolerate

The next question is, how much risk can I genuinely tolerate? And I don't mean how much you think you can tolerate when prices are going up.

Imagine you invest $10,000 and six months later it's worth $5,000, or maybe much less. Would you panic and sell? Or could you stay calm and stick with your long-term plan? That's an important question because crypto can experience very large price movements. Your allocation should be an amount that allows you to sleep at night, even when the market is going against you.

And remember, risk isn't just about how much you invest, it's also about what you invest in. Bitcoin, Ethereum, stablecoins, and smaller altcoins can have very different risk profiles.

Think in terms of your whole portfolio

Rather than asking, how much euros should I put into crypto, it can be more useful to think it in terms of your overall investment portfolio.

For example, someone might decide that crypto represents a small portion of their investments, while another person with a higher risk tolerance and a deeper understanding of the market may choose a larger allocation. There is no universal percentage.

Position sizing

The key is position sizing. If an investment has a high probability of significant volatility or loss, you don't necessarily need to avoid it completely. You can manage the risk by making the position smaller.

Diversification and the bigger picture

Another important point is diversification. Putting all your money into one cryptocurrency, or even into crypto as a whole, creates concentration risk.

Think about your overall financial picture. You may have cash, pensions, property, stocks, bonds, a business, and other assets. Or maybe not. Crypto should be considered as part of that bigger picture, rather than something that exists separately from your finances. And within crypto itself, you should understand exactly what you're holding and why you're holding it.

Three questions to ask yourself

So, how much should you invest in crypto? The answer isn't whatever someone tells you on the internet. Instead, ask yourself three questions. Can I afford to lose this money? Can I handle significant volatility without making emotional decisions? Does this investment make sense within my overall financial plan?

If you can answer these questions clearly, you're already approaching crypto investing in a much more sensible way. Because ultimately, successful investing isn't about taking the maximum amount of risk you can afford. It's about taking the right amount of risk for you.

Closing

And so remember, if you've got a question on crypto you'd like me to answer, I'd love to hear it.

Thanks for watching, and I'll see you on the next Ask Viv.

Three questions do more work than any percentage. Can I afford to lose this money? Can I handle significant volatility without making emotional decisions? Does this investment make sense within my overall financial plan?

Risk depends on what you hold as well as how much. Bitcoin, Ethereum, stablecoins and smaller altcoins carry very different risk profiles, and putting everything into one coin, or into crypto as a whole, concentrates that risk. Crypto belongs inside your wider financial picture, alongside whatever cash, pension, property or stocks you have.