Cryptocurrencies have become regular fixtures in investment and financial news in the last couple of years. For much of 2017, many people were attracted by the speedy rise of Bitcoin in which it outperformed all other traditional assets to make a high of almost $20,000 by the end of the year. Bitcoin has lost of much those gains this year; yet, people are still actively participating in cryptocurrencies in the hopes of a return to bullish ways or finding the next big thing.

The media also does an excellent job of idolizing success stories of everyday people made fortunes through cryptocurrency investments either through strategic planning or plain happenstance. However, one undeniable fact is that the cryptocurrency market remains highly volatile and people that lack expertise in fundamental and technical analysis will most likely lose money as short-term traders. Nonetheless, you can increase your odds of profiting from cryptocurrencies by playing a long-term game. This piece provides 5 practical insights on how to invest in cryptocurrencies effectively for the long term.

1. Understand Trading vs. Investing

The first insight that can help you invest successfully in cryptocurrencies for the long term is to understand the difference between trading and investments. Trading is a deliberate effort to make money off the short-term volatility of an asset. Investment on other hand is a deliberate effort to look for undervalued/underpriced asset and holding on to them until their fair market value is realized. If you are always buying and selling the same cryptocurrencies based on market swings, you are most likely trading.

2. Learn to manage FOMO

One of the biggest issues that cryptocurrency investors often deal with is FOMO – fear of missing out. The cryptocurrency industry seems to encourage hype; hence, it is often heartbreaking to see unseasoned investors jumping onboard any altcoin that seems to be getting buzz irrespective of its inherent value. FOMO also comes to play when investors respond to naysayers and fear mongers to prematurely sell their cryptocurrencies because of a short-term downtrend in the market.

3. Don’t Underestimate Your Own Research

Many altcoins that debuted via ICOs are sold on nothing more than the strength of hype, a beautiful landing page, and a bamboozling whitepaper. Do your OWN research so that you can separate the fact from the fiction and put your money on substance and not hype. That an ‘influencer’, ‘expert’ or ‘professional’ has endorsed a coin doesn’t mean that it is bound to succeed. Take the time to read their whitepaper, one-pager, and tech-paper. Conduct some due diligence on the team and the advisors to the project. You may also want to take the time to engage them in forums such as Telegram and Reddit to see how they respond to questions.

4. Store Your Cryptocurrencies Properly

It would be a shame to take the time to find undervalued cryptocurrency gems, invest your hard-earned money, stay steadfast amidst the FOMO madness; only to lose your investment to cybercriminals or because you can’t access your wallet. As an investor, you’ll probably have different cryptocurrencies in your portfolio; hence, it might be impractical to buy dedicated hardware wallets for each token. You can find different types of multi-cryptocurrency wallets, hardware wallets, and simple paper wallet solutions for storing investment safely, you should avoid the temptation to take the path of least resistance to store your coins on an exchange.

5. Keep a Diversified & Balanced Portfolio

The importance of diversifying your investment portfolio can’t be overemphasized. To begin with, cryptocurrencies are still in a speculative stage; hence, you need to be committed to responsible investment practices and only put a reasonable fraction of your total investment portfolio in cryptocurrencies. While investing in cryptocurrencies, you should also strive to maintain smart asset allocation in security tokens and utility tokens. You may also want to take the time to be sure that you are investing in a diversified base of tokens that could disrupt different industries, markets, and economies.