Ethereum’s co-founder Vitalik Buterin offers four financial tips to help new and seasoned investors mitigate risks amid massive volatility in the crypto space.
The Ethereum boss shared the tips after famous blogger Alexander Voigt highlighted how diversification strategy helped Microsoft founder Bill Gate to build his net worth.
How Microsoft Founder Boosts Portfolio Using Diversification Strategy
Voigt noted that when Gates became friends with prominent American businessman Warren Buffett, he sold most of his Microsoft shares. According to Voigt, the move helped Gates to diversify his portfolio and acquire other stocks.
As a result of the decision, the Microsoft founder built his fortune to $138 billion. Voigt emphasized that Gates would have been worth only $1.33 billion if he did not diversify his portfolio.
Ethereum Founder Reacts, Offers 4 Financial Tips
Reacting, Buterin characterized Voigt’s financial tip as awful. However, he offered four tips, which he described as “actual financial advice.”
This is awful advice. Some actual financial advice:
* Diversification is good.
* Save. Get to the point where you have enough to cover multiple years of expenses. Financial safety is freedom.
* Be boring with most of your portfolio.
* Don't use >2x leverage. Just don't. https://t.co/CIvDJcD3UG— vitalik.eth (@VitalikButerin) January 7, 2024
The Ethereum founder first recognized the importance of diversification. Diversifying one’s portfolio cannot be overemphasized, as it helps mitigate risks. Spreading your investment across various assets would ensure that the negative performance of one asset does not entirely affect your portfolio.
Secondly, Buterin pointed out the importance of saving. He recommended that people should accumulate sufficient funds to the point where they can cover multiple years of expenses. It bears mentioning that there is no guarantee in investing, given the recent economic downturn that has wreaked havoc on most financial markets. Hence, saving more could help shield one from the problems associated with investing.
For the third point, Buterin encouraged investors to be boring with most of their portfolios. The concept of being boring with one’s portfolio suggests that people should opt for low-cost and low-risk assets. Here, Buterin recommends that people be prudent with investing instead of committing their funds to high-risk assets.
Lastly, the Ethereum founder warned against using high leverage when investing in the futures markets. Specifically, he cautioned against using over 2X leverage. This advice is necessary, especially in crypto trading, where volatility is rife. Recall that following a 7% dip in Bitcoin price last week, over $655 million worth of long positions were liquidated. The majority of long traders who got liquidated were mainly those who used high leverages.
Buterin’s financial tips are suitable for both new and seasoned crypto investors. They serve as a reminder, urging people to be prudent as they seek to bolster their portfolio.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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