Regardless of one’s level of education, profession, or socioeconomic standing, it is vitally important in the 21st century to educate oneself about modern financial trends and investment opportunities to maximize savings and improve your financial literacy. So how can you, as a woman in the modern-day, diversify your savings accounts to benefit yourself and your children?
To diversify and improve savings, consider investing in cryptocurrency. While this may seem like a task that requires expert knowledge, this isn’t the case. Instead, it’s about understanding what “dollar cost averaging” is vs. full and immediate investment, both of which can yield excellent results however one is clearly superior to the other with the benefits of lower risk.
Understandably, no investment, crypto included, can be justified without data to back up the claim that cryptocurrency is actually a stable investment method over the medium to long-term with huge potential returns realized in just a few years. Therefore, the discussion below will highlight the data to back up these claims while also explaining the different investment methods to achieve these returns safely!
At face value, it may appear that making investments (particularly in the realm of cryptocurrency) is simply about finding the right cryptocurrency to invest in, then investing a lump-sum and hoping that your luck pays off, allowing for a good return on investment in the coming years.
However, this simplistic approach to investment suggests that it is merely a form of educated gambling, which couldn’t be further from the truth. Instead, investments are about diversifying one’s savings and employing well-thought-out investment strategies to maximize your potential gains and subsequent return on investment.
One such method of investing (in both cryptocurrency and other assets) is Dollar-Cost Averaging.
Dollar-Cost Averaging is an investment approach whereby an investor selects a specific asset and commits to purchase/invest a set amount of money at set time intervals into that specific asset regardless of the price. In other words, this strategy means that you would commit, for example, to buy $100 worth of Bitcoin each week for several years regardless of what price Bitcoin was trading at.
Consequently, Dollar-Cost Averaging is actiually a very simple method of investment that ignores the need/desire to enter and exit the market according to price fluctuations. The key benefits of Dollar-Cost Averaging are:
When looking to invest in cryptocurrency, most investors will begin with Bitcoin, given its popularity and relative stability. So let’s explore what the past four years of investing in Bitcoin would have looked like had an investor opted to employ the Dollar-Cost Averaging investment strategy.
If an investor began investing in Bitcoin in 2017 and invested all that they planned to invest at the time, it would have been difficult to time the market and choose the ‘right’ entry point. Instead if you had invested as little as $100 a week this method would have helped you avoid the greuling emotions associated with investing at the top.
So assuming you started investing in 2017 up until early 2022 you would have seen the price of Bitcoin rising and dropping quite rapidly at times. If you had invested all your money in on go, you may have been tempted to exit the market. However, at $100 a week, most investors could ride this volatility all the way into 2022 since your average cost per Bitcoin would be lower than the current market price.
To put it more starkly, if you invested $100 every week from the 17th of December 2017 (market top at the time!) until the 9th February 2022, you would have invested a total of $21,700 over four years. The return on investment for your Bitcoin portfolio as of 9th February 2022 would be $98,551 for a 354.15% return on investment! If you had simply invested the entire lump sum on the 17th of Decemember 2017 your portfolio would now be worth $43,463 or a 127% return on investment. In other words, Dollar Cost Averaging effectively doubled your returns and greatly reduced your volatility at the same time!
Understandably, you may be saying to yourself, “sure, Bitcoin may have been a worthwhile investment, given its ubiquity within the cryptocurrency space as a whole, but surely this wouldn’t have worked with other coins?”
To dispel this myth, let’s explore the same dollar-cost averaging strategy, but look at Ethereum, which followed a similar bull-bear market trajectory to Bitcoin.
Assuming you invested $100 every week from 17th December 2017 until 2nd February 2022, you would have invested $21,700 over four years. The return on investment for your Ethereum portfolio as of 9th February 2022 would be $216,264 or an 896.61% return on investment! If you had simply invested the entire lump sum on the 17th of Decemember 2017 your portfolio would have grown by ‘only’ 332% which is still a fantastic return however this meant far more volatility for only a third of the gains when compared to Dollar Cost Averaging.
In conclusion, Dollar-Cost Averaging is a good strategy for individuals looking for long-term gains and savings over time, as opposed to individuals hoping for a quick return on their investment, which puts pressure on investors to invest in the right asset at the right time.
Given the above, we have shown that Dollar-Cost Averaging is a low risk, long-term investment that encourages investors to ride out the market volatility and lock-in real long term gains. This makes this strategy a perfect method not just for your average investor but it’s also particularly suited for mothers who are concious of their monthly budgets and expenses and gives them an opportunity to create a true savings vehicle for their children that offers low volatility, protection from inflation and is a great way for families to comfortably diversify their savings.
To find out more about how Dollar Cost Averaging can work in the ‘real world’ check out this video here that we made explaining it in clearly and using simple graphics and language.
As we have shown above, cryptocurrency is clearly not as volatile and not as risky as most people think. Imagine if you will, that instead of giving your children a little pocket-money each week, you invested it in an asset such as Bitcoin instead? Not only would this provide genuine wealth for your children for the long-term, but it’s also a great way to teach your children the benefits of investing and saving.
Unfortunatley our education system today does a poor job in teaching our children the benefits of ‘sacrificing something today in order to reap the benefits tomorrow. Using Dollar Cost Averaging to grow a savings account for your child can be done with with as little as $10 a week and you can choose just about any timeline and almost guarantee that your nest-egg that you created for your children will out-grow, by a massive margin, any bank savings account.
For example if you invested $10 a week over the last three years (for a total of about $1,500) your net-egg would be worth almost $7,000 today. If you started 5 years ago and invested only $5 a week? You would have $11,000 today! The point is, the sooner you start the better your returns will be and, no matter what your financial position is, we can all afford $5 a week (that’s less than a Whopper from Hungry Jacks!)
Fortunately for women in and outside the workforce, access to this investment strategy is becoming easier by the day. Investing in cryptocurrencies in Australia has become more accessible, and is best illustrated by the role of reputable institutions such as Stripe, Mastercard, Visa, PayPal, and national banks such as Commonwealth all offering on-ramps into cryptocurrency trading and investing. This means that you have no excuses for building a strategy to accumulate wealth and retire on your own terms. No where in the investing world can you realistically 10x your return on investment anywhwere else other than cryptocurrency.
If you’d like to learn how to replace your full-time income and are serious and committed to changing your life financially for as little as a few hundred dollars but are not sure where to start, orgnaizations such as Digital Wealth Group can help you achieve financial freedom with personal coaching tailored for your situation and your goals.
References
https://digitalwealthgroup.com.au/
https://www.investopedia.com/investing/investing-strategies/
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