Thinking Loud on Dollar Cost Average (Auto-Invest) Plans

When it comes to investment then I believe the best strategy is to keep our portfolio diversified and try to invest in multiple instruments. When I say diversification then I mean to say that we need to invest in several instruments to minimize the risk because you never know how things will be turning out in the future. Sometimes things do not go as planned and that's when this portfolio diversification helps us to reduce the loss. I have seen many instances in the past when things were going well but all of sudden something happened that resulted in a big loss. Because of this, I try not to put all my eggs in one basket. I avoid doing this even if things are looking so good because we cannot predict the future and this is why I follow a balanced portfolio approach that includes portfolio diversification.

These days most exchanges are providing this facility however they are using different names but the purpose is the same. Coin trading may be more profitable but I will leave that there is a difference between the short-term and long-term goals in cryptocurrency. If I share my experience then my long-term holding has been more profitable than whatever I traded for the short term and this is the reason why I always prefer long-term investment.

What is Auto Invest?

As the name suggests, we can put our investments in auto mode so that there is nothing much to do for us. All we need to to is that keeping enough balance in the wallet. Sometime back I had started my dollar cost average plan on the Binance exchange. In the beginning, I had started only buying Bitcoin through this, and later I added some more coins. Although the word is called dollar cost averaging in technical terms but some people are not aware of it. Auto invest sounds easy and even one can easily understand what it could be as the word says it will keep on investing automatically on the coins that we like. The exchange has provided multiple options to choose from and even the functionality to start any time we want with the option to pause or hold for a particular duration.

My Auto Invest Strategy

I think that I have started a bit late but it's still better because I believe that now since the market is down so this will give me a great opportunity to buy more quantities in less price. We can get a lot of options in the exchange but still, there are some coins that are were but still not part of the auto-invest and I hope that binance will be doing it sometime later. All the leading coins that are well known are available and we can choose any frequency as per convenience that could be daily weekly or monthly. One of the best benefits that we get with auto investing is that it buys even when the price is high and also when the market dump so this way we get more amount of tokens for the same price that has been configured in the beginning. There is an option to change the amount anytime so complete flexibility is provided and there is no such limited functionality that whatever we started with has to continue with the same.

Anything invested for less than a year cannot be called long term and that's what I follow with investment strategy. Another good thing is that whatever amount is purchased to auto-invest will be moved to flexible saving and this way an additional amount of interest is also paid. This amount is definitely not so high but I believe that something is better than nothing and there is an option to enable or disable it. I believe that this should be on all the time because it is flexible and we can withdraw the amount anytime with no lock-in period.

Its good to enable flexible saving so that there is some additional amount earned on the investment and this can be withdrawn or sold anytime because its not locked. Keeping things in auto is the best and it saves our time. I will continue to invest the same way and I really liked the experince.

Thank you.

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