How to Maximize the Chances Your Crypto Investment Will Make You Money

Don't buy such a volatile investment unless you make some smart financial moves first.

Investing in cryptocurrency can be risky due to the volatility of this asset class and the sheer number of cryptocurrencies out there -- only some of which likely are viable over the long-term.

If you're considering adding virtual coins to your portfolio of assets, there are a few steps you should take in order to maximize your chances that your investment will be successful.

Here's what they are.

1. Research your investment options carefully

Some cryptocurrencies have a lot more potential than others to be successful over the long-term. Others may end up with inflated prices despite lacking a path to long-term profitability, just because they capture the endorsement of celebrities or become hyped up on social media.

You want to make sure you understand what makes a cryptocurrency investment a good one, and have metrics against which you evaluate any coins you're thinking about buying, so you stand the best chance of your investment producing generous returns over the long-term.

2. Avoid buying anything you don't understand

You never want to invest in anything you don't understand, so if you aren't sure about the technology behind a particular cryptocurrency or its founders and long-term goals, you shouldn't buy it.

If you put in the time to do your research and you make sure you know the ins-and-outs of the cryptocurrency market and the factors that affect both individual coins and the market as a whole, you're much more likely to make money.

3. Invest for the long-term

Warren Buffett, one of the world's best and most successful investors, has famously made clear his preferred holding period for investments is forever. The Oracle of Omaha has also advised that if you aren't interested in holding an asset for at least a decade, you shouldn't put your money into it for 10 minutes.

Buffett's advice is sound, because you never know when economic headwinds will adversely impact even a great investment. If you're intending to buy cryptocurrency because you want to hold onto it for a long period of time and think its value will grow over many years, then you're less likely to lose money because of poor market timing or unexpected economic events.

4. Build a diversified portfolio

Putting all your money into just one cryptocurrency increases the risk of loss because you're relying on that particular coin to perform well.

You should consider spreading your money around to maximize the chances at least some of your investments will pay off. You should also make sure you have a good portion of your money in more traditional investments such as stocks and bonds so you can limit the risk of loss.

5. Make sure you're confident in your investment thesis

The cryptocurrency market is very volatile and wild price swings can happen. This can increase the likelihood you'll unload your assets at a bad time due to panic selling if you see the coins you've purchased start to plummet in value.

To avoid this, you need to make sure you're confident in the investments you're making. If you have solid, well-researched reasons for your investments and believe in your reasons for buying a particular coin, you're less likely to overreact and make bad decisions about buying and selling.

If you follow each of these five steps, hopefully you can make a great cryptocurrency investment that helps you earn a lot of money and build more wealth.