Have you always wanted to invest in crypto, but aren’t sure where to begin?
Perhaps you’re fascinated by the opportunity to profit from new technology but also worried about the risks involved. Bitcoin may have blown up in price over several years, but not every investment has been a success story. How can you invest in cryptocurrencies without risking your money?
While there are always going to be risks involved with any investment, with a crypto index fund, those risks can be minimized.
But what’s the best cryptocurrency index fund out there? And what do you need to know to get started? Most importantly, is there an even better way to invest in crypto?
For answers to these questions and more, keep reading.
What Is a Cryptocurrency Index Fund?
If you’ve explored traditional investing, then you should know what an index fund is. Basically, a traditional index fund is a low-risk alternative to investing in individual stocks.
When you invest in the stock market, you’re typically either investing in index funds or specific companies. When you invest in a single company, like Apple or Amazon, you’re betting that the stocks you buy now will go up in value later. However, you’re also taking a big risk, because the stocks could also go down in value.
However, when you invest in an index fund, your investment money is spread out among a wide range of companies, along with the money of other investors. If half of those companies’ stocks go down in value, you won’t lose your investment as long as the other half have their stocks go up. In the long run, you should earn money back on your investment, because the market as a whole should go up in value.
In other words, when you invest in index funds, you aren’t trusting a single company to be profitable—you’re trusting the entire market to be profitable. That’s a much safer bet.
An index fund for cryptocurrency works with the same premise. As you probably know, some crypto tokens will explode in value the year after they come out, while others stagnate and disappear. If you invest in a cryptocurrency that’s about to go up in value, you’ll earn more; if you invest in a poor-performing token, you’ll lose money.
Just like traditional index funds group different companies’ stocks together, a crypto index fund groups multiple cryptocurrencies. Instead of investing in a single token, you’re investing in the entire crypto industry. Since crypto is almost guaranteed to go up in value overall, that’s not a bad idea.
Crypto Index Funds
Several companies have tried to build a cryptocurrency index fund that competes with traditional investing. However, there’s no one-size-fits-all approach. Just like the bank you use, investing is a personal matter, and the best choice for you will depend on your preferences.
Some of the index funds are Stacked Invest, Crypto20, Shrimpy, CryptoIndex, and EmberFund. Each one has its own set of strengths.
Most of these platforms have custodial wallets, which comes with several risks.
SmartCredit.io is completely non-custodial, which means your assets and keys are stored in your own wallet, apart from others. You also can invest with the SmartCredit.io Crypto Fixed Income feature.
By now you know more than most people about blockchain index funds. But even though crypto market index funds are powerful, there’s a similar investment opportunity that might work better for you.
Why You Should Consider a Crypto Fixed Income Fund
Index funds allow you to invest in many stocks or assets at the same time. Instead of betting on one stock or token to increase in value, you’re trusting the market as a whole to grow. This means you have much less risk involved in your investment.
However, even with index funds, you’re never guaranteed a specific return on your investment. At the end of the day, it’s still a gamble that you’ll earn much at all. For more predictable investment outcomes, you must turn to a fixed income fund.
A fixed income investment is one that is guaranteed to pay a specific amount in dividends by the end of its term. There are many types of investments that operate under fixed income rules. For example, CDs (or certificates of deposit) are fixed income investments offered by many banks.
Depending on the exact investment type, using fixed income can allow you to earn passive income continuously. That’s the way crypto fixed income from SmartCredit.io works.
Unlike traditional fixed income funds, our crypto fixed income funds don’t require you to share funds or profits with other investors. Your funds belong only to you throughout the duration of your investment period. Best of all, there are no high fees or high minimum investment requirements.
Get Started With Low-Risk Investing Today
The reason cryptocurrency index funds are popular is that they allow you to profit from overall market growth without taking a big risk on a single asset or business. Fixed index funds are popular for a similar reason, in that they provide a specific amount of profit over a predetermined period of time, thus eliminating risk altogether.
Now it’s time to make a choice. How will you profit from crypto technology?
To start making money from crypto investments, see our guide to earning on crypto today.