Cryptocurrency has been at the center of market news in 2021. From boom to bust and yet more boom, the Bitcoin-led rollercoaster of cryptocurrency has made numerous millionaires and changed lives.
Awareness of cryptocurrency is growing, with more than 90% of Americans saying they are somewhat familiar with cryptocurrencies.
Our SoFi Invest review speaks of how this robo-advisor offers an easy way to invest and build a well-diversified portfolio. What we also mentioned was how SoFi cryptocurrency investing can form part of your portfolio.
Let’s take a look at how you can start building a cryptocurrency portfolio with SoFi Invest.
Understanding SoFi Cryptocurrency
There are hundreds of different cryptocurrencies. Not all of them are feasible which is why SoFi takes the time to evaluate cryptocurrencies before letting you add them to your investment portfolio.
As of this writing, there are 21 different cryptocurrencies you can trade on the platform, including:
- Bitcoin – The king of cryptocurrency and the only digital currency with a market cap of $1 trillion. Many people use the words “cryptocurrency” and “Bitcoin” interchangeably.
- Ethereum – The second-largest cryptocurrency. Market cap of more than $300 billion and is most often used on the Ethereum platform itself to build decentralized applications.
- Litecoin – Litecoin was one of the first Bitcoin alternatives. It offers faster transaction times, which is ideal for investors who want to swing trade.
While there are other cryptocurrencies, these are the three main crypto options we recommend for novice investors.
How Much of My Portfolio Should Be Invested in Crypto?
SoFi has always made it clear that cryptocurrencies are a speculative type of investment. For this reason, never invest more than 5-10% of your total portfolio into crypto.
There are no guarantees as to its value and huge swings of thousands of dollars are common. While currencies like Bitcoin can turn you into an overnight millionaire, they can also ruin you in the same amount of time.
This is a speculative, high-risk investment.
How Do I Trade Cryptocurrency with SoFi Invest?
Firstly, understand that different U.S. states and territories may have restrictions on who can buy cryptocurrency.
For example, New York prohibits purchases of newer cryptocurrencies; thus, SoFi investors in that state will have a smaller pool of options to choose from.
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Residents of Puerto Rico, on the other hand, are prohibited from purchasing cryptocurrency. This is because SoFi must obtain individual state and territorial licensing.
So, how do you buy crypto with SoFi?
- Step One – You will need to create a SoFi Invest account and make sure you have at least $10 in your wallet. SoFi allows for fractional investing, so if you can’t afford a full Bitcoin you can still invest.
- Step Two – Choose your cryptocurrency of choice from your dashboard and select how much you want to buy.
- Step Three – Initiate your purchase.
Unlike buying cryptocurrency on a third-party platform, SoFi only allows these transactions for investments. The crypto is not held in a wallet with a separate key for every investor, so you cannot use your purchased crypto to perform other transactions elsewhere.
Does SoFi Invest Offer Cold Storage for Cryptocurrency?
Traditionally, crypto investors have been concerned about security. In 2019 alone, more than $4 billion in crypto was stolen. If wallet keys are intercepted, investors may potentially lose access to their holdings forever.
Cold storage, on the other hand, allows crypto investors to store their coins offline. Sound wallets, a physical USB drive, or a paper QR code (known as a paper wallet) are all viable cold storage options.
While cold storage is less convenient than online storage, it’s by far the safest way to store crypto.
SoFi does not offer cold storage options for holders of cryptocurrency. However, since SoFi simply allows you to hold your crypto as an investment, you’re not responsible for their security. The SoFi customer support team guarantees the security of your holdings.
This is another reason why we highly recommended this platform in our review on SoFi Invest. We believe that they are a solid, secure platform, where investors can hold multiple types of investment in a single location.
Beginner Tips for Investing in Cryptocurrency with SoFi Invest
Even many experienced investors don’t feel confident about investing a portion of their portfolio in cryptocurrency. For this reason, we’ve provided some beginner tips below:
- Stick to the well-known cryptocurrencies. These are the most stable options.
- Avoid investing significant chunks of your portfolio into cryptocurrencies.
- Resist checking the price daily. Crypto prices are highly volatile.
- Opt for a stop-loss order to protect your investment.
- Follow crypto news to stay on top of the latest data.
The Bottom Line
While cryptocurrency is not an ideal investment opportunity for more conservative, risk-averse investors, SoFi offers this function to appeal to a wider pool of investors.
If you want to get into cryptocurrency for the first time, you can. Create an account with SoFi Invest now and start investing for free by clicking on our link.
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