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How Much Should You Invest in Crypto

Everyone who has considered investing into cryptocurrencies has asked themselves this question: “How much should I put in?”

Some people already have an idea on how much they want to invest in crypto but is the amount they want to invest a prudent amount? Others have no clue at all how much to invest. Having seen a lot of people ask this question, I documented here my recommendation for asset allocation when it comes to crypto investing.

Before I proceed, please take note that this is not financial advice and each person has different circumstances so you should take these recommendations as reference only. You should tailor your own allocations based on your specific needs.

With that out of the way, I now share with you my thoughts on asset allocation where crypto is concerned. To be able to talk about allocation however, I will need to expand the discussion to cover all your assets and not just crypto. First, divide your assets into two: Emergency funds and Investable assets.

1. Emergency Funds

This should ideally be 6 months of your current monthly expenses. Basically, this should be in cash or cash-equivalent funds that can easily be accessed when there is an emergency. This will ensure that if you suddenly lose your job, get into an accident or have any other unscheduled expenses, you can still survive for at least 6 months. Multiple financial advisers recommend that you do not go into any investments until you have this emergency fund in place.

2. Investable Assets

These are your funds after setting aside your emergency fund. Take note that for safety, you should diversify this fund by investing in a mix of assets. Recommended asset allocation is in the following section.

Allocation for Investable Assets

Investments should ideally be made from a mix of assets which are not correlated to each other. This will not give you the highest returns but it will prevent you from losing everything when things go south. As the saying goes, “Don’t put all of your eggs in one basket”. When it comes to investable assets, I recommend 3 baskets where you can allocate your eggs (funds). See below these 3 baskets and their recommended allocation percentages:

1. Safe But Slow Instruments (20 to 80%)

These include government/corporate bonds and fixed deposits. These typically give higher yields compared to normal bank savings accounts though yields are a lot lower compared to equities. Nevertheless, there is little risk of investment loss.

The actual percent of investable assets you allocate to this will depend on your risk tolerance and investment horizon. For example, if you are an investor in your 20’s, you can take more risks since you still have decades to recover from a failed investment as compared to an investor nearing retirement age.

2. High Yield, Higher Risk Instruments (20 to 80%)

These include equities and index funds which can give significant gains over time, but can also incur significant losses on the short term. I recommend that everyone allocate some funds to this category even if you are risk averse. This is because these instruments have the potential to give you a lot of gains at manageable risk. If you want to be safer, you can go into index funds which are already diversified since they are composed of a basket of funds and are less likely to be manipulated.

Again, the actual percent of investable assets you allocate to this will depend on your risk tolerance and investment horizon.

3. Aspirational, Highest Risk Investment (max 10%)

Crypto falls under this category due to its high volatility. It is not unusual to see up and down swings of up to 40% within a week for some coins. You can earn money fast but you can also lose money fast if you are not careful. Keeping your total allocation low at 10% for this category will help you to mentally ride through long periods of bear markets and not panic sell at the slightest dip.

Nuances of the Recommendations

The above recommendations are an oversimplification and I did not include other less liquid assets like property and insurance.

Also, note that it is highly recommended to further diversify within each category where possible. For example, for equities, try to buy from a mixture of industries (e.g. tech, finance, real estate, transport, etc) and a mixture of geographies (e.g. US, Europe, Asia) so you are protected when there is a crisis in one industry or geography.

Similarly, with crypto, even if you are a big fan of a progressive cryptocurrency like Cardano, it is always a good idea to further diversify by also getting other coins like Bitcoin and Ethereum if you can.


When thinking about investing into cryptocurrencies, set aside money for your emergency fund first. You are then left with your investable income which you should further divide into safe assets (e.g. bonds) and more risky assets (e.g. equities). For your riskiest assets (e.g. cryptocurrencies), you should keep them within 10% of your total assets to protect yourself.

The above recommendations may be considered conservative but it is meant to prevent you from losing a lot of money while still seeing reasonable gains on your investments. Use this as your starting point and feel free to tweak it according to your risk appetite.

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