Investing In NFTs

The number one takeaway when investing in NFTs is to protect your initial investment funds at all times, take profits, always DYOR (Do your own research), and store your NFTs safely in an NFT wallet.

Many investors enter the NFT space (FOMO in) without really learning about this asset class and then lose their money. Please take the time to research this market and do not enter until you understand why some NFTs have value and others do not.

When you feel you’re ready, don’t go “All in” look to DCA (dollar cost average) into plays, and whenever you are about to purchase an NFT, you should have a clear answer to “why am I buying this NFT?”

Leave the flipping to the professionals. Once you are a few months in, you should be good enough to start this lucrative game.

Tax Tip

Before investing (just as you would in property or stocks), look at how NFTs are taxed in your jurisdiction. Some jurisdictions, for example, allow a lower tax rate if you hold your crypto or NFTs for a certain period of time. The way your Country taxes NFT investing and trading can help you formulate a more tax proficient strategy early on.

We wish you the best of luck on your NFT journey, and welcome to the fam!

Have a look at our NFT Tax section where you will find a list of NFT Tax Accountant and helpful links.

1. Twitter

You should spend a lot of time looking through Twitter and researching who is offering genuine FREE content to help NFT investors.

Look at the NFT mints they recommended, did they do well? Or, were they dumped onto their followers? You learn a lot by looking through the post’s comments section and seeing what people are saying.

Be careful who you follow, but over time you will start to see the Twitter accounts that know what they are doing and are happy to share with others openly and without motive their picks, including their winners and losers.

Twitter is useful for you to follow all your NFT projects and keep up-to-date on their progress and news.

Useful Tip

Once you have found a few reliable and honest people to follow in this space look through that person’s list of the people they follow and you will probably find some more smart money NFT people to follow.

Warning

If you receive DMs (personal messages) offering you something be very careful as NFT holders are a juicy target for scammers pretending to “help” or offer advice.

View our NFT influencers section to see some of the important people in this space.

2. Discord

I personally much preferred using Telegram over discord, but if you are serious about NFT investing, you will have to learn to use discord too.

Literally, every good NFT project will have a discord room you can join for free.

Once you have joined you, will need to click on the main dropdown menu of the group, and I would suggest disabling the private messaging as this reduces the chance of being scammed.

NFT discord groups can have 20 or more sub-rooms inside their main channel. I would suggest upon entering to read the F.A.Q section first. Then keep an eye on the announcements channel so you know how the team is performing. Finally, most have an official links section where you will find staking and their legitimate links.

The fun part of being in a discord group is chatting to fellow investors, getting into early mints, giveaways, and showing off your collection.

Discord Fun Fact

Did you know there are secret and private groups for high-level NFT investors? You will only know about them when someone invites you. Some groups automatically allow entry once you have been verified and are holding a particular NFT and some only allow entry to the whales that own 10 or more NFTs in a collection.

Sometimes, becoming a member of a whale room allows you a direct line to the project’s team and even have a direct say in the direction of the project.

What Happens In These Private Discord Rooms?

I am in a few and all I will say is that you will meet a great bunch of fun, smart investors. They discuss: ideas, mints, traits, trade together, and help you learn (fast track) not only about the project but also about other projects. Some investors buy an NFT simply to gain access to what is in essence, a private investors NFT club.

In 2022 we are seeing investors creating niche groups for people invested in a particular NFT collection.

For example, I was recently invited into the

https://twitter.com/DeGods_UK
sub-group which is for members from the UK who own a DeGod. They have organised meet-ups in real life and it was fun to be invited and meet everyone.

After one of our meet-ups, we decided to create an NFT media and marketing company as a group and help new NFT projects in this space.

If you would like to talk to us about helping you start an NFT or crypto project and also with your marketing needs please contact us at DeWay.

Important Tip

Be very careful on discord as it is riff with NFT scammers and they will at some point try to take advantage.

Discord groups are also hacked on a worrying frequency and so be aware of this and double-check if the post is the admin or someone mirroring them.

Discord Scams

Ufff … where to begin!
One of the most popular discord scams is someone posts a direct link to a “new” limited edition mint or DM’s you trying to privately purchase your NFT.

Impersonators pretending to be admin will contact you directly to “help” you.

What is the Solution?

Always insist on using either an NFT Escrow or official marketplaces like OpenSea or MagicEden when selling your NFT.

If in doubt of a link or mint simply take a screenshot and post it in the chat room of the discord group and ask if others think it is a scam. OG NFT holders are quick to help new investors, which is one of the reasons I like the NFT community so much.

Here is an article explaining how a hacker scammed a discord group out of $150,000.

https://www.protocol.com/bulletins/fractal-hack-discord

Admins won’t directly contact you, so don’t respond.

3. Telegram

Telegram is used more for Crypto investing, but some NFT projects have telegram rooms.

This is where investors can chat with each other and ask the NFT team for help or answer an investment question.

It is a useful platform, and you will also meet a lot of like-minded NFT enthusiasts.

As with Discord, be careful of clicking on links or answering private messages.

4. NFT Escrows

If you insist on not selling your NFT on an official NFT marketplace, then I would highly recommend that you use a well-known and trusted NFT escrow service. We have created a list of these here.

5. NFT Loans

I would not recommend borrowing money to buy NFTs, however, it can be tax efficient to take loans out from time to time using your NFT as collateral.

6. Multiple NFT Wallets

As your NFT collection grows in value it is important to protect them at all costs!

Small Investors And Beginners

You will probably want to download a wallet onto your phone so you can trade at work and on the move. This is often referred to as a burner wallet. You can use this to mint projects too. Keep just enough funds in it to buy and mint NFTs.

I recommend using this wallet for purchasing and then having a second wallet stored on a desktop to hold your valuable ones. This way if you lose your phone your collection is not at risk. Once you purchase an NFT on your phone simply send it over to your desktop wallet.

OG Investors

If you are lucky enough to own some valuable NFTs then I would suggest having a dedicated desktop computer. This computer is used for nothing other than simply holding your NFTs. You don’t browse the Internet or click links it is 100% only used for your wallets.

My NFT Wallet Setup

I have gone overboard on protection and for good reason. As your collection expands you will probably want to do the same.

I have 2 dedicated Apple desktops that do nothing other than hold my NFTs. Each one also has a VPN and antivirus software running at all times. Each computer also has different passwords to access them.

I have one computer that holds my long-term collection and I use brave browser, chrome, and firefox. Each browser has a phantom wallet and a meta mask wallet. 6 wallets in total and I rarely turn the computer on. If I buy a new NFT I am looking to hold longterm it goes into one of these wallets.

I use my laptop for browsing collections and the initial NFT and then move it out within minutes of purchasing.

My second desktop holds just one NFT as it pays out a substantial amount once a month. I sleep easy knowing it is safe.

I am aware this is overkill but if you have ever met someone that has lost their NFTs you will understand not only are you losing a substantial amount of net worth, but also you can become rather fond of them as art or the community and so I am happy to go above and beyond to protect them.

I would advice purchasing an NFT 2FA hard wallet that will give your NFTs a secondary layer of protection.

The best wallet for this is the Ledger!

7. NFT Calculators

NFT calculators help you value an NFT before you purchase it.

Here are a few useful links to help you value an NFT collection

Calculators
Valuations
Rarity

8. NFT Wills

NFT investors often forget to make an NFT will!

You MUST please create an NFT will that not only shows who should inherit your collection but also how to access and if needed sell them.

An NFT will is easy to make but how many of your friends and family would know what an NFT is, how much it is worth, which ones to sell, and how to even access your NFT digital wallets?

Have a look at our NFT Legals section for further help and information.

How I Did My NFT Will

My family have no understanding of NFTs or crypto, nor do they want to. My Mother doesn’t even know I am in NFTs. Sounds familiar?

I went old school and created printouts of all wallets and their passwords/recovery phrases. I didn’t like doing this but it is necessary in my case. I also have them backed-up on encrypted USBs.

I created separate folders for each computer I have and the access password to them.

I then walked my father through how to turn the computers on and access them. I then showed him the wallets and had him run through putting the passwords in. I also told him the rough value of each NFT.

Having done all this I realised there is no way that he would know what to do but at least he has all the information needed.

I contacted a very close friend that is also in NFTs and he agreed to come to help my Father in the case of my untimely demise.

If you trust lawyers then you can always create an official NFT will with them.

NFT estate planners
Crypto estate planners

9. NFT Insurance

We are very early in this sector, but I have created an NFT insurance section on this website where in time you will be able to insure your NFT collection.

On this note, NFT custodial services will be more mainstream in a few years time and you can look to put them in an insured cold storage vault.

10. NFT Swaps

You can swap one NFT for another NFT rather than having to sell yours on the open market. Be careful and only use a trusted NFT swap platform.

Check it is the real one and not, for example a vanquished collection.

11. NFT Scams

I would advise learning and keeping up-to-date with new NFT scams so that you are always one step ahead.

12. Passive Income NFTs

Did you know that some NFTs pay you to hold them just like stock dividends?

Some NFTs pay out daily, weekly, and monthly returns while you own them. Basically, the NFT has a cryptocurrency token attached to it, and you receive X amount of that token on a regular basis. Some tokens can be cashed out into USDC or Tether, and investors actually live off this income in their real lives.

Nearly every NFT I own gives me a return. The reason I invest like this is even when the NFT is dropping in value, collectors have a reason to Dimond hand and not panic sell, and you get paid while you wait for the price to recover. You can also use the payouts to buy another NFT from that collection thereby compounding your interest and not having to find fresh funds to buy more.

It is worth noting that if your NFT is dropping in value often the underlying token payout drops with it, but not always.

Be very selective about which collections you own if you are looking for an income and research how they pay out and also how liquid the token is so you can actually sell it.

Most of the time all you have to do is own an NFT and you receive a passive income paid directly into your wallet.

Finally, ensure the token you earn has a utility, or it will become worthless over time. You will find some passive income NFTs here.

13. How to snipe an NFT

Sniping is where you try to buy an NFT under the market (floor) price.

Look at how often someone has listed their NFT and the price changes. Are they getting desperate and changing the price every few hours or days? Some holders get paper hands or need liquidity fast and so sell well under the floor price.

Once you have found an NFT you can offer the seller 20% or more below market value and see if they bite.

14. Flipping NFTs

This is where you find an NFT in a collection that is undervalued and ideally has good news coming out like staking. You buy the NFT before it moves and then sell it when it moves into the FOMO crowd.

Experienced flippers can do this many times a week and then they sell near the top and re-buy on the retracement and flip it a second time when the floor price recovers.

15. Don’t FOMO

FOMO stands for Fear Of Missing Out. This is very common in the crypto and NFT world and however long you are in crypto, it is difficult to resist!

Basically, an NFT collection catches the limelight and makes a huge move, sometimes the floor price can move 2X in a few hours. You notice this move once the price has moved up, and you start seeing tweets showing off these NFTs. You think this is going to 10X (it can) ,and you buy in at the point where the smart and early money is taking profit and selling. A few hours later, the NFT collection has re-balanced in price and dropped 50% from the high. Sadly, you are now what is referred to in crypto as a bag holder.

Experienced traders can spot a trend, jump in and ride the wave and then exit with a nice 100% or more. Leave this to the experts and concentrate on hunting a gem with a solid team and some fundamentals. It is safer to play the long game.

16. Finding An Early NFT Gem

NFT gem hunting is when you look for an undervalued NFT collection to invest in early before it sees its big move up.

As you gain experience, you will be able to start to have a sixth sense about NFTs and if a particular collection is undervalued.

You can use certain NFT Tools, valuation and rarity platforms to help you look at volume, social media activity, and upcoming important roadmap activities like staking.

Also look which influencers are involved, and if the NFT is in a popular sector like metaverse, or P2E and hasn’t moved yet. Check the mint price to see how much it has moved already to ascertain if the NFT is under or overpriced.

In a bear market NFT gems are easier to find as they are more easerly overlooked. Over time you will learn which NFTs have a better chance of becoming popular, and increasing in price.

17. Popular Traits To Buy

1. Rarity – First, you need to check the rarity of a collection and how many NFTs have each trait in a collection. The less NFTs that have a specific trait, the more sought after these will become.

Go to our rarity section to find platforms that will help you.

2. Number In An NFT Collection – When analysing an NFT collection, the less NFTs in a collection the more chance the floor price will go up. There is another argument I have heard that says an NFT collection that has 20,000 NFTs will have more holders and hence more tweets and activity on social media. The argument is this will increase the price, yet the statistics show the limited NFT collections usually have a far higher entry price.

Popular Traits

  • Unique and interesting artwork (aesthetically pleasing)
  • Gold body, teeth, accessories, and clothes
  • Laser and rainbow eyes
  • Rare backgrounds
  • Clean NFTs – Literally as naked as possible

18. Control An NFT Collection

Whales and early investors do this, and it is very effective! Find a promising NFT collection and buy as many, if not all of the rarest traits. For example, buy all the gold coloured NFTs in a collection. You can now control the floor price of a trait in an entire NFT collection! Smart investing.

19. Circulating Supply

As collections become popular (more are sold) there will be less of them for sale. NFT collections that have staking really helps this happen. Supply and demand makes an NFT price go up and down. The fewer there are for sale, the more likely the price will increase as new investors scrabble to get the few that are still for sale.

20. Copyright Infringement

If you see an NFT collection that is too close to a real product like a cartoon character or another NFT collection avoid these. There may also be IP issues.

21. How To Avoid NFT Rugs

If you are investing in NFTs on a regular basis and especially if you are minting you need to be aware that many projects are scams.

An NFT rug is where the NFT creators scam the investors by disappearing and leaving the holders holding a dead project. Sometimes the NFT holders will take over the project to revive it, but this rarely works out.

Some NFT and crypto rugs involve the creators stealing liquidity, cashing out, or even disabling the saleability of tokens and NFTs.

The best way to avoid a rug is to invest in proven bluechip NFT collections. Rugs usually happen with new NFT projects. However, this is not practical if you want to invest in a new promising project or you don’t have enough money to buy a high-end NFT.

Rugs can come from no where. Some projects can get a lot of hype and volume and suddenly disappear. There are a few things you can do to reduce the chance of a rug, and rugs are why you should never go all in on a new NFT project.

1. Look at engagement, not the follower count.

NFT projects can have fake and paid-for bot followers. An NFT collection may have 50,000, or even 300,000 followers and look legit and popular.

This number means nothing without engagement. Look at their posts and how many real investors are commenting on them. Do people like posts? Are these legit people or bots? You can also look at how many followers each person has commented on. Fake ones often have 5 to 10 followers themselves.
Look to see if the project has a lot of followers on twitter, but very few in their discord for example.

2. Is the team legitimate?

Is the team anonymous? Check the profile of each founder and see if they are respected, experienced, and legitimate. Is it a one-man band? Have the founders rugged projects before? The less known about the founders and team, the more red flags.

If they have associates or partnerships, check to see if they are really involved.

3. The roadmap

Check the roadmap. This tells you a lot about the project and team. Is it realistic? Will the roadmap give the holders value over time?

If you are in NFT investing for long enough you will experience a rug first-hand. Learn to spot the warning signs early and reduce this risk.

22. Avoid Derivative NFT Collections

This is where an NFT collection copies a popular NFT collection in the hopes of attracting investors who missed the boat on the original collection. This is a cash grab. Avoid!

23. Metaverse NFTs

This is a huge space that has only just begun. You can purchase NFTs in popular and up-and-coming metaverses. These NFTs often allow you to own virtual land and start a virtual business.

You will be able to buy NFTs that can be used in the game and even rented out to others for an income.

Each metaverse also has a native token you can invest in.

We suggest researching this sector and learning as much as possible before investing. Check out our Metaverse NFT section on our website.

If you are uncertain how to invest in a metaverse, you can look to invest in metaverse and crypto stocks that trade publicly on the stock market. This way, you get exposure to this sector with less risk as the fund or stock does it for you.

Have a look at our investment lists:

Crypto funds

NFT Funds

24. NFT Funds

There are NFT funds and Dao’s that invest in bluechip NFTs you couldn’t afford to own yourself. This is also a great way to get a little exposure into the NFT market when you don’t know which ones will be successful. Sometimes you simply have to own an NFT and that gives you a percentage of the profit of the fund.

Be careful which NFT funds you join and always do your research!

Missed the NFT, buy their token

A perfect example of this is APE coin which is the underlying token to BAYC. Apes cost hundreds of thousands and rare ones even millions of dollars but late to the party investors bought the token instead and made a good return. If you get in very early you can even make enough of a return on their token to sell it and actually purchase an NFT from the collection!

25. Here Is A Basic Checklist (Questions) You Should Tick Off Before Buying An NFT

1. The Team

Is this the first NFT collection this team has done?

How experienced are the team members in the NFT world?

Is the team capable of pulling off what they are promising, or is a lot of it promised dreams?

2. Unique

Is the project unique, or similar to every other NFT project? Why invest in this project and not another?
Are they doing something unique in this space?

3. Seller verification

Check that the NFT collection has been checked and verified on the NFT marketplace. Not all NFT collections are verified, but the bluechips are.

4. The royalty fees

When you sell your NFT, there is often a royalty percentage you need to pay to the creator. Check the percentage before you buy as this will affect your profit margin.

5. The marketplaces fee

When you buy and sell an NFT the marketplace you use will charge you a fee. This fee needs to be costed into your investment.

6. NFT volume and liquidity

This is very important. Ensure there is demand for your NFT and their token. When you come to sell you will need buyers!

7. Teams past collections

Many NFT collections create a secondary collection. Check how their first collection is performing before buying their secondary.

8. Wallet fees

Buying and selling will involve using an NFT wallet. Ethereum fees can be very expensive, whereas, Solana NFT wallets are very affordable. This adds to your bottom line when purchasing and affects your profit when selling.

26. How To Take NFT Profits

The ideal position an NFT investor can be in is to have a free ride! Savvy NFT investors will often buy/mint at least 3 NFTs in a collection.

They sell one NFT to cover the cost of the mint/total purchase price of all 3. They are protecting their initial money at all times. This is called risk management. From now on whatever happens they are playing with the house’s money.

The second NFT is sold to give the investor an actual profit.

The third NFT is often kept longterm if the investor likes the project or sold when it moons and the price is eye-watering.

You will have to decide for yourself your own risk/reward factor. But never forget the two golden rules; Protect your downside and capital whenever investing, ask yourself why you think this NFT will be sought after, and give you a good R.O.I.

27. What do experienced NFT investors have to say to new NFT investors?

I asked some well-respect NFT investors from the DeGods and Cets on Creck community what is the best advice and number one most important aspect of an NFT collection.

Below Are Their Responses:

  • Community
  • Vibe
  • A picture is worth a thousand words
  • Have some fun and patience
  • To be very skeptical about all you see online 99.99 might be fake
  • Do as much research as you can before buying any NFT
  • Be selective. Do not mint everything. Watch the space a little before you hop directly on the next best project.
  • Don’t ever assume you have Liquidity, if no one wants to buy your NFT no one wants to buy your NFT.
  • Start with only 2weeks of your salary and try to 2x before going to zero. If you go to 0 start again until you learn enough and feel confident to invest more. But always be ok with losing it all again. Don’t gamble your life savings. Be patient. Be observant.
  • Use tools like https://solradar.io and https://solsniper.xyz to do analysis before buying. Technical analysis + Community are key to finding winning NFTs for both short and longterm gains.
  • Be as safe as possible, immediately bookmark legitimate websites such as http://magiceden.io NOT ANY OTHER EXTENSION I GOT RUGGED THIS WAY BEFORE. Have multiple wallets, at least one that you never connect to any type of exchange and leave for cold storage, and 1/2
  • Stay away from derivative.
  • Have one burn wallet that you use just for minting. This is a good safety practice to keep your assets secured.
  • Don’t rush into new projects, do your research and wait for the golden ones. Try to gather input/recommendations from many different areas.
  • Double down on high conviction plays.
  • Also search for a community you like and try to get involved! You learn a lot more this way. And try to get in on projects relatively early if you can obviously.
  • Learn how blockchains and wallets work.
  • FOMO can be expensive. Don’t use money you can’t afford to lose.
  • “It’s better to have a partial interest in the Hope diamond than to own all of a rhinestone.”
  • My advice would be… just because an influencer endorses a project doesn’t mean it is legit/ or will 100x. Also, if you see it all over CT then 9 times out of 10 you’ve missed the pump so wait for the consolidation period bc there will be one.
  • Look for an active community. Community + good art has never failed me. That’s something Cets and DeGods have in spades. Jump in the discord and see if there’s actual discussion and not just inauthentic talk to level up for a WL (that’s for premint)
  • Look for nice and friendly communities.
  • Patient, don’t expect team to deliver right after mint. Investing in NFTs are just the same as investing in other things but the numbers are way quicker, risk are all the same.
  • Not all that shines is gold.
  • Sometimes selling at a loss is a win.
  • Don’t get too obsessed with whitelists. If you DYOR you can often get excellent opportunities off secondary.
  • IMO, the first thing is understanding the infinite possibilities that this technology can be used for, (music, art, certificate etc) then be curious about this ecosystem, what’s the meta, what has been done etc.
  • A project that has a good community, good art or good utility can be successful. The ones that fly are the ones that can combine all 3.
  • Spent at least 4 hours a day learning, everyday. Be present. Time is crucial.
  • You’ll learn the most by making mistakes. Buy cheap NFTs at first to minimise tuition costs for those mistakes.
  • Try out a lot of different projects with transparent devs and don’t concentrate your investments right off the bat because likely they wont be the most successful ones. You’ll learn faster this way by being forced to find the difference between a good team and one in it for the $.
  • It’s all about the team. Credibility is key and leadership is crucial. From there, community takes it to the next level.
  • Remove emotions while trading NFTS, learn to always take profits.
  • Never get too attached to your NFTs unless they have proven that they can withstand several market cycles (bear/bull).
  • Play safe. If you are up, take out your initial investment and hold the rest. Don’t do it only for the money.
  • Do not ape into TOO many projects, do not let FOMO drive you. Actually do some research and only buy into the ones you feel comfortable with and only put in money you are not going to need on short term. NFTs for me at least it is a Long term game (aka DeGods)
  • Wait for a project that doesn’t need to shill. Mint >1 NFT of projects you feel good about so that you can get liquidity out. Stay on top of announcements. Look at how the team reacts when shit goes wrong. Long hold through the FUD. Stake early. Take profit. (Don’t be me)
  • Keep your private keys private.
  • I know everyone says this, but most beginners don’t do it until they lose… store all your nfts in a BURNER wallet. Only use that wallet to sell/trade on verified sites. Use the other to mint and connect to all the other sites besides marketplaces.
  • Biggest lesson I’ve learnt over the last few months in NFTs and also the number 1 piece of advice I’d give everyone starting out.. It’s exponentially easier to 2x 50 times than 100x once!
  • https://www.de.xyz
  • I would say that beginners should expect to lose whatever money they put into NFT’s, since they are highly speculative. Hope this thread is able to help new people navigate the space.
  • Invest in teams, leaders and communities.
  • Don’t chase, find conviction, bet big but responsibly, PATIENCE, and have dynamic exit points in all projects you don’t plan on holding for 6+ months.
  • Ensure to read up on and understand the usage of burner wallets and ledgers.
  • I think one of the most important tips is on portfolio management! Have your long term holds, flips etc but always keeping liquidity. You always need buying power when you don’t have it.
Thank you for reading this and we hope you have found this useful. Please share this with your friends and on your social media. Thank you!

Have a look at our NFT resources section where you will find everything you need to help you invest.

If you are looking to create an NFT project, or you would like help marketing your existing one please contact us. We work closely with DeWay Media which is a collective of NFT investors and marketing specialists.

This article was written by the founder of spendingcrypto.com Jonathan Titley.

Jonathan Titley
Author: Jonathan Titley