Want to Make $5,000 With Shiba Inu? Follow These 4 Rules.

While there's no guarantee that anyone will make money when investing in a silly meme coin like Shiba Inu (CRYPTO: SHIB), there are a few things you can do to maximize your chances of walking away with some cash, and minimize the risk of a total wipeout of your investment.

Follow these four rules wisely and persistently, and you could potentially turn a $1,500 total investment into a $5,000 profit. Here's the lowdown.

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1. Attend to more important financial priorities first

The first rule to follow to maximize your opportunity with meme coins is to only invest in them when your financial life is rock solid and completely in order.

You must diversify your portfolio with other investments first, including stocks, bonds, and safer cryptocurrencies that aren't based on memes. Additionally, you should have an emergency fund, enough money in your checking accounts to cover your necessities and basic luxuries, and a strategy for paying down high-interest debt.

It's a lot easier to see that risk through to a favorable outcome if you aren't worried that you'll need to liquidate your holdings to pay off your credit card loan at the end of the month.

2. Don't commit all your capital at once to meme coins

Today, Shiba Inu's market cap is near $8.2 billion. Less than a year ago, in March 2024, it was worth $21.1 billion. So it has lost more than 50% of its value since then.

Now, imagine that you had gotten all excited during that period when the meme coin's price was surging, and, fearing missing out on a massive gain, you dumped a few thousand dollars into the cryptocurrency. By now, you'd have been feeling pretty sheepish, assuming you held on to your Shiba Inu investment.

Hence the second rule: Don't drop a sizeable lump sum of your investment capital into meme coins all at once. Dollar-cost average (DCA) into your position until it's the size you want.

Dollar-cost averaging means you will likely miss out on purchasing the token when prices are at the very top or bottom. However, this also strategy also ensures you are adding to your investment at regular intervals and across various price points on average, irrespective of the direction of the price movement. This helps spread out your purchases so that you are insulating yourself investment from extreme volatility by cancelling out extreme price points.

3. Buy more when it feels the worst to do so

As mentioned in the prior point, buying Shiba Inu gradually over time will help to reduce some of the impact of the coin's volatility on your cost basis as well as your returns. But there's another way to juice your returns to be a bit better.

The third rule is to make additional purchases on top of your regularly scheduled purchases during periods when the token's price is really low, or when it's falling sharply each week.

It will feel terrible to purchase a coin that recently lost a lot of value, one or that seems to be losing even more of its value. Put simply, the market's interest in that meme coin is waning. That's why nobody else will be buying it. And that's also why if you do force yourself to buy it, you'll be setting yourself up for a better return down the road.

If the price recovers eventually -- and with a fairly durable meme coin like Shiba Inu, it probably will -- your capital will likely grow significantly as a reward for mastering your emotions.

4. Check the price once per week or less

It's fun to invest in meme coins because of how frequently the price changes. Within the same day, it could swing as much as 10% or more.

But looking at the price does not change it. And, if you're the type who gets stressed out about their investments being underwater even for a second, looking at the price too frequently is a recipe for stress.

If you choose to make a speculative bet on this token at all, you need to commit to that bet for at least a year or more. Within that time frame, there is little to gain from checking the price more than once per week, so don't bother with it.

Good financial practices help generate confidence and give you the breathing space to have some conviction in your choice of token.

At the end of the day, the objective behind buying meme coins, like Shiba Inu, is to give you exposure to a potentially big reward without being necessarily exposed to a debilitating loss. These four principles should greatly help you sleep well at night while ultimately setting you up to reap the rewards.

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Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.