Curious about crypto? This is what 10 financial experts think


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According to the financial advisors hired to answer these questions, everyday investors are overwhelmed with questions about cryptocurrency.

There is clearly an "emotional euphoria that seems to be permeating the public regarding cryptocurrency," said Frederick Stanfield, CFP at Lifewater Wealth Management in Atlanta, Georgia.

But is it time for the average person focused on retirement planning and financial stability to invest in cryptocurrency?

The answer is complicated, so we asked financial advisors for their crypto advice, and here is what 10 of them are telling clients. In an emerging area with few established rules and norms, we have discovered some universal truths that everyone should know before putting money into cryptocurrency.

First and foremost, financial advisors say that a healthy dose of skepticism is a crucial place to start, and you should never invest in crypto if it interferes with other goals and financial foundations like paying off debts, building an emergency fund, or maximizing your retirement accounts.

Don't let the intrigue and allure of this new technology seduce you, however difficult it may be, says Stanfield. Instead, use the same mindset that you bring into your regular investment strategy.

The experts want you to know something else about investing in cryptocurrency:

Be prepared for losses

As with any investment, financial returns are nowhere near guaranteed with cryptocurrency investments. For some financial advisors, crypto is more like a lottery ticket than an investment strategy.

That said, you should only enter what you can lose. "On a spectrum between gambling and investing, I think it's closer to the former," said Matt Morris, principal advisor at Sanderling Finance in Columbia, South Carolina.

As a high risk, high return investment, keep track of all crypto investments while keeping your broader goals and finances in mind. As with certain types of gambling, "you have a high chance of losing it all but a small chance of winning it all," said Nate Nieri, CFP at Modern Money Management in San Diego, California. "Just don't gamble an amount that would put a strain on your family or prevent you from achieving your goals" when you've lost it all.

Avoid it if you are risk averse

If you are risk averse, crypto is not the investment for you.

“How well can you sleep at night knowing this is an emerging asset class with high volatility? And if you woke up one morning and found that crypto had been banned by the developed world and became worthless, would you be all right? “Asks Stanield.

According to Stanfield, if you are constantly worrying about your crypto investment or are tempted to change your investments in the face of the volatility associated with crypto, you'd better put your money into a more stable investment.

"I think it's still in its infancy, and just like with any new fund or IPO, there is some uncertainty about the future that I can't stand," said Alajahwon Ridgeway, owner of Ridgeway Wealth Management in Lafayette, Louisiana. "I believe my clients are taking an unnecessary risk at this point in meeting their financial goals."

Unlike traditional ETFs and index / mutual funds, there is also far less historical cryptocurrency data available to help investors make informed decisions. Crypto investors face additional risk in the form of poor or inaccurate trading data, competition between fellow investors, theft, loss of wallet passwords, supply and demand issues, government regulations and energy use concerns, says Chelsea Rude, CFP at Rude Wealth Advisory in Olney , Illinois.

"For investors in particular, there is a lack of a well-designed and tested method for valuing assets," says Rude. This means that crypto investors are essentially going blind and exposing themselves to the uncertainty that comes with new business or investments

Know why you are interested in the first place

Some people see crypto as an up-and-coming investment while others see it as an interesting new global currency that you can use in place of the US dollar or other international currencies. However, it is still uncertain whether crypto will last in the long term on both fronts.

"I firmly believe that the vast majority of people who own cryptocurrency are doing so for the wrong reasons and misunderstanding what they are really buying," said Ben Lies, chief investment officer at Delphi Advisers.

Many experts are concerned that people are putting their money into crypto without really understanding the field. Do your own research and make sure you think right about your investment.

"Space hype and excitement are not reasons to include in a portfolio, but I believe there are compelling reasons to consider cryptocurrencies," said James Vermillion, owner of Vermillion Private Wealth in Lexington, Kentucky. “When I discuss crypto with customers, I value education and understanding. It is important to note that there are thousands of cryptocurrencies that are not created alike. Due diligence is just as important as stocks or any other investment vehicle. "

Nieri cautions those considering Bitcoin as a currency to think about what that means for an investment. “I don't usually trade or have currency hedging as part of my investment strategy. Have you ever thought about trading dollar for euro as an investment? For Bitcoin to be a legitimate currency, the world's governments would have to accept it as a global currency, which is very unlikely, ”says Nieri.

Keep the crypto in place

Don't rely on crypto investing in your retirement or overall financial strategy. Make sure that the bulk of your investment portfolio is made up of stable assets that are forecast for long-term growth.

“What I share for What to do is build their future financial pie with investments like stocks and bonds. If there is extra money to play with, buying crypto is an option, ”said Eric Powell, financial advisor and founder of Future Mill.

Make sure your entire investment portfolio is mostly made up of conventional investments like stocks and bonds, Powell says. However, for all crypto investments, experts recommend sticking to the big names.

"Personally, I'm not going beyond Bitcoin and / or Ethereum," says Michael Kelly, CFA at Switchback Financial in Madison, Connecticut. "I think these two have a slightly more established base and the risk of other coins getting too big."

https://dailyaffiliatemarketingnews.com/curious-about-crypto-this-is-what-10-financial-experts-think-2/

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