Ask Kim: Should You Put Crypto in Your Investment Accounts?

Posted on September 18, 2024

Dear Kim,

I have seen on Social Media and the news a lot of reports about crypto tokens like BitCoin, and I know their value seems to go really high and then drop seemingly overnight. Some notable investors like Warren Buffett hate them, while others embrace them. As a financial planner, what is your opinion on them?

Thanks,

Curious About Crypto

Dear Curious About Crypto,

Crypto currencies have certainly been making headlines for the last several years, largely due to the volatility in their prices. A lot of money has been made and frequently lost investing in them.

Charles Schwab has this to say: “Whether cryptocurrencies are right for you depends on your goals and risk tolerance.” While some traders have made money on the dramatic swings in the price of Bitcoin or other cryptocurrencies, others have found out the hard way that what goes up can most definitely come down. Thus, investors in this speculative asset should never risk more than they can afford to lose.

I have a few clients that dabble in crypto, but in an account separate from their serious money and they have had mixed success. If you decide you’d like to venture into the world of crypto currencies, here are some things to consider, also from Charles Schwab:

  • Volatility: Cryptocurrency prices historically have been highly volatile, and fluctuations could result in significant financial losses.
  • Fraud: According to the Federal Trade Commission, “Many people have reported being lured to websites that look like opportunities for investing in or mining cryptocurrencies, but are bogus.” And while login credentials are typically required to access a cryptocurrency exchange, these can be stolen or lost.
  • Lack of recoverability: With conventional financial accounts, there’s normally a recovery process if you forget or misplace your login credentials. However, If you lose your cryptocurrency “key” you cannot retrieve your crypto tokens. Similarly, if you lose access to the place where you store your key, you will effectively lose possession of your cryptocurrency.
  • Lastly, my advice as a financial planner is to never invest more than you would take to Las Vegas to gamble. Never make this type of investment with money you are relying on to retire, educate a child, or to cover any other serious financial goal.

Best of luck in navigating the world of investing responsibly.

Kim

If you need help navigating your finances, talk to Kim Spencer by clicking the link below!

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Investment advisory services offered through Equita Financial Network, Inc. (“Equita”). Equita also markets investment advisory services under the name Next Step Financial. The foregoing content reflects the opinions of the author(s) and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct.  

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