Bitcoin and other cryptocurrencies are all the rage. But should you invest your money in them?

I recently received this listener question:

“There is a lot of talk going on about Bitcoin and Dogecoin. Are they good investments?“

Bottom Line Up Front: I do not currently recommend putting money in cryptocurrencies, because it would be mostly speculation and not investing. Realize that if you do not participate there’s a good chance of FOMO with the constant news and watercooler discussion (is that still a thing?)

Julie and I discuss the following:

• A well-diversified, low-cost index fund portfolio will serve you well. There’s no need to speculate with cryptocurrencies.
• Realize if you put money into Bitcoin, it’s not an investment, but a speculation. There are no fundamentals - you are hoping that someone else will pay more in the future. The entire value right now is an implicit societal agreement that it’s worth something.
• Cryptocurrencies are built on the Blockchain. This technology is a massive breakthrough and will be heavily used on the internet. Speculation in crypto is not an investment in Blockchain.
• Bitcoin and other crypto assets are not currencies: they are too volatile. Currency exchanges do fluctuate, but not that fast. And when they do, it’s not a good sign!
• There are a lot of risks with putting money into cryptocurrencies: Regulatory, Security, Insurance, Fraud, Market and Liquidity.  Be aware.

Resources:

• Larry Sweadroe discusses his view of investing in crypto at the start of this podcast. 

Find out more about Mike at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/