Cryptocurrencies are all the rage right now, but that doesn’t mean they’re a good investment for everyone. Are you thinking of investing in cryptocurrencies? If so, you’re not alone – a record number of Americans are planning to buy into the digital asset class.
But while there’s definitely potential to make money by buying crypto, putting money into this asset class isn’t the right choice for everyone.
If you’re not comfortable with taking risks, then investing in crypto may not be for you. Cryptocurrencies are incredibly volatile and can swing in value dramatically over a short period of time. If you’re not prepared to lose some or all of your investment, then it’s best to stay away from this type of investment.
Another thing to consider is the level of technical knowledge required to invest in crypto. You’ll need to be familiar with blockchain technology, exchanges, and how to store cryptocurrencies safely. If you’re not confident in your ability to handle these things, it’s best to steer clear.
In fact, there are several signs that suggest you should stay away from crypto if you don’t want to lose your money. They are the following:
1. You don’t understand how crypto works
If you’re not familiar with how cryptocurrencies work, it’s probably a good idea to hold off on investing. After all, you don’t want to invest in something you don’t understand.
2. You’re not comfortable with risk
Cryptocurrencies are high-risk investments, and they can be incredibly volatile. If you’re not comfortable with risk, it’s best to stay away from digital currencies.
3. You need access to your money right away
Cryptocurrencies are not liquid assets – in other words, you can’t just sell them when you need the cash. If you need access to your money right away, crypto is not a good investment for you.
4. You don’t have the time or inclination to research cryptos
If you’re not willing to do your own research into cryptocurrencies, it’s probably a good idea to stay away from them. Doing your own research is essential if you want to make sound investment decisions.
5. You are not tech savvy
Cryptocurrencies are a digital investment, so you need to be comfortable with using technology in order to invest in them. If you’re not very savvy with gadgets and computers, it might be best to stay away from this type of investment.
6. You don’t have a portfolio of traditional investments
Some investments are riskier than others. Cryptocurrencies can be one of the riskiest due to the volatility associated with virtual coins and the speculative nature of crypto pricing. As a result, it’s generally best to build a portfolio of safer, more traditional investments such as stocks and bonds before buying crypto.
If you have a diversified portfolio of investments that have a proven track record of success, you’ll stand a better chance of earning reasonable returns and building wealth over time — even if your crypto investments don’t pan out. In fact, financial experts such as Suze Orman recommend investing money in crypto only if you can afford to lose it.
Cryptocurrencies are definitely a high-risk investment, so if you’re not comfortable with taking risks, it’s best to steer clear of them. Remember, you can lose everything if the market takes a downturn.
