3 answers
raymond
Student
Boise, WA
4
Questions
Asked
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Why does crypto sound like a scam ?
I'm thinking of investing in crypto but I don't know if it'll be beneficial
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3 answers
Fred Rosenberger
Data Analyst
515
Answers
St. Louis, MO
Updated
Fred’s Answer
Everyone has different opinions on crypto, so take anything said with a grain of salt (even what I tell you).
The only reason ANYTHING has value is because people believe it does. Whether it's gold, art, information, or crypto, two people have to agree on a value - and generally of two things - and they trade. If I have a baseball card you want, and you have a piece of jewelry I want, we can consider trading. If I think your jewelry is worth the same (or more) than my card, and you think my card is worth the same (or more) than your piece of jewelry, we would probably agree to trade.
The same goes for cash. If I think your jewelry is worth the $50 cash I have, we can trade.
Crypto works the same way. It only has value if people agree it has value. Crypto is still pretty new, and many people (including myself) think it is in a bubble that will crash at some point. Maybe tomorrow, maybe in a year.
Investing is a LONG TERM process - like 10 years or more. I would not invest in crypto. I may speculate (short term), but I think it'd be incredibly risky. It'd be easy to lose everything I put into it, and hard to make money.
So, my non-professional, personal advice would be to invest in a mutual fund, indexed to one of the major indices. Let it sit. Add more when you can. Don't try and time the market (i.e. take money out and put it back in based on what the market is doing). You can't win this way. Just leave it there until you retire, adding more whenever you can.
There are ways to do this in a tax-beneficial way. If you really want to invest, you should speak to a qualified financial advisor who can guide you best.
The only reason ANYTHING has value is because people believe it does. Whether it's gold, art, information, or crypto, two people have to agree on a value - and generally of two things - and they trade. If I have a baseball card you want, and you have a piece of jewelry I want, we can consider trading. If I think your jewelry is worth the same (or more) than my card, and you think my card is worth the same (or more) than your piece of jewelry, we would probably agree to trade.
The same goes for cash. If I think your jewelry is worth the $50 cash I have, we can trade.
Crypto works the same way. It only has value if people agree it has value. Crypto is still pretty new, and many people (including myself) think it is in a bubble that will crash at some point. Maybe tomorrow, maybe in a year.
Investing is a LONG TERM process - like 10 years or more. I would not invest in crypto. I may speculate (short term), but I think it'd be incredibly risky. It'd be easy to lose everything I put into it, and hard to make money.
So, my non-professional, personal advice would be to invest in a mutual fund, indexed to one of the major indices. Let it sit. Add more when you can. Don't try and time the market (i.e. take money out and put it back in based on what the market is doing). You can't win this way. Just leave it there until you retire, adding more whenever you can.
There are ways to do this in a tax-beneficial way. If you really want to invest, you should speak to a qualified financial advisor who can guide you best.
Thank you for the advice.
raymond
Faimie Fang
accounting
3
Answers
Culver City, California
Updated
Faimie’s Answer
Crypto is something that people should invest in if they have excess cash. I wouldn't advise investing in crypto as it's extremely risky. If you're thinking of investments and only have a little extra money then going a safe route like S&P 500 is the best choice.
This was super helpful, thank you!
raymond
Dave Baird
Business Analyst
4
Answers
Fort Collins, Colorado
Updated
Dave’s Answer
I would not advise in investing in crypto for a new investor, because it is highly risky. As noted by Fred, investing in a mutual fund or ETF (exchange traded fund) that tracks a major stock market index like the S&P 500 Index is a better way to start and build a foundation for future investments. Once you are able to build a solid foundation of investments, then it is ok to take a small percentage (less than 10%) of your funds and invest it in something risky such as crypto. That way if it the risky investment loses a lot of its value, you still have the rest of your investments.