Is Crypto My Best Bet?
It’s easy to want to get rich quick when you hear of celebrities and nobodies growing their wealth seemingly overnight with their investment in the newest cryptocurrency. We are inundated with these stories on Twitter, Facebook, TikTok, and the like from people we believe could just as easily be us. So why not invest my savings where so many others are seeing success? The danger in following their lead is in asking why they are telling you to do this. Many advocates will teach you their secrets if only you subscribe, which earns them money. Celebrities may very well have had a huge pay day from a crypto investment, but how many cryptos before that did they lose money on? The truth is that you have no idea how many losses they took or even what percentage of their wealth they risked on these investments. It is quite likely that the majority of their investments are in much safer and secure places. If you really want to follow suit, do not risk more than you are willing to lose because your odds of losing far exceed your odds of winning.
Celebrities who have already invested in a crypto are going to encourage you to do so as well so the value of the crypto can grow before they pull out, take their gains with them, and the crypto begins to plummet. To hedge against this risk, many cryptos are implementing buy and sell limits and controlled burns. While this certainly reduces the risk of big fish superficially inflating the value of a crypto only to pull out all at once, you still have to ask yourself if a currency backed by no government or real assets will retain its value in the long run? Certainly, whichever direction you believe this market is going may or may not be correct. It could be that cryptos are here to stay. But if you truly want to grow your wealth, you cannot afford to risk it all in a single market or venture. A wise decision may be to risk only a little and diversify the rest of your investments.
of Where the Masses Invest Their Money
The Rise and Fall of the Stock Market
Most company-sponsored plans and individually sought plans today involve investing in the market. Whether you have a 401k, a Roth IRA, a trading account, or a combination thereof, your money is subject to the rise and fall of the markets.
A look at history indicates that we may be on the precipice of a large market correction (see What History Can Teach Us About the Markets Today). Whether true or not, we can certainly count on daily fluctuations in the marketplace, some bigger than others. In 2008, many Americans saw their investment portfolio diminish by 25%. Many of these portfolios took 10 years to recover what was lost. As recently as February 2020, retirement funds lost 10% in one month.
Why are these market losses the status quo? Sure, the markets bounced back and even gained some, but why do we need to accept these losses while hedge funds simultaneously make billions (see Don’t Listen to Hedge Funds or Financial News)? What if instead of using these traditional investment funds, you put your money in a secure account where your money only participates in the market when it’s on the rise? Imagine if you had pulled out in 2008 and in February 2020, then reinvested only to participate in all the gains that were made to get us back to where we are today? How much more wealth would you have accumulated compared to the other funds that also took the heaviest losses? Find out how by scheduling your free consultation.