Be Careful of Unknown Investments
For the last few years there has been a lot of buzz about certain cryptocurrencies especially Bitcoin and Ethereum. Unfortunately, now as many news reports state many people have lost significant amounts to investment plans revolving around cryptocurrencies. Over the last few years we have asked regularly whether people should invest in them and always struggled to answer. We’ve done our research now and we are proud to admit that we aren’t sure. This little piece will hopefully clear up our thoughts on the cryptocurrency market.
The reason we, and many of you, we’re looking into the market in the first place is because we had all heard the success stories of people getting huge returns. However, according to the BBC £27 million of people’s money was lost to these types of schemes over the last year. The average case lost £14,600! Many of these people would have joined in the craze without much regard for risk because they were scared of missing out on the initial upshot in prices. This BBC article details how many of the cryptocurrency trading schemes were promoted by celebrities showing how the fear of missing out spreads. These examples should serve as a warning for us to be careful and not jump on the craze of the moment.
However, as I mentioned before there is money to be made with cryptocurrencies. If you want to take the risk, there are a few things to take into account. Firstly, never invest more than you are willing to lose. This isn’t like the ‘cappuccino factor’ or other saving strategies, without evidence it is a risk. Secondly, there are some legitimate crypto-asset investments, make sure you choose regulated ones. If you want to find out who they are then look up ‘CryptoUK’, a self-regulatory body for the industry. Thirdly, if a deal works it is likely to be short term and quite active, meaning you may need to keep close attention to it.
The crypto market is like the wild west, we just don’t know what drives it currently. What we can see from the small price history available, is that it is volatile. When we invest, whether passively or actively, we try to make sure we have data on any vehicle we decide to put our money into. We will usually invest in shares or share indices. The world’s major stock markets have been around for over 100 years providing us with plenty of price history. In that time these markets have increased in value much like the property market has. This shows that stock investing is can provide good returns and is safe to use for long term saving strategies. If you want to learn some of our investing strategies then visit the Money Mum website.