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Should You Buy Bitcoin?
In general, many financial experts support their clientsā desire to buy cryptocurrency, but they donāt recommend it unless clients express interest. āThe biggest concern for us is if someone wants to invest in crypto and the investment they choose doesnāt do well, and then all of a sudden they canāt send their kids to college,ā says Ian Harvey, a certified financial planner (CFP) in New York City. āThen it wasnāt worth the risk.ā The speculative nature of cryptocurrency leads some planners to recommend it for clientsā āsideā investments. āSome call it a Vegas account,ā says Scott Hammel, a CFP in Dallas. āLetās keep this away from our real long-term perspective, make sure it doesnāt become too large a portion of your portfolio.ā In a very real sense, Bitcoin is like a single stock, and advisors wouldnāt recommend putting a sizable part of your portfolio into any one company. At most, planners suggest putting no more than 1% to 10% into Bitcoin if youāre passionate about it. āIf it was one stock, you would never allocate any significant portion of your portfolio to it,ā Hammel says.
How to Invest in Bitcoin?
Like a stock, you can buy and hold Bitcoin as an investment. You can even now do so in special retirement accounts called Bitcoin IRAs. No matter where you choose to hold your Bitcoin, peopleās philosophies on how to invest it vary: Some buy and hold long term, some buy and aim to sell after a price rally, and others bet on its price decreasing. Bitcoinās price over time has experienced big price swings, going as low as $5,165 and as high as $28,990 in 2020 alone. āI think in some places, people might be using Bitcoin to pay for things, but the truth is that itās an asset that looks like itās going to be increasing in value relatively quickly for some time,ā Marquez says. āSo why would you sell something thatās going to be worth so much more next year than it is today? The majority of people that hold it are long-term investors.ā
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