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Is crypto putting your money at risk?
©Dave Ramsey
The price of Bitcoin has skyrocketed this year. The digital currency has surged more than “130% year over year, as of April 11,” USA Today reported, and recently “reached its all-time high of $73,835.57 on March 14.” This drastic jump is partly due to the regulatory approval of Bitcoin. exchange traded funds.
“Investors are attracted to the fact that Bitcoin can be treated as an uncorrelated asset, making it extremely attractive for portfolio diversification,” Joel Kruger, market strategist at LMAX Group. explained to CBS MoneyWatch.
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However, not everyone is on board with the crypto frenzy. Dave Ramsey – personal financial expert, best-selling author and founder of Ramsey Solutions, a company that trains and provides financial advice – warns against investing in digital currency. In an article published on the Ramsey Solutions website, the company strongly advises not getting involved in crypto.
Too much risk
Ramsey is clear about avoiding crypto and not getting tempted by the buzz. “Crypto is not a safe investment. You might lose your shirt (and pants) playing with crypto. Warning…Crypto is a risky business,” according to the article.
The article acknowledges that people have made money investing in digital currency – but with high odds. “Yes, some people have invested a lot of money in crypto, but it’s all based on speculation, which is just a step above gambling,” he said.
Try that: I’m a Self-Made Millionaire: I Followed These 3 Dave Ramsey Rules to Get Rich
Crypto is volatile
Another reason why Ramsey does not encourage investing in crypto is that it is volatile. “The value of crypto goes up dramatically and then drops back down, and you never really know what you’re going to get each day,” the article explains. “Someone sneezes and the price goes down!” And unlike stocks that rise and fall based on a company’s performance, cryptocurrencies rise and fall based solely on speculation.
Unproven rate of return
The article compared crypto investing to the Wild West, stating: “You can’t understand changes or calculate returns like you can with growth stock mutual funds.” There simply isn’t enough data, nor enough credibility, to create a long-term cryptocurrency-based investment plan. »
The story continues
Nobody really knows crypto
The article also points out that cryptography has a secret history. “Crypto lives up to its name in that it is quite enigmatic. Think about it: no one even knows who founded Bitcoin! Only a small percentage of people in the world actually understand the blockchain technology that cryptography is based on. And ignorance makes you vulnerable,” he said.
Crypto makes you more vulnerable to theft
Cyberattacks are a constant problem with cryptocurrencies. “Hackers stole $400 million worth of crypto in the first three months of 2023,” according to the article. “And what’s really crazy is that security experts celebrated this number because it’s 70% less than what was stolen in the first three months of 2022.”
Conclusion
Instead of taking your chances with crypto, the Ramsey Solutions article suggests putting 15% of your income into growth stock mutual funds, but only if you are out of debt and have a emergency fund for three to six months.
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This article was originally published on GOBankingRates.com: Dave Ramsey: Is Crypto Putting Your Money at Risk?