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Which generation is most likely to invest in crypto?
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Cryptocurrency may be controversial, but it has also become one of the most popular types of investment. Nearly a quarter (24%) of investors own cryptocurrencies, according to a recent study. investment study by Le Fou Motley. This puts it ahead of bonds, index funds and several other investment products.
Not all age groups feel the same about crypto. Here’s a look at which generation is most likely to invest in it and how to decide if you should do the same.
The generation most likely to invest in crypto
Millennials are the generation most likely to invest in crypto, and it’s not a close race. Here is the percentage of each generation who reported owning cryptocurrency:
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Generation Z: 22%
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Millennials: 43%
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Generation X: 23%
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Baby boomers: 8%
Cryptocurrency is a relatively new investment option, so for the most part, these results are what you would expect. Millennials are much more open to it than any other group, and baby boomers largely avoid it. The biggest surprise is Generation Z. Overall, these younger investors seem much more skeptical of crypto than millennials.
Is investing in crypto a good idea?
Cryptocurrency investing is a roller coaster ride. These are extremely volatile assets, so large price fluctuations are normal. Some major cryptocurrencies have completely failed, with Luna from Terraform being a notable example. There have also been crypto exchanges, including FTX, that have gone bankrupt.
The bottom line is that crypto is a high-risk investment. It could also be very profitable, but don’t expect it to make you rich.
Due to the unpredictable and unproven nature of cryptocurrencies, they should not be your only investment or make up a large portion of your portfolio. But there’s nothing wrong with investing in it if you think it has potential or want to get into something more exciting. If you decide to invest, here are some smart rules to protect yourself:
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Do not invest more than 5% of your portfolio in crypto. For example, if you have $20,000 in investments, limit yourself to $1,000 or less in cryptocurrency. If the amount is higher, you are taking too much risk with your investments.
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Keep most of your money in safer investments. Stocks are one of the best options. The stock market has historically returned an average of about 10% per year over the past 50 years.
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Only invest money you can afford to lose. This way, you won’t have financial problems if the value of your investment drops, which often happens with crypto.
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Plan to buy and hold for at least five to 10 years. The cryptocurrency market has gone through several bull and bear cycles. You’re more likely to succeed if you’re willing to wait out slow times.
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How to get started with cryptocurrency
Now that the SEC has approved Bitcoin (BTC) ETFs, it’s easier than ever to invest in crypto. If you already have an account with a stock broker, check if they offer cryptocurrencies or Bitcoin ETFs. If so, the most convenient option would be to invest through your current brokerage account.
The other option is to open an account on a cryptocurrency trading platform. You can compare the best options on The Ascent’s list of the best crypto exchanges and apps.
You will also need to decide which cryptocurrencies you want to purchase. Bitcoin was the first cryptocurrency, and while it is still risky, it has lower risk than other cryptocurrencies. You can also look at altcoins (cryptocurrencies other than Bitcoin) to see if any others seem like interesting investments to you.
Once you find a place to buy cryptocurrencies and know which ones you want, you can add money to your investment. Whether you decide to make a one-time investment or do it regularly, remember not to invest too much money in crypto. It’s nice to have a little money in long-term investments, but the bulk of your portfolio is better off in safer assets.
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Which generation is most likely to invest in crypto? was originally published by The Motley Fool