- Many people have made a lot of money on cryptocurrencies.
- For me, it’s still not right as it does not fit my strategy and I do not quite understand it.
There are several paths you can take as an investor on your journey to wealth. For some people, this path leads through owning cryptocurrencies
Many people actually have great success investing in digital tokens. But here’s the reason I’m not quite ready to jump into it yet.
1. I do not need more volatility in my portfolio
Since the beginning of the year, my brokerage account balance has fallen sharply due to stock market volatility. I do not panic about this for several reasons.
First, I have no plans to liquidate my investments at some point, and as long as I keep them intact, I will not suffer losses. The stock market also has a history of recovering from recessions. So I have to hope that the recent turmoil is something that will eventually return.
At the same time, I’ve seen enough losses on the screen over the last few months (especially the last few weeks). The last thing I need right now is to put money into an investment that can easily be even more volatile than stocks.
2. It does not match my strategy
Since I first started investing, my strategy has always been to stock up on quality stocks and hold them for as many years as possible. But I’m not sure if cryptocurrencies fit into this strategy.
Cryptocurrencies are still relatively new – they have only been around for less than 15 years. So it’s hard to say if they have endurance if they have not existed that long.
I am also convinced that if cryptocurrencies are not accepted as a means of payment, they will lose value and eventually become worthless. And I’m not the only one who thinks so. Many veteran investors, including the great Warren Buffett, also agree that cryptocurrencies are not a viable investment in the long run. And that’s reason enough for me to stay away from it for now.
3. I do not fully understand them
Generally, it is not a good idea to invest money in a business as you do not understand how it works. That does not mean I do not understand cryptocurrencies at a basic level. But I do not really understand why certain coins have appreciated so much and why there is such a great demand for them.
Conversely, by looking at the stocks I own, I can understand why the companies behind them are making money and why their stocks have increased in value over time. That’s why these stocks fit me well, and they’s not cryptocurrencies.
Is crypto something for you?
You can decide to invest in cryptocurrencies even if they are associated with risks. It’s not necessarily a bad decision. But for now, I’m staying away from cryptocurrencies because they are clearly not the place for my money.
The 3 reasons why I’m not ready to buy the crypto article first appeared on The Motley Fool Germany.
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This article was written by Maurie Backman and was published on Fool.com on 23/05/2022. It has been translated so that our German readers can participate in the discussion.
We firmly believe in the golden rule. Therefore, the editorial opinions are ours solely and have not been reviewed, endorsed or endorsed by the advertisers listed here. Ascenten does not cover all offers on the market. The Ascents editorial content is separate from The Motley Fools editorial content and is produced by a different team of analysts.
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