Should You Invest in Crypto? - Cryptocurrency Investment

Blockchain-Technology for the Future

Douglass says his clients who invest in bitcoin have a conviction that blockchain—the technology tracking crypto transactions across a network of computers—is revolutionary.

It is important to say that they’re not investing money they can’t afford to lose, and their holdings are small, accounting for 1% to 5% of their overall portfolio.

Moreover, successful investors in bitcoin and other cryptocurrencies often implement a dollar-cost-averaging strategy.

This approach involves investing fixed amounts of money at regular intervals, allowing investors to benefit from market fluctuations over time.

How to Invest in Crypto

Before you put any money into cryptocurrencies, establish a core portfolio in line with your investing goals.

If you’re a young professional, that core will likely be funds in your employer-sponsored 401(k), or a traditional or Roth IRA.

Next, choose how to invest.

Most big brokerage firms don’t allow account holders to trade cryptocurrencies directly.

One solution is that you can invest in Grayscale Bitcoin Trust (symbol GBTC, $36), an investment fund that holds bitcoin tokens.

Note the pricey 2% expense ratio, compared with fractions of a percent for, say, an S&P 500 exchange-traded fund.

And be mindful that the trust’s shares can trade at a premium or discount to its underlying assets.

Another option is to go the fintech route.

Financial firm SoFi and broker Robinhood allow account holders to buy and sell various cryptocurrencies through their smartphone apps.

The risk – Your crypto funds aren’t insured by the FDIC or SIPC, meaning that if the institution goes under, your funds are gone for good.