Best Way for Gen X to Start Investing in Digital Assets
Should Gen X invest in digital assets, such as cryptocurrency? It’s the question of the times. As a Greeneville, TN financial advisor who strongly believes in alternative investments such as digital currencies, allow our experienced team to get you started.
Gen Xers need to consider investments concerning their retirement, as they will be the next generation entering their golden years. Cryptocurrency can reward investments with significant and sometimes outstanding returns.
We believe anyone can become financially secure if you commit to the right process. Get started with our fiduciary, fee-only financial advisors in Greeneville, TN.
What Crypto Investors Will Tell You
“It’s money 2.0, a huge, huge, huge deal.” — Chamath Palihapitiya, Venture Capitalist, Entrepreneur, and Businessman
While cryptocurrency investments can be volatile, at Sapiat, we can help diversify your portfolio to avoid putting all your eggs in the blockchain technology basket. Crypto investors will tell you that the best thing you can do is invest when prices are low and not look at your cryptocurrency investments. In short, buy low, sell high, and set it and forget it.
The best way for interested Gen Xers to invest in digital assets is to take a small step while actively managing the risks. There’s an old market adage: never bet more than you can safely afford to lose. It’s especially true of a volatile investment like cryptocurrency.
The fact is, most investments carry some risk. Stocks are also a risky investment, as the price of equities ebbs and flows. Real estate can be risky as prices rise and fall. Bonds carry some risk, as the price fluctuates inversely with interest rates. Rising interest rates will cause bond prices to drop a bit.
The Importance of Diversification with Cryptocurrency
The key is diversification in your portfolio. Diversification of asset classes allows you to strike a reasonable balance between high reward/high-risk assets such as cryptocurrency and lower-risk investments such as bonds (in a non-volatile rate environment) and cash.
Diversification can also heighten your portfolio’s chances of performing well if one asset class encounters choppy waters. If stocks fall, bonds, cash, real estate, and crypto can continue to do well. It essentially lessens the chances that all your investments will drop at once.
A great way to begin investing in cryptocurrency is to manage the risk by investing a small amount of a diversified portfolio that includes stocks, bonds, digital assets, and cash, which may also include real estate and other investments, such as collectibles. Your Greeneville, TN, financial advisor will help you assess and balance your portfolio carefully.
The Best Ways to Invest in Digital Assets
Know your investments.
Briefly, cryptocurrency is a form of currency that is entirely digital. You can purchase cryptocurrency for an investment account and hold it to reap the gains in price or spend it via a protected digital wallet.
An increasing number of companies accept crypto in exchange for goods and services. The more they do, the higher the price is likely to rise because cryptocurrency proponents believe it will eventually replace conventional currency.
Why do they think this? Because cryptocurrency can digitize monetary transactions and spending. Transactions are carried in a distributed ledger system called blockchain, which again exists only in the digital world.
Blockchain is more secure than a store or lending institution. It can also keep track of transactions without recourse to paper ledgers and statements, let alone storage of paper currency and metal coins. It can, theoretically, eliminate the need for physical buildings to hold banking and currency functions. More secure, less paper, and less expensive: that’s the selling point of blockchain.
That said, cryptocurrency also isn’t regulated. In the U.S., for example, the Federal Reserve controls and oversees currency and the economics surrounding it, such as interest rates. Many countries have central banks performing the same function. But crypto has no analog.
The lack of centralization is considered a positive by crypto proponents and obviously why banks oppose it. There are literally thousands of cryptocurrencies.
Know how cryptocurrency can be purchased.
Currently, cryptocurrencies can be purchased on chain, on digital exchanges, through a small number of qualified custodians & online brokers, or through cutting edge investment advisors such as Sapiat.
While blockchain mutual funds and ETFs are available in multiple foreign jurisdictions, the SEC has not yet approved a blockchain mutual fund or ETF to be offered in the United States.
Have a comprehensive financial plan in place.
Having a comprehensive financial plan before investing in crypto is highly recommended. You should know your financial goals and work with a budget that allows you to know where your money goes every month, which guides your saving and investing decisions.
A comprehensive financial plan includes investment and retirement portfolios and estate plans such as wills and trusts, college savings plans if you have children, and risk management for your assets, such as home, car, and life insurance.
If you don’t currently have these, our Certified Financial Planners (CFPs) will be happy to help.
Invest in Digital Assets With Us
Our CFPs in Greeneville, TN, are experts in digital assets. We also offer comprehensive financial planning and fee-only services as fiduciaries, placing your financial well-being above our own.
If you are interested in any of our services, contact us for an appointment. If you have simple questions about how to buy cryptocurrency, we look forward to your call! Every successful investor usually has tried and true professional guidance—you can too.
At Sapiat, we are the first fee-only advisor in Greene County, which means we do not receive a commission, ever; we are paid by fees, like your accountant. There is zero incentive to do anything but give you good advice. As a fiduciary firm, you can feel safe knowing that we agree, legally, to put your interests first.