There are many types of cryptocurrencies available, and the most popular are Ethereum, Bitcoin, and Dogecoin. (Photo taken from the MarketWatch website)
Kurt Mueller understands the risks associated with investing in cryptocurrency as both a financial planner and individual investor.
Mueller, a wealth management advisor for Apollon Wealth Management in Augusta, says you must do your research before choosing any type of investment, whether it be gold, real estate, oil, or stocks. Unlike stocks, “There really isn’t any insider information,” he explains. “It’s speculative, high-risk, and volatile,” so it’s certainly not the best option for all investors.
Mueller cautions his clients to avoid investing in something they don’t understand just because other people are doing it or because of the hype on social media about cryptocurrency. Mueller explains, unlike stocks, cryptocurrency – digital money that doesn’t exist in physical form – trades 24 hours a day, seven days a week, 365 days a year. According to the Ramsey Solutions website, “You exchange real currency, like dollars, to buy ‘coins’ or ‘tokens’ of a certain type of a certain kind of cryptocurrency.”
As an investor, Mueller has bought Bitcoin and Dogecoin on Robinhood because he prefers an aggressive investment style. He says he understands the risks and feels comfortable putting some of his money into cryptocurrency. “I could lose everything tomorrow,” Mueller states. Besides Robinhood, Coinbase is another popular platform for purchasing crypto.
He states it’s important to start by asking yourself a few important questions: “How is this investment going to help me reach my goals? Do I understand the risk, and do I feel comfortable with that risk?” Mueller says no investment is inherently good or bad as long as one understands the risks involved. Most of his clients don’t invest in it, but some have done really well, particularly those who invested in it 10 years ago when the price was much lower. One Bitcoin currently sells for about $37,000, while one Dogecoin costs about 42 cents. There are many different types of crypto, and the most popular are Ethereum, Bitcoin, and Dogecoin.
The price of Bitcoin fell drastically in May for two important reasons. The People’s Bank of China announced it would no longer accept any cryptocurrency besides the one it created – the yuan. Also, Tesla stopped accepting Bitcoin as payment, citing environmental concerns. “Cryptocurrency is not immune to negative headlines,” he says. But it’s different from other investments that must be cashed in to be spent. “It’s unique in that it’s an investment and a form of currency,” Mueller adds.