Is investing in cryptocurrency worth it?

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Josh Asked: Is investing in cryptocurrency worth it?

So I started up a IRA and a 401k with work. I have a friend has been screaming at me to get into Bitcoin, so last week I dropped $100 into it. Nervous about doing so, but curious. I am interested in dropping $1000 now into it, but I not sure what I should know moving forward, my friend has kind of deserted me when I started asking questions. I come here for knowledge.

Answers.

Trading cryptocurrencies in small amounts carries large overhead costs.

Note too, that your gains are taxable.  In an IRA the taxes are deferred, but eventually the gains are taxed at the full rate (not the capital gains rate).

That being said, Bitcoins are designed to be deflationary.  That may become a VERY GOOD THING in this era where the government is printing money like it’s going out of style. (As it may indeed be.)  The only other things you could invest in that are deflationary are TIPS (google them), commodity ETFs, or precious metals. (Bitcoins are sometimes described as “internet gold”).

There is a political risk associated with Bitcoin — if they become really successful, the government could ban them.  This has happened in some other countries.

“Bitcoin is at best an alternative asset investment (includes things like art for investment, precious metals, collectibles).  Your entire portfolio should be at MOST 5% alternative assets  (mine is less than 1/2%).  Even then that 5% assuming your using gold as an inflation hedge and inflation has been really tame here in the US since the internet made price comparison shopping so easy.   Based on your small investment amounts I am assuming your a new investor.   Start with a 6 month emergency savings fund, then either a S&P 500 Index ETF, or start building 10 positions in dividend paying blue chip stocks spread across 10 different industries as the STARTING foundation for your portfolio.  Let your friend play the lottery and base his financial future on hopes and dreams, smart investors build a portfolio over time, brick by brick. .”

tiescore

“Don’t listen to screaming friends. Bitecoin is a speculative gamble, not an investment.  Nothing stands behind it, it doesn’t pay interest or dividends, and you own nothing but a bunch of ones and zeros stored in computer memory. At best, it’s like buying foreign currency without a nation. 

Richard Garcia, Photographe

Buying Bitcoin is NOT investing.

Bitcoin is used as a form of gambling where buyers hope to sell them for more than they paid. Its value fluctuates daily as its novelty and popularity changes. Unlike stock where a business is earning money or a bond that pays an interest amount, there is no reason to expect Bitcoin to make money for you.

If you wish to gamble, I recommend a casino

Donut Tim

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