Does Cryptocurrency Fit Into Your Financial Planning?

Cryptocurrency has made waves in the world of investing in recent years. Many avid and novice investors who are trying to build up their investment portfolio are enticed by what Crypto has and will continue to offer. Dogecoin, Bitcoin, Ethereum, while these names sound humorous, these are the few types of cryptocurrency that are garnering much attention from consumers who are trying to build a stream of passive income. 

 If the pandemic has taught us anything, it’s that we should be prepared for all kinds of situations that are thrown our way and being financially stable is important for securing wealth that you can pass onto your children or loved ones. Cryptocurrency can be a viable choice for those looking to get their feet wet with investing, but like with most investment ventures, there is some risk that can be incurred. It’s important to assess the pros and cons so that you can make informed decisions for your financial investments.

 Financial planning in Fairfield CT for cryptocurrency portfolios has the potential to allow those to significantly restructure their wealth and status in society. 

What Is Crypto And Why Should You Invest?

In this blog, we typically discuss the importance of financial therapy and why working alongside a professional who specializes in financial planning will ensure that your personal assets are kept in check. This will secure your family’s interpersonal wealth for years to come and alleviate much of the stress that would come if you were doing the planning all on your own. While you can certainly wing some decisions in your life, your financial wellness is not one of those things you should gamble with. 

Think of crypto as another method to augment your overall financial health and wellness. Typically speaking, cryptocurrencies are digital assets that people will use as investments to make purchases. Users can exchange real currency to buy coins or tokens and in certain places, you can use it like real money at businesses that accept them. It’s a great way to diversify your portfolio and its popularity has soared since the inception of COVID. 

For instance, when the pandemic started, Bitcoin could be purchased for $7,300. Today, the same coin goes for $46,800 which is a 640% increase. The fever pitch reached an all time high when BTC achieved its highest value at $64,863 on April 14 (the same day Coinbase went public). If you invested in April during the mania, you were unknowingly facing a disappointing loss of money when the crypto market inevitably crashed and BTC dropped to $30,000. To say that cryptocurrencies are volatile is an understatement!

Personal Investing in Your Pocket

Cryptocurrencies are riding a wave of which can only be called a renaissance in personal investing. Apps such as Coinbase or Robinhood provide ease of access for anyone to simply download and start investing their money that same day, putting real power (and financial vulnerability) into the hands of the investor.

This is especially true of the rising tide of black Americans who--according to Forbes, are receptive to cryptocurrencies, with Bloomberg also covering the growing interest of black investors in both cryptocurrencies and traditional stocks. It’s clear that these new asset classes are tied to a belief that they can help close the wealth gap that many disenfranchised ethnic groups have felt held back by.

You can read more about this empirical analysis from Columbia Law School’s blog regarding corporations and the state of the capital market. This information is vital for those who are looking to make a sound investment as a means of enhancing their personal wealth. 

Based on the findings and continual upswing for crypto, the decision to invest in digital currency is a personal one, but it could prove resourceful for those who are trying to build out their financial bandwidth. It’s not a perfect system by any stretch of the imagination as certain places have cracked down in usage; example being with China banning Bitcoin and Ethereum but conversely, El Salvador has started to create an infrastructure that would make bitcoin a legal tender. It is interesting to see how some countries are attempting to crack down on cryptocurrencies as much as possible while others are wholeheartedly embracing it.

In summary, the appeal and downsides of crypto lie in:

·         Huge gains yet high volatility

·         New and exciting but does not have the same credibility as traditional investments

·         Part of a perceived financial shift in society but changes could be overly idealistic

Should you invest in crypto? There’s a lot to consider, but a qualified financial planner can assess your situation and help you come to a decision that you feel comfortable with.

Financial Planning in Fairfield CT

Cryptocurrency should not be the only investment that you have at your disposal. Instead of following an influencer who centers their content around pushing crypto, you should coordinate with a professional that focuses on financial planning in Fairfield CT, who can evaluate your personal situation and determine the best approach for properly handling your assets so that you can make the most of them for yourself and your loved ones. Contact us today to set up a time to speak!