Is it a good idea to buy the latest cryptocurrency token or coin? It is amazing how many people have approached me to ask if they should invest their money in bitcoin. Darien Financial Analyst David Rewcastle of Connecticut recently conducted an investor education program at a retirement community and a woman said to me, “My children keep telling me I need to hurry up and invest in bitcoin–is it safe, have I already missed the boat?”
Seniors are not the only ones interested in bitcoin and other cryptocurrency-related investments. The trend is also being adopted by millennials. While David Rewcastle can’t give investment advice about bitcoin or any other cryptocurrency-related investment or product, he can provide advice on some things you should consider when deciding if an investment is right for you.
Perhaps the most important thing to know is that cryptocurrency-related investment markets are very different than our regulated securities markets. For example, our securities laws provide important protections that you may not be getting when dealing in cryptocurrency-related investments. You may not be able to know who you are dealing with, where your money is going, or what you get in return. You can find more information in the wealth and portfolio articles on the official website of David Rewcastle.
These digital assets are a hot trend and have received endorsements from celebrities. They may be seen on TV, social media, or radio promoting bitcoin and other products. Don’t base your investment decisions solely on celebrity endorsements. It doesn’t necessarily mean that a product or service will be a good investment just because your favorite celebrity endorses it. Do thorough research on the product before you make any investment.
According to data compiled by the Bank for International Settlements, around three-quarters of cryptocurrency investors are likely to have lost their money. The data was based on retail use of crypto-exchange apps in 95 countries between 2015-22. According to the study, 81% would have lost their money if they bought $100 each in Bitcoins in the first month after downloading the app.
Fraudsters love trendy investments so be aware that there is a high risk of being scammed. Scammers take advantage of the novelty of an investment opportunity if there isn’t much information about the product. Investors are more likely to buy an investment product if there is a lot of buzzes. The pressure to purchase the product immediately mounts.
David Rewcastle emphasized not falling for the high-pressure sales pitches, promises of guaranteed returns, or too good-to-true claims. You should review the red flags of investment fraud and verify that the investment professional with whom you are dealing is licensed. You should take the time to make the best investment decision. Ask questions and get clear answers. Here are some examples of questions Rewcastle recommends asking, including “Who am I contracting with?” or “What is my money being used for?”
It is important to understand that if you lose your money, the SEC and other regulators may not be able to help you. This includes fraud cases.
You should be aware that digital currencies and tokens are still new. You may take a significant risk investing in something that isn’t around for a while. It’s a good idea to only invest in new products if you’re willing to lose them. This will ensure that the investment is not financially disastrous. Diversify your investments to spread the risk. Do not put all your eggs in the same basket. This way, if one investment loses money, other investments can make up the difference.
Although cryptocurrencies might seem like a bright, exciting new opportunity today, there are significant risks. Be cautious, do your research, assess your financial goals, and, most importantly, never flip a coin while making investment decisions. David Rewcastle will help you avoid investing in fraud and make smart investment decisions.
