More and more clients have been asking me about investing in cryptocurrency - many know someone who bought crypto at the right time and is now sitting on a stack of money - and they want to know how they can be like that friend.

For better or worse, the advice I have about crypto is the same boring advice as for most investments: do your research.

But what does that look like?

First, it’s important to know your risk tolerance. Do you have a large margin of wealth (do you have wealth?) that you can afford to lose? Does the appeal of making a lot of money outweigh the possibility of losing it? 

Second, Warren Buffet’s advice to invest in something because you believe in it applies to crypto as well as individual stocks and businesses. Many early adopters of bitcoin invested because they believed in a decentralized economy. For some of those pioneers, a loss would have been offset by the knowledge that they were putting money into an idea that felt right to them. 

Third, the advice “buy low, sell high” is very simple but rarely easy, and maybe the hardest element to research. The basic principle of buying something for cheap so you can sell it at a much higher price means you have to have some measure of certainty that it will be worth more in the future. 

But how can we know that? Which crypto will be the next hit?

If I had the answer to that question, I would be one of the aforementioned people sitting on a huge pile of money, but I can point to a couple of questions that everyone considering a high-risk investment should probably investigate. 

1. How do other people feel about the cryptocurrencies that exist or will be developed? If people are feeling good about it, it will gain more value because a large group of people will decide it has value (the true mind#### of money). 

2. Do you believe in it, whether philosophically or purely financially?

3. Can you afford it?

4. Can you see an inherent and unique value in it? What does it do that no other currency does?

One big way crypto investments can vary from individual stock investments is that the former offers mining as a way of earning a portion of the currency, but that in itself is a complex process that may or may not be accessible to you, dear reader, and that I don’t have space to write about here (yet)! So, if you’re interested in mining, I’ll refer you to the top of this post by lovingly saying, do your research.

And open an IRA first 😊

XOXO