Every type of investment has its upside and downside, and some are riskier than others. Cryptocurrencies, for example, are the newest type of investment. They are unregulated digital currencies bought and sold on cryptocurrency websites.
Cryptocurrencies such as Bitcoin have gained a lot of interest in recent years as an investment vehicle—some people even think it may replace gold in the future. However, cryptocurrencies remain an incredibly risky investment due to the fact that there are many unknown factors. For example, there is the possibility of government regulation and the possibility that the cryptocurrency will never see widespread acceptance as a form of payment.
At this point, no one knows for sure what the future holds for cryptocurrencies, so investing in cryptocurrencies is little more than speculation. Rule #1 investors don’t invest in things they don’t know. That’s not investing, that’s gambling.
On the other hand, cash and commodities are typically considered low-risk investments. So if you’re new to investing or risk-averse, one of these options could be a good place to start. However, these low-risk investments also tend to have low returns.
Gold is an example of a commodity, so its price is based on scarcity and fear which can be impacted by political actions or environmental changes. If you are investing in gold, be aware that your protection against a price drop, your moat, is based on external factors so the price can fluctuate a lot, and quickly.
The price tends to go up when scarcity and fear are abundant and down when gold is widely available and fear is abated. If you think the world is going to be a more fearful place in the future, then gold could be a good investment for you.
Everyone’s reasons for investing and personal risk tolerance are different, so you have to decide which investment types suit your lifestyle, timeline, goals, and risk tolerance best. What a good investment is for one person isn’t necessarily a good investment for you. Listen to this podcast today for more information on your different investment options and the risk related to each.
Learn more about your investable asset options with my Beginners Guide to Investing in 2021. Click here to download: http://bit.ly/37ldvE2
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