- Cryptocurrency is a volatile investment with serious risk.
- Suze Orman believes investing in cryptocurrency can be appropriate for some people.
- She thinks it makes sense to buy cryptocurrencies as long as you can afford it and have the right time frame.
If you're thinking about buying cryptocurrency, you may want to take her advice.
If you're considering investing in cryptocurrency, you'll want to think carefully about whether it's a good idea to put money into this asset class.
Cryptocurrencies are a newer type of investment. Most coins don't have the long proven track record of more established assets such as stocks, bonds, and mutual funds. As a result, doing your research and knowing what you're getting into is essential.
One of the ways you can decide if investing in crypto is a good idea or not is to consider the advice given by financial professionals. For example, finance expert Suze Orman has offered some tips on whether you should invest in cryptocurrency.
Here's what she's said about the issue.
Suze Orman believes cryptocurrencies can be a good investment
Unlike some investing professionals who have been largely negative about cryptocurrencies, including Warren Buffett, Orman has had some positive things to say about buying virtual currencies.
“I think it should be a part of your portfolio," Orman said, speaking specifically about Bitcoin. Bitcoin is one of the most established of the cryptocurrencies available on the market, and is generally accepted by more merchants than most other kinds of coins.
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Orman has personally invested in cryptocurrency herself, indicating she owned around $5,000 worth of Bitcoin as of August 2021. She took a simple, straightforward approach to buying her coins, purchasing them through PayPal rather than trying to use a dedicated crypto exchange or signing up for a crypto wallet.
She believes others should invest some money into the coins as well by using a specific approach called dollar-cost averaging. That involves regularly buying coins over time, and purchasing the same amount of Bitcoin or your other chosen currency each month.
She recommended a $100 monthly purchase. But the key thing that's important about dollar-cost averaging is that you consistently spend the same amount of money to buy the same asset at a set time on a monthly basis. This eliminates the problem of market timing, which can be especially tricky to do if you're buying a volatile asset -- which most cryptocurrencies are.
However, Orman has a caveat to buying crypto
Although Orman has obviously adopted the view that there's a potential to make money with crypto investing, she doesn't necessarily believe everyone should be adding this asset to their portfolio.
Instead, there are two preconditions that she says you should make sure apply to you before buying Bitcoin or other crypto assets. Specifically, Orman believes you should make this type of investment only if:
- You can afford to lose the money you are investing.
- You intend to hold onto the crypto assets you're buying for a "seriously long period of time."
She believes caution is in order because "I would view it as a seriously speculative investment at this point in time.”
If you opt to follow her advice, be sure you add cryptocurrencies to your portfolio only if you have plenty of other safe investments and you'd still be able to successfully accomplish your financial goals even if your crypto investment doesn't end up paying off for you.
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