Cryptocurrency has been all over the news and has become part of conversations both offline and online, especially during the time of pandemic. Investing in cryptocurrency can be as easy as a few taps on your mobile device but before diving right into cryptocurrency, you have to assess your financial situation and appetite for investment risks. This way, you will be able to evaluate if crypto is appropriate for you now - or ever.
What is Cryptocurrency?
According to Investopedia, Cryptocurrencies like Bitcoin are digital currencies not backed by real assets or tangible securities. They are traded between consenting parties with no broker and tracked on digital ledgers.
Cryptocurrencies are digital assets that people can use as investments and for online purchases. You can store your cryptocurrency in a digital wallet, which is usually in an app or through the vendor where you purchase your coins. Your wallet gives you a private key or a unique code that you enter in order to digitally sign off on purchases.
According to Ramsey Solutions, Cryptocurrencies use something called blockchain technology. A blockchain is like a really long receipt that keeps growing with each exchange of crypto. It’s a public record of all of the transactions that have ever happened in a given cryptocurrency.
You might not become curious if it is worth investing in cryptocurrency. But before engaging, it is important to create a strong financial foundation and learn everything you can about cryptocurrency before you put any real money in.
Before you say goodbye to your money and hello to Bitcoin or any other types of crypto, there are a few things you need to know upfront.
1. Cryptocurrency is unstable
Cryptocurrency is unpredictable. Its value may swing way up, only to come plunging back down, and you never really know what you’re going to get each day. The value of cryptocurrencies can go through extreme ups and downs.
As many people say, cryptocurrency is not a sure thing and it carries a huge amount of risk.
2. Cryptocurrency has lots of unknowns
When it comes to cryptocurrency, there is still a lot that needs to be ironed out. As a matter of fact, only a small percentage of people in the world really understand the system and know how it operates.
3. Cryptocurrency makes fraud easier
Cryptocurrency is prone to fraud. Scammers will do anything to get access to your personal information and passwords, even your bank account. And cryptocurrency makes it that much easier for them.
4. Cryptocurrencies have an unproven rate of return
Trading in cryptocurrency is similar to gambling. According to experts, since it’s exchanged from person to person without any real regulations, there’s no pattern when it comes to the rise and fall of its value. You can’t figure out the changes or calculate returns like you can with growth stock mutual funds. There is not enough data, or enough credibility, to create a long-term investing plan based in cryptocurrency.
Tips Before Engaging with Cryptocurrency
Put Financial Safeguards in Place
Before investing in crypto, you need to prepare first for those times when things don't go as planned or in case of emergencies.
Think of the case of workers who lost income because of the pandemic - they had no choice but to tap into their savings or take on debt to be able to pay for their bills.
It is still important to save up six months of living expenses if you're single, or around three months if you share expenses with a working spouse or partner. Meanwhile, if you have any high-interest debt, like credit card debt, paying this down can further strengthen your financial position.
Take time to review your insurance coverage too because these policies can provide the much-needed money during difficult times. You may want to consider life insurance especially if you have dependents.
Save and Invest For You and Your Family
Once you have already set aside money for emergencies, you need to begin thinking about your short, medium, and long-term financial goals, which includes retirement.
Educate Your About Cryptocurrency
When the time comes that you have the money and you're ready to dive into the crypto bandwagon, make sure that you did your research and educated yourself about it, including how it will fit into your overall financial plan or if cryptocurrency is too risky for you.
Dedicate some time to learning everything that you can about crypto. Understanding how it works is important, but so is learning what kind of investor you are, because that also affects the kinds of investments that would be a good fit for you.
Once you have a grasp on how it all works, you can begin to think about allocating some of your excess cash toward crypto. But keep your investment totals small and manageable.
A Better Way to Invest
The road to building wealth is slow and steady, and there are still way too many uncertainties when it comes to cryptocurrency.
If you are into the get-rich-quick schemes, then risk it with cryptocurrency. But if you want a more stable investment option, choose real estate. Real estate can be a sound investment, and you can have the potential to provide a steady income and build wealth over time.
However, as with any investment, you have to keep your expectations realistic, and make sure to do your own research before making any investment decisions.
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At Vista Residences, unit owners can take advantage of the property’s centrality. The properties of Vista Residences are strategically located near the country’s premium universities and CBDs, making them an attractive investment for both local and foreign investors.
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