Bitcoin continues to surge like there’s no tomorrow, and as a result, many people are getting involved in the space without too much thought. However, according to certified financial planner Sophia Bera, there are several things one needs to do before they even consider getting involved in bitcoin and in the cryptocurrency space.
Sophia Bera: There Are Tasks to Complete Before Getting Involved in BTC
According to Bera, many of her clients have been asking her several bitcoin-related questions as of late given how the asset has recently reached a new all-time high of roughly $40,000. Bera acknowledges that bitcoin is expanding and that many people are likely worried about potentially losing out. However, she has a motto in situations like this: “Simple first, sexy later.”
What that means is that no matter how cool or hip a specific asset may look, it’s always important to start one’s investing journey via simple means before getting wrapped up in something that one isn’t likely to understand in the long run. She comments:
When people bring up bitcoin to me, I think a lot of times what they really want is to get started in investing and they are wondering what they should invest in.
While she’s not necessarily against bitcoin or investing in crypto assets, she says that if you are relatively new to the investing space, there are several things you must do before even considering the world’s leading digital currency by market cap, and the first it to fund your initial financial goals.
This could include anything from paying off credits cards or student loans or getting a 401K or retirement account started. She says that it’s important to set oneself up financially before embarking on a long and complicated investing ride, which can ultimately get in the way of specific goals if the person is not wholly prepared.
The next thing is to try and establish a diversified investing portfolio for oneself. Bitcoin, naturally, looks pretty darn attractive considering how well it’s done these past few months, but traders should not turn their backs on things like standard stocks, exchange-traded funds (ETFs), index funds and the like because these can potentially help one’s portfolio remain safe and stable during volatile periods.
Next, she says that one should only have about five percent of their portfolio allocated in bitcoin. Invest any more than that and investors are likely taking a big chance given how risky cryptocurrency can be. Lastly, it’s important to fully understand that risk and know that nothing in the crypto space is ever set.
Know the Risk
Even when we are talking about individual stocks, we don’t want that to take up too much of a portfolio, but even individual stocks have a lot more longevity and history. They have financials to back up their value.