Tag: Crypto Currency

Why I don’t invest in Crypto

Posted on by Karac Avalron

So another finance piece today. There is a massive story that broke recently pertaining to FTX exchange collapse. Let me get this out of the way now, I am not a crypto expert. You should take any advice/opinion you see online with a grain of salt and always do your own research. The FTX collapse is tied directly to Crypto currency values. Many people have lost a lot of money and for them I offer my deepest condolences. I know what it’s like to lose money on investments, it sucks.

So for me I never invested in crypto. Why? Because I am not educated in that market. It really is that simple folks and YOU should apply this simple philosophy to anything you chose to invest in. You have to be educated on the investment type. Now a caveat here, you can invest in things you are unfamiliar with if (big if) you are not risking a major portion of your portfolio (5% or less).

I simply don’t know crypto currencies. Further they, for the most part, are not regulated in any manner so the risk is much higher. So is the reward of course. Like most things in life the higher the risk the greater the reward. For me I use a long term conservative approach to investing. I invest in things I know, like Microsoft, Toyota, McDonalds. You see companies like that, whether you like them or not have long term established business models.

Money gives you the opportunity for a comfortable life.

I always felt more comfortable investing in companies who produced a tangible product that I actually used. See for me, the best advice I ever got for investing was “Take note of the products you buy and use and invest in those companies”. It made sense to me, if I am buying the product its likely other people are as well. That establishes a revenue stream that equates to value.

So those simple principals enable me to avoid the current decline in crypto currency. It also means I missed any and all gains by crypto as well. It’s a double edged sword. Meantime I keep the long term boring process of investing in companies that produce goods and services with a long term track record. Coca Cola, Intel, Google, Apple we can go on and on. The point here is I know these products, I use them and by slowly and steadily investing into stocks and mutual funds that hold these stocks I’ve created a nice portfolio.

Maybe you know crypto, maybe you know oil or real estate? There isn’t a perfect formula here, but investing in what you know is often the best you can do. Sure you might miss a trend and not get in on those huge returns, I get it that sucks. By long term steady investing into companies and products you are educated on is a great way to ensure liquidity and viability of your investment portfolio.

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3 questions you have to answer before you invest in Crypto Currencies

Posted on by Karac Avalron

Yes, today is another finance piece. As with all financial information given on this blog I want to stress that these are my opinions only. You should do as much research as you need to make sure you are educated and comfortable before making any financial decisions. I have been working in finance for nearly 30 years, I have a lot of experience and knowledge but I am one person, and I don’t know you.

Now disclaimer out of the way let’s talk a minute about crypto currencies. Unless you have been living under a rock you know generally what these are. Let’s get the formal definition out of the way first.

  What Is Cryptocurrency?

A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation. Source:

What does that mean in actual application? It means simply that groups of people agree that a virtual currency is worth “X” that group can be you and I, or you, me and your friend Rachel, or the 3 of us and 8 million other people. We can then exchange this currency for goods and services like you would any other currency (like dollars or pesos). It is virtual though, you don’t carry it in your wallet and it is not backed by a government.

Is this guy serious?

That’s how crypto is used, as an investible commodity though should we begin to entertain the notion of investing in crypto’s to diversify our portfolios? The answer is yes, with caveats, three questions need to be answered first.

  1. Are you risk averse? Simply put, does the risk of losing money scare you? Cryptos are a new asset class, unregulated and highly volatile. Yes, you can make a lot of money, you can also lose a lot.
  2. Do you already have a diverse portfolio? Are you just starting to invest, or have you been investing for years with a good spread of mutual funds, cash, other assets?
  3. Do you understand what Crypto is and how it works? Beyond my article have you used it yourself and understand its current application and can logically think about its future application?

These three questions are critical. If you answered yes to question 1, you should not invest in crypto. If you answered no to question 1 move on the question 2. If you answer no to question 2, you should not invest in crypto build up your other asset classes first. If you answer yes to question 2, go to question 3. If you answer no to question 3, do not invest in crypto. If you answer yes, green light go for it.

Summary:

Question 1: Yes Answer = Do not invest in Crypto. No Answer = Move to Question 2

Question 2: Yes Answer = Move to Question 3, No Answer = Do not invest in Crypto.

Question 3: Yes Answer = Go ahead and invest in Crypto. No Answer = Do not invest in crypto.

This is a very simple formula/questions that should provide you with very basic guidance to whether or not you are ready to invest in crypto. Like any financial advice, do as much research as you can and always trust your instincts.

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