Author: Leigh Jobling, Partner, TAG Financial Services
There has been much media frenzy over stellar increase in values of cryptocurrency over the last 2-3 years, and then the recent correction of 25%-40% in the last month or so.
While TAG does not provide advice on the merits or otherwise of cryptocurrency in client portfolios, we will make the following comments:
- One of the attractions of cryptocurrency is that it is unregulated. There is a real risk that, in time, governments around the world will attempt to regulate the cryptocurrency market, thereby tempering enthusiasm.
- While cryptocurrency may be here to stay, there are many types of currencies available and not all will be successful over the long term. It is worth doing some researching and choosing wisely.
- They are high growth and speculative in nature. Such assets are often the first to be negatively impacted by high inflation and rising interest rates. We are starting to see this play out in the market.
- You should only invest where you not only understand the risk, but also understand the underlying fundamentals and key drivers of the assets.
- Just because “everyone else is doing it” doesn’t mean you have to as well. Make sure you understand the market and the risks you are taking.
- If you do invest, only invest what you can afford to lose. Long term quality investing is not gambling – it’s about time, patience and method. Investing in cryptocurrencies could be more a “win or lose” situation.
If you have any questions, please don’t hesitate to contact me or my team on 03 9886 0800 or via email.
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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686). Copyright 2022. Please do not reproduce without the expressed written consent of the author.