Everyone knows a friend or two that have invested into cryptocurrency. They have told many of their friends and family all the money they have made investing into cryptocurrencies. For the last couple on years, many investors have made some money. That has all changed recently when such investments have lost lots of value. Now, we don't hear so much about the exciting news. Rather, we hear many facing the realities of losing all their cryptocurrency investments from its recent decline. Finances can be very brutal.
A couple recently walked into my office. They were both in their mid-20s with three young children. They applied for a mortgage to purchase a very expensive home – one that would push the budgets of most families. They did not have much savings, only a n investment in crypto. Then the husband made an interesting statement. He said, “I’ll have this mortgage paid off within two to three years.”
Many people in their 20’3 and 30’s have invested in crypto thinking it will be their ride into early retirement. Many crypto currencies have suddenly taken a deep dive in 2022 and lost 40% of its value. Some investors have attributed crypto currency to the early days of the dot.com bust when values dropped suddenly and many investors lost most of their money.
One billionaire, John Paulson, has stated that cryptocurrencies will eventually be worthless. Mr. Paulson shorted the housing bubble in 2008 while most lost hundreds of billions riding the housing market crash. Despite many warnings, young investors have had high dreams to make lots of money to become early millionaires. Those dreams have taken a big hit this year.
Cryptocurrencies investors must realize that their road to retirement will probably not go through cryptocurrencies. There are a few stories of a few people making some money from them. However, wise investors are best to realize that such investments are very risky – and can drop substantially as has been seen recently.
No one should assume like the young couple that you will be paying off a very expensive house within a year or two. You could also lose everything you have put in it. It is best you only put money in cryptocurrencies that you can afford to lose in case things turn bad. If you make some money, feel fortunate. There is a some valued cryptocurrency guidance; “Pigs get rich, hogs get slaughtered.”