When I first started investing in stocks, I was admittedly very nervous about it. Though I had done some research and knew a bit about how to choose stocks, I also knew that stock market crashes could happen out of the blue, and I didn't like the idea of losing my hard-earned money.
I've since gotten more comfortable with buying stocks. And these days, I don't stress if my portfolio value declines, because I know that as long as I don't actually liquidate investments at a loss, I won't lose any money.
But when it comes to cryptocurrency, I'm still extremely skittish about adding digital coins to my portfolio. Here's why crypto makes me far more nervous than stocks.
1. It's more volatile
Stock values can plummet at any time on an individual or large-scale basis. A given company with solid financials could have one product fail, and boom — down goes its share price.
The broad market could also tank on the whole. That's exactly what happened last March, when coronavirus-related fears sent stock values plunging.
But as volatile as the stock market is, the cryptocurrency market seems even more extreme. And I'm just not sure I have the stomach for it.
2. It hasn't been around as long
There are companies in my portfolio that have been around for over 100 years. But we can't say the same thing about crypto.
Bitcoin (CRYPTO: BTC), which is generally considered the first cryptocurrency, was founded in 2009. Compare that to a company that's been around eight times as long, and you don't get the same level of comfort. Or at least I don't.
3. It's harder to research
Before I put money into a given stock, I take a deep dive into the company behind it. I look at things like recent earnings and metrics like earnings per share. I also look at what the company actually does and what gives it an edge over its competition to make sure it's a good buy.
I find it difficult to research crypto since it's a completely different beast. Sure, I can see which currencies are more accepted as payment forms than others, but it's not the same thing as being able to dig into a specific company.
A tough sell for me
I know a lot of people who are excited to diversify their investment portfolios with cryptocurrency. But frankly, I'm still nervous to do that. If I decide to buy cryptocurrency, it will be in a very limited quantity, and I won't look at it as a long-term investment because I have no idea how much staying power it has.
Of course, there may come a point when I no longer fear crypto. After all, I used to be scared to buy stocks, and now I don't even sweat it when my portfolio takes a beating. But right now, I'm just not there yet. And since I know loading up on cryptocurrency will cause me to lose sleep, it's something that's just not worth doing.
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