Here’s Why Crypto Still Makes Me Nervous

A lot of people I know have purchased cryptocurrency over the past year. But for the most part, I’ve stayed away. I have a negligible amount of money in crypto, and I don’t see myself expanding that position anytime soon.

Although I don’t consider myself a particularly risk-averse investor, cryptocurrency makes my stomach churn. Here’s why.

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1. It’s so volatile

As someone who’s been investing in stocks for well over a decade, I know full well that the market can swing wildly. But as volatile as stocks can be, cryptocurrency tends to be even more erratic.

I know that you don’t actually lose money as an investor until you liquidate positions at a loss. And I’ve done my best to position myself to not have to tap my portfolio for cash by building a solid emergency fund. But even so, those swings are just too extreme for me.

2. It hasn’t been around that long

I own a number of stocks that have been around for many, many decades. Cryptocurrency, meanwhile, didn’t exist until about 13 years ago, and there’s something unsettling about that. In fact, my main fear is that crypto will either become worthless or non-existent at some point in time.

3. It could become further regulated

We don’t know what rules might come down the pike that change the way cryptocurrency is regulated or taxed. Granted, the rules could change within the realm of stocks, too. But since stocks have been around for longer, I don’t foresee any major changes hitting soon.

How I’m building my portfolio instead

Clearly, I have no plans to allow cryptocurrency to comprise a large chunk of my portfolio. That’s just not within my comfort zone. Instead, I’m sticking to the same plan I’ve had for years, and that’s loading up on quality stocks that I’m comfortable with and holding them for as long as I can.

Of course, I don’t just choose my stocks at random. For one thing, I aim to own a wide range of companies across different industries so my portfolio stays nice and diverse. This could help prevent a scenario where, say, tech stocks tank and suddenly my portfolio is down 40% or 50%.

I’ve also started buying more REITs, or real estate investment trusts. I’ve been looking for a way to branch out from stocks outside of cryptocurrency, and REITs align better with my strategy and comfort level.

One of the things I like most about REITs is that they tend to pay higher-than-average dividends. In fact, a number of the stocks I own don’t pay dividends at all. That anticipated income stream could help protect my portfolio during a stock market crash, and it gives me money to reinvest for added growth as I see fit.

It’s just the wrong fit

While cryptocurrency may be a suitable and smart investment for a lot of people, I can’t get over the fact that it still doesn’t sit right with me. And so rather than give into peer pressure, I’m mostly opting out — at least for now.

If cryptocurrency sticks around for many more years, I may grow increasingly comfortable with it. By then, will I have lost out on a prime money-making opportunity by getting in too late? Maybe. But that particular risk is one I’m willing to take.

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