I’m a Long-Term Investor, but Not When It Comes to Crypto. Here’s Why.

When it comes to investing my money, I tend to follow one simple rule: Load up on quality stocks and hold them for many years so they’re able to appreciate in value.

More recently, I’ve taken to expanding my portfolio into REITs, or real estate investment trusts. I like REITs because they tend to pay higher-than-average dividends, and because they fit nicely into my buy-and-hold strategy.

Meanwhile, I’ve started to get on board with the idea of buying cryptocurrency. I’ll admit that the idea makes me nervous, but I also think that if I keep a small percentage of my assets in crypto, it won’t cause me to lose sleep.

Besides, following the stock market these past few months hasn’t exactly been a picnic, and while the crypto market can be even more volatile, it’s not like I’m not used to that.

Image source: Getty Images.

At the same time, though, the approach I take to buying and owning crypto differs from the approach I take to the rest of my portfolio. While I consider myself a long-term investor, I don’t intend to hold my cryptocurrencies until retirement. Here’s why.

It’s all too speculative

I know a lot of people who have made money with crypto. But I also know that crypto has only been around for a little over a decade.

By contrast, there are stocks in my portfolio that have been around for numerous decades, and that have proved their ability to keep gaining in value and keep paying dividends even during periods of economic upheaval. Those are the stocks that I hope and plan to hold for many more years. But when it comes to crypto, I really have no long-term expectations.

That’s why crypto plays a very specific role in my portfolio: to potentially generate some near-term gains that I then move over into stocks. I don’t plan to hold crypto for 10 years or longer because who knows whether there will even be a market for digital currencies at that point? And even if there is, who’s to say what regulations will apply?

Furthermore, while many investors believe that crypto will soon become a widely accepted means of paying for things, let’s remember that cashing out digital currencies at a gain means facing a host of tax consequences. As someone who already pays her share of money to the IRS, that’s not something I want to worry about.

A reasonable compromise

I don’t necessarily want to sit things out on the cryptocurrency front, and so I’ve been trying to push myself to buy a little more of it incrementally. At the same time, I don’t regard crypto as a long-term investment, and because of that, I intend to limit the extent to which it takes up room in my portfolio.

I know other investors who think differently. They insist that cryptocurrency is going to be their ticket to a financially sound retirement. For their sake, I hope they’re right. But in my gut, I don’t know that they are.

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