I figured it’s time to start becoming serious about investing and I have been looking into the various options. I know that both have risks and that crypto is higher risk but also potentially higher reward.
I guess people who have a lot invested have it spread over multiple things but I’m trying to decide which is best to begin with and try to build it up over time.
So I'm curious, what made you choose one over the other or do you invest in both? And if you do both, did you start with both right away or did you start with one?
Crypto, stocks or both and why?
byu/Forever_Summer192 ininvesting
Posted by Forever_Summer192
5 Comments
IMO starting with stocks (indexes) is the better play. It’s relatively stable compared to crypto and as an investor you really want to have a strong foundation built before you start making different plays. I think stocks over the long term also give you a different insight into how to think as an investor. Eventually you start to notice the boom bust cycles that present the opportunities to make educated guesses and make money.
If you’re asking these kinds of questions, the best vehicle for you is likely index funds. VOO/VTI.
I know you probably won’t take my word for it, and that’s okay. I’m not a financial advisor so you probably shouldn’t. But I would recommend at least keeping the majority of it in a broad market index fund. And starting with a small satellite portfolio (5-10% max) of your most high conviction positions. Start small so you don’t lose big. Maybe look into dollar cost averaging If you’re looking to buy and hold long long-term.
If you’re going to crypto, do the ETF’s in a broker like Fidelity. Set an auto weekly amount. Only sell when you have an urgent expense to pay for.
Reality is that the blue chips crypto work similar to SP500 and Nasdaq, but the volatility is such that the penalty for panic selling is much more severe.
You panic sel sp500 you might blow out 5-10%, 40% could be a Tuesday for BTC/ETH, people don’t understand the differences.
I like crypto, but I don’t flinch at volatility. The plan is the same for me. Set to auto. Sell only when something urgent to pay for.
I give $20 a week to FBTC (Bitcoin etf) to avoid FOMO. If it gains exponentially then I win, if Bitcoin dies it’s a very small portion of my portfolio. Honestly I despise cryptocurrency, but I can spare $20 a week and I do believe Bitcoin is here to stay.
They are not remotely the same thing
Crypto is more like trading cards or sports cards or Art . Sure they are worth money and their price can change. You can buy an art piece for 1k and sell it years later for 2k maybe. However it has no real intrinsic value. I guess I can buy an art piece and hang it up and look at it every day and admire it, but it has no cash flows, it produces nothing
Companies are not just ticker symbols on a page, they own real assets , the produce real products , they sell goods and services and most importantly they produce cash flow.
Its like would you rather have a nice painting of a tractor or a real tractor? With a tractor you can actually do work , you can plow a field and get paid, or you can rent it out to people who need a tractor and still get paid. This is somewhat a poor analogy as you still need to do work if you get a tractor
A better analogy is your friend who does custom plowing needs cash to buy more tractors and she agrees to split some of the profits if you put up cash while she does all the work .
The painting, well it sits on your wall and does nothing, no matter how much you stare at it, its just sits there