Cryptocurrencies may be controversial, but they have also become one of the most popular types of investments. Nearly a quarter (24%) of investors own cryptocurrencies, according to a recent study. investment study by The Motley Fool. That puts it ahead of bonds, index funds and several other investment products.
Not all age ranges feel the same about cryptocurrencies. Here's which generation is most likely to invest in it and how to decide if you should do the same.
The generation most likely to invest in cryptocurrencies
Millennials are the generation most likely to invest in cryptocurrencies, and it's not a close race. Here is the percentage of each generation who said they own cryptocurrencies:
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Generation Z: 22%
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Millennials: 43%
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Generation X: 23%
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The baby boomers: 8%
Cryptocurrencies are a relatively recent investment option, so for the most part, these results are what you would expect. Millennials are much more open to it than any other group, and baby boomers largely avoid it. The biggest surprise is Generation Z. Collectively, these young investors appear to be much more skeptical about cryptocurrencies than millennials.
Is it a good idea to invest in cryptocurrencies?
Investing in cryptocurrencies is a rollercoaster. These are extremely volatile assets, so large price swings are common. Some large cryptocurrencies have completely failed, with Terraform Moon being a notable example. There have also been crypto exchanges, including FTX, that have gone under.
The bottom line is that cryptocurrencies are a high-risk investment. It could also be a great reward, but don't think it will make you rich.
Because of how unpredictable and unproven cryptocurrencies are, they should not be your only investment or make up a large part of your portfolio. But there is nothing wrong with investing in it if you think it has potential or want to venture into something more interesting. If you decide to invest, here are some smart rules to protect yourself:
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Don't put more than 5% of your portfolio in cryptocurrencies. For example, if you have $20,000 in investments, limit yourself to $1,000 or less in cryptocurrency. If it is higher, you will be taking on too much risk with your investments.
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Keep most of your money in safer investments. Stocks are one of the best options. Historically, the stock market has averaged a return of about 10% annually over the past 50 years.
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Only invest the money you can afford to lose. This way, you won't have financial problems if the value of your investment drops, which often happens with cryptocurrencies.
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Plan to buy and hold for at least five to ten years. The cryptocurrency market has gone through several bullish and bearish cycles. You are more likely to be successful if you are willing to wait out the downtimes.
How to get started with cryptocurrencies
Now that the SEC has approved Bitcoin (BTC) ETFs, it's easier than ever to invest in cryptocurrencies. If you already have an account with a stockbroker, check to see if they offer cryptocurrency or Bitcoin ETFs. If so, the most convenient option would be to invest through your current brokerage account.
The other option is to open an account on a crypto trading platform. You can compare the best options on The Ascent's list of the best crypto exchanges and apps.
You will also need to decide which cryptocurrencies you want to buy. Bitcoin was the first cryptocurrency and although it is still risky, it is lower risk than other cryptocurrencies. You may also want to check out altcoins (cryptocurrencies other than Bitcoin) to see if others sound like interesting investments for you.
Once you've found a place to buy cryptocurrencies and know which ones you want, you can add money to your investment. Whether you decide to make a one-time investment or do it regularly, remember not to invest too much money in cryptocurrencies. It's okay to have a little money in long-term investments, but the bulk of your portfolio is better off in safer assets.
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We firmly believe in the golden rule, which is why editorial opinions are solely our own and have not been previously reviewed, approved or endorsed by included advertisers. The Ascent does not cover all the offers on the market. The Ascent's editorial content is independent of The Motley Fool's editorial content and is created by a different team of analysts.Lyle Daly has positions in Bitcoin. The Motley Fool has positions and recommends Bitcoin. The Motley Fool has a disclosure policy.
Which generation is most likely to invest in cryptocurrencies? was originally published by The Motley Fool
