Investment in stocks and cryptos at an earlier age may become a blessing for some people. But investments without little knowledge and at the wrong time may become a curse. According to Pew Research Center, about 16% of all adults in the United States have invested in some form of cryptocurrency through different crypto exchanges including Binance, Coinbase, Gemini, etc.
If you are also considering investing in cryptocurrencies like Bitcoin, Ethereum, Dogecoin, or any other cryptocurrency then you must read this post before diving into the crypto market.
With Crypto investments like Bitcoin, you can make extra cash but it also has some risks associated with it. The risk depends on a number of factors including market circumstances, crypto pumps and dumps, crypto whale’s manipulations, etc. You should know about these risks before investing in crypto.
Here we are going to discuss 8 types of people who should not invest in Bitcoin or any other crypto, if you are also one of them then you should avoid crypto investments.
1. People Who Are Nearing Retirement
People who are nearing their retirement should avoid crypto investments because the money they have saved in their whole life is the main source of their income. Crypto investments have a high risk and it also takes time to grow your money.
Many experts believe that once you are close to your retirement then you should make more conservative investment decisions or consult some investment advisors.
2. People Who Don’t Understand Crypto
Cryptocurrencies work on some blockchain technology and this makes crypto very complicated for novice users. It becomes time-consuming and difficult to explain to someone, what exactly crypto is, how it works and which cryptocurrencies give a better return on investment.
If you invest in crypto without proper knowledge or after hearing from someone then it becomes the worst condition for you and you may lose all your investment. So this is not a good idea to invest in a volatile and unregulated product like cryptocurrency before proper knowledge.
3. Don’t Invest Without Having an Emergency Fund
People who don’t have enough emergency funds must avoid crypto investments. To make all expenses everyone must have saved cash for at least three to six months. Emergency funds are necessary to cover sudden expenses like rent charges, medical bills, etc.
If you have some extra cash and also saved enough amount in the form of emergency funds for at least three months then you can think about crypto investments to make some money. But if you are hardly covering all your living expenses in your salary or paycheck and haven’t any emergency funds then you must be cautious before making crypto-like risky investments.
4. People Not Taking Employees’ Provident Fund
People who are not taking advantage of the Employees’ Provident Fund are literally throwing away money from their pockets. Funds like EPF and PPF help in saving money that can be used for emergency funds. If you are not contributing schemes like EPF and PPF then you may think twice before investing in crypto like risky and volatile investments.
5. Having Credit Card Debt or Loan
If you have any loan or credit card debt then most of your income may go to pay the EMI of your loan or credit card debt. Putting your money in cryptos having credit card debt or some loan seems like putting your money in the black. Crypto investments are unregulated and don’t provide any guarantee to give a higher return on investment.
6. Having a Dream of Retiring Early
Today many people want to retire early but few of them have actually a plan to do it. Making only crypto investments is not a good plan for early retirement. You must consult a financial advisor before planning an early retirement. A good financial advisor can create a solid plan that can help you to retire early.
7. People Who Think They Will Get Rich Quick
Crypto investments might be a good choice for long-term strategy. In the crypto market, nobody knows how much you can make with your crypto investments. But if you are investing in crypto with a dream of getting quick money or becoming rich in a short time then this is not a good idea for you.
In 2022 the crypto market is facing the largest dip and many cryptocurrencies like Terra Luna and exchanges like FTX have crashed and people almost lost their investments. Even Bitcoin is more than 60% down from its all-time high. And if you are investing in crypto with the dream to become rich quickly then it is very dangerous for you.
8. People Who are Risk-Averse
Cryptocurrency trading or investing is highly riskier than investing or trading in stocks. Putting money in cryptocurrencies is much riskier than putting money in banks and Fixed Deposits. In banks, you get a guarantee of getting your money back from the Reserve Bank even after the bank’s collapse.
But in the case of cryptocurrency, there is no guarantee of anything. You may lose all your investments due to a hack of exchange or collapse of the cryptocurrency assets.
If you are risk-averse then you need not invest in cryptocurrencies and you may choose any other safe investment plans for you.
The Bottom Line
Everyone has a dream of getting rich quickly or making money from their investment. But if you can’t afford the risk of losing money then you must avoid crypto investments. You may consult a financial advisor to make a secure plan to grow your wealth.