Before investing in bitcoin or any cryptocurrency, you should first consider whether you can handle the volatility, experts say.
Each investor's risk tolerance will vary. It's important to understand how much you can personally tolerate.
For some people, the volatility"may be OK, that may coincide with your appetite for risk and your own risk tolerance and investment time horizon," Douglas Boneparth, certified financial planner and president of Bone Fide Wealth,Regardless of your tolerance level, financial experts warn that this volatility makes bitcoin and other cryptocurrencies a riskier investment than something like a low-cost index fund, which allows investors to buy a collection of stocks at once, rather than...
If you decide to invest anyway,"you have to make sure that it's money that you can really afford to lose," Jariwala said. Boneparth agrees:"Be very careful about how much you allocate and understanding what you can tolerate, because if 80% of your net worth is tied to bitcoin, and it goes down 30%, that's rough."
Depending on what you can afford, a smaller allocation in bitcoin can hedge any potential downturns in the market.
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