Cryptocurrencies may be controversial, but they are also one of the most popular investment types. According to a recent Motley Fool investment survey, nearly a quarter (24%) of investors own cryptocurrencies. This puts it above bonds, index funds, and several other investment products.
Not all age groups feel the same way about cryptocurrencies. Here's a look at which generations are most likely to invest in it, and how to decide if you should do the same.
Generations most likely to invest in cryptocurrencies
Millennials are the generation most likely to invest in cryptocurrencies, it's not a close game. Here are the percentages of each generation who say they own cryptocurrencies:
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Generation Z: twenty two%
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Millennials: 43%
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Generation X: twenty three%
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Baby boomer: 8%
For the most part, these results are as expected since cryptocurrencies are a relatively recent investment option. Millennials are more open to this than any other group, and baby boomers largely avoid it. The biggest surprise is Gen Z. Overall, these younger investors appear to be much more skeptical of cryptocurrencies than millennials.
Is investing in cryptocurrencies a good idea?
Cryptocurrency investing is a roller coaster. These are highly volatile assets, so large price fluctuations are not surprising. Some major cryptocurrencies have completely failed, and Terraform's Luna is one notable example. Cryptocurrency exchanges such as FTX also went bankrupt.
The bottom line is that cryptocurrencies are high-risk investments. Although the rewards may be high, don't buy with the expectation that it will make you rich.
Cryptocurrencies are highly unpredictable and unproven and should not be your only investment or a large part of your portfolio. But if you believe it has potential, or want to try your hand at something more exciting, there's nothing wrong with investing in it. If you decide to invest, here are some sensible rules to protect yourself.
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Do not invest more than 5% of your portfolio in cryptocurrencies. For example, if you have a $20,000 investment, keep your cryptocurrencies under $1,000. Anything more than that and you're taking a big risk on your investment.
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Keep most of your money in safer investments. Stocks are one of the best options. Over the past 50 years, the average stock market return has been about 10% per year.
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Invest only money you can afford to lose. This way, you won't run into financial problems due to a decline in the value of your investment, which often happens with cryptocurrencies.
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Plan to buy and hold for at least 5 to 10 years. The cryptocurrency market has gone through several bullish and bearish cycles. You have a better chance of success if you are willing to wait for the down period.
How to get started with cryptocurrencies
Investing in cryptocurrencies is now easier than ever with the SEC's approval of Bitcoin (BTC) ETFs. If you already have a brokerage account, 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.
Another option is to open an account with a cryptocurrency trading platform. Compare the top options on The Ascent's list of best cryptocurrency exchanges and apps.
You will also need to decide which cryptocurrency to purchase. Bitcoin was the first cryptocurrency, and while it still has risks, it is less risky than other cryptocurrencies. You can also check out altcoins (cryptocurrencies other than Bitcoin) to see if there are other investments you might be interested in.
Once you've found where you can buy cryptocurrencies and know which one you want, you can add money to your investment. Whether you're making a one-time or regular investment, be careful not to put too much money into cryptocurrencies. It's fine to have a little money in long-shot investments, but most of your portfolio is better invested in safer assets.
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We strongly believe in the Golden Rule. As such, editorial opinions are our own and have not been previously reviewed, approved or endorsed by any included advertisers. Ascent does not cover all offers on the market. Editorial content on The Ascent is separate from editorial content on The Motley Fool and is produced by a separate team of analysts. Lyle Daly has a position in Bitcoin. The Motley Fool has a position in and recommends Bitcoin. The Motley Fool has a disclosure policy.
Which generation is most likely to invest in cryptocurrencies? Originally published by The Motley Fool
