Bitcoins

Aegis

grund1g wrote: »

Thanks Aegis and my Apologies if I didn't explain it right. I will shortly have some money to invest and a friend mentioned Bitcoins. I did a google search and came across the Bitcoin Trader FXTM site, I registered to have a look round and within a few minuets of registering really someone contacted me. I don't have any experience with stocks and shares at all and was told Bitcoin does everything for you.

I'll get flack for this, but my firm belief is that buying bitcoin isn't investing, it's either speculation or gambling. In other words, you are buying an asset which by itself does nothing, generates no income (in real currency) and owns no assets which you then co-own. The expectation you must therefore have is that either the assets has been mispriced and you are cleverer than the market as a whole at the moment (speculation) or you don't believe there is a reasonable price and you think the price is likely to bounce around with some likelihood of being able to sell at a higher price at some point (gambling).


In essence, you're going from little to no experience and diving straight into the deep end of very risky speculation or gambling rather than investing. If this money matters to you, you should take a firm step back from this, put your money into National Savings and Investments for a while (I say that because it is safe, any combination of banks where your exposure is under the FSCS limit of £85k will do, but NS&I has unlimited protection).


Once your cash is safely housed, start reading up on investments, specifically on the subject of diversification and investing for yield (you may wish to look at the proportion of long-term returns which arise from dividends and interest rather than capital growth). Once you have a good grounding in some of the basics, you will probably not be looking at putting all of your money into bitcoin any more, and will instead be thinking about a blend of cash, bonds, equities and some other types of holding. These can be held either directly (sometimes lower cost but more work) or via a fund (usually more cost, but very little work until you review the manager's performance and decide whether to switch). Typical fund types to consider as a beginner will be unit trusts and open-ended investment companies (OEICs), possibly veering into exchange-traded funds (ETFs) or investment trusts if circumstances warrant their inclusion.



bitcoin definitely doesn't do everything for you. Take that friend's advice with a large pinch of salt, as it sounds like he has embraced bitcoin as a game-changing technology but thinks that makes it a good investment.

grund1g

Thanks for all the advice. I think I will just step back from Bitcoin as It doesn't seem to deliver all that I have been told.

eskbanker

I just posted some places to start researching on investing in another thread:

https://www.moneysavingexpert.com/investments/
http://www.monevator.com
http://diyinvestoruk.blogspot.com/
https://www.moneyadviceservice.org.uk/en

MaxiRobriguez

Aegis wrote: »

I'll get flack for this, but my firm belief is that buying bitcoin isn't investing, it's either speculation or gambling.

Not sure why you'd get flak for that, it seems entirely correct.

I have a small allocation to cryptocurrency, but unlike my other holdings I'm not expecting anything in particular from it and I'm fully prepared for it to go become worthless.

I think if you can accept that risk then it's OK but I worry for my friends who assume losses will be contained and who have an expectation that crypto like stocks will in the long term always rebound and eventually provide profit.

You pays your monies and you take your chances, nothing more or less for Crypto.

Aegis

MaxiRobriguez wrote: »

Not sure why you'd get flak for that, it seems entirely correct.

I have a small allocation to cryptocurrency, but unlike my other holdings I'm not expecting anything in particular from it and I'm fully prepared for it to go become worthless.

I think if you can accept that risk then it's OK but I worry for my friends who assume losses will be contained and who have an expectation that crypto like stocks will in the long term always rebound and eventually provide profit.

You pays your monies and you take your chances, nothing more or less for Crypto.

I don't expect it from everyone, but certainly from a few who believe that cryptos are the best things ever that are destined to one day overtake the current value of the entire world economy per coin (slight hyperbole, I know!).

aurelieweill

Early investors in Bitcoin have profited from staggering gains over the past few years. Cryptocurrencies were the hot-investment of 2017. Most people who invested in or kept their Bitcoin during 2018 have seen huge losses. I don't expect this to change and can only warn people not to speculate with cryptos.

MaxiRobriguez

aurelieweill wrote: »

Early investors in Bitcoin have profited from staggering gains over the past few years.

Only if they could crytalise those gains.

The main Crypto exchange made it very difficult for UK "investors" to actually sell their coins for GBP when the going was good.

AnotherJoe

aurelieweill wrote: »

Early investors in Bitcoin have profited from staggering gains over the past few years. Cryptocurrencies were the hot-investment of 2017. Most people who invested in or kept their Bitcoin during 2018 have seen huge losses. I don't expect this to change and can only warn people not to speculate with cryptos.

That isnt necessarily the case and is likely only true for a minority, since it depends when they sold.
True story, friend of mine got some share options very cheap in a major company back in the 80's. When she was sitting on a few £k profit early 90's she sold. Had she held until the dot com peak they would have been worth around one million £.

I've just looked them up now out of interest. They would now be worth £2 Million. And thats ignoring the dividends as well.

So she was an early investor but did not make out like gangbusters unfortunately.

And there will have been plenty like that with BC.

Plus

Cryptocurrencies are pretty risky (PDF)

Jonbvn

Type_45 wrote: »

Why assume it's a scam? Most people are nice.

Perhaps I am a little older and more cynical. After working around the world in numerous countries, I tend to assume everyone is guilty until proven innocent.