My dad wants to invest in Bitcoin. Should he?


In this file photo taken on June 17, 2014 in Washington, DC bitcoin medals are pictured. — AFP

Q. My father is 78 and has about US$1mil (RM4mil) in his retirement accounts. He’s now talking about buying bitcoin and chasing stocks he reads about on social media. How can I get him to stick with mutual funds?

— Concerned

A. Cryptocurrency has been pretty hot lately, as have stocks pumped up by interest on social media boards.

But before investing in these or any investment, there are some basic fundamentals to consider.

First, said Jeanne Kane, a certified financial planner with JFL Total Wealth Management in Boonton, you need to understand where an investment gets its value.

Apple, for example, is a technology company that sells computers, phones and watches.

Next, understand how the investment may increase or decrease in value, she said. Apple, for example, had revenue of US$89.6bil (RM368bil) in second quarter of 2021, up 54% year over year with earnings per share of US$1.40 (RM5.76)

For stocks, bonds, and mutual funds, you can research and get the answers to these questions, she said.

“Investments like bitcoin should be held to the same standard,” Kane said. “Where does bitcoin get its value and why does it increase? If your dad can’t answer those questions for bitcoin or any other investment, he shouldn’t be investing in it.”

In talking to your dad, Kane recommends you don’t try to steer him in a totally different direction. She said that generally that does not work, especially when it sounds like he’s getting emotionally caught up in the excitement created around certain investments.

“Maybe suggest that he set up a separate account and put in US$100,000 (RM411,00) or less and ‘play’ with that. Limit the exposure,” she said. “It is his money, and he will do what he wants — which is his right. To tell him he can’t will only make him want to do it more.”

That’s why it’s probably your best option to give him an opportunity to do what he wants while limiting the downside.

“Emotion runs high with investing, especially in an up market, really since 2008, with only one negative year — 2018, ” she said. “Logic generally does not work well with emotional responses so the best you can do is really to limit the downside.” – NJ Advance Media/TNS

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
   

Next In Tech News

Biden tells Putin certain cyberattacks should be 'off-limits'
Virtual reality ads make their way to Facebook's Oculus headsets
Lyft says wait times decrease as U.S. drivers mark gradual return
German minister in talks with Tesla over sharing supercharger network
Google must face shareholder lawsuit claiming it hid security risks
Facebook says it removed fake Ethiopia account network ahead of election
Apple's Cook says proposed EU tech rules threaten security of iPhones
France's Macron says whether to break up U.S. tech giants is legitimate question
Croatia's hypercar maker Rimac explores strategic options
Big Tech in focus next week as U.S. House panel votes on new bills

Stories You'll Enjoy


Vouchers