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Today’s financially savvy teens are thinking a lot about cryptocurrency, blockchain and NFTs.
Many are curious about how they should start investing in the often-volatile asset class.
Experts say that new investors don’t need to shy away from cryptocurrency but should educate themselves on the asset class and take the necessary precautions to be protected from volatility.
“I say dive right in, but dive right in with the appropriate amount,” said Brian Kelly, founder and CEO of BKCM, LLC during CNBC’s Thursday event, “Money without Borders: A Virtual Summit,” a collaboration between Invest In You and Junior Achievement.
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How much to invest
Because cryptocurrencies are much newer than other assets such as stocks and bonds, investing in them carries different risks, he said. To balance this risk, Kelly suggests making crypto investments a small part of the total money you put into the market.
“What I’ve always said to most people with an investment portfolio is take 5% or less of what you’d invest in stocks or bonds and put it into crypto,” he said. This way, if cryptocurrency doesn’t end up being a winning bet, you’re protected from extreme loss.
“It’s going to hurt, but it’s not going to change your life,” he said.
On the flip side, if cryptocurrency does grow exponentially, that original 5% could become a major part of your portfolio, he said.
“Just like any other investment, it is really about your position size and risk management,” he said. “Where people make mistakes is they just get too big because they want to try to get rich quick.”
Other experts say to only invest what you’re willing to lose.
“Never ever, ever, ever put in more money than you feel comfortable losing to something that you don’t fully understand or that has large volatility,” Sam…
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