Short Term Investments Aren’t Always the Best, So Plan Well

This year has seen an intense increase in the promotion and involvement in crypto currencies. Many stories of individuals cashing out at the right time, leaving them young, wealthy and already retired has left people drooling at the potential for crypto investments. Additionally, influencers and online personalities have been successfully promoting certain crypto currencies to their followers who invest, effectively pumping up the value of the coin, only for the influencer to sell and make a great profit, effectively performing a ‘pump and dump’ fuelled by the influence of their large online following.

While the potential for a massive pay day may have you seeing dollar signs, these influencer pump and dump schemes, with limited regulation given the relatively recent popularity of this type of investment, leaves you exposed to high risk and potentially minimal reward. This gives us the perfect example of exactly why we prefer measured, long-term financial planning to short-term speculation and online excitement.

How much can you earn? How much could you lose?

Setting aside the larger implications of online excitement for our financial system, let’s focus on the individual.

Yes, some crypto investors are cashing out large multiples of their initial investments. But many others are letting their investments ride, hoping for even greater returns or getting caught in the fast decrease in the lost value of certain crypto coins. The losses for some investors could be catastrophic, especially young people who are betting their rent money, emergency savings, or COVID-19 relief checks.

Also, while we generally get excited and support young people getting more interested in investing, managing your finances using social media feeds, apps and message boards isn’t foolproof. Influences promoting certain crypto for their own clear benefit is a perfect example of how easy it can be to be manipulated by investment information online.

Short-term gains or long-term prosperity?

While making a couple thousand dollars overnight sounds exciting, that ROI is no match for the wealth-building power of a balanced, diversified financial plan.

The small investments that the crypto crowd are cashing out today could be compounding by 10% annually had they been invested in the S&P 500 rather than the hot stock of the moment. Hopefully, some crypto investors will reinvest their earnings in plans that will help them create a more secure financial future.

But that leads to another problem with crypto investing was that creating secure financial futures wasn’t really part of the plan.

What’s your plan?

Fast and easy investment returns that potentially come with crypto currency don’t tend to take into consideration the following:

• Buying a new house.
• Sending your kids to college.
• Paying down debt.
• Saving for a comfortable retirement
• Starting your own small business.
• Supporting a sick or struggling family member.
• Saving for a dream family vacation.
• Moving to your ideal retirement destination.

And aren’t these things you want for your future? This is why we’re different. Because our investment decisions for you are not just based on financial return, but more importantly the life goals that you wish to achieve with this financial return.

If there are individual companies that you want in your portfolio, we are happy to help you assess potential investments and make informed decisions. But our big-picture strategy is much bigger than any one stock or any one market fluctuation. Instead, we structure your Life-Centered Financial Plan to meet the goals, challenges, and transitions that you and your family will face throughout every stage of your lives.

We’d also love to help your family’s next generation get a head start on their planning as well. If your kids or grandkids are asking you about crypto or have a new interest in finance, let’s schedule a group meeting or video call to keep their allowance money pointed in the right direction.