How To Invest In Bitcoin And Other High Risk Assets Safely

Apologies for the audio : (
Still getting to grips with this new mic!
If you are tempted to invest your money in something that is rising fast, then you may need an investment playpen.
Bitcoin, Artificial Intelligence, GameStop, the financial media is full of stories of huge gains being made in certain types of investment.
You might want a piece of the action. Why should others be getting rich and you not?
It’s very easy to suffer from the FOMO (fear of missing out) and social media can make this 10x worse.
However, you need to consider the risks. As many examples there are of huge gains being made there are also those stories of huge losses. People losing everything as quick as they made it.
Get rich quick investing should not be a strategy you use for your family’s life savings, however there is a way to scratch the itch if you are still tempted. This is where your investment playpen comes in.
The secret to true and long-lasting wealth unfortunately does not lie in get rich quick schemes.
Proper investing involves diversifying your money across the great companies of the world. For most people, the easiest way to do this is via a portfolio of funds or even one global equity fund.
This strategy is more a get rich slow scheme which doesn’t sound very exciting but its what works. All good things come to those who wait. Patience and consistency are key when it comes to investing. Following this strategy will make you rich compared to the majority of people.
Investing in global equity funds is not risky. It will be volatile meaning the value of your investment will fall and rise, sometimes quite significantly but there is virtually zero chance you are going to lose all your money.
Risk is permanently losing all your money, either because the thing you invest in goes bust or it doesn’t grow as much as inflation and therefore you are losing purchasing power.
An investment playpen is essentially a proportion of your wealth that you use to invest in areas that excite you. That potentially offer high reward but for high risk.
By creating an investment playpen, it gives structure to your investment strategy and means you can invest without worrying about jeopardising your family’s life savings.
You won’t feel like you are missing out and you can join your friends in discussing how your position in the latest investment craze taking over social media is working out. Safe in the knowledge that you will be the winner in the long run as the bulk of your wealth is in the one strategy that beats all others over the long term, investing in global equities.
How much you put in your investment playpen will very much depend on your own individual circumstances. The best way to decide is to ask yourself, how much am I prepared to lose? That’s what an investment playpen is, it’s money you invest but are prepared to gamble accepting that the downside is you lose everything.
As a rule of thumb, I would usually say no more than 10% of your wealth should be allocated to your investment playpen.
In terms of what goes in your investment playpen, the key thing to ask yourself will be “is there a realistic chance that I could lose the full value of my investment?” If the answer is yes, then it goes in the investment playpen.
Some examples would include:
Trading individual shares for short term gains
Where you buy and sell shares in individual listed companies on a regular basis because you believe the share price is going to rise in the near future.
Trading currency or commodities
As above but instead of buying shares in companies you buy currency including cryptocurrency like Bitcoin or metals like gold or even oil.
Anything where you are only holding the asset on a short-term basis, perhaps days or sometimes even hours. Trying to make a quick win.
Buying shares in private equity
Investing in businesses that are not publicly listed. This usually means start-ups. This would also include investing into funds like Enterprise Investment Schemes (EIS), Seed Enterprise Investment Schemes (SEIS).
Not only could these businesses go bust, but because there is usually no market to buy and sell the shares you could find your money tied up for very long periods.
Lending to friends!
You might have a friend that promises you a much better interest rate or return if you lend them the money for a business opportunity.
A classic example I see often is the friend who is a builder or property developer. They promise the money back with interest once the property is sold.
You might trust your friend but just remember, if the deal goes wrong there is unlikely to be anyway to get your money back and probably a broken friendship.
A good phrase to always remember when it comes to investing is, “if it sounds too good to be true, it probably is.”
But if you’re still convinced or want to give something a try, stick it in your investment playpen.
#bitcoin #investmentplaypen #investinginbitcoinsafely

[@ianvanderhyde]

Carl. That realy helped me right now as just deciding how much high risk to proportion for my final 10years of pension contribution. Many Thanks

[@carlrobertsonmoney]

Great. Thank you so much for the feedback.

[@ianvanderhyde]

How do we actually incorporate Bitcoin into our sipp to utilise both growth and the tax advantage side

[@carlrobertsonmoney]

Very difficult as the UK regulator doesn’t believe it is ‘safe’ for retail investors!

[@johnm1859]

I am confused the only reason i watched rhis podcast was to learn how to invest in Bitcoin and i learned nothing😂 Title was very misleading!

[@razzamattaz179]

Well that was 10 mins of you just blathering on about nothing. I thought with your qualifications you’d mention efficient was to wrap it, isa for example. Instead you just said 5-10% without adding anything of substance.