Best Cryptocurrency Exchange

Are These Wise Financial Investments for Docs in 2022?

Are These Wise Financial Investments for Docs in 2022?
Written by publisher team

David Rooney, a general surgeon in Portsmouth, Virginia, first learned about cryptocurrency in 2012, as a medical student at the time, Rhoiney didn’t have the spare money to invest, but he kept watching the space at all where.

In the years since, the original bitcoin has taken off “to the moon,” as crypto enthusiasts like to say, to an asset with a market capitalization of $880 billion in mid-December (down from over $1 trillion in November).

Rhoiney, who started investing in cryptocurrency in 2020, cashed out his Bitcoin profits this year to buy Tesla. “Bitcoin is obviously not going to get to zero,” Rhoiney says, “it’s been around for a decade. Crypto assets have a use case.”



The amazing and volatile rise of Bitcoin has piqued the interest of many investors. In 2010, the value of bitcoin was about 9 cents. By December 2018, its value had jumped to over $9,000, but had fallen to $3,400 by the end of that year. As of December 15, Bitcoin is trading at $46,500.

Bitcoin was the first and most popular cryptocurrency, but now there are thousands of different types of cryptocurrencies that are attracting the interest of doctors like Rhoiney and other investors. Cryptocurrencies are one type of digital asset, a broader category that includes all items of value and contained in a digital format. Other digital assets include non-fungible tokens (NFTs) and stock tokens.

Cryptocurrencies are encrypted digital assets that users trade using a decentralized online ledger known as a blockchain. This ledger exists across many devices, so no single person or entity is responsible for it.

Cryptography, combined with a decentralized ledger, makes transactions nearly impossible to forge or alter because the history of each transaction is automatically updated across the entire network.

Some brokerages allow the purchase of some digital assets, but investors often buy and sell them directly on decentralized exchanges. When you join an exchange, you usually connect it to your bank account, which makes it easy to exchange fiat currency (the currency issued by the government that is not backed by a physical commodity, such as gold or silver) for cryptocurrency. The price is high at the moment, and most exchanges allow you to buy partial bitcoin, so you can buy any dollar amount you want.

Cryptocurrency proponents believe that technology has the potential to change the way transactions are conducted around the world.

However, there are several crypto components that you should be aware of: buying cryptocurrency is more difficult and more complex than most traditional assets; There is little government or insurance protection; Volatility is much higher than most other assets; And if you lose or forget the password for some crypto accounts, you may lose access to your holdings.

The explosive growth of Bitcoin and other high-profile digital currencies has attracted investors who see it as a way to diversify their investment portfolio. Some adherents of cryptocurrency believe that it has a future as a decentralized financial system, while others believe that it can act as a hedge against inflation or as a store of value like gold. Critics see only a very risky speculative investment as a means of payment. Famous investor Warren Buffett called bitcoin “rat poison.”

There is some mystery surrounding Bitcoin. Its developer, known as Satoshi Nakamoto, is actually the pseudonym of the real Bitcoin developer… and so far, no one knows who he actually is. Rhoiney admits that there are no sure bets when it comes to crypto.

“This is a very risky asset,” he says. “If you’re going to invest in the space, make sure you have a risk management plan in place.”

Amy Goerich, Senior Partner at Stepp & Rothwell Inc, a Kansas City-based financial planning firm that has about a third of physician clients, takes a more cautious approach with its clients.

“Our clients ask us about it all the time,” Guerich says. “But it is difficult for us in good conscience to recommend something that has no intrinsic value.”

However, Guerich says she has many clients who invest in crypto themselves, with money they are “playing” with outside of their financial plan and the long-term portfolio they are building with Stepp & Rothwell.

If you are considering investing in immersion in the cryptocurrency market, answer the following questions first:

Why do you want to invest in cryptocurrency?

Fear of getting lost is not a good reason to make financial decisions, whether you are buying a home or building a portfolio. Cryptocurrency has made its way into mainstream consciousness over the past few years, with coins like Bitcoin and Dogecoin reaching dizzying valuations, minting a new batch of millionaires and media attention.

However, there were fewer stories about traders who failed to time the markets and ended up losing some or all of their investment when prices fell again. Sure, it might seem like everyone else is making money from cryptocurrencies, but in the late ’90s it seemed like everyone was investing in tech stocks and in the early 2000s they were flipping their houses.

“There are always winners and losers,” says Shelley-Ann Iweka, director of financial planning at TIAA, a financial services organization. “We always hear about winners, but seldom do we hear about losers.”

Do you understand the assets?

From navigating digital currencies (any cryptocurrency other than bitcoin) to creating a crypto wallet and choosing the best exchange, investing in cryptocurrencies can require a more learning curve than getting started with other asset classes.

Before diving in, you may want to spend some time familiarizing yourself with terms such as “hot” (online), “cold” (offline) storage, and nodes (computers that connect to the block chain).

Not sure where to start? Coursera and The Wharton School at the University of Pennsylvania are offering a free online class, “Cryptocurrency and Blockchain: Introduction to Digital Currency.” You can also find great entry-level content at LearnCrypto.com and Coinbase.

Are you investing more than you should?

Due to the speculative nature of cryptocurrencies, experts suggest only investing in cryptocurrencies after you are on track to achieve all your other financial goals. This means you set up an emergency fund, paid off student loans and high-interest debt, and maximized your retirement savings.

“Review your financial checklist and make sure all is well,” says Eweka. “Then, if you have some money that you would like to take a huge gamble, you can consider cryptocurrency.”

Even then, only invest in cryptocurrency as much as you can afford – or can afford to – lose. In general, keep your digital assets at no more than 2% to 5% of your net worth. If the value of your property is much higher than that, consider rebalancing to remove some of the risk from the table.

“You’re not going to put all of your money into a single stock or a commodity like gold, so we don’t recommend doing that with crypto either,” says Robert Michel, chief investment officer at Glen Eagle Advisors.

If you’re saving for short-term goals, like a wedding or a down payment on a house, keep that money outside of cryptocurrency as well.

Can You “Hold on to Dear Life” (HODL)?

HODL is the code word for “Hold on Dear Life,” and this is what cryptocurrency investors have to do during periods of extreme volatility. In the past year alone, bitcoin has jumped from a low of $21,300 in December 2020 to a high of nearly $68,000 in November 2021 to $48,000 in December 2021, hitting many peaks and valleys in between.

While most other altcoins have a much lower value, they all show massive price fluctuations on a regular basis. Cryptocurrency is basically a new asset class, and investors are still trying to figure out how to price it — which leads to more volatility.

“When you invest in cryptocurrencies, the value of what you own fluctuates every day, so you have no idea how much it is really worth,” Guerich says.

Are you diversifying your holdings of cryptocurrency?

Even if you keep your crypto investments at less than 2% of your net worth, you may want to diversify into these investments as well. While Bitcoin gets the most attention, there are thousands of alternative currencies that you can invest in. However, most of them don’t have much track record to rate.

“Even in a diversified crypto wallet, the weighting is mostly on Bitcoin and Ether.” [the second largest cryptocurrency]says Jimmy Hopkins, principal at The Carson Group. “Other than that, you get small percentages. It’s not like there are hundreds of high-quality crypto investments out there today. It’s relatively new, with only a few being worth it from a diversification standpoint.”

Rhoiney says that he takes a “venture capital” approach to his crypto investments, allocating a wide range of cryptocurrencies with the hope that one will make it big.

“You spread a little bit into a lot of different areas and hope one or two of them have big returns,” he says.

Where will you store your cryptocurrency?

One of the things that makes crypto riskier than other investments is that it is a highly unregulated market, so your investments will not have any protection from the Securities and Exchange Commission or the Federal Deposit Insurance Corporation (FDIC). To reduce your risk, go to one of the largest security-focused cryptocurrency exchanges.

If you choose to use a digital wallet, take extra precautions about your password. Unlike most websites on the internet that allow you to reset your password by answering a few questions about your high school English teacher or first car, there is no digital key reset (online password) that you need to access a crypto wallet . This means that if you lose or forget your password, you may never be able to access that wallet – or cryptocurrency – again.

What is your time horizon?

The market for digital assets such as cryptocurrency and Bitcoin is a rapidly developing space. Frequently, the popularity of new “ICO” coins (their launch with an initial coin offering), as well as new assets such as NFT, are growing in popularity.

As cryptocurrency continues to move into the mainstream, it is also attracting the attention of institutional investors and federal and international regulators. With the timely introduction of the new regulations, it may be easier for retail investors to enter the space, even though they may have missed the rapid early rise of some cryptocurrencies. But it’s also possible that there are a lot of cryptocurrencies fading out in the meantime.

“It is important to understand the difference between innovation and current use when it comes to coding,” says Michel. “Innovation is the core blockchain technology. Everyone can understand that the blockchain of the future will allow you to create decentralized and secure financial contracts and transactions. But this does not mean that every cryptocurrency is worth something.”

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