Dave Ramsey: Is Crypto Putting Your Money at Risk?

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Bitcoin’s price has soared this year. The digital currency has surged over “130% year over year, as of April 11,” USA Today reported, and it recently “hit its all-time high of $73,835.57 on March 14.” This drastic jump is in part because of the regulatory approval of Bitcoin exchange-traded funds.

“Investors are getting turned on to the fact that Bitcoin can be treated as an uncorrelated asset, which makes it extremely attractive for portfolio diversification,” Joel Kruger — a market strategist at LMAX Group — explained to CBS MoneyWatch.

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However, not everyone is on board with the crypto frenzy. Dave Ramsey — a personal financial expert, bestselling author and founder of Ramsey Solutions, a company that educates and provides financial counseling — warns against investing in digital currency. In an article posted to the Ramsey Solutions website, the company strongly advises not to get involved with crypto.

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Too Much of a Risk

Ramsey is clear about avoiding crypto and not getting tempted by the buzz. “Crypto is not a safe investment. You could lose your shirt (and pants) messing around with crypto. Steer clear … Crypto is risky business,” according to the article.

The article acknowledged that people have made money from investing in digital currency — but at high odds. “Yes, some people made lots of cash investing in crypto, but it’s all based on speculation — which is just a step above gambling,” it stated.

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Crypto Is Volatile

Another reason Ramsey doesn’t encourage investing in crypto is it’s volatile. “Crypto’s value swings way up only to come plunging back down, and you never really know what you’re going to get each day,” the article explained. “Someone sneezes and the price drops! And unlike stocks that rise and fall based on a company’s performance, crypto goes up and down based purely on speculation.”

Unproven Rate of Return

The article compared investing in crypto to the Wild West, stating, “You can’t figure out the changes or calculate returns like you can with growth stock mutual funds. There just isn’t enough data, or enough credibility, to create a long-term investing plan based on cryptocurrency.”

Nobody Really Knows About Crypto

The article also pointed out that crypto has a secretive backstory. “Crypto lives up to its name in that it’s pretty cryptic. Think about it: Nobody even knows who founded Bitcoin! Only a small percentage of people in the world really understand the blockchain technology crypto is based on. And ignorance makes you vulnerable,” it stated.

Crypto Makes You More Susceptible to Theft

Cyberattacks are a continual problem with cryptocurrency. “Hackers stole $400 million of crypto in the first three months of 2023,” according to the article. “And what’s really crazy is that security experts celebrated that number because it’s 70% less than what was stolen in the first three months of 2022.”

Bottom Line

Instead of taking a chance on crypto, the Ramsey Solutions article suggested putting 15% of your income in growth stock mutual funds, but only if you’re out of debt and have a three- to six-month emergency fund.

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This article originally appeared on GOBankingRates.com: Dave Ramsey: Is Crypto Putting Your Money at Risk?