It is no surprise that many millennials have embraced cryptocurrency. With over half of this demographic wanting to invest in crypto assets, it's clear there’s an interest among those who use technology heavily and understand its potential.
A Bankrate survey revealed how many people feel about investing in crypto assets. 49 percent are comfortable investing in crypto coins, while only 37% from Gen X and 22%, respectively, say they can invest safely
Indeed, millennials (ages 25-40) are the most comfortable with the cryptocurrency of any age group. Only 15% of Generation X (ages 41-56) and 4% of baby boomers are "very comfortable" investing in digital currencies (ages 57-75).
The millennials are starting to think like investors. They want a safe investment that will be worth it in the long run, and cryptocurrency might fit those needs best because they can buy low when prices drop too far or sell high before things go up even higher.
In comparison, only 9% of Generation X and 5% of baby boomers believe cryptocurrency is the best investment over the next decade or more.
The survey findings come at a time when interest in Bitcoin and other cryptocurrencies is increasing. To much fanfare, the first Bitcoin-linked ETF began trading in mid-October, allowing investors to bet on the price of the cryptocurrency via a stock exchange.
Popularity and Volatility
Cryptocurrencies are becoming more popular with each passing day. This has led to an incredibly intense level of volatility that can be dangerous for those who don't know how to handle it or process their own emotions when prices change drastically in either direction. The danger makes these coins alluring - they're risky but lucrative if you get out before they snap your fingers.
If you're thinking about adding cryptocurrencies to your portfolio, keep in mind that they're high risk, and size them accordingly, says Tony Molina, CPA and product evangelist at Wealthfront. "This means that to limit your risk, you should only invest a small portion of your total portfolio in cryptocurrencies."
However, aside from the risks of cryptocurrency, McBride believes that you often have much higher priorities for money than gambling in a high-risk market. He lists having "an adequate emergency fund, contributing to tax-advantaged retirement accounts such as a 401(k) and Roth IRA, and paying off high-cost credit card debt" as priorities.
Additionally, millennials interested in cryptocurrency should ensure that their student loans are paid off before entering the cryptocurrency market. Paying off your debt and eliminating the interest expense is the most certain return you'll ever get, and it also gives you more financial freedom.