Crypto investments can still bring losses

A COUPLE of years ago, I was asked to look into Bitcoin and cryptocurrency for a radio interview.

I did a bit of research then bought some – just to see how easy it was and what was involved. I invested £50 and it was a straightforward process.

Today, my £50 is worth £268, a return of more than 500 per cent in a couple of years. So if I had been braver and invested £1000, I would now have more than £5000. And if I had a spare £100,000 to invest, I would have more than £500,000.

Some people have made millions over the last few years investing in an asset they don’t really understand and isn’t in fact in use in many places, although that may be starting to change with recent announcements from some retailers and payment channels suggesting they are set to accept the digital currency as a payment method.

The point of writing this is not to get involved in an explanation of what it is and what it can do, rather it’s to sound a warning to those who are investing, or about to invest, in it.

I’ve read a few horror stories about investors, mainly under 40, who are borrowing heavily to invest in cryptocurrency, spurred on by the thought of making a return of many times their initial investment.

While there are people who have made that sort of money, there are just as many who have suffered heavy losses.

That’s OK if you are using your own money to invest but if you are borrowing money, investing in cryptocurrency is a dangerous game.

The currency is still very volatile and money can be lost very quickly.

You should only ever invest money you can afford to lose – hence my starting investment of £50 – and you should never borrow money to invest.

Be very careful as well if you use your credit card since some will see this sort of transaction as a cash advance and charge a higher rate on interest.