Why You Shouldn't Invest In Cryptocurrency, According To This Analyst

Cryptocurrency investing — with all of its risk and volatility — is not for everyone, and a financial planner recently explained why.

What Happened: In a Monday Business Insider article, financial planner Anthony Carlton explains that crypto is now in a "digital gold rush," and everyone wants in, but not everyone should join the party.

He points out that before pouring capital into anything, it is important to not only consider why investing in it would be a good idea but also why it would not.

This helps to avoid investing based on emotion and making costly mistakes.

Carlton claims that investors who check the value of their portfolio multiple times a day and are afraid of losing 5% to 20% in a few hours should avoid the cryptocurrency market.

He said that this is a mindset more in line with traders than investors, and "only a small percentage of people can do this well."

Instead, a better reason to buy — according to Carlton — is believing that crypto will succeed in the long run, potentially decades from today.

With this mindset, not knowing what will happen in the short term does not happen, and short-term volatility does not matter.

Another kind of investors that Carlton believes should avoid cryptocurrencies are those who buy out of fear of missing out, hoping to get rich quickly.

This kind of investor buys because everyone tells him to, without reviewing his goals, portfolio, and understanding crypto.

Read also: Billionaire Investor Tim Draper Still Believes Bitcoin Will Hit $250,000 By End Of 2022

Lastly, Carlton points out that before investing in anything, an investor should ask themselves if they have more important financial priorities such as setting money aside in their emergency fund, for their home down payment, retirement fund or even going on vacation.

Put it simply, they ask those who consider investing, "Can your money work harder for you somewhere else?"