Be wary of crypto currency fad, financial expert warns
A leading financial advisor is warning people against getting caught up in the latest craze of investing in crypto currency without fully understanding the risks involved.
Mike Jordan, whose company Jordan Financial Management celebrated 25 years in business last year, said 'buzz ' on social media was driving people to invest in crypto, bypassing the checks and measures provided by seeking professional advice.
A crypto currency is a digital asset designed to work as a medium of exchange which does not exist in physical form, like paper money, and is typically not issued by a central authority.
In recent weeks individuals across the globe have been investing in crypto currencies, spurred on by conversations on social media platforms such a Reddit.
Mike (pictured) said: "People need to understand what they are getting involved in when they invest their money.
"People get sucked in by these types of fads because their experience of investing and investment history - how many times have similar fads led to investors losing money - is limited. Sometimes their only knowledge relates to the tales of the huge gains that people are talking about on certain investments.
"But these online conversations rarely focus on the fact that you can lose money too. Crypto currency is tremendously volatile, often unproven and interest in it short lived. For example, the legal status of crypto currencies varies substantially from country to country.
"You cannot understate the value of gaining professional financial advice when it comes to investment, as opposed to following the crowd on social media. You also have to understand that stocks can go down as well as up, something that 's not always communicated properly in the social media world.
"Our long experience shows that only investing in conventional markets, with a well-constructed and balanced portfolio, can provide financial security for the future. When you see a 'buzz ' like there is at the moment over crypto currency, you do become concerned that people may lose significant amounts of money if they are persuaded to invest in schemes without understanding the full ramifications."
Mike said that the current interest in crypto currency had echoes of the many previous fads that have previously led to investors losing large amounts of money and he suggests that, anyone thinking of purchasing Crypto currency, first read up about two previous examples - the 'Southsea Bubble ' and the 'dotcom boom '.
"These examples are 200 years apart but were in reality very similar, ” added Mike.
"What tends to happen in circumstances like this is that people who invest early and then sell fuel the good news story - but then everybody else who piles in later eventually suffers great losses.
"It is more sensible to obtain professional advice, so that a person actually invests their capital to try to obtain steady long-term returns, rather than gambling it on short-term gains."