Take a look at bitcoin’s price chart, and
it’s easy to see the appeal for investors. The largest and most widely traded
cryptocurrency is up 118% over the past 12 months, and returns have been
astronomical since the coin’s creation in 2009.
Nevertheless, much of the old guard of investing
and personal finance want nothing to do with it.
Earlier this year, financial podcaster Dave
Ramsey compared buying to investing in the Iraqi dinar, which he
views as an unstable currency that doesn’t enjoy the robust government backing
of the U.S. dollar. Due to its volatility, “I wouldn’t wish bitcoin investments
on someone I really dislike,” he said.
Berkshire Hathaway Chair Warren Buffett is out,
too. Since bitcoin doesn’t produce earnings or throw off cash, Buffett once
said he wouldn’t pay $25 for the entire world supply.
But don’t count Suze
Orman among the crypto naysayers. The financial expert and host of “Women
& Money (and Everyone Smart Enough to Listen)” counts bitcoin as part
of her portfolio and thinks you’d be wise to hold some as well.
“Everybody should absolutely have exposure to
bitcoin,” she tells CNBC Make It. “But in case I’m wrong — and I’ve been wrong
— you gotta be OK with losing that money. So put as much money in there as
you’re OK losing.”
Orman’s case for holding bitcoin
Crypto enthusiasts cite a variety of reasons to
hold bitcoin and other popular cryptocurrencies. Some say bitcoin can
operate as a store of value akin to a precious metal, since, similar to
gold, there is a finite amount of it available. Others say bitcoin could serve
as a long-term hedge for inflation. Others see appeal in bitcoin’s
function as a currency and hold it in case the dollar or other currencies
collapse.
But Orman isn’t interested in any of that.
“As younger people make more money and mature,
[bitcoin] will be one of their investments of choice, and that will cause it to
go up,” she says. “I don’t think it will ever be a currency or a store of
value. But because the younger generation has a fascination with it — and you
see the energy — a whole lot of people having interest in it, eventually it
could very well catch fire.”
Some 70% of cryptocurrency ownership belongs to
millennial — those born between 1981 and 1996 — and Gen Z — those born between
1997 and 2012 — investors, despite those two generations making up 41% of the
population, according to Morning Consult.
Essentially, Orman’s case is that crypto is a
speculative asset, one that moves not based on fundamentals but on investor
demand, that will continue to attract more speculators. If you’re willing to
stomach some volatility, she says, you stand to boost the value of your
portfolio over the long term.
“This is an investment that you’re either going to
lose it all, or you’re going to let it run until it’s worth $100,000 or
$200,000,” she says.
Keep the risks in mind
Still, Orman says, you can’t invest without
keeping in mind that your stake could go to zero. That’s why she suggests two
guardrails.
One is only investing what you can afford to
completely lose. For many Americans who will rely on their investments to fund
their income in retirement, that’s not much. Many experts suggest devoting no
more than 5% of your investable funds to high-risk assets.
Orman also favors buying crypto through a bitcoin
spot exchange-traded fund rather than owning it in a digital wallet or
through a crypto brokerage.
“I feel better owning an ETF because I would never
want to see an FTX happen again. And don’t tell me it can’t happen again,” she
says, referring to the collapse of the once-prominent crypto exchange.
As for holding bitcoin directly: “I still will
never understand how the wallets work and how if you lose your passcode, you
never get it again,” Orman says.
Moreover, Orman likes the ease of seeing her
investment in a portfolio alongside her stocks, ETFs and mutual funds, rather
than holding crypto in a separate account. “I can just relate to that. I can
understand it,” she says.
Take a look at bitcoin’s price chart, and
it’s easy to see the appeal for investors. The largest and most widely traded
cryptocurrency is up 118% over the past 12 months, and returns have been
astronomical since the coin’s creation in 2009.
Nevertheless, much of the old guard of investing
and personal finance want nothing to do with it.
Earlier this year, financial podcaster Dave
Ramsey compared buying to investing in the Iraqi dinar, which he
views as an unstable currency that doesn’t enjoy the robust government backing
of the U.S. dollar. Due to its volatility, “I wouldn’t wish bitcoin investments
on someone I really dislike,” he said.
Berkshire Hathaway Chair Warren Buffett is out,
too. Since bitcoin doesn’t produce earnings or throw off cash, Buffett once
said he wouldn’t pay $25 for the entire world supply.
But don’t count Suze
Orman among the crypto naysayers. The financial expert and host of “Women
& Money (and Everyone Smart Enough to Listen)” counts bitcoin as part
of her portfolio and thinks you’d be wise to hold some as well.
“Everybody should absolutely have exposure to
bitcoin,” she tells CNBC Make It. “But in case I’m wrong — and I’ve been wrong
— you gotta be OK with losing that money. So put as much money in there as
you’re OK losing.”
Orman’s case for holding bitcoin
Crypto enthusiasts cite a variety of reasons to
hold bitcoin and other popular cryptocurrencies. Some say bitcoin can
operate as a store of value akin to a precious metal, since, similar to
gold, there is a finite amount of it available. Others say bitcoin could serve
as a long-term hedge for inflation. Others see appeal in bitcoin’s
function as a currency and hold it in case the dollar or other currencies
collapse.
But Orman isn’t interested in any of that.
“As younger people make more money and mature,
[bitcoin] will be one of their investments of choice, and that will cause it to
go up,” she says. “I don’t think it will ever be a currency or a store of
value. But because the younger generation has a fascination with it — and you
see the energy — a whole lot of people having interest in it, eventually it
could very well catch fire.”
Some 70% of cryptocurrency ownership belongs to
millennial — those born between 1981 and 1996 — and Gen Z — those born between
1997 and 2012 — investors, despite those two generations making up 41% of the
population, according to Morning Consult.
Essentially, Orman’s case is that crypto is a
speculative asset, one that moves not based on fundamentals but on investor
demand, that will continue to attract more speculators. If you’re willing to
stomach some volatility, she says, you stand to boost the value of your
portfolio over the long term.
“This is an investment that you’re either going to
lose it all, or you’re going to let it run until it’s worth $100,000 or
$200,000,” she says.
Keep the risks in mind
Still, Orman says, you can’t invest without
keeping in mind that your stake could go to zero. That’s why she suggests two
guardrails.
One is only investing what you can afford to
completely lose. For many Americans who will rely on their investments to fund
their income in retirement, that’s not much. Many experts suggest devoting no
more than 5% of your investable funds to high-risk assets.
Orman also favors buying crypto through a bitcoin
spot exchange-traded fund rather than owning it in a digital wallet or
through a crypto brokerage.
“I feel better owning an ETF because I would never
want to see an FTX happen again. And don’t tell me it can’t happen again,” she
says, referring to the collapse of the once-prominent crypto exchange.
As for holding bitcoin directly: “I still will
never understand how the wallets work and how if you lose your passcode, you
never get it again,” Orman says.
Moreover, Orman likes the ease of seeing her
investment in a portfolio alongside her stocks, ETFs and mutual funds, rather
than holding crypto in a separate account. “I can just relate to that. I can
understand it,” she says.
