Many mutual fund investors charmed by cryptocurrencies, trading

[ad_1]

Cryptocurrency and day trading have gained the attention of several mutual fund investors, especially young people, according to financial planners and mutual fund advisers. According to these advisers and planners, many investors are likely to lose their hard-earned money if they bet heavily on these so-called investment options which they believe can make people rich overnight.

It is a frightening scenario. Many investors, young as well as seasoned investors, bet heavily on cryptocurrencies, says Suresh Sadagopan, chief planner at Ladder7 Financial Advisors. Unlike other investment options like mutual funds, there are no underlying cryptocurrency assets. If things go wrong, your money is gone, he says.

Advisors say most of them do not encourage investing in cryptocurrencies because its regulations are unclear. Most investors invest on their own because they think they can get high returns. It is a dangerous investment. A lot of investors will realize this over time, says an adviser who does not want to be quoted.

Most advisers ETMutualFunds.com spoke to said they are apprehensive about these investments because there is no clarity on who will help investors if something goes wrong. It is not clear who is responsible in case an investor has a problem, says Sadagopan. He says he has no problem with cryptocurrencies per se. It’s a great concept. But a currency cannot be just for speculation.

Advisors also say that many investors think they can easily make a lot of money by trading. There are many investors who want very high returns in a day. They believe day trading can do it for them, says the mutual fund advisor. He says that once they see high returns in one or two trades, many investors go too far, and it can be very risky, if you reserve a percentage for such speculative activity it’s always good. Otherwise, investors will lose all their money, says Sadagopan.

Mutual fund advisers and planners say investors, especially those who have invested with a plan, should not engage in such speculation to build wealth.

They think new investors won’t listen until they lose their shirts, but seasoned investors shouldn’t fall for those big one-day super-returns claims. You may have also encountered such instances in your mutual fund investment journey. Stick to your financial plan, says the mutual fund investor. Investing regularly over a long period of time is the only proven way to build wealth.

[ad_2]