Should you invest in Digital Assets?
A recent survey has found that 71% of high net worth individuals (HNWI) have invested into digital assets. This is a figure that is expected to grow as Decentralised Finance (DeFi) becomes more refined and is increasingly adopted in the ‘real world’. However, it seems that there are many pitfalls in investing in digital assets and its still a widely unregulated market.
What are Digital Assets?
Traditionally, the assets that might make up an individual’s personal wealth were property, savings accounts, and stocks and shares. However, more people are turning to digital assets to hold and accrue their wealth. Digital assets include cryptocurrency, non-fungible tokens (NFTs), exchange traded funds (EFTs) and metaverse related product.
The era of blockchain and web 3.0 is still in its infancy and whether it offers opportunities for tangible wealth is still largely unknown, however the risks of investing in crypto assets have become apparent in recent years. Since 2021, digital currency markets have been in a slump as they’ve fallen victim to various factors that have dragged down their value. These events include Elon Musk announcing that Tesla will no longer accept Bitcoin as payment, and China’s crackdown on bitcoin mining, both of which sent the digital asset market plummeting to a level it has not yet recovered from.
Investing in Digital Assets
While the crypto market is still unstable, we feel that the risks can outweigh the benefits of investing in digital assets, and advise our clients to stick to traditional, proven investment opportunities.
However, if you are interested in holding digital assets, it’s important to arm yourself with as much information as you can before you invest. This includes
- Investing and buying from a reputable source. Apps, websites and brokers make it easy to invest in digital currencies and tokens, but it’s vital to only use reputable companies and brokers to make your purchases.
- Do your research. Before you make any financial decisions, it’s important to research the asset you are planning to invest into.
- Seek advice. As always, the best thing to do when making important financial decisions is to get advice from professionals. Ask your wealth manager to review any potential digital investment opportunities before you go ahead.
For professional wealth management advice The Bateman Group are here to help. Call our experts on 01926 405 883 for advice on managing your digital assets.