Talk soon,
Thanks for reaching out. I’m looking forward to connecting with you to understand your needs and discover how I can serve you best.
Menu
The best Financial Advisors are constantly on the lookout for better ways to help clients grow wealth and produce income. In recent years, cryptocurrency has gained significant attention for its remarkable volatility and growth. In this article, we explore this new, exciting, volatile but still widely misunderstood asset class.
VOLATILITY & GROWTH
Cryptocurrencies, such as Bitcoin and Ethereum, have been making headlines for their rapid growth. In the last 6 years, Bitcoin has grown from under US$1,200 to now over US$30,000. That’s over 2,500% growth. Not to be outdone, in the same period, Ethereum has gone from under US$50 to well over $2,000, a staggering 4,282% increase. To put this into perspective in the same period the S&P 500 has achieved around 177% and ASX200 has only managed 123%. Crypto returns are nothing short of incredible.
Coin | 15 April 2017 | 15 April 2023 | Growth |
Bitcoin | $1,180 | $30,468 | 2581.36% |
Ethereum | $49 | $2,103 | 4282.21% |
S&P500 | $2,338 | $4,137 | 176.96% |
ASX200 | $5,951 | $7,352 | 123.55% |
We see the same story when we compare funds. Over a five-year timeframe, the average stock market hedge fund returned around 150%, whereas the average crypto hedge fund returned around 550%, almost four times better.
Well-informed CFPs can proactively help their clients develop a diversified investment portfolio that includes cryptocurrencies. This will help to reduce risk and maximize potential returns. CFPs can also help their clients monitor their cryptocurrency investments and make adjustments as needed.
REGULATION
As crypto markets are still largely unregulated (more on this next month) and can be far more volatile than stocks, many advisors feel it would be unwise to unload all their clients’ stocks and put all their funds into a crypto hedge fund. However, there is much to be said for the strategy of putting a percentage of a portfolio into a good quality diversified crypto hedge fund to gain extra performance whilst limiting overall portfolio risk.
RISK
Despite the attractive growth rate, many advisors and investors are concerned about the volatility and with good reason. If you had bought Bitcoin in November 2021 at its peak of around US$67,000, you would be none too pleased with its current value of around US$30,000. Despite the volatility, many investors are starting to see the benefits of incorporating cryptocurrency as part of their long-term investment holdings.
CONCLUSION
In conclusion, as a certified financial planner, it is important to stay up-to-date on the latest trends and developments in the world of finance. Cryptocurrency is an exciting new emerging market that has the potential to offer significant benefits to investors and some experts say has the potential to revolutionize the way we invest.
CFPs who are willing to educate themselves about cryptocurrencies can help their clients take advantage of this booming new asset class. By educating yourself and your clients on the potential advantages and risks of cryptocurrency, you can help them make informed decisions about whether or not to add it to their portfolios.
About the Author: Patrick Woodcraft
As a wholesale investment specialist, I help Certified Financial Planners and Qualified Financial Advisors with the information and education they need about investment funds that are poised to perform best for their clients through the volatile economic seasons ahead. Book a free 15 minute discovery call with me to see what value I can bring to your business and establish if we’re a good fit to work together.
HOW CAN I HELP YOU PROSPER THROUGH THE CHAOS
Thanks for reaching out. I’m looking forward to connecting with you to understand your needs and discover how I can serve you best.
*Patrick Woodcraft does not provide financial advice or investment advice. Nothing on this website may be construed as financial advice or investment advice. Read the full disclaimer here.
© Patrick Woodcraft 2023