Research shows that more than a quarter of young adults between the ages of 18 and 30 are investing in cryptocurrency, and not all of them with money they can actually afford to lose. In an article by Dutch newspaper De Telegraaf, Mary Pieterse-Bloem, Professor of Financial Markets at Erasmus School of Economics, expresses her concerns about this new development.
Some 77% of young adult investors say you should only invest with money you can afford to lose. However, not all of them seem to follow this principle. Pieterse-Bloem even knows stories of students who put part of their student loan in crypto. ‘That really goes against all the rules of thumb of sensible investing’, she says.
Nevertheless, she is very happy that so many young people are interested in investing. ‘It is a very good way to build up wealth. Also with small amounts. The return on investment is very powerful. However, you must have sufficient savings in reserve. With investments you put money away for the long term, so you should only do that with money you can afford to lose.’
Pieterse-Bloem is concerned about the large number of young people who are involved in crypto. ‘It is very difficult to link an underlying fundamental value to crypto. It is in fact only change for transactions that take place on the blockchain. Crypto advocates say: it's the money of the future, but only time will tell.’ She points out that crypto now only has speculative value. ‘There is also a chance that governments and central banks will draw a line under it, partly because the transactions are not transparent and are used for money laundering activities.’
According to Pieterse-Bloem, the safest way of investing is to own shares and bonds in different sectors. ‘And you certainly shouldn't open your investment app every time and fly in and out of markets. The rule with investing is actually: the more boring, the better.’