Don’t See This Crypto as a Risk? ‘You’re Dumb,’ According to Dave Ramsey
Personal finance expert Dave Ramsey says a sole investment in bitcoin without seeing the risk is a dumb idea. He might not be entirely off the mark, either.
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Bitcoin is fundamentally volatile, but less so than many large and popular stocks such as Netflix (NFLX). Bitcoins’ realized volatility over a 90-day timeframe averaged 46%, while Netflix averaged 54%.
However, while investors this year have been moving from gold to bitcoin, gold remains the better performer year-to-date — up 23.8%, according to Bloomberg — outperforming bitcoin and hitting a new all-time high earlier this year.
Make Sure You Have Money To Burn
From 2020 to 2024, bitcoin has been three to nearly four times as volatile as various equity indices, which is especially notable as “equity indices are typically considered the riskiest part of modern traditional portfolios due to their historical volatility”, according to Fidelity.
Ramsey said he comes across young people who say they’ve invested everything they have in bitcoin and they don’t have anything else. He equates it to the same deal as gambling in Vegas.
“If you chart bitcoin and you don’t see risk, you’re dumb,” he said on a recent podcast. “It’s all over the freakin’ world and that tells you it’s a highly volatile, short-term play and you’re trying to ride this thing out.”
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Ramsey added it’s got the “cool factor” because it’s related to technology and people want in on it because it’s a fad.
He advised, however, that you just need to be comfortable with the amount of money you put into bitcoin and its potential loss, saying, “Just be able to burn the amount of money you put in there, in the middle of the kitchen table, and not miss it.”
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This article originally appeared on GOBankingRates.com: Don’t See This Crypto as a Risk? ‘You’re Dumb,’ According to Dave Ramsey
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