Elon Musk says he plans to hold long-term bitcoin on B-Word panel

Despite his recent criticisms of bitcoin mining and its environmental impact, billionaire Elon Musk has confirmed that he personally owns the cryptocurrency and holds it for the long term.

Although he did not specify the exact amounts, Musk shared that bitcoin is his biggest cryptocurrency stake, above ethereum and dogecoin, at the “The B-Word” conference on Wednesday. “.

The CEO of Tesla and SpaceX also said he has no plans to sell his bitcoins anytime soon.

“If the price of bitcoin goes down, I lose money. I could pump, but I don’t empty. I certainly don’t believe in raising the price and selling or anything like that,” he said. Musk said. “I would like to see bitcoin succeed.”

Although experts warn that cryptocurrency is a risky and speculative investment, if you own or will buy bitcoin, other experts agree that Musk’s long-term holding strategy may be best practice.

Before deciding to invest in bitcoin or any other cryptocurrency, you must first educate yourself and understand the risks involved.

“For someone new, it’s important that they always understand that this is a very volatile asset class,” Anjali Jariwala, chartered financial planner, chartered accountant told CNBC Make It and founder of Fit Advisors. “You have to be comfortable with the swings and you also have to be comfortable with wasting your money.”

The crypto space is still largely unregulated and not quite mainstream, so when investing, “you need to make sure that this is money that you can really afford to lose,” she says.

Then, if you ultimately decide to invest in bitcoin, experts recommend sticking with a long-term strategy rather than trying to trade short-term.

“It’s definitely the best strategy if you want to own bitcoin,” Amy Arnott, portfolio strategist at Morningstar, told CNBC Make It. “The problem with trying to trade on the basis of daily or weekly price movements is that it’s so volatile that you could easily get cheated.” It recommends providing for a detention of at least 10 years.

Transaction costs for cryptocurrency can be relatively high, so buying and holding can also be beneficial in this regard, says Arnott.

Jariwala agrees. “In order to remove some of the stress and anxiety associated with huge price swings, a better approach is to see [bitcoin] like something that you’re going to hold onto for a while, ”she says.

While it can be tempting to trade alongside the social media buzz, experts warn against it. “You want to have an approach that you can stick with consistently and an approach where you don’t have to constantly monitor the market or watch your Coinbase account when making your investment decisions,” Jariwala explains.

It’s also important to diversify beyond cryptocurrency and limit it to a relatively small portion of your portfolio.

When his clients express their interest in investing in cryptocurrency, Jariwala first assesses how much “extra money” they have. “My rule of thumb is no more than 3% of your overall allocation in this asset class,” she says.

“I would be less concerned about diversification in this [crypto] wallet, because for me the crypto account is basically their game account, ”Jariwala explains. “We have allocated part of their portfolio that even if this account goes to zero, it will not impact the other financial goals they set. because we are saving and investing appropriately for those buckets elsewhere. “

Like Jariwala, Arnott also recommends keeping bitcoin at a relatively low percentage of your wallet. “It’s such a volatile asset that even if you add a very small percentage to your portfolio, it can dramatically increase your portfolio’s risk profile and potential losses,” she says.

Once you’ve determined how much you would be comfortable allocating to bitcoin, don’t feel rushed to spend it all at once. Start by buying little by little.

That way, “if there is a big drop that happens, you will have funds available that you can still put into it,” Jariwala explains.

“As with any other investment, you can’t see what the real value or performance is until you have time for that investment,” she continues. “If it’s something that you’ve held for five or 10 years, you’re really going to see what the impact is and what its consistent performance is.”

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