Bitcoin made headlines throughout 2020 as its value rose by 288% and hit an all-time high of $64,000 in 2021. Those are big numbers — and you're not alone if they've piqued your interest in the cryptocurrency.
Many experts think their clients would be wise to sit this trend out.
When people bring up Bitcoin to me, I think a lot of times what they really want is to get started in investing and they are wondering what they should invest in," said financial planner Sophia Bera. In response to curious clients, she shares her motto: "Simple first, sexy later.
If you've been thinking about buying bitcoin through your stock-trading app or brokerage, here are a few things to consider before spending your hard-earned cash on what could be a flash in the pan.
1. Fund your financial goals first
2. Build a diversified portfolio
3. Limit your bitcoin investment to 5% of your portfolio
4. Understand the risk
Although bitcoin's value reached an all-time high in the second week of January, it's important to understand its highly speculative and volatile nature.