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Cryptocurrency versus Regulated Funds

By Jozef Spiteri - Topics: Cryptocurrency, Investment Bonds, investment diversification, Malta
This article is published on: 10th January 2022

Patience is a virtue, but in today’s world this is sometimes forgotten as people try to do as much as possible as quickly as possible. This approach is often also applied to investing – trying to get rich quick – but this can result in flawed investments which may result in losing money. An asset class which has been used this way over the past year is cryptocurrency, with its rollercoaster ride making and breaking fortunes.

Still a relatively young asset class, cryptocurrency first gained traction with the Bitcoin boom in 2017 and were again very much in the news in 2021. The value of Bitcoin shot up making those who had held the coin for years very rich. As often happens, the opportunity attracted much attention, leading to the increase in popularity of alternative coins such as Ethereum and Litecoin, and the creation of numerous others.

But what is cryptocurrency? Cryptocurrencies are digital currencies which permit automated transaction recording and record maintenance by a decentralised system, using cryptography, as opposed to using a centralised, regulated authority to keep the accounts. They are based on blockchain technology, which is an important innovation in itself with potential uses in a multitude of applications across all industries. But a key point to remember before you buy cryptocurrencies is that they are currently unregulated by any authority, which means that their value can be manipulated and safety cannot be guaranteed. This is the main reason why most financial advisers rarely recommend this asset class to their clients.

cryptocurrency

So, what do financial advisers prefer to recommend to clients? International financial advisory firms, such as Spectrum, have access to a wide variety of providers offering regulated funds to create a fully diversified portfolio across a range of asset classes. One such example is Prudential International’s PruFund range of funds, one of the largest and most secure investment portfolios available to expatriates globally – (watch the video explanation here)

An advantage of this well diversified investment is what is termed as its ‘smoothing’ effect. Simply, this means that by being invested in such funds you will not experience the full extent of stock-market highs and lows. The smoothing feature protects investors from the extremes of market volatility, providing investment growth that is smoother and steadier.

The most important requirement for investment success is patience. An investment portfolio should therefore be created with a long-term outlook, prioritising assets that are regulated and in line with your risk profile.
Please contact us to learn more about investing patiently and successfully.

Article by Jozef Spiteri

If you are based in Malta you can contact Jozef at: jozef.spiteri@spectrum-ifa.com for more information. If you are based in another area within Europe, please complete the form below and we will put a local adviser in touch with you.

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