Why Jim Cramer Invests in Crypto – Reuters News in France and abroad

Jim Cramer, host of CNBC’s “Mad Money” and Investing Club, is a “believer” in cryptocurrencies, but only as a speculative investment that represents a small portion of your portfolio — less than 5%.

“I can’t tell you not to own crypto; I own Ethereum,” Cramer told CNBC Make It.

Cramer first bought it in order to bid on an NFT, or non-fungible token, at a charity event. “They wouldn’t let me make any dollars,” he said. “I was supposed to buy it in Ethereum, so I researched it, and it has some qualities that I like. »

Cramer argues that the long-term value of crypto “is its speed” as a decentralized, peer-to-peer currency that could gain widespread adoption over time. He recommends bitcoin and ethereum, which have the most followers and “look the most legit.”

Owning crypto can also be a good short-term bet that takes advantage of the momentum of its price swings, especially since there are plenty of eager investors in the space who are willing to “buy high,” he said.

However, there is a catch: “You have to admit it’s speculative” and be aware that your bet might not pay out. As with any investment, past performance does not guarantee future returns.

The recent downturn in the crypto market underscores this risk, as there is no way of knowing how much crypto might lose in value. This is why experts generally advise investors to only put in as much money as they are comfortable losing.

Because of these risks, Cramer says you should never borrow money to own crypto: “Borrow for your house, borrow for your car, but don’t borrow for crypto. »

Crypto should also be treated differently from safer long-term investments like blue chip stocks. “Don’t put it in the Procter & Gamble class. It’s not Coca-Cola, it’s not Apple,” he says.

Cramer recommends allocating no more than 5% of your investments to crypto, as well as up to 5% to gold, another speculative investment.

Despite the inherent risks of owning crypto, Cramer says he would never discourage anyone from investing because of “all the fortunes that have been made there.” He also thinks it’s possible for a whole new group of people to make their fortune there.

“I wish it was you,” he said.

To learn more about investing, you can join the CNBC Investing Club with Jim Cramer at a reduced rate.

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Why Jim Cramer Invests in Crypto – Reuters News in France and abroad

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