Kavan Choksi – Stock Versus Cryptocurrency Investments- What Should You Consider?

Cryptocurrencies have risen in popularity in the past few years, and investors are re-evaluating how stocks in the market will play a role in their investment portfolios. Some of them are even thinking of jumping into cryptocurrency investments. However, financial experts caution investors not to get into any investments without gathering adequate financial education about them. 

Kavan Choksi– Factors to consider before getting into investments

Business and finance expert Kavan Choksi states there are significant distinctions between cryptocurrencies and stocks. According to him, the most crucial difference is that stocks refer to an ownership in the company’s business that is backed by its cash flow and assets. Cryptocurrencies, on the other hand, are different as before you buy them, you must know what they mean and how they work when compared to traditional investments. 

The investment’s time horizon 

When you evaluate the feasibility of an investment in your portfolio, you should consider its time horizon. According to him, the shorter the time horizon is, the more stable your investment is, and if the investment is volatile, the assets are not suitable for those having a restricted time frame. 

Stocks and their volatility 

Stocks are highly volatile. However, they are less volatile than cryptocurrencies. As an investor, you should note that individual stocks are more volatile than a portfolio of stocks. They are perfect for investors who can leave their money alone for some time. The general rule here is that the longer you wait, the majority of your portfolio should be equities. 

Be cautious with cryptocurrencies

From the above, it is evident that cryptocurrencies are very volatile. However, financial experts emphasize that their volatility is much lesser or nothing compared to the levels of volatility that cryptocurrency holds. It is due to this reason that cryptocurrencies are not suitable for investors that want to invest in the short-term. It is perfect for investors who wish to leave their assets in a holding pattern to wait for them to recover.

What about the administration of your portfolio?

When it comes to the administration of your portfolio between stocks and cryptocurrencies, you need to ascertain what your time horizon is along with your tolerance for risks before you decide whether you want to go ahead with stocks or cryptocurrencies. 

According to Kavan Choksi, cryptocurrency has its share of inherent risks, so it will only work well if you limit it to a small ratio of your investment portfolio. For instance, you should allocate a percentage of 5% or less to cryptocurrencies in your overall investment portfolio to stay safe against its high volatility. Stocks, on the other hand, have a solid and long-term track record, so he recommends you to invest in a diversified stock portfolio. This act of investment works really well if you have a time horizon of several decades before you retire in the future. 

Last but not least, if you are a beginner at investments, ensure you consult a skilled and experienced financial advisor to help you with understanding stocks and cryptocurrencies. Being aware will help you make informed choices!