Scott Pape: Bitcoin-fever fuels flock to digital goldmine
IT’S very hard to resist the lure of getting rich quick, right? Listen to your gut, not your mate who’s dripping with Bitcoin-fever, says the Barefoot Investor.
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IT’S very hard to resist the lure of getting rich quick, right? Listen to your gut, not your mate who’s dripping with Bitcoin-fever, says the Barefoot Investor.
TED ASKS: I have a friend who states that he invested $50,000 in Bitcoin many months ago and now owns an investment of $1.5 million.
So I have done a lot of reading about Bitcoin, as well as listening to its promoters online.
The problem is that there is a lot of pressure to invest, by subscribing to their newsletters and, ultimately, paying a high price for their “professional” guidance. Does it live up to the hype?
BAREFOOT REPLIES: It’s very hard to resist the lure of getting rich quick, right? But you need to listen to your gut, not your mate.
I wouldn’t subscribe to an investment newsletter that claims to provide “professional” guidance on Bitcoin.
Reason being, there is no way to value Bitcoin (or any other “cryptocurrency”). The price is surging right now because, well, everyone wants to be your mate.
And the newsletter writers are picking up on it, to sell subscriptions. (And let me guess: even though they’re dripping with Bitcoin-fever, when you get to their payment page you’ll find they only accept old-school analog dollars.)
So don’t buy some cheesy newsletter.
Instead, I’d encourage you to get a copy of Extraordinary Popular Delusions and the Madness of Crowds, by Charles Mackay. It was first published way back in 1841, so admittedly it’s a little light on the analysis of cryptocurrencies.
But the stories McKay tells of investors losing their minds and losing their money are as relevant today as ever. Good luck.
A WORKING SOLUTION
NATALIE ASKS: I’m a 41-year-old single mum stuck on Centrelink benefits. I cannot work for health reasons, but I love (and have always loved) houses!
I am cashflow poor but have a good amount of equity in my home and want to work towards having two or three properties to support myself and provide for my future.
I have found a few cheap, positively geared properties I could buy with the equity, but once their value reaches $250,000 my benefits would be cut. Any advice on how to get out of this cycle?
BAREFOOT REPLIES: I love that you want to get off the welfare cycle … but you’ll be replacing it with a debt cycle.
Now, even though you have equity in your home, and you’re planning on buying cash flow-positive investments, the banks are bound by responsible lending laws to take your income into account.
And if you’re on Centrelink, you don’t have enough income.
My view? If you’re smart enough to hunt down positively geared investments, then you should be able to turn your talents to doing paid work in some capacity. And working is the only sure-fire way to escape the welfare cycle. You’ve got this!
Read more:
How to save for a baby without going broke
Barefoot Investor weighs in on booming Bitcoin
FACING MALCOLM — LIVE
IT doesn’t matter how old you are … when something major happens in your life, you want to ring up your parents and tell them your big news. It happened to me this week:
Barefoot: “Hey, Dad! Malcolm Turnbull’s office just emailed and asked if I’d like to do a Facebook Live with him!” Dad: “Ripper!” Wait for it … Dad: “So … that means that you’ll both be on the Facebook … er … live?” I’ve got to hand it to him — that was a decent stab in the dark for a man who owns a flip phone with five contacts programmed into it. (And at least he didn’t come back with “Oh, Malcolm Turnbull ... you mean the mechanic from Manangatang?”)
Truth be told, I’m flattered by the invitation. Emails from the Prime Minister (well, his minions) don’t come every day. What it says to me is that, after more than a decade of doing this, people are starting to take notice. Who would have thought that old-school values — like spending less than you earn, avoiding debt, investing for the long term, taking responsibility for your money, and looking after your family — would be so sexy? (Particularly in Canberra … have you seen their credit card debt?)
The Barefoot community has been described in the media as “Australia’s biggest finance cult”. Yet really it’s a movement of everyday working people who are taking control of their finances. It’s fitting, then, that you now get the chance to ask the top boss how he’s managing the country’s cash. So if you’ve got a question for the Prime Minister, head over to my Barefoot Investor Facebook page and let me know. Yes, I want you to hit Malcolm with your money shot. I’ll pick out the best ones and ask the PM on the Facebook … er … live.
Tread Your Own Path!
FATHER’S DAY
NEXT weekend is Father’s Day, so I’m devoting the whole column to dads. So, if you’re a dad (or you have one) head over to my website and shoot me a question. Those who get answered will receive a signed copy of my recently updated 2017 edition of The Barefoot Investor. And if you haven’t bought your old man a Father’s Day gift yet, the book would make a cracker of a present. Think of it as a way of thanking the man who’s made a lot of financial sacrifices for you.
Read more:
Wife is right to be wary on spouse starting his own business
Barefoot Investor talks to AFL coach Brad Scott about player finances
Getting a mortgage means being an adult and taking responsibility
The Barefoot Investor holds an Australian Financial Services Licence (302081). This is general advice only. It should not replace individual, independent, personal financial advice
Originally published as Scott Pape: Bitcoin-fever fuels flock to digital goldmine
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