I strongly discouraged a non-investment minded friend, who was not in regular employment, from putting $1,000 into Ripple in Dec 2017, when she asked my advice.
She countered with:
- it's different to Bitcoin
- it's the future
- I don't have much savings, so I can't rely on average returns (6-7% p.a), I need to make lots of $ quick
I gave her various reasons not to, including by pointing out if you don't have much money saved up, then an average return of 6-7% is so much better than losing 90%...but I could tell my arguments weren't terribly convincing. Although perhaps if I was encouraging it would have convinced her to buy? Who knows.
Anyway, remained pretty committed to the idea, but she decided not to buy any.
Fast forward to around September 2018, after the dust had settled, and she got back into regular employment and the cryptocurrency bubble had subsided, I updated her on how her $1,000 would have performed. It would have become $140 at the time. She was relieved.
I'd like to comfort myself that speculative bubbles in any investment class are fine so long as you are a seasoned investor and allocate at percentage of your portfolio you'd be happy to risk....however, it's pretty clear that these bubbles gain their traction and momentum from sucking in lots of money from people who are unlikely to understand all the risks of these kinds of investments.
I do feel for the people who have lost out from their holdings. Greed is a motivation for investing, but so too is anxieties from the fear of being left behind/missing out. And if they were motivated to strike it big to make up for years of not saving/investing etc, this just puts them into a bigger hole.