Should Doctors Invest in Bitcoin?

Dennis G. Murray, MA

Disclosures

January 23, 2018

In This Article

Blockchain May Be the Real Opportunity

Nevertheless, Altfest and some of her financial industry colleagues are comfortable with investing in bitcoin in certain limited situations.

"If someone has significant wealth—meaning more than they need to retire comfortably—then I don't have a problem with them investing in bitcoin," says Albert J. Zdenek, Jr., CEO and president of Traust Sollus Wealth Management, which has offices in Princeton, New Jersey, and New York City. "But I wouldn't advise pulling any money from my retirement accounts to do this."

Altfest agrees but makes an additional stipulation: "There's no harm in investing in bitcoin if you're truly prepared for a possible loss. The hard part here is setting limits and keeping to them. Often, if you're winning, you want to invest more, and if you're losing, you want to regain what you lost. So sometimes it's hard to maintain boundaries."

Unless you're a patient, experienced investor with some extra money that you're comfortable putting at great risk, it's best to stay away from bitcoin. But that doesn't mean you can't still capitalize, even if it's not right away.

"Blockchain is the real opportunity," says Zdenek, who is an accountant and a financial planner. "I don't know which of the many cryptocurrencies will survive, but blockchain is here to stay. So the ongoing opportunity for investors is to find the start-up businesses that will make use of blockchain. For example, I expect to see new companies that will supply this technology to the financial industry, changing drastically how stock transactions are performed and recorded."

Blockchain Has Potential but Is in Its Early Stages

Matt Kelley agrees. "The underlying technology is fascinating," he says, "and we think it has the potential to impact and change the world in which we all live. It's the first time that humans have found a way to register and own digital assets. That said, we're still in the very early stages of the process, so it will be interesting to see how governments and people adapt."

Zdenek believes that blockchain may one day extend to medicine as well, as a way to store information that insurance companies could use to approve payments.

But that sort of innovation may be years away, say financial advisors. In the meantime, they recommend much safer places to put your money than in cryptocurrencies like bitcoin.

"Cryptocurrencies have a value derived only from the belief that someone will be willing to pay more in the future for something with no tangible value or cash flows," says Kathy Stepp, CPA, CFP, a founder of Stepp & Rothwell, a financial planning and investment advisory firm in the Kansas City area. "It was the same thing we saw during the dot.com bubble."

"The harm here," she explains, "is that doctors could very likely lose all—or nearly all—of their money. That's why I don't recommend speculative ‘investments' purely for sport."

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