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Cryptocurrency - a key part of a diversified portfolio

While many financial advisers remain wary of cryptocurrencies an expert is urging the industry to get on board with the evolving investment opportunities they can create.

Thursday, August 12th 2021, 6:01AM 3 Comments

by Matthew Martin

Janine Grainger.

According to Easy Crypto founder Janine Grainger, any modern diversified investment portfolio should have at least 1% invested in cryptocurrency saying it should be treated like any other investment - but admits it is still a high-risk high-return investment.

Grainger, a former strategy manager for Westpac NZ, Air New Zealand and PwC NZ, and her brother Alan set up Easy Crypto in 2017 and now have more than 100,000 customers.

She spoke about its investment opportunities as part of Financial Advice New Zealand's (Financial Advice NZ) series of 'Bring in the Experts' webinars yesterday giving financial advisers important insights on cryptocurrency.

She says a recent Financial Services Council survey found 1 in 5 Kiwis have considered investing in crypto and 1 in 10 already have. 

"As a financial adviser, being in the know and keeping your finger on the pulse is a must when it comes to this hot topic," says Financial Advice NZ chief executive Katrina Shanks.

"This is an asset class which your clients are hearing about through mainstream media, providers and family and friends. From the construction worker to the wealthy entrepreneur, crypto is available to anyone.

"As a financial adviser, it is important you understand this changing environment to ensure you are the source of knowledge.

"It's fascinating, there are so many different parts to it but it seems isn't going anywhere so we need to keep talking about this and get educated," Shanks says.

Grainger says crypto is a lot safer than people think and is gaining traction around the world with Bitcoin now the 9th most valuable asset in the world, worth around $869 billion.

Gold remains top of the list at $11 trillion but Grainger says crypto is predicted to topple gold as the most valuable asset class in years to come.

"It's fully trustworthy," she says.

"You can't do a fraudulent transaction on the blockchain, they can't be changed or interfered with...we are yet to understand its full value.

"Crypto can be seen as very similar to gold as a store of wealth but even better because it's easily stored, transportable and transparent - you know how much there is on the market."

She says transactions are faster with almost no fees and anyone can use them as they are "open, accessible and democratic".

"Regulation is getting better, but it is not there yet and people do run away with the money - but that doesn't happen very often, so like anything in finance, you need to do your research."

A question about how crypto can be used in everyday life - to buy a pair of shoes or a car or converted into cash - came from a participant.

Grainger responded by saying it was quite easy and is commonly done by getting a crypto credit card that can be used like Visa or Mastercard in the real world.

People also realise their funds by converting their cryptocurrencies into cash via bank deposits and in New Zealand, any capital gains are taxed.

"We can sell it and have the money in your bank account the same day - but would you use your shares in ANZ to pay for some milk at the dairy?"

Grainger says more people are turning to crypto as an investment as traditional wealth products are limited to those that already have money.

"Yes, they are highly volatile, but give high returns so a small amount in a portfolio can be a good thing."

She says regulation of crypto is getting better, storage options are safer and crypto is becoming less volatile as more and more investors take it on.

"It's definitely not a term deposit.

"Get educated, only use trusted players - like you would in any traditional investment. Make sure they are regulated and audited and remember the golden rule - if it seems too good to be true, then it probably is."

Tags: cryptocurrency Easy Crypto Financial advice Financial Advice New Zealand Janine Grainger Katrina Shanks portfolio monitoring

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Comments from our readers

On 12 August 2021 at 9:13 am dcwhyte said:
And with US$600m hacked and diverted from Poly Network, NZ investors need to be aware of the extent of the risks involved. BBC reports losses from crime at US$1.9bn in 2020 and US$4.5bn in 2019 - dropped in 2021 to $681m so far. Seek professional advice!!
On 12 August 2021 at 5:52 pm Carey Church said:
David Whyte - exactly what I was going to say.
On 13 August 2021 at 1:51 pm Graeme33 said:
...Go Paul Tudor Jones,NZ Funds and Crossgate Capital !! Janine Beautiful

Graeme GM System Futures Ltd

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