The recent massive plunge and wild fluctuations in prices in the cryptocurrency market are a timely reminder that such investments are unsuitable for conservative investors.
While savvy traders are mentally and tactically prepared to take profits or cut losses in line with changing market conditions, conservative investors with long-term objectives of holding assets in their portfolios are less inclined to do so.
The Monetary Authority of Singapore (MAS) has put in place guidelines in the crypto sector to protect retail investors. At the same time, MAS has alerted potential investors to be aware of the risks in such trades that are speculative in nature and not related to any economic fundamentals, unlike equities and bonds.
We should appreciate the efforts made by the relevant authorities to safeguard the financial interests of the public.
Individuals must be responsible for their own actions and exercise care when approached to acquire unfamiliar risky financial products marketed by unscrupulous industry players.
Even if we are unable to resist the temptation to invest in certain financial assets, it is advisable not to commit one's entire savings into a single product. Be prudent and maintain a diversified portfolio of assets.
Lim Kheng Yee