Cryptocurrencies seem to be having difficulty fitting inside the traditional idea of investments.
Even the government seems to be having difficulty. As you know, gains are taxed as capital gains, much like gains on commodity contracts. Direct ownership of coins is not permitted in TFSAs, RRSPs or similar plans.
Nonetheless, you can invest in crypto through ETFs if they are traded on a recognized stock exchange. Some you can find easily. There is an extensive list here. I don’t think the list, despite having 56 funds shown, is complete, and I have no idea how to evaluate them as an investment. Traditional investment fund ideas like alpha, beta, and sigma are unlikely to apply. You must remember these assets have no reality. There is no business spinning out so many widgets a day. They are an asset only so long as people think they are an asset.
Crypto is, in some ways, like gold and silver. It offers a way to diversify beyond stocks and debt instruments. Diversity is a value, and it relies on the fact that not all assets behave the same way at any one time. That idea is sometimes untrue for conventional investments. There is a truism that claims that all stocks and all bonds are correlated in times of chaos. Precious metals and crypto may avoid that correlation.
Things are not yet chaotic, but you can see the outline.
Do some research. Decide if crypto has a place in your portfolio. A small place, probably. Crypto is immensely volatile and is not an investment in the traditional sense. You will be forced to think differently. You will be required to know yourself and your investment tendencies. Pay less attention to the hype and more to the idea of functionality.
I don’t yet know enough of the underpinnings to be a helpful guide. Some can help. Seek them out and listen to their advice. Then make your own decision.
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I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning. I have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Business Development Bank.
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