Dear DTA,
Just wondering about which cryptocurrency you recommend? I’m thinking about jumping in on Bitcoin or Ethereum while they’re cheap.
-Maurice A.
Hi, Maurice.
Thanks for writing in to us. We love to hear from readers.
You’ve got a great question there.
I think you’ll get a lot of different answers here, depending on who you ask.
None.
That’s right.
I don’t recommend any cryptocurrency.
And I’ll tell you why.
It’s pure speculation.
Now, you can make money by speculating. I’m not saying you can’t.
You can also make money by going to Las Vegas and throwing everything on red.
But I’m an investor.
And I believe in intelligently and pragmatically investing your money.
I think investing is a far more reliable and consistent way to build wealth and passive income over the long run than speculating.
Cryptocurrency relies on the “greater fool” theory.
You have to count on someone else down the line paying more for your cryptocurrency than what you paid.
That’s because there’s no intrinsic value.
No earnings. No cash flow. Certainly no income from any of it.
It’s only something that some people give value to. And you have to count on that continuing.
It’s a tough thing to speculate on because it’s a medium of exchange that has some massive competition.
That competition is the global currency system that already exists.
And much of that currency is already digital.
I’d point you in the direction of investing instead.
Specifically dividend growth investing.
Fellow contributor Dave Van Knapp lays out exactly what this strategy is all about in his Dividend Growth Investing Lessons.
This is a powerful investment strategy that relies on a special combination of wonderful businesses, compounding, and time.
I used that little recipe to go from below broke at age 27 to financially free at 33, as I describe in my Early Retirement Blueprint.
I’m now retired in my 30s.
This lifestyle is possible because of the five-figure passive dividend income I collect from my FIRE Fund.
That’s my real-money stock portfolio, Maurice.
It’s full of the wonderful businesses I just spoke of, many of which can be found on the Dividend Champions, Contenders, and Challengers list.
If you don’t believe me, here’s what Warren Buffett has said about cryptocurrency:
“Cryptocurrencies basically have no value. They don’t produce anything. You can’t do anything with it except sell it to somebody else. But then that person’s got the problem.”
Warren Buffett built a fortune worth many billions of dollars.
He did so by investing.
In fact, he did so by investing in many of the same stocks that I have.
Buffett loves his growing dividends.
It’s easy to understand why.
A dividend is as passive as income gets.
Go to sleep with 1 bitcoin. Wake up to 1 bitcoin.
But a portfolio of high-quality dividend growth stocks means you’re regularly waking up to new money.
If you decide to give dividend growth investing a shot, make sure to follow my Undervalued Dividend Growth Stock of the Week series.
I take the time every Sunday to highlight a high-quality dividend growth stock that appears undervalued at the time of publication.
Every stock undergoes a rigorous analysis and valuation process.
I also include valuations from professional equity analysts.
It’s ultimately up to you, Maurice, to allocate your capital as you see fit.
But I would think very carefully about what you do next.
And ask yourself whether you have more confidence in a group of world-class businesses or a digital currency over the next 10 years.
I think the answer to that question should guide you moving forward.
No matter what you decide to do, I’ll leave you with my best advice of all.
Start today.
I wish you luck and success.
— Jason Fieber
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