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  • Writer's pictureBridget Sullivan Mermel CFP(R) CPA

Should I Invest in Bitcoin? Does cryptocurrency fit into your financial plan?

Updated: Dec 18, 2021

How should you think through buying bitcoin or other cryptocurrencies?

Let’s face it: Bitcoin, Dogecoin, and other cryptocurrency are fascinating. Many people think: should I invest in bitcoin? We talk about how we as financial planners think about cryptocurrency. More importantly, is it time to jump in and buy some?

Cryptocurrency is fascinating and different currencies have some marketing and promotion muscle behind them. So, people want to know how they fit into a portfolio.

We put investing and gambling on a continuum. We have on one side of our continuum is investing in companies which represent groups of individual’s commitment to add value to and make money. On the other end of the spectrum is gambling--betting on a particular outcome. Speculating--buying something and hoping the value goes up—is on the gambling end of this continuum.

Buying cryptocurrency--an attempt to develop a new currency other than the dollar–is in the speculation category at this point.

We talk through a bit of the history of bitcoin. We conclude that cryptocurrency currently is on the speculating side of the spectrum. Specifically if you buy bitcoin, you are speculating that bitcoin will be the cryptocurrency that prevails AND that the entire cryptocurrency industry survives.

That doesn’t mean we’re against buying Cryptocurrency. It’s just important to keep it in perspective. It is not long term investing.

It’s not something to invest in and forget. This is something you’ll want to watch and trade if appropriate. If you want to put 5% of your portfolio in cryptocurrency, have fun with it. If it’s not fun, stop.

There’s nothing wrong with it! We just don’t consider it long term investing. It can be a fun part of your financial plan and help you get engaged with your finances. Good luck!


Bridget: Cryptocurrency! It's the latest thing, and people seem to be making a lot of money on it. Should you go and buy some cryptocurrency? Hi, I’m Bridget Sullivan Mermel, and I'm a fee-only financial planner in Chicago, Illinois.

John: And I'm John Scherer. I'm a fee-only financial planner in Middleton, Wisconsin. It's a great topic for today's episode of Friends Talk Financial Planning. I've had a few ideas, like I've looked at this, of course, and I sort of pay attention, but, Bridget, I know that you've done some more research than I have. In fact, on your TV show, you interviewed a cryptocurrency expert recently, right?

Bridget: Yeah.

John: So, I'm just interested to hear what you talk about with your clients and what you learn from this expert. And if I'm sitting in your office, I say, “Geez, I should be investing in cryptocurrency, shouldn't I?" How do you talk about that with folks?

Bridget: Well, you know, cryptocurrency is an interesting topic to me because it's a newer thing, so it's something new that's come up probably in the last 20, 25 years. So, some people think that it's really recent, but it's really been around. People started developing it, I think, in the late nineties, but it's really coming to play recently. And people wonder about it, and there's very persuasive arguments made for the reason why it might be a good thing.

So, there's some marketing muscle and some people that are very effective salespeople influencing people on why this is a good thing and the next big thing, and why they should get involved. The other thing is that it appeals to people who are intelligent, people who are into computers and people who are futuristic thinking. So, it's a different type of new thing than some of the others that maybe we've seen. So, I think that's what the appeal is for people.

The way that I look at it is jeez, we talk about investing and on one side of the spectrum and gambling on the other side of the spectrum…and gambling and speculating. And when we talk about investing, we're thinking about investing in companies that are trying to make money and maybe hopefully add value to society over time, or we're trying to loan money, maybe the US government or to companies, again, because they're trying to improve things, right?

A cryptocurrency, I would say, is really on the other end of the spectrum, where it's more speculating at this point…whether or not our financial system will change to accommodate the specific cryptocurrency you might be interested in buying.

So, I'm not saying that the technology that's behind cryptocurrency probably is going to be useful and used, but I am not so sure that any particular cryptocurrency is going to be the one that makes it, or if any of the ones that are currently available will actually be used in the future. So, it is on the speculating end of things.

John: Yeah. That's interesting. There's a couple of things I wanted to pick out of what you said. The one I thought this was really interesting that I had not heard of before was that I was on the impression this is new technology, and it's 20 or 25 years old. I'm thinking in my head as you're describing that, so why is this big now? That marketing muscle, right?

And those things that's out there sort of follow the money on that. That's an interesting thought process of why it might seem so appealing now. And then the other thing that as you're talking about that, as you know, I use that gambling versus investing sort of thing. You make money gambling, right? And speculating…I've never really associated it with that. But it's the same thing. But speculating feels different, right? Because there's reasons for doing that.

Bridget: Right

John: It's not like, “Are the dice going to come up with two threes…

Bridget: Right.

John: ...or whatever, right? Well, listen, there's logic to it, and it makes it feel differently, but you're sort of betting on what's going to happen. And one of the things that it reminded me of is even if this cryptocurrency takes over, right? It gets legs. And as I heard you say, anyway…is it going to or not? We don't know.

But so much of what I think about these things, or what I hear people talking about is: “Oh, is this going to be the next thing? I'm betting on it's going to be the next thing." But if you take away from that, whether it is or not, maybe it is going to be. But speculating on which company is it going to be, and how is it going to work? It's sort of like these days, if you think of a big company, Google or Apple or things in eco, golly if I just invested in them 20 years ago?

But when you think about, let's say, Google being in the search engine, it is today. It's easy to forget that back in the 90’s, we also had Ask Jeeves, and we had Netscape as browsers, those things. And you remember those winners. And you go, “Oh, I wonder if fill in the crypto is going to be the next winner?”

And even if the technology really changes the world, this is what it's going to be. That doesn't mean that today we can make smart decisions about it, right? It's an interesting thing. And look at airline industry. It changed the world, right? But geez, you had to pick the right one to make money. Automobiles changed the world, but, you know, there were over 100 automobile manufacturers back in the early part of the last century.

That history feels so appealing, that's where that speculation…I love that analogy on things, but then how to pick that? So, from a practical standpoint, that's some great background. Like, okay, so what do we do? What do I do today? That's great, Bridget. What do I do now? Do I invest in it?

Bridget: If you're really interested, don't think of it as investing. And what I tell clients is don’t put more money into it than you would be willing to lose in Vegas and then sure, give it a try. But don't think of it. I would say it's not investing. It's short-term speculating. And think of it that way…So, if you buy some and it goes up, sell half of it...

John: Yeah.

Bridget: So you can still keep a little bit, but sell it as you're going along. Think of it as a short-term thing that you're interested in now. Don't think, “I'm going to buy this and forget this.” If you want to buy something and forget about it, do I bonds?

John: Right.

Bridget: Don't do a Bitcoin or any other cryptocurrency. So that’s my take. The other thing about the specific type is that governments will…I'm going out a little bit on a ledge here, passed where I probably know, but this is according to experts. I think the government will probably get involved, right? Now it's all individual companies or people that are doing this.

Government's control currency now. Bitcoin is another type of currency, so I think that that is the way that it might go is the government will take over, get the technology or develop the technology themselves. And so the whole thing could go away, but maybe it won't? I don't have a total crystal ball on this, but I would just consider it speculating, which is fine. You can speculate, but it should be fun for you, too.

John: And then you talked about what happens in the future, right? As I understand again, my limited knowledge is that one of the appeals to it now is it's not regulated. It's not part of the governmental currency issue. And one of the dangers, and when you think about your money, is that the tendency to think that what's going on now or what has gone on is going to continue.

Bridget: Right.

John: It’s important, again, to think about: Well, what if that changes? How does that change this? And that's not something I hear many people talking about when they do about the crypto currency.

Bridget: The technical term for what you're talking about is recency bias. So, we think what's happening now is going to keep happening forever, but that's not the case.

John: Yeah, that's great. I got the layman's terms in there.

Bridget: Right. The jargon is recency bias.

John: Yeah, right. One other thing that I just wanted to bring as you talked about the difference between investing and speculating or investing and gambling. And I do the same as you with client like, hey, have some money, have 5%. It's fun to pay attention to that stuff, right?

Bridget: Right.

John: And the image that came into my head as you're talking about that is... and you mentioned early in the episode a business that's looking to create value or do something good, right? And I thought of a farmer buying farmland, right? There's value; you're going to be able to grow crops and sell and sell your crops or your livestock or whatnot.

And you don't expect to make a ton of money in the first year. I mean you're not going to double your investment in the first year. You're not going to get a 50% return. But why would you do that? Because over time, over the next 25 years, you've pretty reliable that, hey, you're going to have crops, and people are going to buy milk and all those sorts of things.

Versus the speculation of saying, “Well, gee, I think land price are going to spike, so I am going to buy some now, right?” And that different viewpoint is building wealth long-term. That's where the investing comes in. And we're not going to hit home runs necessarily, but that doesn't mean that you can't or it's not fun to do some of that speculating and see if you can hit a couple of home runs. So, that's great.

Bridget: It seems like that's a great place to wrap it up, John. I'm Bridget Sullivan Mermel, and this is John Scherer. And the first thing I want to mention is that please subscribe to our channel. That helps us get some more attention with YouTube and help other people find us.

John: And if you like the ideas that we talk about on this show, both Bridget and I are members of the Alliance of Comprehensive Planners, a nationwide group of fee-only comprehensive financial planners that think in a similar way that we do. And if you're interested in checking out somebody that might provide this sort of advice for you, you can look us up at And with that, thanks, Bridget.

Bridget: Thanks, John.

At Sullivan Mermel, Inc., we are fee-only financial planners located in Chicago, Illinois serving clients in Chicago and throughout the nation. We meet both in-person in our Chicago office and virtually through video conferencing and secure file transfer.

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