- Ex-Wall Streeter Vivian Tu says crypto is going to be “a big part of our future.”
- She says everyone should invest in crypto, but not if you’re investing money you can’t afford to lose.
- Tu suggests real estate, ETFs, or I-bonds if you’re worried about cryptocurrency’s volatility.
- This article is part of a series focused on millennial financial empowerment called Master Your Money.
Known for her candor about systemic injustice in finance and her ability to break down big financial concepts in a 60-second clip, Tu tells Insider that cryptocurrency — or at least the blockchain technology behind it — will radically change the way that we think about money for generations to come.
She adds that people shouldn’t be “YOLO-ing” their entire life savings on crypto, and that you should maximize other passive income streams first, like an employer 401(k) match, if you have one.
If you’re worried about
in the crypto market, here are four other, less-volatile, investments Tu says might be a better fit.
1. Exchange-traded funds or mutual funds
Instead of buying individual stocks like Apple, Tesla, or Disney, ETFs and mutual funds allow you to buy smaller pieces of each stock, bundled into one package.
ETFs are a basket of securities that’s traded on the stock exchange. Mutual funds, on the other hand, are a group of stocks and other assets typically handled by a fund manager to maximize profits. Because you’re buying a diversified bundle of assets, there’s less risk than investing in cryptocurrency.
2. Real estate investment trusts
A real estate investment trust (REIT) is a company that owns, operates, and invests in income-producing rental properties. “REITs are a great way to access real estate without spending tons of money,” Tu says.
3. Savings bonds
“If you’re very afraid of crypto, I-bonds are about as safe as they come,” Tu says. “They’re sold by the US government and the return rate changes every six months depending on inflation.”
Cryptocurrency is still relatively new and there are tons of security loopholes, she continues. If you want something guaranteed to give you a little bit more cash at the end of the investing period, an I-bond, a type of savings bond that you can cash out after five years with no penalty, might be best for you.
4. Fractional shares
Fractional shares are small portions of a whole share from companies like Apple, Tesla, and Disney. They allow investors to diversify their portfolio with smaller amounts of money to start. Some employers even offer fractional shares of the company as an added benefit on top of 401(k) retirement plans and health insurance.
“There’s nothing wrong with putting a few dollars into fractional shares from a company you feel really passionate about,” Tu says. “This could be your favorite tech company that you couldn’t live without, or your favorite haircare brand, or even your favorite quick service restaurant chain.”
Editor’s note: This post has been updated to clarify that I-bonds are cashed out after five years, not six months.