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Money Choice: My son taught me how to invest in cryptocurrencies

Conceptual illustration representing the bitcoin cryptocurrency. (Photo: Getty Creative)
Conceptual illustration representing the bitcoin cryptocurrency. (Photo: Getty Creative)

By Gemma Koh

You are never too young or too old to invest. Paul, a private investor in his 40s, shares his adventures in investing with his son, and how his own father introduced him to the world of finance at age 10.

At 17, my son got interested in blockchain and cryptocurrencies. He took online courses in his spare time at school and during breaks from National Service. He explained the technology to me and showed me how to set up an online wallet. In early and mid-2017, using his strategy, we bought a portfolio of 20 cryptocurrencies, the majority of them in Ethereum and some bitcoin.

There had been a big run in the value of many cryptocurrencies, and the surge continued. Bitcoin went from around S$5,000 in mid-2017 to as high as S$26,000 in December, and Ethereum surged from about S$200 to over S$1,500 in a similar period. My son invested earlier than I did, but I managed to buy Ethereum at around S$300 and sold enough in December at a price of around S$900 to fund a family holiday for four to Vietnam. We didn’t sell all of it, and the price has since fallen dramatically. Ethereum is now back down to around S$200 and Bitcoin around S$6,000.

Timing and luck was everything. We invested early, before the big boom which has now turned to bust. It was not about being skilful, but in understanding the risks involved. We did it more of academic interest, but happened to make a phenomenal return. It was an education for my son of how technology and finance come together.

It also showed that you don’t have to be grey-haired like me to invest.

It is important to understand the underlying blockchain technology and cryptocurrencies and how they work. Your investment has to be a very tiny part of your portfolio. It is the riskiest part in your portfolio, because the volatility is very, very high. As with all investments, you should be prepared to lose it all.

Learning from my dad

I learnt about investing from my father who was a financial journalist. Every morning, he’d have the Financial Times open on the breakfast table. I read the FT as a kid, and also read books on finance and the business section of the newspapers.

At age 10, I was interested in foreign exchange. My dad said: “See if you can make money buying pounds, selling it and buying US dollars; selling US dollars and buying Swiss Francs; selling Swiss Francs and buying French Francs, and then buy your pounds back .” I did the exercise and found out that of course you can’t make a profit doing this and was frustrated.

My father also taught me three golden rules which I’ve passed on to my children:

  • There is nothing to prevent a stock from going down to zero. They can be risky.

  • Never invest what you are not prepared to lose.

  • If a stock has gone up, be happy to sell and take a profit. Don’t worry if it goes up further. Always let someone else make some money. If you try to sell it at its peak, chances are you won’t. In psychological terms, don’t have sellers regret.

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