Invest as if your life depended on it!

What ordinary investors can learn from "coiners"— and vice versa in the quest for more sensible investment strategies.

If you don’t understand the above title then you’re probably an 'ordinary investor'. If you do, then you’re familiar with the cryptocurrency slang acronym ‘HODL’, meaning hold on for dear life, and probably don't invest in ordinary shares.

Investing in crypto currencies such as bitcoin and ethereum has become more and more popular in recent years. Yet it’s rare that investors favor both cryptocurrencies and traditional assets. The people who have been investing in stocks for years often think that crypto carries too much risk. And, surprisingly, crypto investors often regard investing in stocks as too risky. An old Dutch proverb could be applied to both: "What the farmer doesn't know he doesn't eat."

But both groups have a lot to learn from each other, if they would take the time to talk to each other.

So, firstly, what can "coiners" (people who invest in bitcoin or altcoins) learn? They would be wise to learn the basic rule of old-fashioned investing: portfolio diversification. Putting all your money in a single crypto coin is, of course, a very risky investment. Spreading your investments over several coins is a lot wiser, as you don’t lose so much if one coin loses value. But why not go further and think of other asset categories? Some coiners add gold or silver, which is already a good start.

I'm afraid that most coiners don't (yet) do much with stocks, bonds or real estate. While that would really add something, perhaps it would be less of a stretch for them to invest across several coins?

Another way for "coiners" to stay in their industry is to invest in a spread of companies engineering the blockchain and digital assets revolution. We have set up our VanEck Crypto and Blockchain Innovators UCITS ETF for precisely this purpose. Obviously, before deciding to invest in this ETF, an investor should well consider its risk, such new technology risk, volatility risk and regulatory risk.

Turning to ordinary investors, they would do well to adopt the slogan HODL from coiners. This means not letting the vagaries of the market drive you crazy; just sitting them out and sticking to your long-term strategy. Unfortunately, too often we see ordinary investors getting carried away with their emotions during sudden sharp price falls, and only getting back into markets when they have recovered somewhat (or completely). That is a sure recipe for destroying your return; a hearty portion of HODL would help here.

The differences between the two groups of investors is illustrated by the media they prefer. To say it very black and white: coiners find crypto information on Instagram, podcasts and YouTube. But ordinary investors prefer traditional media, such as newspapers, websites, TV and newsletters. Quite simply, these media platforms don’t cross, so it’s not surprising that coiners and their more traditional counterparts don’t necessarily learn from each other.

So you see, both worlds have something to offer. Coiners should diversify and ordinary investors should hold on for dear life.