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Stocks and Cryptocurrencies are different in many ways. Stocks can be seen as an investment in a company. Their prices are affected by the company's performance. Cryptocurrency is a form of digital currency and it's value is affected by the scale of community involement (more demand = higher supply). Throughout this padlet, I will be explaining the risks and benefits involved with investments in stocks and cryptocurrencies.

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Buying stocks essentially means that you are buying a small portion of a company. For example, if Apple was split into 100 shares and you bought 1 you own 1% of the company. People buy stocks for companies that they believe will perform well, which will increase the price of each share they own. Investing in stocks won't be too risky if you invest in multiple companies rather than putting all of your money into one. Another way to reduce risks when buying stocks is to do your research on companies to see if they are reliable enough to invest in. Cryptocurrency is a decentralized form of digital currency meaning that it isn't managed by any specific government or country. Cryptocurrency market prices are more volatile than stocks since they are based on supply and demand. This means that there is a possibility for a higher risk along with a higher reward for investments. Stocks offer lower risks along with lower rewards, which is better for people that are new to investing in the market.

I chose to include this video because it explains stocks and cryptocurrency using simple terms that can be easily understood by people that are new to investing. I think this video is important for new investors since it explains that you need to properly do research on stocks or crypto that you wish to invest in in order to reduce the risk of losing money. Investing in stocks should be based on your views of the reliability of a certain company or project rather than gambling money based on what is popular.

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STOCKS vs CRYPTO in 2021 - Which is better?

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This was one of the best videos I found about the stock market since it gives great advice to beginners without using too many complex words. One of the tips was to choose a strategy based on your financial position. For example, it is important to make sure all of your debts are paid off and that you have an emergency fund before allocating money to invest in stocks. Another tip he gave was to invest in ETFs (Index Funds) which are less risky and distribute your investment across hundreds of company stocks rather than making you pick and choose individual ones.

I chose this video because it encourages viewers to constantly analyze their financial position as well as the current state of the market before making and impulsive decisions. It also explains the importance of having a strategy (short/long term goals) rather than just investing in good stocks to make as much money as you can (Eg. setting a goal to save up for children's education or setting up a retirement account).

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Investing For Beginners In Canada (10 THINGS YOU NEED TO KNOW!!)

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This video explains the purpose of why Bitcoin was created along with reasons why it is so important in todays society. It is explained that there are many issues to having centralized money (less privacy, bank/government can lock your account).  Bitcoin was created to be used as an asset as well as an alternative to regular fiat money. Some of its advantages are that you are in full control of your funds, there is no need for a middleman such as a bank, and that it can be used to send and receive funds by anyone in any part of the world.

I chose this video because Bitcoin was the first cryptocurrency and it has been the largest one for years. It is important to do your own research before investing in random cryptocurrencies or stocks. Although Bitcoin was the first cryptocurrency, it has outlasted hundreds of other ones. It started by selling around 0.06 cents in 2009 to now being worth over $75000 CAD per coin. When I started investing in cryptocurrencies and stocks last year, I watched videos similar to this since the concepts are easy to grasp and are explained using simple terms.

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What is Bitcoin?  Bitcoin Explained Simply

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This video explains how new investors are fooled into investing in popular stocks and lose money because they don't know what they are doing. It explains that the proper way to make money in the stock market is to research undervalued stocks from reliable companies and investing in them. The mistake that most people make is buying stocks when they are high and selling when they are low without having any reasoning for  their actions. Most people think that stocks are a quick and easy way to double or triple their investments, so they invest in whatever stocks they see are doing well in news headlines or on social media. As soon as the stock value drops, they fear that they will lose their money and quickly sell the stock in order to reduce their losses.

I chose this video because it reminded me of how some of my friends began investing in stocks. Some of them spent hundreds of dollars on Nokia stocks when they were almost at an all time high value. Due to their lack of research, my friends ended up losing most of that money after the value of the stock plummeted. This video is important because it teaches the lesson that money doesn't just magically double or triple in the stock market and that it is important to have strategies and goals rather than just following what your friends tell you to buy or what you see on social media.

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Watch This Before You Invest In The Stock Market in 2021

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This article sarcastically explains common mistakes that are made by "lousy stock traders". One mistake is to put 60% or more of your money into one or two stocks and avoid diversifying them. This is a common mistake where people find popular stocks on social media or through friends or family and blindly invest in them. By not diversifying stock picks, people invest in only one category or industry. For example, if someone puts all of their money into energy stocks and it happens to be a bad year for that industry, they will have lost a lot of their money.

I chose to include this article because it does a great job of telling you what not to do in a funny, sarcastic manner. One of the lessons it teaches investors is that high rewards come with high risks and it isn't smart to take high risks with a lot of your money over long periods of time.

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Wealthsimple makes powerful financial tools to help you grow and manage your money. Learn more

This article is part of Slow Money Rule #1: Go deep on one or two stocks , a column by Wealthsimple's investment team about growing wealth over time.
Let's say you want to be an awful stock picker. Not just a slightly reckless trader, or an ineffectual one (which studies show many of us are destined to be). But a truly terrible one - a Bad Trader™ who behaves as if he has dog chow for brains and wants to find ways to throw handfuls of cash out a window. So how would you do it? Well, for those who are curious, we've made a definitive list of the five most surefire ways to ensure your money would be way better off in a bank account earning .001% interest than under your management. And, for those who don't want to be awful stock pickers, this also works as a list of behaviours never to engage in.

To reach the upper echelons of terrible trading, you'll want to avoid diversification at all costs. Instead, you need to become obsessed - absolutely obsessed - with a tiny handful of stocks. Or, better yet, pick a single stock that you're certain will rise forever, then pour all your money into this sole investment. How to find such stock(s)? Just trawl r/wallstreetbets, or ask your cousin Larry what he's buying. Because odds are Larry is wrong. The U.S. stock market, as a whole, has marched steadily upward since 1900, and Canadian stocks have done much the same. But only a tiny fraction of individual stocks - about 4%, according to one study - have earned investors more money than banks pay in interest, meaning most stocks really aren't worth buying. That also means that, though betting on the whole market generally results in long-term gains, concentrating your bets on one or two stocks significantly ups the odds that you won't pick a moneymaker - your entire goal as a lousy stock picker.
Rule #2: Bet on all the same stuff

The stock market, as a whole, has marched steadily upward since 1900. But only a tiny fraction of individual stocks have earned investors more money than banks pay in interest.

And, when choosing stocks to obsess over and bet big on, don't sleep on the big guys! Since the market's best-performing companies change all the time, you can easily overinvest and lose money on popular blue chips. For instance, if you'd put all your money in General Electric back in 2000, when the company had the single largest market value of any S&P 500 company and its stock was going for $480 a share, you'd be swimming in a sweet, delicious sea of losses now that GE stock costs about $109 a share, and it's the 75th most valuable S&P company and will soon be splitting into three separate entities.
Rule #3: Trade all the freaking time
A slightly more crafty way to avoid diversification, beyond investing in a few individual stocks, is to build what's known as a thematic portfolio, in which your positions are concentrated on a single industry or region. That way, you're entirely exposed to sector- and country-specific downturns. If you go all in on Canadian energy stocks, for instance, and the Canadian energy sector has a rough year (while the U.S. and Chinese energy sectors do just fine) great! You'll be all in on the losses.

A terrific thing about thematic portfolios is that you can build one unwittingly, by having investments that might appear diversified but aren't in reality, and thereby unintentionally negate the benefits of holding broad-based index funds. If you're invested heavily in, say, U.S. tech companies - Apple, Google, etc. - and the rest of your money is in S&P 500 index funds, you aren't really diversified, since the biggest companies in the S&P 500 are U.S. tech companies. Which means, if the U.S. tech sector suddenly craters, a lot of your investments will nose-dive at once. And that's the sort of devastating shock Bad Traders live for. Thematic tech ETFs can also serve up huge helpings of hurt.

So you've picked a few stocks that you truly, madly, deeply believe in and you've built a thematic portfolio. Next, make sure you're trading All. The. Time., trying to time the market. The charts below shows the performance of three Canadian equity investments: Blackberry, Suncor, and the overall market (TSX). Suncor's stock is the winner, given its rise over the past 20 years. But! Individual stocks, even the ones that do well over time, like Suncor, experience far bigger swings in value than the boring diversified TSX index. Check out the spaghetti chart: each squiggle represents one year's performance; the wider and more squiggly the range, the more volatile the stock. Suncor stock hasn't swung as much as Blackberry's, but it's still done some serious rollercoastering compared with TSX. And actively trading in reaction to these swings creates opportunities to bungle your timing - by selling during a downturn, say, and missing the rebound - which can turn a decent investment into a regrettable one. Frequent trading also racks up fees that cut into your profits, which Bad Traders love to see.
Rule #4: Chase winners, buy high, YOLO

Rule #5: Panic like a pro and sell low

As a committed Bad Trader, you want to chase extreme performance at every turn. So, once you're comfortable trading on a whim, keep a close eye on stocks that shoot up dramatically, especially ones that gain 100% or more in a given year. The more speculative and hyped, the better (for doing worse, that is). The truly world-class Bad Traders embrace every FOMO-driven frenzy; it's the best way to ensure that you pay a lot more per share for chancy stocks than any sane person ought, often long after savvy traders have already made piles of money and cashed out. Unfortunately for Bad Traders, moments of frantic, terrible-trading splendour, like the GameStop frenzy, don't come along every day. But, with enough Twitter and Reddit scrolling, you'll be ready to pounce whenever the next meme stock takes off, so you can YOLO yourself straight into the red.

The timing of your exit from the market needs to be as ill-considered as your FOMO-fueled entry into it. One reliable, particularly ruinous way do that is to trust your gut and bail whenever things get a wee bit scary out there in stockmarketland. Echoing the Suncor example above, one study found that, during big market drops, households have lost more money panic selling than they would have staying put, especially since these same households tend to delay reinvesting, missing rebound opportunities and then buying again after prices have already climbed back up a bunch. A huge number of households made this mistake after the 2008 financial meltdown and after the early-aughts sell-off, and presumably after the 2020 Covid crash, too. But, as a Bad Trader, you relish selling low and missing rebounds. And here's a bonus tip: if you want to be a first-rate panic seller, it helps if you're a male over the age of 45, have dependents/kids/etc., are married, and think you're a super-awesome stock picker. Research shows that investors with that profile are more likely to freak the heck out and lose money when the market goes sideways compared with other investors.

GOOD JOB! Congrats on completing our five-point course on being a terrible trader! You're now ready to steadily do worse than folks who just invest in a well-diversified portfolio of ETFs and forget about them. Which has proved to be an investment strategy that beats even hedge funds over the long term. Just ask Warren Buffet. Or don't if you're a true ride-or-die crappy trader.

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Five Simple Rules To Be the Absolute Worst Stock Picker | Wealthsimple

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Wealthsimple makes powerful financial tools to help you grow and manage your money. Learn more This article is part of Slow Money Rule #1: Go deep on one or two stocks , a column by Wealthsimple's investment team about growing wealth over time. Let's say you want to be an awful stock picker.

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Earlier this month scammers got away with around $3.38 million USD after tricking people into buying his cryptocurrency token. The token was called "Squid" and was inspired by the extremely popular Netflix show "Squid Game". The digital token was marketed to be used in games and able to be traded for other cryptocurrencies. It got lots of hype from social media and news outlets and its price went up from 1 cent to approximately $2850 USD a few days later, its value dropped 99.9% and people who had purchased the tokens were unable to sell them. The creators of the "Squid" token took down its website and disappeared from social media. They exchanged their all of their tokens for real currency, which drastically dropped the liquidity of the cryptocurrency, causing other buyers to be unable to sell their tokens.

I included this article because I see it as a lesson to not blindly follow what is popular when it comes to investing my money. Making quick money comes with extremely high risks of losing it. Millions of dollars were lost because people blindly purchased a cryptocurrency based off hype from news outlets and social media influencers. Many social media influencers tried to warn others that the token was a scam but it was already too late. This is why it is important to only invest money that you are ok with losing as well as doing your own research to purchase cryptocurrencies that you believe are reliable and have some longevity.

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Squid Game crypto token collapses in apparent scam

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"In fact, open pump and dump schemes are rampant in the crypto world, with investors often jumping in with eyes wide open, perhaps hoping that they can ride the wave and dump their holdings for a quick profit before prices collapse," he said.

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This article explains the difference between investing and gambling when it comes to cryptocurrency. Investing and gambling offer both risk and reward however the difference between them is that a person who invests has a strategy as well as short and long term goals. On the other hand, gamblers mainly care about winning and earning money fast. Whether you decide to invest or gamble your money in stocks or cryptocurrency is up to you. However, it is important to only invest money that you're ok with losing. Long term investors don't worry about short term losses because they account for volatility in the market when creating strategies.

I included this article because I was confused about this exact topic when I first started investing in stocks and cryptocurrency. I saw my friends gambling lots of money into random altcoins and quickly pulling out their money to make quick gains. It made me wonder what the point of trading stocks or purchasing crypto was if there was such a high risk. After doing some of my own research I realized what to look for in cryptocurrencies or stocks to know whether they'd be reliable to invest in over a specific time period. I only allocated a certain amount of my earnings to invest and I never took huge risks because I didn't care about making money quick since I had long term goals.

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I'm one of the lucky ones. I invested very little money, and now own cryptocurrency worth more than $350,000. I'm 30 years old, I rent, and I don't have much in savings or retirement investments other than my crypto. I'm really struggling as to what to do next. I don't know whether to keep going, or to take the $350,000 and do something more practical with it. Am I foolish to just let it ride? - Mason, Chicago
You do realize "let it ride" is a gambling term, right? While you might think I've unfairly targeted one throwaway phrase in your email, it's the blurred line between gambling and investing which makes cryptocurrency so confounding.

Too many people believe investing is gambling. As it turns out, investing is not gambling. Is risk involved? Yes. Is reward involved? Yes. Is investing a game of chance? Well, that depends on your investing strategy.

The primary difference between gambling and investing is an investor will use tools of diversification to mitigate risks and decrease the chance for loss. A gambler is typically all-in with a singular lever dictating whether they win or lose. And even if you hold different types of cryptocurrency, the use of a single asset class means you aren't mitigating risk through asset allocation and diversification.

► Cryptocurrency, explained: How does bitcoin even work?

Investors have very specific goals around rate of return, time horizon, and risk tolerance itself. Additionally, investors generally have specific goals for specific accounts whether the money is meant for retirement, college, or some other time-determined event. Gamblers primary goals revolve around winning the bet, without any additional structural elements or constraint.

The strangest reality about the intersection of investing and gambling is the same asset can theoretically be either an investment or a gamble. It's the strategy and planning behind the asset which decide whether or not you're gambling.

Gambling is exciting. Investing, when done well, is really boring. I, too, am tired of reading/hearing quotes from the great investing gurus of our time, but Warren Buffett wasn't wrong when he warned, "Beware the investment activity that produces applause; the great moves are usually greeted by yawns."

Don't make your decision so binary. There is no inherent "all or nothing" moment here. You can take money off the table and do something less speculative with it.

I've always believed a person can earn the right to take additional investing risks by creating underlying financial stability in their life. For instance, a healthy emergency fund, a properly funded retirement strategy, and the absence of consumer debt make investing excess funds in speculative vehicles much more tolerable. It's tough to accomplish this level of stability when your entire net worth is tied-up in something as volatile as crypto.

Consider using some of the value of your crypto holdings to create more conventional stability. By doing that, you allow the rest of your crypto holdings to become less of a gamble and more of a specific investing strategy. You'll still have the theoretical upside of crypto, but you'll also have a more reliable base to your financial planning strategy.

You need to come to terms with the FOMO (fear of missing out) which inevitably comes with switching from a speculative investing strategy to a more prudent investing strategy. You can't forever measure your decision to diversify with an open-ended timeline that would otherwise allow your previous speculative investments to swing wildly, if not higher. That will be the temptation in all of this. If you were to diversify and then your previous investments shot up like a rocket, you'll feel like you failed. You didn't fail. That's FOMO, and it's as old as investing itself.

One additional note: If you do sell any cryptocurrency, be sure to account for taxes. Unfortunately, a gaggle of crypto investors are going to learn an incredibly harsh lesson when they don't consider the tax obligations they hold to the IRS.

► Colonial Pipeline hack: Majority of $4.4 million cryptocurrency ransom payment recovered
Peter Dunn is an author, speaker and radio host, and he has a free podcast: "Million Dollar Plan." Have a question for Pete the Planner? Email him at AskPete@petetheplanner.com. The views and opinions expressed in this column are the author's and do not necessarily reflect those of USA TODAY.

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Is buying cryptocurrency investing or gambling? Here's how to tell the difference

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I'm one of the lucky ones. I invested very little money, and now own cryptocurrency worth more than $350,000. I'm 30 years old, I rent, and I don't have much in savings or retirement investments other than my crypto. I'm really struggling as to what to do next.

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This website explains the benefits and disadvantages involved with investing in stocks. Some benefits are that stocks take advantage of the growing economy and that they're a very liquid investments meaning they are easy and quick to buy and sell. Some reasons not to buy stocks include the risk of losing some of your money, the time involved in researching good stocks, and the emotional rollercoaster that comes with investing (avoiding being greedy and buying stocks while high while also avoiding selling them too early when they drop a little).

I included this article because it explains who investing in stocks is and isn't for. It is especially important to understand the disadvantages before investing rather than learning the hard way which could cost you a lot of time and money if you're not careful. Another reason why I included this article is because it explained ways to lower investment risks such as diversifying your portfolio by industry or by location.

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This image displays a popular cryptocurrency called Dogecoin that is known as a "memecoin" since it has been extremely volatile in the past. It has been talked about all over social media by influencers and even Elon Musk, the CEO of Tesla. I've seen many investors including a lot of my friends pour lots of money into this coin and while some of them gained a lot of money, many more of them lost a lot. I tend to avoid "memecoins" as I find them to be unreliable and too risky for my liking since they only rise due to social trends. I prefer to set long term goals and invest in more reliable coins that I can either use or sell in 8+ years (Eg. Ethereum).

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This image is of the app "Wealthsimple Trade". I personally use this app to invest in stocks and ETFs and I believe that it is the best Canadian stock trading app. It is the best trading app because its easy to use and understand, it requires no account minimums, and it is the only stock trading app in Canada that doesn't charge commission for trading stocks and ETFs.

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What did you learn about your topic that surprised you the most?
The thing that I learned about this topic that surprised me the most was that scammers got away with approximately $3.38 million dollars after promoting a scam token called "Squid". It made me realize that I shouldn't necessarily follow trends on the crypto market especially if I haven't done any research or if things seem too good to be true.

Provide a real-life example of how this topic is relevant or interesting for you.
The reason why I chose this topic in the first place is because I recently started investing in crypto and stocks and I wanted to learn more about the risks and benefits involved with them. One example of how the risks are relevant to me is that I first started trading stocks without knowing what I was doing and I lost around $150 last year. I made the mistake of blindly following what my friends were doing and I also freaked out and sold my Blackberry stock early out of fear that I would lose more money from it dropping.

If you could pass on your knowledge to a family member or friend, what do you think is the most important thing to pass on?
I would let them know that it is smarter to allocate some of your money towards investments and create long term goals rather than trying to make some quick cash and taking huge risks. I wouldn't recommend gambling money in stocks or cryptocurrencies since it is much easier to lose money than gain it when you don't have a plan.