“Cryptocurrencies are not an investment. That being said, the technology behind them will change the world.”
This is according to Dawie Roodt, chief economist at the Efficient Group, who was speaking to MyBroadband about the investment landscape in South Africa.
Roodt said the likes of Bitcoin and Ethereum were not investments, and South Africans should not invest substantial amounts in them.
He did encourage people to get involved in cryptocurrencies, however, as the technology behind them was revolutionary.
Roodt said South Africans should buy a few hundred rands worth of cryptocurrencies so they can learn about the different coins, how they are traded, and the systems and apps which interact with them.
Where to invest
If Bitcoin is not an option for a solid investment, where then should South Africans put their money?
Using an example of a person in their 30s who has discretionary funds for investments, Roodt said equaties were a good call.
“I want to be in Japan or India,” said Roodt, referring to markets which have good investment potential.
US dollar-based equities are also a solid option, and with the rand strengthening against the dollar, now is a good opportunity to buy equities in the US, for example, said Roodt.
By allocating a portion of your investment portfolio toward dollar-based equities, it ensures you are sufficiently diversified, he said.
Local investors who are keen to place money into the JSE as the rand strengthens must remember that a large portion of the JSE’s earnings comes from foreign currencies, he added.
Roodt’s comments follow a drop in the value of Bitcoin in recent weeks, which has gone from just under the $20,000 mark in December 2017 to around $11,000 this week.