Liz: Welcome to the NerdWallet Smart Money Podcast, where we answer your money questions and help you feel a little smarter about what you do with your money. I’m your host, Liz Weston.
Sean: I’m your other host, Sean Pyles. As always, be sure to send us your money questions. You can call or text us on the Nerd Hotline at 901-730-6373. That’s 901-730-NERD or you can email us at firstname.lastname@example.org.
Liz: And while you’re at it, make sure you rate, review and subscribe wherever you’re getting this podcast.
Sean: All right! This episode we’re taking on a money question about whether bitcoin and cryptocurrencies are a smart investment. Spoiler alert: They might not be. But first, Liz and I are going to do our new segment, “This Week In Your Money,” and we’re going to be talking about what it means to work from home and remote work in general because that’s a lot of our new normals.
Liz: Right! The other week, Twitter announced that employees could work from home forever. And that got us thinking about the opportunities of working from home, the challenges it presents, and what our own experiences have been.
Sean: Yeah, as a quick aside, I don’t think they would have gotten nearly as much press had they not used the word “forever” in there. Because a lot of places are working from home indefinitely, but it’s not quite as flashy a word as “forever.” We, for example — I’ve been working from home for quite a long time. It’s been two years for me. And how long have you been working from home, Liz?
Liz: A long, long time: 2002. So what, 18 years? A long, long frickin’ time.
Sean: Yeah. So, you are a professional, certified pro on working from home. I would love to hear from you about what has and hasn’t worked for you. I’ve learned some lessons along the way. But what about you?
Liz: Well, I think the big lesson is the learning to separate work life and home life. I love working from home because I can blend those two things. I can get up, walk around, do the dishes. Think about a column lead, walk the dog, you know, and I’m working the whole time because my head’s working on whatever I’m doing. The problem is when that goes on indefinitely. One of the things I finally learned to do — and it took a long time — was literally shut my computer off, not just put it to sleep and not just walk away. Shut it off at the end of the day, because that marks, “Boom, OK, now we’re switching to family time, to home time, whatever.”
Sean: Yeah, boundaries are super-important, even when you are kind of blending them. Like every day, midday I take my dog for a good hourlong walk. And as you said, I mean, I’m often thinking about an article or the next podcast episode that you and I are going to be recording. But physically, I’m out there at the park. I’m not at my computer, and that helps me a lot. And it helps that my manager knows, “OK, Sean is going to be taking a break midday. I won’t be able to talk to him for this hour,” but she also knows that when I get back, I’ll be there and I’ll be able to finish my work but I’ve made it pretty clear from the get-go, that I do have those firm lines. And at the same time, I’m also pretty good about finishing my work ahead of time, which I think makes this a little bit easier to get away with.
Liz: Well, you brought up a really good point, which is communication. That is key. Your team needs to know when they can find you. And if they need to get you in an emergency when you are offline, how to do that. I think that’s something that takes a little while to build up the remembering to do it and the team’s trust that they can find you. What has been particularly challenging for you, Sean?
Sean: For me, sometimes the boundaries do bleed together, especially when it’s the middle of winter here in Portland and it’s super rainy. I don’t really want to get dressed for work, but I sometimes will get to a place where I’m just wearing sweats every single day I’m rolling out of bed, opening up the laptop, throwing out some emails — and when I begin to let things bleed in that way, which is so easy to do gradually — that’s when I find OK, I’m feeling kind of bogged down and I can’t separate my home self from my work self, even though it’s all happening in the same space. So, making sure that I’m firm about those boundaries can be hard for me sometimes.
Liz: Yeah, that you know, the dressing up for me actually has been an important part of this. And it’s interesting because people love the idea of being able to wear sweats all day. I can’t get in the right mindset if I’m still in my pajamas or whatever. What was interesting is NerdWallet sent the remote team a gift, they sent us a piece of swag, which was the most comfortable pair of sweats.
Sean: Oh, aren’t they so soft?
Liz: Yes! Which makes it all the more alluring, to where I had to give mine to my daughter. It’s like, “No, no, this is just too tempting.” Very early on, I made a decision that the distractions could not happen during the day. In other words, no watching TV, no going off to my favorite blogs or whatever. I really do need to set aside this time and not let myself wander away, which is easy to do, easy to get distracted.
Sean: I have friends that can watch TV while they’re writing or doing any kind of work. And there’s just no way I could balance the two of those things. But it’s been really interesting seeing my partner adjust to work-from-home life because with his work, you could never work from home, really. And now they’ve had to, and it was a little bit difficult for him, in the beginning, to say, “OK, now, how are we going to work in the same space?” Our house isn’t all that big. When are you going to start work and stop work? How are we going to juggle the chores that we’re going to be doing? Like that. I think, again, takes a lot of communication and negotiation. And it’s just the two of us with our pets here. I can only imagine how it is for other families that have younger kids or kids in elementary school, something like that, where they have to take care of them as well as working.
Liz: Yeah, that is a huge issue that probably hasn’t gotten enough attention — that people with little kids are going up the wall because little kids need a ton of attention and they don’t understand, “Hey, my boss is on the line. I’ve got to deal with him right now.” Yeah, and it’s not funny. I mean, some of these things are amusing when you see the kid pop into the screen during a Zoom meeting, but parents are at the end of their rope and my heart just goes out to them. I have a teenager. She loves to be in her room anyway. So there’s not been an issue. We’ve got to figure out some way to support parents a little bit better, especially if day cares aren’t opening up again.
Sean: Yeah, I think that what has helped me when I feel a little bit bogged down — I’m sure that a lot of parents might not have the flexibility to do this, but when I’m feeling overwhelmed or stressed, what helps me beyond taking my dog for a walk is honestly just having a nap. A 20-minute nap, which is one of the best perks of working from home as opposed to working in the office. I get that brain fog like at 2:30 p.m.; I just can’t focus on anything. I’ll find myself scrolling in social media and I’m just doing it because I feel like I need to be at my computer. Whereas, if I took that 20 minutes, close my eyes — I set a timer on my phone — after that short lay-down, I feel totally refreshed. Yeah. And I think that it’s really important to be able to recognize when you need to take a break, and you don’t have to force yourself to continue chugging along at the monitor, because that’s what you feel like you, quote-unquote, should be doing.
Liz: And Sean, you mentioned that you take a walk every day. And that is hugely important. I don’t think we fully grasp when we start working from home how much basic exercise we got, when we were going to an office, I mean, just walking to your car, driving and then getting out of your car and then walking to the office and popping up to get some coffee or, you know, talk to a coworker, whatever it is, there’s a lot of movement built in to going to an office that suddenly goes away. And if you aren’t moving that body, if you aren’t deliberately setting aside some time to exercise, your brain is going to atrophy.
Sean: And your muscles as well.
Liz: That as well.
Sean: I mean, I would have days when I first started working from home, where one, I wouldn’t leave the apartment all day, but two, I wouldn’t talk to anyone besides people on Zoom or Slack at work. And I would be like a puppy waiting for my partner to get home. And I’m like, “Oh my gosh, finally, someone to talk to, how incredible!” Whereas he’s super exhausted, he just walked home from work. So he’s not in any mood to talk. And then, we got a dog and everything became a lot more balanced. Because now I’m getting that activity, making friends at the dog park, which, you know, you can still do, well, socially distancing. And that made me feel like I was getting that balance again because that’s really what the key to success is — knowing what works for you in terms of your workflow when you’re your most productive. And when you need to take a break and maybe make a nice lunch for yourself, which I’ll admit I almost never do. But whatever works for you to have some sort of stability and flexibility in your work schedule.
Liz: And one of the great things about this unintentional experiment that we’re all experiencing is that everybody’s kind of doing the same thing. Everybody’s now remote. Everybody’s now wrestling with Zoom, everybody’s trying to learn all these things. So you can actually bond with other people just sharing what works for you or simply sharing what’s not working for you. We’ve had some great discussions online via Slack and via Zoom, just about the fact that we are Zoomed out or that you know, this is a problem or that’s a problem. And just getting support from your co-workers is huge. It can make you feel a lot less alone.
Sean: Any other tips that you have around working from home and work-life balance?
Liz: I would just forgive yourself a lot. It’s gonna take a while to get your groove on and you’re going to forget certain things and you’re going to fall into bad habits and it’s just, pull yourself back up, get restarted. You can restart 20 times a day if you need to.
Sean: And also remember, you’re not just working from home. We’re all working from home in the middle of a global pandemic, the scale of which we’ve never seen before, and it’s hard and there’s no getting around that. So giving yourself a lot of room to maybe not be your most productive, but also understand when you can work when you can’t and being flexible.
Liz: Yeah, I think that’s important.
Sean: All right, well, I think that about covers it for now. Let’s get to this episode’s question from a nameless listener. As a quick aside, when you guys send us your money questions, please tell us your name and maybe a little bit about yourself. Do this in part, because I am personally nosy but also it can help us answer your money questions with a little bit more depth and clarity. Anyway, the question this week is, “Is bitcoin a safe investment? And do you recommend it?”
Liz: No and no. OK, we’re done.
Sean: Yeah. Easy, wrap it up.
Liz: To help answer this question, though, we’re talking with one of our favorite investing Nerds, Arielle O’Shea.
Sean: All right, let’s get into it. Hey, Arielle. Thanks for joining us.
Arielle: Hi, thank you for having me.
Sean: We are super-happy to have you here and we’re hoping you can help us answer a couple of simple, but maybe not-so-simple questions.
Basically our dear nameless listener is wondering whether bitcoin is a safe investment and whether we nerds recommend it. What do you say?
Arielle: I say that you’re right. I wish I knew more about this person because if they are looking to invest in bitcoin for fun, they have a little money set aside to play — and I would emphasize play — then I would give a different answer than I would give a general audience, which is, like Liz said, no. And no.
I think it’s important to understand that investments — especially ones that are going to earn you a decent return — are not safe. If you want to earn a return, you are not also going to be able to keep your money safe. Those two things don’t necessarily go together. So, no, bitcoin is not safe. I don’t recommend it. We recommend low-cost index funds.
Liz: But there are various levels of risk you take when you invest. So at one end are investments like Treasury bills that the government issues. Those have an incredibly low risk of losing money and they also have an incredibly low return. In the middle, somewhere of this continuum would be a diversified portfolio of stocks.
So any single stock can lose you money, but a portfolio of stocks, even though it can drop in a bad market, over time we know that a diversified portfolio of stocks will give you your best returns.
At the very far end of the risk scale are things like commodities and futures and other super-volatile investments. You could earn a lot, but you also could lose a lot. That’s where bitcoin fits in.
Arielle: If you are still interested in bitcoin, we could maybe get at some of the reasons why you’re interested in bitcoin. Are you looking for a little thrill, nameless listener? Are there other ways to find that?
Liz: That’s a really good point. I mean, I’m really interested in the blockchain technology, which underlies all the cryptocurrency, bitcoin and all the other ones. But that doesn’t mean that you want to invest in any of these as a long-term strategy.
Blockchain technology is a thing. Big companies are investing in it. It is the way of the future. We’re going to see a lot more of it but that doesn’t mean that every investment in blockchain technology or cryptocurrency is going to work out. As Arielle says, it’s very, very speculative. The value goes up and down all the time. So this is not where you put your retirement fund. This is where you put your fun money, if you want to try it.
Arielle: Right. Exactly. And I think bitcoin and crypto have risks that are not typical with other investments. Some of them can happen with other investments, but hacking is a bigger issue with bitcoin. Hot wallets where bitcoin are stored are sort of big targets for hackers. And so investing is a little bit complex. It requires a little bit of knowledge and bitcoin in particular has a much steeper learning curve than most investments, I would say. I mean, if you were going to invest in it, then you need to be able to do the research and that’s going to require a lot of time and a little bit more know-how.
Liz: You also have to be pretty good about keeping track of your passwords and your PINs. If you have trouble with that with your ATM card, man, don’t go anywhere near cryptocurrency. If you want to know why, a friend of mine wrote a column for Wired Magazine, Mark Frauenfelder, about losing his password, and you should read that before you invest in any of this stuff. It’s pretty harrowing.
Arielle: Yeah, and that’s not a risk that you would think of when you are talking about your retirement account or other investments. So that’s definitely something to highlight.
Liz: Yeah. It’s not like you can call up your bank and get your password reset if you lose it.
Sean: OK. So say our nameless listener here, is just looking to do some hands-on investing and bitcoin seemed like a pretty tempting way to do that. I have some friends that saw it as a quick way to make money — which obviously some people have made a lot of money on it — but it’s not necessarily a safe way to do that. But Arielle, I’m wondering what you think would be some safer ways for someone to do hands-on investing that might have some good returns.
Arielle: So again, I don’t want to imply that anything is safe and I would say that before you dabble in any of these more thrilling investment strategies, more hands-on investment strategies, you should make sure that you have some building blocks in place. So that means you’re investing enough for retirement and that money is going into tax-advantaged accounts and investments like low-cost index funds and diversified portfolios that you can build with those.
But aside from that, if you have that all covered, you can set aside, maybe 10% of your overall portfolio, to dabble in some more active strategies. So that might be investing in individual stocks, right? There are a lot of brokerages now that are offering even fractional shares where you can buy a small portion of any stock rather than forking over the whole share price, which in some cases can be pretty big. So that’s a good way to go because you don’t need to put a lot of money into it. It’s not a big investment but you can put a few dollars here and there into lots of different individual stocks and then kind of follow them and learn about investing that way and get a little bit of fun out of it that you’re not going to get with sort of more of those passive investments, like those index funds.
Sean: That way you’re doing it without having a target on your back for hackers. So, that’s a plus.
Arielle: That is a plus. Yes, for sure.
So you can invest in big well-established companies and that’s going to be even less risky than something like bitcoin, right? You’re still investing in individual stocks, so you’re getting a little bit of that active portfolio but you’re not going all the way to bitcoin which is extremely risky, extremely speculative.
Liz: And if you’re like me where you’re interested in the blockchain technology that underlies all this, maybe look at the companies that are investing in that and invest in them. So there’s likely financial services companies, insurance companies, all kinds of companies. Just do some searches and you’ll see who’s really diving in big-time on blockchain, and that’s a way to put a little money on it without putting all your retirement or all your funds at risk.
Arielle: Exactly. That’s a great suggestion.
Sean: Is there a middle ground between investing in bitcoin and going one of the safer routes like with a brokerage firm?
Arielle: There is. So there are brokerage firms — more and more — that are offering bitcoin and other cryptocurrencies. So you could open an account with one of those firms. Some examples are Robinhood, which is known for free trading, SoFi Wealth [and] TradeStation. These brokers all offer cryptocurrency as well as all the traditional investments, index funds that I mentioned before, and ETFs and individual stocks. So you could sort of do both with an account at one, and so that’s a good option if you want to kind of dabble.
Sean: All right, Arielle. I want to address now, one key word in the nameless listener’s question. The word “safe.” What do you think would be some good, safe investments for them to pursue?
Arielle: So if you are looking for safety, nameless listener, and it sounds like you are, then you really want to kind of steer away from investing, honestly, and look at things like money market accounts, online high-yield savings accounts, which aren’t as high-yield as they used to be now that interest rates are down, but they are paying more than the traditional brick-and-mortar bank.
There are also accounts — cash-management accounts. You might also consider certificates of deposits. These are called CDs and they’re best if you know the amount of time that you want to put your money away for. So if you have a goal that’s, one, two, three, five years away, you can put your money in a certificate of deposit and perhaps earn a little bit more than you would earn in a high-yield savings account or something like that. So that’s where I would go if you’re primarily looking for safety.
Liz: Yeah, it is interesting that people talk about safe investments and a lot of the ones who contact me are looking for a safe investment with a high return and it’s really hard to get across the idea, those don’t go together. If you’ve got a safe investment, safe’s a relative word. But if you’ve got something where you can’t lose your principal, you aren’t going to get a big return. You’re probably not even going to keep up with inflation. Is that something you run into to Arielle?
Arielle: Absolutely. So that’s the trade-off, right? You can either have safety or you can have a high return and the investments that are paying a high return are doing so because they’re asking you to give up that safety. So that’s what people have to understand and generally speaking, if you have a really long-term investment, if you’re investing for retirement or something that’s very far away, you can give up that safety because you have that long time horizon and you can ride out volatility and so you’re able to sort of chase those higher returns.
But again, you need to do so with a diversified portfolio and that does not come from investing in bitcoin or any one asset.
Sean: OK. Well, I think that that about touches on all of the aspects of our nameless listener’s questions. Any final words you have Arielle?
Arielle: I would just remind people to make sure that they’re putting the bulk of their portfolio into diversified investments and then allowing themselves to — if they are after that kind of active strategy — to do that, but to do it with a very small portion of that portfolio.
So again, our rule of thumb is really 10% of it or less. If you want to play around in the market, you should keep that game to 10% or less of your portfolio.
Sean: All right. Well, thank you so much.
Arielle: Sure. Thank you for having me.
Liz: And now let’s get to our takeaway tips.
First of all, bitcoin and other cryptocurrency are extremely risky investments. Ask yourself what financial goal you’re hoping to achieve when you’re thinking about investing in cryptocurrency and maybe think about other ways to achieve it.
Sean: Next up, if you are set on investing in a speculative stock like bitcoin or in individual stocks, we recommend keeping those investments to less than 10% of your portfolio.
Liz: Safety and high returns do not go together. If you need to keep your money safe — in other words, if you can’t risk losing your principal — stick to money market accounts, high-yield savings accounts and certificates of deposit.
Sean: That is all we have for this episode. If you have a money question of your own, turn to the Nerds and call or text us on the Nerd hotline at 901-730-6373. That’s 901-730-NERD or you can email us at email@example.com. Also visit nerdwallet.com/podcast for more info on this episode and be sure to subscribe, rate and review us wherever you’re getting this podcast.
Liz: Here’s our brief disclaimer, thoughtfully crafted by NerdWallet’s legal team. Your questions are answered by knowledgeable and talented finance writers but we are not financial or investment advisors. This Nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Sean: And with that said, until next time, turn to the Nerds.